Business Context and Reporting Period
Company: Motorsport Games Inc. (MSGM)
Filing Type: Form 8-K (Current Report)
Date of Report: November 20, 2024
Reporting Period: Event date November 20, 2024; Financial data referenced from the quarter ended September 30, 2024.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or operating margins. The primary financial metric disclosed is:
- Stockholders' Equity: $2,170,911 (as of September 30, 2024).
- Nasdaq Minimum Requirement: $2,500,000.
- Deficit: The company is below the minimum stockholders' equity requirement for continued listing.
Material Changes and Listing Status
On November 20, 2024, the Company received a deficiency letter from The Nasdaq Stock Market LLC stating it is not in compliance with Nasdaq Listing Rule 5550(b)(1) due to insufficient stockholders' equity. The Company also failed to meet alternative continued listing standards regarding market value of listed securities ($35 million) or net income ($500,000).
Despite the deficiency, the Company's Class A common stock continues to trade on The Nasdaq Capital Market.
Outlook, Management Commentary, and Risks
Compliance Plan: The Company has 45 calendar days (until January 6, 2025) to submit a plan to regain compliance. If accepted, Nasdaq may grant an extension of up to 180 calendar days to evidence compliance.
Proposed Actions: Management is considering options to regain compliance, including potential equity and/or debt financing arrangements or similar transactions.
Risks and Uncertainties:
- There is no assurance the Compliance Plan will be developed successfully or accepted by Nasdaq.
- There is no assurance the Company will regain compliance within the allotted extension period.
- There is no assurance that additional financing can be obtained.
Investor Verification Checklist
- Verify the Company's submission of a Compliance Plan to Nasdaq by January 6, 2025.
- Monitor announcements regarding the acceptance of the Compliance Plan and any granted extension periods.
- Review future filings for details on any executed equity or debt financing arrangements.
- Check subsequent 10-Q or 10-K filings for updated stockholders' equity figures to confirm if the $2.5 million threshold is met.