Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On November 11, 2022, Motorsport Games Inc. (the "Company") notified The Nasdaq
Stock Market LLC ("Nasdaq") that, as a result of the Director Resignations
described in Item 5.02 of this Current Report on Form 8-K, the Company was no
longer in compliance with Nasdaq Listing Rule 5605(b)(1), which requires a
majority of the Company's board of directors (the "Board") to be comprised of
Independent Directors as defined in Rule 5605(a)(2), and Nasdaq Listing Rule
5605(c)(2), which requires the Audit Committee of the Board to consist of at
least three members, each of whom is an independent director under the Nasdaq
Listing Rules and meets the heightened independence standards for Audit
Committee members.
Also, on November 11, 2022, the Company notified the Nasdaq that the Company is
not in compliance with the Nasdaq Listing Rule 5550(a)(4) requiring minimum of
500,000 Publicly Held Shares as defined in the Nasdaq Listing Rules.
On November 14, 2022, the Company received a deficiency letter from the Listing
Qualifications Department (the "Staff") of The NASDAQ Stock Market notifying the
Company that, as a result of the Director Resignations, the Company no longer
complies with Nasdaq's audit committee requirement under Listing Rule 5605 (the
"Rules") and that, as such, Mr. John Delta is now the sole independent director
remaining on the Company's audit committee (as described in Item 5.02 of this
Current Report on Form 8-K ) and the Company is not eligible for the cure period
under the Rules. The Staff stated in the letter that, under the Rules, the
Company has 45 calendar days to submit a plan to regain compliance. If the Staff
accepts the Company's plan, the Staff can grant an extension of up to 180
calendar days from November 14, 2022 to evidence compliance.
Also, on November 14, 2022, the Company received a deficiency letter from the
Staff notifying the Company that it no longer meets the minimum 500,000 publicly
held shares requirement for The Nasdaq Capital Market. The Staff stated in the
letter that, under the Rules, the Company has until December 29, 2022 to provide
the Staff with a specific plan to achieve and sustain compliance with all The
Nasdaq Capital Market listing requirements, including the time frame for
completion of this plan.
The Company plans to provide the Staff prior to December 29, 2022 with the
Company's plan to regain compliance. The Company is actively looking for
independent director candidates. To regain compliance with the 500,000 share
threshold, the Company plans to issue additional shares to non-affiliates,
including, without limitation, by way of awards of Company's Class A restricted
stock to employees under the Company's existing Amended and Restated Equity
Incentive Plan, issuances of the Company Class A shares in future equity
financing, subject to compliance with the Rules; provided that there can be no
assurances that a plan to regain compliance will be consummated or that it will
achieve its intended effects.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Director Resignations
On November 9, 2022, Neil Anderson and Peter Moore, the independent members of
the Board and the Audit Committee of the Board, notified the Board of their
resignations from the Board, effective immediately, as a result of (i) a
disagreement with Motorsport Network LLC ("MSN"), the majority stockholder of
the Company, regarding proposals by such directors to raise additional capital
for the Company in one or more transactions that could require stockholder
approval and that would be dilutive to MSN, and (ii) the November 7, 2022
written request by MSN, sent in its capacity as majority stockholder of the
Company, that such individuals resign from the Board because of such
disagreement. The resignations were not over any disagreement with the Company
or with other directors of the Company on any matter relating to the Company's
operations, policies or practices.
On November 9, 2022, Francesco Piovanetti, the independent member of the Board
and the Audit Committee of the Board, notified the Board of his resignations
from the Board, effective immediately, as a result of (i) a disagreement with
the Company and MSN regarding proposals by such director to raise additional
capital for the Company in one or more transactions that could require
stockholder approval and that would be dilutive to MSN, and (ii) the November 7,
2022 written request by MSN, sent in its capacity as majority stockholder of the
Company, that such individual resign from the Board because of such
disagreement. The resignation was not over any disagreement with the Company or
with other directors of the Company on any matter relating to the Company's
operations, policies or practices.
On November 9, 2022, James Allen, a member of the Board, notified the Board of
his resignation from the Board, effective immediately, not over a disagreement
with the Company on any matter relating to the Company's operations, policies or
practices, but so that, given the resignations of the above directors, a new
board can be appointed.
In connection with the foregoing changes, John Delta, the Company's Interim
Chief Financial Officer, resigned, effective November 9, 2022, such position and
immediately thereafter, was appointed to the Company's Board of Directors and
its Audit Committee to fill the vacancy from one of the above independent
directors' resignation. The Board of Directors determined that Mr. Delta
qualifies as an independent director for purposes of the rules and regulations
under the Securities Exchange Act of 1934, as amended, and under the applicable
NASDAQ listing standards, notwithstanding his brief prior service as Interim
Chief Financial Officer from October 4, 2022 to November 9, 2022, in part in
reliance on NASDAQ Rule 5605(a)(2), which provides that employment by a director
as an executive officer on an interim basis shall not disqualify that director
from being considered independent following such employment, provided the
interim employment did not last longer than one year. In addition, while during
his brief tenure Mr. Delta reviewed certain financial materials, he did not
participate in the preparation of the Company's financial statements while
serving as the Company's interim Chief Financial Officer. The Board of Directors
determined that Mr. Delta qualifies to be a Director of the Company and to serve
as Chairman of the Board's Audit Committee in light of his experience in the
finance and accounting industries, as well as Chairman of the Board's
Compensation Committee and Nominating and Governance Committee. As a member of
the Company's Board of Directors and as a Chairman of each of the Audit
Committee, Compensation Committee and Nominating and Governance Committee, Mr.
Delta will receive such compensation as disclosed in the "Director Compensation"
section of the Company's Definitive Proxy Statement filed with the SEC on April
27, 2022. Accordingly, the Consulting Services Agreement with TechCXO pursuant
to which the Company paid TechCXO an hourly rate of $450 for Mr. Delta's service
as Interim Chief Financial Officer has been terminated effective November 9,
2022.
In connection with John Delta's resignation as the Company's Interim Chief
Financial Officer, effective November 9, 2022, Dmitry Kozko was appointed to the
Company's Interim Chief Financial Officer, as well as the Company's Principal
Financial Officer and Principal Accounting Officer. Mr. Kozko will not receive
any additional compensation in connection with assuming such duties.
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