Shares of Motorsport Games Inc. (NASDAQ: MSGM) skyrocketed 203.74% to reach a pre-market trading price of $65.00, following the company’s announcement of having regained full compliance with all regulatory requirements. This positive development has generated excitement among investors and driven the stock’s impressive performance.
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Which requirement has MSGM fulfilled?
Motorsport Games (MSGM) received positive news from the Nasdaq Stock Market LLC on January 30, 2023. Nasdaq notice informed MSGM that it has fully regained compliance with the Nasdaq Listing Rules, which are the requirements, set by Nasdaq for companies to maintain their listing on the exchange. With this news, MSGM is now in good standing with Nasdaq and can continue to trade on the exchange, providing its shareholders with ongoing liquidity and access to capital markets.
MSGM was previously out of compliance with Nasdaq Stock Market LLC (Nasdaq) requirements in November 2022. The company failed to meet the minimum number of publicly held shares requirement of 500,000 and did not have a majority of its board of directors consisting of independent directors, as well as not having its audit committee comprised of the minimum number of 3 independent directors with heightened independence standards.
Motorsport Games also this week entered into a debt-for-equity exchange agreement with its major stockholder, Motorsport Network, LLC. MSGM entered the agreement to repay $1 million in debt, which was accumulated under the company’s $12 million line of credit with Motorsport Network. Included in the agreement were also piggyback registration rights for Motorsport Network which are subject to the terms and conditions outlined in the agreement.
What does that agreement mean for MSGM?
The debt exchange agreement between Motorsport Games (MSGM) and its majority shareholder, Motorsport Network, LLC, brings various benefits to MSGM. The agreement improves MSGM’s balance sheet by reducing its outstanding debt and the accompanying interest expenses. Furthermore, it signals the continued confidence and support of Motorsport Network in MSGM. By exchanging debt for equity, Motorsport Network is demonstrating its belief in MSGM’s long-term potential and commitment to its success. This is a positive sign for MSGM and its shareholders, as it provides a strong foundation for the company to build upon as it moves forward.
