Image Entertainment, Inc. (NASDAQ: DISK), one of the largest
independent home entertainment distributors in North America and a
leading pioneer of the multi-billion dollar optical disc industry,
reported today that on February 1, 2010 it had received a letter
from The Nasdaq Stock Market notifying the Company of the Nasdaq
Hearing Panel's determination to deny the Company's request for
continued listing on Nasdaq and to delist the Company's common
stock. The Company previously requested and participated in a
hearing before the Nasdaq Hearing Panel on January 20, 2010 to
appeal the delisting determination of the staff of The Nasdaq Stock
Market Listing Qualifications Department. The letter indicated that
the Company's common stock will be suspended from trading on Nasdaq
effective at the open of business on Wednesday, February 3,
2010.
Following the delisting, the Company currently expects that its
common stock will be quoted on the Pink Sheets, a centralized
electronic quotation service for over-the-counter securities, so
long as market makers demonstrate an interest in trading in the
Company's common stock. No assurance can be given that the market
makers will continue to make a market in the Company's common stock
or that the Company's common stock will be quoted on the Pink
Sheets.
The Company currently does not intend to deregister its common
stock with the SEC. Accordingly, it will continue to file periodic,
quarterly and annual reports with the SEC.
In addition, on January 27, 2010, the Company received a Nasdaq
Staff Deficiency Letter citing violations of Nasdaq Listing Rules
related to the Company's issuance of 3.5 million shares of common
stock on January 8, 2010 to the holder of its senior secured
convertible note due 2011 in exchange for $10,000 in principal
amount of the note. Those violations include Listing
Rules 5635(d) and 5250(e)(2) relating to the issuance of 20%
or more of the pre-transaction shares at a discount to market value
without obtaining shareholder approval, and the failure to timely
file a Notification Form Listing of Additional Shares with respect
to the shares issued in the exchange. The Staff determined to
aggregate the exchange and the Company's previously announced sale
of Series B Preferred Stock and Series C Preferred Stock that also
closed on January 8, 2010 and that did not comply with Listing
Rules 5635(d), 5635(b) and 5640. The Staff's determination to
aggregate the exchange with the preferred stock financing was based
on the timing, use of proceeds and the fact that the transactions
were all part of the same financing plan.
As previously announced, on January 8, 2010, the Company closed
the sale of preferred stock to certain affiliates of JH Partners,
LLC, a San Francisco-based private equity firm focused on building
sustainable, long-term equity value in consumer and
marketing-driven growth companies, (the “Investors”) for an
aggregate purchase price of $22.0 million. The Company used a
portion of the net proceeds from the sale, along with the issuance
of shares of common stock, to repay in full and retire its senior
secured convertible note due 2011. The remainder of the net
proceeds will be used to repay other outstanding indebtedness and
outstanding liabilities and for general working capital. As a
result of the transaction, the Investors acquired control of the
Company and a new board of directors and management team were
appointed.
About Image Entertainment:
Image Entertainment, Inc. is a leading independent licensee and
distributor of entertainment programming in North America, with
approximately 3,200 exclusive DVD titles and approximately 340
exclusive CD titles in domestic release and approximately 400
programs internationally via sublicense agreements. For many of its
titles, the Company has exclusive audio and broadcast rights and,
through its subsidiary, Egami Media, Inc. has digital download
rights to approximately 2,000 video programs and over 300 audio
titles containing more than 5,100 individual tracks. The Company is
headquartered in Chatsworth, California. For more information about
Image Entertainment, Inc., please go to www.image-entertainment.com.
Forward-Looking Statements:
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
relating to, among other things, the Company's current expectations
that its common stock will be quoted on the Pink Sheets and that it
does not intend to deregister its common stock with the SEC. These
statements may be identified by the use of words such as “will,”
“may,” “estimate,” “expect,” “intend,” “plan,” “believe,” and other
terms of similar meaning in connection with any discussion of
future operating or financial performance or other events or
developments. All forward-looking statements are based on
management’s current expectations and involve inherent risks and
uncertainties, including factors that could delay, divert or change
any of them, and could cause actual outcomes and results to differ
materially from current expectations.
These factors include, but are not limited to, (a) market
makers not continuing to make a market in the Company's common
stock, (b) the ability of the Company’s common stock to be quoted
on the Pink Sheets, (c) the Company’s ability to continue as a
going concern, (d) the Company’s ability to service its
principal and interest obligations on its outstanding debt or
otherwise renegotiate or refinance such outstanding debt, which
renegotiation may not be successful and refinancing may not be
available on acceptable terms, if at all, which may trigger
defaults under its other debt agreements, create liquidity issues,
potentially force the Company to file for protection from its
creditors under Chapter 11 of the U.S. Bankruptcy Code and
prevent the Company from continuing as a going concern,
(e) the Company’s limited funds and the Company’s inability to
raise additional funds on acceptable terms or at all, (f) the
Company’s ability to borrow against the Company’s revolving line of
credit, (g) the Company’s ability to secure media content on
acceptable terms, (h) the Company’s DVD manufacturer
continuing to manufacture and fulfill orders to Company customers
while the Company is past due on its payables to such manufacturer,
(i) the performance of business partners upon whom the Company
depends upon, (j) changes in the retail DVD and digital media
and entertainment industries, (k) changing public and consumer
taste and changes in customer spending patterns,
(l) decreasing retail shelf space for the Company’s industry,
(m) further sales or dilution of the Company’s equity, which
may adversely affect the market price of the Company’s common
stock, (n) changes in the Company’s business plan,
(o) heightened competition, including with respect to pricing,
entry of new competitors, the development of new products by new
and existing competitors, (p) changes in general economic
conditions, including the performance of financial markets and
interest rates, (q) difficult, adverse and volatile conditions
in the global and domestic capital and credit markets,
(r) claims that the Company infringed other parties’
intellectual property, (s) changes in accounting standards,
practices or policies, and (t) adverse results or other
consequences from litigation, arbitration or regulatory
investigations.
For further details and a discussion of these and other risks
and uncertainties, see “Forward-Looking Statements” and “Risk
Factors” in the Company’s most recent Annual Report on Form 10-K,
and the Company’s most recent Quarterly Reports on Form 10-Q. Many
of the factors that will determine the outcome of the subject
matter of this press release are beyond the Company’s ability to
control or predict. Actual results may differ materially from
management’s expectations. Unless otherwise required by law, the
Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise.
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