Debut suing former employee as it reports down quarter

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Revenues plunged 40% in Q1 to $245,439 for Debut Broadcasting, the smallest of the publicly traded US radio companies. The company blames a former employee, whom it is suing for millions of dollars.


As reported by RBR-TVBR, Debut had been the biggest percentage gainer of the stocks reported in our daily stock lists for Q1, surging 900% from three cents to 30 cents. But lately the stock has dropped back below 10 cents.

In its quarterly 10-Q filing with the SEC Debut said the drop in revenues for the quarter was primarily attributable to the damages it incurred from charges spelled out in a lawsuit it filed May 6th against its former VP of Radio Network Operations and Director of Marketing, Marcus Rowe, and his newly formed company, Nectar Media.

The lawsuit alleges that before he left Debut last October Rowe took a company laptop containing the entire client database and other proprietary material. It also accuses him of erasing all emails incoming and outgoing from the company server that were more current than July 29, 2010 and convincing the company’s IT chief to give him the password to the backup server, where he allegedly deleted all emails.

Debut claims that from the beginning of 2009 until he left in October, Rowe was signing deals with clients for his own Nectar Media, rather than his employer’s Impact Radio Networks, ultimately walking away with 25% of Impact’s client base.

The lawsuit seeks $3.5 million in damages for the client loss, return of the laptop and verified erasure of all copies of its proprietary data, and $350K in damages for Rowe allegedly telling clients that Debut was going out of business.

Rowe has not yet returned a phone call from RBR-TVBR seeking comment on the lawsuit.

Despite the decline in Q1 revenues, Debut was able to reduce operating expenses by nearly $200K and reduce its operating loss by $29K to $224K. The company’s net loss declined nearly $25K to $255K for the quarter.