Inspired Entertainment Moves towards Nasdaq Compliance
LISTEN TO THIS ARTICLE:Inspired Entertainment has received approval from Nasdaq for its plan to regain compliance with the stock exchange’s regulations.
The company submitted a plan last month, detailing its intention to file a 10-Q form for the third quarter of 2023 with Nasdaq by 28 February. This is part of Inspired’s efforts to address the late filing of its Q3 2023 results. Alongside this, Inspired is working to complete a 10-K/A for the year ended 31 December 2022, which includes restated financial statements.
It also plans to submit revised Forms 10-Q/A for the first and second quarters of 2023 by the same deadline. Nasdaq’s acceptance of this plan is important for Inspired in regaining compliance and moving forward from this setback.
Background of Compliance Issues
Inspired faced challenges with Nasdaq compliance when it did not submit its Q3 2023 results on time. The stock exchange contacted Inspired in November regarding this delay, which put the company in breach of Nasdaq’s rules. Initially, Inspired was given until 22 January to propose a compliance restoration plan but missed this deadline by a day, filing the plan on 23 January.
The delay in filing was attributed to several reasons, including accounting errors related to US GAAP compliance, specifically in the capitalization of software development costs. These errors, identified in financial statements since 1 January 2021, rendered the statements unreliable and necessitated restatement.
Inspired Reassures Investors
In response to these issues, which Inspired described as “material weaknesses” in internal control over financial reporting, the company is actively working to rectify these matters. As part of the compliance plan, Q3 figures are expected to be disclosed before the end of February.
To alleviate investor concerns, Inspired has stated that these adjustments are unlikely to affect its cash position or business strategy. The last financial results released by Inspired were in August 2023, showing a 12.3% rise in Q2 revenue to $80.1 million. Despite higher spending leading to an 85.4% decrease in net profit, adjusted EBITDA increased to $26.2 million. For the first half of the year, revenue rose by 11% to $146.4 million, though net profit fell by 53.6%.
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