Inspired to submit restated financial reports addressing Nasdaq non-compliance warning

Inspired Entertainment has notified Nasdaq that it plans to submit restated financial documents after accounting errors were identified that led the B2B gaming content and solutions provider to receive a non-compliance notification.

On November 29, 2023, Inspired announced receiving a standard notification letter from Nasdaq for not complying with Nasdaq Listing Rule 5250(c)(1), due to failing to timely file its Form 10-Q for the quarter ended September 30, 2023 with the Securities and Exchange Commission. 

At the time, Nasdaq said Inspired could have its shares de-listed if it did not publish the figures by an agreed deadline and set a deadline for data publication. For its part, the company argued it needed more time to complete the financial statements for the third quarter and to work on restating certain prior financial statements.

The provider now said that it will submit a Form 10-K/A for the year ended December 31, 2022, with restated financial statements, as well as Forms 10-Q/A for the quarters ended March 31, 2023, and June 30, 2023, and a Form 10-Q for the quarter ended September 30, 2023, by no later than February 28, 2024. The company also intends to submit its Form 10-K for the fiscal year ended December 31, 2023, by the end of the March 2024 deadline.

According to the company, the delay in filing results was due to identified accounting errors related to compliance with U.S. Generally Accepted Accounting Principles (US GAAP), specifically in policies for capitalizing software development costs. These errors, found in financial statements starting January 1, 2021, require a restatement of the financial statements, which can no longer be relied upon.

Furthermore, Inspired acknowledged "material weaknesses" in its internal control over financial reporting and, according to the company, is implementing corrective measures. The provider also assured investors that the planned changes would not significantly impact its cash position or overall business plan.

Inspired's financial results for the second quarter, released in August, showed a 12.3% increase in revenue, reaching $80.1 million, with growth across all business areas. Despite the increase in costs, which resulted in an 85.4% decrease in net income, adjusted EBITDA saw an improvement, reaching $26.2 million.

For the first half of the year, revenue grew by 11.0%, totaling $146.4 million, though net income decreased by 53.6%, totaling $3.9 million for the six-month period.