Penny stock company Debut Broadcasting reported that Q3 revenues dropped 72.7% to $154K. The company blamed the drop on a former executive whom it is battling in court.
Debut had sued its former VP of Radio Network Operations and Director of Marketing, Marcus Rowe, and his newly formed company, Nectar Media, claiming that he took proprietary information and signed deals taking away clients for his own new company even while he was on the Debut payroll.
When it reported Q2 results Debut said it was in settlement talks with Rowe. Now, though, the company says in an SEC filing that it anticipated pursuing the litigation with “renewed vigor” in Q4 and into 2012.
“The company has discontinued all excess inventory sales as it continues pursuing legal action against former employee Marcus Rowe and Nectar Media LLC,” Debut said in explaining its Q3 revenue decline.
Operating expenses declined 5.8% in Q3 to $364K. But with the sharp drop in revenue coming in, that overhead was more than double revenues for the quarter.