The whole board of directors at Motorsport Games has resigned due to several funding disagreements, according to a recent filing with the US Securities and Exchange Commission (SEC). The document lists several successive resignations by the board of directors members in response to proposals to raise additional funding for the firm.
The parent entity of the American company, Motorsport Network, appears to have made such an outlandish request that the whole board of directors has resigned while it seeks to find a means to secure further funding.
In accordance with the United States stock market requirements, the New York Stock Exchange and the NASDAQ require listed corporations to have a majority of external, or independent, directors on their board.
This rule, however, may still cause issues for the company because the present board of directors, which appears to consist of just one individual chosen by Motorsport Network, is no longer consistent with NASDAQ regulations.
This implies that Motorsport Games might be delisted from NASDAQ if a solution is not found soon.
In other words, a company’s stock value typically plummets if it is delisted from NASDAQ. Meaning that some stockholders or investors might decide to leave the organization before the ship fully sinks sooner rather than later.
Now that they have 30 days to find: a) a new board of directors (to satisfy NASDAQ listing auditing criteria) b) 500,000 publicly marketable shares, they are in serious trouble.
The whole scenario is actually pretty bad and Motorsport Games looks like going through a troublesome situation as the company already brought in $1.2 million in revenue with a $7.5 million net loss in the third quarter of this year according to a trusted Motorsport and esports commentator.
Insider Gaming run by former eXputer writer Tom Henderson also revealed an email that was initially forwarded to employees by Dmitry Kozko, the CEO of Motorsport which says a lot about resignations.
The email reads, “Our organization is in a non-compliant position with NASDAQ, however, there is a 45-day grace period for us to present a plan on how we are able to remedy this, along with the possibility of an additional 180-day extension.”
Kozko went on to further discuss the corporation’s 1 for 10 reserve stock split, citing instances of how the company could make use of it.“all such time of options are still being explored and considered”.
The email continued,
I want to assure all of you that each of these changes has been carefully made in the best interest of the business and the team, in the effort to create a strong and sustainable organization so that we fulfill our mission; to create a virtual racing ecosystem where each product drives excitement, every esports event is an adventure and every story inspires.”
According to some insiders who are still at the company or who have previously worked there, many people have departed Motorsport Games in the last few months for various reasons.
What do you think about Motorsport Games’ current quest at this point? Can the company be saved? Let us know down in the comments section.
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