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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 2, 2023
Inspired
Entertainment, Inc.
(Exact
name of registrant as specified in its charter)
| Delaware |
|
001-36689 |
|
47-1025534 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
250
West 57th Street, Suite 415
New
York, New York |
|
10107 |
| (Address of principal executive
offices) |
|
(Zip Code) |
Registrant’s
telephone number, including area code: (646) 565-3861
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under
any of the following provisions:
| ☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| |
|
|
|
|
| Common stock, par value
$0.0001 per share |
|
INSE |
|
The NASDAQ Stock Market
LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
In
connection with the preparation of the financial statements of Inspired Entertainment, Inc. (the “Company”) for the quarterly
period ended September 30, 2023, the Company, in consultation with the Company’s current independent registered public accounting
firm, KPMG LLP, identified certain accounting errors relating to the compliance with U.S. GAAP in connection with the Company’s
accounting policies for capitalizing software development costs. The errors relate primarily to the application of the relevant accounting
standards to projects, including the timing of capitalization with respect to software development projects and the nature of costs eligible
for capitalization. The Company is currently undertaking a review of other financial statement line items and related accounting policies
to ensure U.S. GAAP compliance. The Company is currently unable to determine whether this review will result in further adjustments being
required.
On
November 2, 2023, the Audit Committee (the “Audit Committee”) of the Board of Directors of the Company, in consultation with
the Company’s management, determined that the Company’s previously issued audited consolidated financial statements as of
and for 2021 and 2022 included in the Company’s Annual Report on Form 10-K for the years ended December 31, 2021 and 2022 and associated
reports of the Company’s prior independent registered public accounting firm, Marcum LLP, as well as the Company’s previously
issued unaudited condensed consolidated financial statements during those years, as well as for the first and second quarters of 2023
included in the Company’s Quarterly Reports on Form 10-Q (the “Subject Periods”) contained the accounting errors set forth above. As a result of these errors, the Audit Committee has determined that the Company’s consolidated financial statements
for the Subject Periods should no longer be relied upon and should be restated. Similarly, any previously issued or filed reports, press
releases, earnings releases, investor presentations or other communications of the Company describing the Company’s financial results
or other financial information relating to the Subject Periods should no longer be relied upon. Additionally, the reports of Marcum LLP,
the Company’s former independent registered public accounting firm, on the Company’s consolidated financial statements for
2021 and 2022 likewise should no longer be relied upon.
The
Company’s management has concluded that as a result of the financial statement errors noted above, one or more additional material
weaknesses exist in the Company’s internal control over financial reporting. As a result, the Company’s disclosure controls
and procedures were not effective during the Subject Periods, and, as such, the report of Marcum LLP on the Company’s internal
control over financial reporting for the year ended 2022 should no longer be relied upon. The Company will implement changes to remediate
the identified material weaknesses.
As
a result of the foregoing accounting errors, the Company intends to restate its consolidated financial statements and the notes thereto
with respect to the Subject Periods in an amendment to the Company’s prior Annual Report on Form 10-K for the years ended December
31, 2021 and 2022 and the Company’s condensed consolidated financial statements during those years, as well as the first and second
quarters of 2023 included in the Company’s prior Quarterly Reports on Form 10-Q for such periods (the “Amended Reports”)
to be filed with the Securities and Exchange Commission (the “SEC”). The adjustments to such financial statement items will
be set forth through expanded disclosure in the financial statements included in the Amended Reports, including further describing the
restatement and its impact on previously reported amounts.
The
Company does not believe that the foregoing changes will have any impact on the Company’s cash position or overall business plan.
Although
the Company cannot at this time estimate when it will file the Amended Reports, it is diligently pursuing completion of the restatement
and intends to make such filings as soon as reasonably practicable.
The
description in this report of the accounting errors, the required adjustments and the expected impacts of the restatement are preliminary,
unaudited and subject to further change in connection with the ongoing review of the accounting errors and the completion of the restatement.
Accordingly, there can be no assurance that the actual effects of the restatement will be only as described above.
The
Company’s management and the Audit Committee have discussed, and continue to discuss, the matters disclosed in this Item 4.02 with
KPMG LLP, the Company’s current independent registered public accounting firm, and Marcum LLP, the Company’s prior independent
registered public accounting firm.
The Company expects
to file a Form 12b-25 with the SEC which states that it will be unable to file its Quarterly Report on Form 10-Q for the
period ended September 30, 2023 by the prescribed due date without unreasonable effort or expense due to the above
errors.
Item
7.01 Regulation FD Disclosure.
On
November 8, 2023, the Company issued a press release announcing that it would not be able to timely file with the SEC its Quarterly Report
on Form 10-Q for the period ended September 30, 2023, and its intention to restate the Company’s consolidated financial statements
for the Subject Periods. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
The
information furnished in this Item 7.01, including the attached exhibit, shall not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange
Act, except as shall be expressly set forth by specific reference in such a filing.
Cautionary
Note Regarding Forward Looking Statements:
This
Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified by the use of forward-looking terminology such as “expects,” “believes,”
“estimates,” “projects,” “intends,” “plans,” “seeks,” “may,”
“will,” “should” or “anticipates” or the negative or other variations of these or similar words.
Although the Company believes that its expectations are based on reasonable assumptions within the bounds of the Company’s knowledge
of its business, there can be no assurance that actual results, including the impact of the restatement, will not differ materially from
its expectations. Meaningful factors that could cause actual results to differ from expectations include, but are not limited to, risks
relating to the final impact of the restatement on the Company’s financial statements; the impact of the restatement on the
Company’s evaluation of the effectiveness of its internal control over financial reporting and disclosure controls and procedures;
delays in the preparation of the financial statements; the risk that additional information will come to light during the course
of the Company’s financial statement and accounting policy review that alters the scope or magnitude of the restatement; and the
risk that the Company will be unable to obtain, if needed, any required waivers under its debt indenture with respect to a significant
delay in filing its periodic reports with the SEC, which could affect its liquidity. The Company does not intend to update publicly any
forward-looking statements, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events
discussed in this Current Report on Form 8-K may not occur.
Item 9.01. Financial Statements and Exhibits.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| November
8, 2023 |
Inspired
Entertainment, Inc. |
| |
|
|
| |
By: |
/s/
Carys Damon |
| |
|
Name:
Carys Damon |
| |
|
Title:
General Counsel |
Exhibit
99.1
INSPIRED
REQUIRES ADDITIONAL TIME TO COMPLETE FINANCIAL STATEMENTS FOR THE THIRD QUARTER OF 2023 AND RESTATE CERTAIN PREVIOUSLY ISSUED FINANCIAL
STATEMENTS
New
York, New York, November 8, 2023 - Inspired Entertainment, Inc. (“Inspired” or the “Company”) (NASDAQ: INSE),
a leading B2B provider of gaming content, technology, hardware and services, today announced that it requires additional time to complete
its financial statements for the third quarter ended September 30, 2023 and to restate certain of its previously issued financial statements.
In
connection with the preparation of the financial statements of the Company for the quarterly period ended September 30, 2023, the Company,
in consultation with its current independent registered public accounting firm, KPMG LLP, identified certain accounting errors relating
to the compliance with U.S. GAAP in connection with the Company’s accounting policies for capitalizing software development costs.
The errors relate primarily to the application of the relevant accounting standards to projects, including the timing of capitalization
with respect to software development projects and the nature of costs eligible for capitalization. The Company is currently undertaking
a review of other financial statement line items and related accounting policies to ensure U.S. GAAP compliance. The Company is currently
unable to determine whether this review will result in further adjustments being required.
On
November 2, 2023, the Audit Committee of the Board of Directors of the Company, in consultation with the Company’s management,
determined that the Company’s previously issued audited consolidated financial statements for financial periods commencing January
1, 2021 (the “Subject Periods”) contained the accounting errors set forth above. As a result of these errors, the Audit Committee
has determined that the Company’s consolidated financial statements for the Subject Periods should no longer be relied upon and
should be restated. Similarly, any previously issued or filed reports, press releases, earnings releases, investor presentations or other
communications of the Company describing the Company’s financial results or other financial information relating to the Subject
Periods should no longer be relied upon. Additionally, the reports of Marcum LLP, the Company’s former independent registered public
accounting firm, on the Company’s consolidated financial statements for 2021 and 2022 likewise should no longer be relied upon.
The
Company’s management has concluded that as a result of the financial statement errors noted above, one or more additional material
weaknesses exist in the Company’s internal control over financial reporting. As a result, the Company’s disclosure controls
and procedures were not effective during the Subject Periods, and, as such, the report of Marcum LLP on the Company’s internal
control over financial reporting for the year ended 2022 should no longer be relied upon. The Company will implement changes to remediate
the identified material weaknesses.
As
a result of these accounting errors, the Company intends to restate its consolidated financial statements and the notes thereto with
respect to the Subject Periods. The foregoing has been reflected in a Current Report on Form 8-K filed by the Company with the Securities
and Exchange Commission (“SEC”) on November 8, 2023. The adjustments to such financial statement items will be set forth
through expanded disclosure in the financial statements included in the amended reports to be filed with the SEC, including further describing
the restatement and its impact on previously reported amounts.
The
Company does not believe that the foregoing changes will have any impact on the Company’s cash position or overall business plan.
Although the Company cannot at this time estimate when it will file the amended reports, it is diligently pursuing completion of the
restatement and intends to make such filings as soon as reasonably practicable.
The
description in this news release of the accounting errors, the required adjustments and the expected impacts of the restatement are preliminary,
unaudited and subject to further change in connection with the ongoing review of the accounting errors and the completion of the restatement.
Accordingly, there can be no assurance that the actual effects of the restatement will be only as described above.
About
Inspired Entertainment, Inc.
Inspired
offers an expanding portfolio of content, technology, hardware and services for regulated gaming, betting, lottery, social and leisure
operators across retail and mobile channels around the world. The Company’s gaming, virtual sports, interactive and leisure products
appeal to a wide variety of players, creating new opportunities for operators to grow their revenue. The Company operates in approximately
35 jurisdictions worldwide, supplying gaming systems with associated terminals and content for approximately 50,000 gaming machines located
in betting shops, pubs, gaming halls and other route operations; virtual sports products through more than 32,000 retail venues and various
online websites; interactive games for 170+ websites; and a variety of amusement entertainment solutions with a total installed base
of more than 16,000 terminals. Additional information can be found at www.inseinc.com.
Forward-Looking
Statements
This
news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements
can be identified by the use of forward-looking terminology such as “expects,” “believes,” “estimates,”
“projects,” “intends,” “plans,” “seeks,” “may,” “will,” “should”
or “anticipates” or the negative or other variations of these or similar words. Although the Company believes that its expectations
are based on reasonable assumptions within the bounds of the Company’s knowledge of its business, there can be no assurance that
actual results, including the impact of the restatement, will not differ materially from its expectations. Meaningful factors that could
cause actual results to differ from expectations include, but are not limited to, risks relating to the final impact of the restatement
on the Company’s financial statements; the impact of the restatement on the Company’s evaluation of the effectiveness
of its internal control over financial reporting and disclosure controls and procedures; delays in the preparation of the financial
statements; the risk that additional information will come to light during the course of the Company’s financial statement
and accounting policy review that alters the scope or magnitude of the restatement; and the risk that the Company will be unable to obtain,
if needed, any required waivers under its debt indenture with respect to a significant delay in filing its periodic reports with the
SEC, which could affect its liquidity. The Company does not intend to update publicly any forward-looking statements, except as required
by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this news release may not occur.
Contact:
For
Investors
IR@inseinc.com
+1
(646) 277-1285
For
Press and Sales
inspiredsales@inseinc.com
v3.23.3
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