Inspired Reveals Plan to Regain Nasdaq Compliance

Date: 2024-01-24 Author: Dima Zakharov Categories: EVENTS
news-banner
Inspired Entertainment's Nasdaq Challenge
Gaming technology firm Inspired Entertainment has been in the spotlight recently due to its efforts to regain compliance with the US stock exchange Nasdaq. The company received a warning from Nasdaq in November regarding the late filing of its Q3 financial results. Nasdaq had made it clear that Inspired's shares could face delisting if the financial figures were not disclosed within an agreed-upon timeframe.

A Race Against Time
Inspired cited the need for additional time to finalize the financial statements for the period ending on September 30, 2023. Additionally, the company acknowledged ongoing work to rectify certain previously reported financial statements. Nasdaq, however, deemed the late filing a breach of its Listing Rule 5250(c)(1) and granted Inspired a 60-day window, ending on January 22, 2024, to either submit the required documentation or present a plan to regain compliance.

Inspired's Roadmap to Compliance
As the deadline approached, Inspired unveiled its plan of action on January 23, outlining its commitment to submit the necessary documents no later than February 28. These documents include a Form 10-K/A for the year ending December 31, 2022, featuring restated financial statements, as well as Forms 10-Q/A for the quarters ending March 31, 2023, and June 30, 2023, along with a Form 10-Q for the quarter concluding on September 30, 2023. Additionally, Inspired intends to file its Form 10-K for the year ending December 31, 2023, by the March 2024 deadline. These efforts are aimed at regaining compliance with Nasdaq's rules, with no immediate impact on the listing of the company's securities on Nasdaq.

Why the Delay?
Inspired's delay in filing its Q3 results was attributed to several concerns, including accounting errors related to compliance with US Generally Accepted Accounting Principles (GAAP) concerning the capitalization of software development costs. These errors primarily pertain to accounting standards associated with projects and were identified in financial statements starting from January 1, 2021. Consequently, these statements cannot be relied upon and must be restated. The company clarified that any financial information in statements, earnings releases, press releases, and investor presentations after this date should also not be relied upon.

Addressing Internal Control Issues
Upon reviewing the situation, Inspired identified "material weaknesses" in its internal control over financial reporting. The company is now taking steps to rectify these issues. The restated results and new financial figures are expected to be published in the upcoming month. Inspired assured investors that it does not anticipate these changes affecting its cash position or overall business plan.

Previous Performance
Inspired's most recent set of results, published in August, covered the second quarter and first half of 2023. In Q2, the company achieved a 12.3% increase in revenue, reaching $80.1 million. However, higher expenses resulted in an 85.4% decline in net profit to $2.3 million, although adjusted EBITDA rose to $26.2 million. For H1, revenue increased by 11.0% to $146.4 million, but increased spending led to a 53.6% drop in net profit to $3.9 million for the six-month period.
image

Leave Your Comments