Esports Entertainment Group, Inc. (OTCQB:GMBL), a Nevada-based company specializing in amusement and recreation services, has announced a significant change in its financial oversight. On Thursday, June 13, 2024, the company dismissed Marcum LLP as its independent registered public accounting firm. This decision was made by the company's Board of Directors and Audit Committee.
The reports from Marcum LLP for the fiscal year ended June 30, 2023, did not contain any adverse opinions or disclaimers, but they did include an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern. During the two most recent fiscal years and subsequent interim periods, there were no disagreements on accounting principles or practices, financial statement disclosure, or auditing scope or procedure that would have led to a reference in their reports. However, material weaknesses were identified in the company's internal controls over financial reporting.
Following the dismissal, Esports Entertainment Group appointed TAAD LLP as its new independent registered public accounting firm for the fiscal year ending June 30, 2024. The company confirmed that it did not consult with TAAD LLP on any accounting principles or transactions that would influence their decision to hire the firm.
The change in certifying accountant and the engagement of a new firm were reported in compliance with the Securities and Exchange Commission regulations, as detailed in the company's Form 8-K filing. The company has provided Marcum LLP with a copy of the report and has included Marcum LLP's response to the SEC as an exhibit to the filing.
Esports Entertainment Group's decision to change auditors is a significant step in the company's financial reporting process. The appointment of TAAD LLP is effective immediately, and the firm will oversee the company's financial statements for the upcoming fiscal year.
InvestingPro Insights
In light of Esports Entertainment Group's recent change in financial oversight, it's insightful to consider some key financial metrics and analyst expectations. The company has demonstrated impressive gross profit margins, with a figure of 67.89% for the last twelve months as of Q3 2024, according to InvestingPro data. This indicates a strong ability to convert revenue into profit at a fundamental level.
However, it's important to note that analysts are projecting a sales decline in the current year, and the company's short-term obligations exceed its liquid assets. These factors may contribute to the substantial doubt about the company's ability to continue as a going concern, as previously expressed by Marcum LLP. Additionally, with a market capitalization of just $0.69 million and a significant revenue decrease of 69.38% over the last twelve months as of Q3 2024, the financial stability of Esports Entertainment Group appears to be under pressure.
For investors considering Esports Entertainment Group's stock, it's also worth noting that the company is quickly burning through cash and analysts do not anticipate it will be profitable this year. The stock has experienced high price volatility, and the price has fallen significantly over the last year, as evidenced by a year-to-date price total return of -84.11%.
For those interested in a deeper analysis, there are additional InvestingPro Tips available, offering comprehensive insights into the company's financial health. To access these tips and more detailed financial data, consider using the promo code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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