Esports Entertainment Group Announces Voluntary Delisting from the Nasdaq and Transfer to the OTCQB Venture Market
Esports Entertainment Group, Inc. (GMBL) announces a voluntary delisting from Nasdaq to OTC Markets to drive cost savings, improve growth, and profitability. The company plans to focus on strategic initiatives to enhance shareholder value.
Negative
The delisting from Nasdaq may impact the company's visibility and investor confidence in the short term.
Moving to OTC Markets could limit access to capital and potentially reduce liquidity for the company's securities.
Being out of compliance with Nasdaq's stockholders' equity requirement may raise concerns among investors about the company's financial health.
The decision by Esports Entertainment Group, Inc. to delist from Nasdaq and move to the OTCQB Venture Market is a strategic maneuver that reflects a trade-off between the prestige and visibility associated with a Nasdaq listing and the financial burden it imposes. Delisting from a major exchange like Nasdaq typically reduces regulatory compliance costs and filing fees, which can be substantial, particularly for smaller or restructuring companies. However, it's important to note that trading on OTC markets generally involves lower trading volumes and less stringent reporting requirements, which can lead to reduced liquidity and wider bid-ask spreads for the securities. This move could signal to investors a need for cost containment and a focus on internal growth strategies over market visibility.
Additionally, the CEO's statement about reallocating resources towards high-return activities suggests that the company is prioritizing operational efficiency and profitability. This could be perceived positively by investors who are focused on long-term value creation. However, the market's reaction will largely depend on the company's ability to execute its growth initiatives and eventually meet the listing requirements of a senior U.S. Exchange in the future.
Esports Entertainment Group's delisting from Nasdaq and anticipated move to the OTCQB Venture Market could influence the company's stock visibility and investor perception. The OTCQB is considered a middle-tier equity market that caters to early-stage and developing companies in the U.S. and abroad. While it provides an opportunity for companies to grow with fewer regulatory burdens, it may also be perceived as a less prestigious market, which could impact investor confidence. The company's shares might attract a different investor base, potentially one that is more speculative and risk-tolerant.
The esports and iGaming industry is rapidly evolving and companies within this space are expected to be agile and innovative. Investors will be interested in how Esports Entertainment Group's strategic initiatives unfold and whether the cost savings from delisting will translate into tangible improvements in the company's financial health. The esports market is known for high engagement levels and the company's ability to leverage its assets and management expertise could be pivotal in determining its future success.
Moving from the Nasdaq to the OTCQB requires a thorough understanding of the legal implications and regulatory differences between the two markets. The OTCQB has less stringent financial and corporate governance standards compared to Nasdaq, which may ease the company's regulatory burden but also potentially decrease shareholder protections. This shift necessitates careful communication with shareholders and compliance with Securities and Exchange Commission (SEC) regulations regarding the delisting process. The company's mention of filing a Form 25 with the SEC is a critical step in the delisting process, which must be followed by a waiting period before the removal from the exchange is finalized.
Investors should be aware that while the move might save costs in the short term, it could affect the company's ability to attract institutional investors and capital in the long term. Institutional investors often have mandates that restrict investing in stocks that are not listed on major exchanges, which could limit future capital-raising efforts. However, if Esports Entertainment Group successfully executes its growth strategies and meets the requirements to relist on a senior U.S. Exchange, it could regain broader market access and institutional investor interest.
02/13/2024 - 02:30 PM
Temporary Shift to OTC Markets Expected to Drive Additional Cost Savings
St. Julian's, Malta--(Newsfile Corp. - February 13, 2024) - Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLP) (NASDAQ: GMBLW) (NASDAQ: GMBLZ) ("Esports Entertainment", "EEG", or the "Company"), a leading, global iGaming company and business-to-business (B2B) esports content and solutions provider, today announced that its Board of Directors, after thorough and careful consideration of all available information, has approved a voluntary delisting of the Company's Common Stock, par value $0.01 , 10.0% Series A Cumulative Redeemable Convertible Preferred Stock and Common Warrants (the "Securities") from the Nasdaq Stock Market ("Nasdaq"), which is expected to reduce the Company's public costs as it advances its strategy to drive growth and profitability. As a result, the Company anticipates that it will file with the Securities and Exchange Commission a Form 25 relating to the delisting of its Securities and expects its Securities will be listed on the OTCQB® Venture Market of the OTC Markets, until such time it decides to reapply and is approved to relist on a senior U.S. Exchange. On February 13, 2024, when the Company informed the Nasdaq of its intention to delist it was under a Nasdaq Panel Monitor and not in compliance with the Nasdaq's stockholders' equity requirement.
Alex Igelman, CEO of Esports Entertainment Group, stated, "While we have solid assets inside the business, and have assembled a first-class management and board, the restructuring and turnaround of the business has been no small undertaking. Although we have made substantial and rapid progress, we have several more significant initiatives still underway. At the same time, the expenses related to maintaining our Nasdaq listing are significant, and, despite our listing on a senior U.S. exchange, we do not believe the current market price reflects the intrinsic value of our business. At the moment, we are 100% focused on driving growth and profitability and believe that this move to the OTC Markets will allow us to regroup as we execute on the aforementioned initiatives. In this way, assuming we meet the listing requirements, we could relist on a senior U.S. Exchange at a time of our choosing. In the meantime, we plan to reallocate resources towards activities, some of which we have previously identified, that we believe will generate the highest return on capital and maximum long-term value for our shareholders."
About Esports Entertainment Group
Esports Entertainment Group is a global MGA-licensed, "esports-focused" iGaming B2C operator and a US-focused B2B provider of esports solutions. The Company owns and operates the world's leading esport venue management system, currently deployed in over 1000 global locations, including more than 200 colleges and universities. The Company's strategy is to capitalize on the multi-billion-dollar market for esports and esports wagering by leveraging its leading position in the industry. The Company is also targeting the rapidly growing market for short-form esports wagerable content, which features competitive, short-cycle head-to-head leagues that are optimized for betting. In addition to its plans to distribute esports content, the Company currently provides B2C-focused wagering through its MGA-licensed suite of brands. For additional information about the Company, please visit www.esportsentertainmentgroup.com .
Forward-Looking Statements
The information contained herein includes forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "will be," "will continue," "will likely result," and similar expressions. These statements relate to future events or to our strategies, targeted markets, and future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, and those discussed in other documents we file with the SEC, including, the timing of the effectiveness of our delisting and ability and timing of deregistration of our Securities, our obligations under our outstanding preferred stock and the settlement agreement, and our ability to continue as a going concern. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, unless required by law. The safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of such Act.
Contact:
Crescendo Communications, LLCGMBL@crescendo-ir.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/197787
Why is Esports Entertainment Group (GMBL) voluntarily delisting from Nasdaq?
Esports Entertainment Group is delisting from Nasdaq to reduce public costs, focus on growth, and improve profitability.
What will happen to Esports Entertainment Group's (GMBL) securities after delisting?
The company's securities are expected to be listed on the OTCQB Venture Market of the OTC Markets.
Who approved the voluntary delisting of Esports Entertainment Group (GMBL) from Nasdaq?
The Board of Directors of Esports Entertainment Group approved the voluntary delisting from Nasdaq.
What impact could the delisting from Nasdaq have on Esports Entertainment Group's (GMBL) stock price?
The delisting may affect the company's stock price due to reduced visibility and potential investor concerns.
How does Esports Entertainment Group (GMBL) plan to enhance shareholder value post-delisting?
The company intends to focus on strategic initiatives to generate higher returns on capital and long-term value for shareholders.
