Motorsport Games Receives Deficiency Letter from Nasdaq Over Stockholders’ Equity; Faces Compliance Deadline

Motorsport Games Inc. (NASDAQ: MSGM) recently disclosed in a Form 8-K filing with the Securities and Exchange Commission that it received a deficiency letter from The Nasdaq Stock Market LLC on November 20, 2024. The letter, issued by the Listing Qualifications Department, highlighted the company’s non-compliance with the minimum stockholders’ equity requirement of at least $2,500,000 for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1). In its quarterly report for the period ending September 30, 2024, Motorsport Games reported stockholders’ equity at $2,170,911, falling short of the minimum requirement.

Furthermore, the company failed to meet alternative Nasdaq continued listing standards, which include maintaining a market value of listed securities of at least $35 million or net income of $500,000 from continuing operations in the most recently completed fiscal year or in two of the three most recently completed fiscal years.

As per Nasdaq regulations, Motorsport Games has until January 6, 2025, a 45-day period from the date of the deficiency letter, to submit a plan to regain compliance (the “Compliance Plan”) with the Stockholders’ Equity Requirement. If accepted, Nasdaq may grant an extension of up to 180 calendar days for the company to demonstrate compliance.

Despite the deficiency letter, Motorsport Games’ Class A common stock will continue to trade on The Nasdaq Capital Market, provided the company adheres to other continued listing requirements. To address the shortfall, the company plans to submit the Compliance Plan to Nasdaq before the deadline and is exploring various options to meet the Stockholders’ Equity Requirement. These include potential equity and/or debt financing arrangements or similar transactions. However, Motorsport Games cautioned that success in developing an acceptable plan, its approval by Nasdaq, and ultimately regaining compliance within the allowed extension period are not guaranteed.

The company has issued forward-looking statements in line with the Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties, including the ability to timely develop and submit a Compliance Plan, Nasdaq’s acceptance of the plan, and the company’s eventual compliance with the Stockholders’ Equity Requirement within the prescribed extension period. Motorsport Games is committed to providing updates as developments unfold but is under no obligation to alter its forward-looking statements, even if future circumstances indicate otherwise.

Investors are advised to closely monitor Motorsport Games’ filings with the SEC for additional information on risks, uncertainties, and factors that may impact actual results compared to those expressed or implied in forward-looking statements, particularly as the company navigates compliance issues regarding its Stockholders’ Equity Requirement.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Motorsport Games’s 8K filing here.

Motorsport Games Company Profile

Motorsport Games Inc develops and publishes multi-platform racing video games in the United States. It operates through Gaming and Esports segments. The company offers rFactor 2, a realistic racing simulation game; NASCAR Heat Mobile, a racing experience for mobile devices; NASCAR Heat 3, NASCAR Heat 4, NASCAR Heat 5, NASCAR Heat Ultimate Edition, and NASCAR 21: Ignition, which are racing video games; KartKraft, a kart racing simulator; NASCAR Rivals, a racing video game; and Le Mans Ultimate, a official game of the FIA World Endurance Championship and 24 Hours of Le Mans.