Newgioco Group, Inc. (OTCMKTS:EMGL) Files An 8-K Other Events
Item 8.01
As a result of the global outbreak of the COVID-19 virus, Newgioco Group, Inc. (the “Company”) is filing this Current Report on Form 8-K to avail itself of an extension to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the "Quarterly Report"), originally due on Friday, May 15, 2020. The Company is relying on an order issued by the Securities and Exchange Commission (the "SEC") on March 25, 2020 (which extended and superseded a prior order issued on March 4, 2020) to Section 36 of the Securities Exchange Act of 1934, as amended (Release No. 34-88318) (the "Order"), regarding exemptions granted to certain public companies.
The Company has followed the recommendations of local health authorities to minimize exposure risk for its employees for the past several weeks, including the temporary closures of its retail locations throughout Italy and its offices, and having employees work remotely to the extent possible, which has to an extent adversely affected their ability to work efficiently. As a result, the Company\’s books and records were not easily accessible, resulting in delays in preparation and completion of its financial statements. Further, the various governmental mandatory closures of businesses in these locations have precluded the Company\’s personnel, particularly its senior accounting staff, from obtaining access to its subsidiaries\’ books and records (including those of the Company\’s wholly-owned subsidiaries, Multigioco Srl, Rifa Srl, Ulisse GmbH, Odissea Betriebsinformatik Beratung GmbH Odissea, Virtual Generation Limited, Elys Technology Group, Inc., Newgioco Group Inc. (Canada) and Newgioco Colombia SAS) necessary to prepare the Company\’s unaudited condensed interim financial statements to be included in the Quarterly Report.
The Company\’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and the rest of world, and thus the Company\’s business operations have been disrupted and it is unable to timely review and prepare the Company\’s financial statements for the quarter ended March 31, 2020.
As such, the Company will be relying upon the 45-day grace period provided by the SEC\’s Order to delay filing of its Quarterly Report and is furnishing this Form 8-K prior to original filing deadline of the report. The Company will file its Quarterly Report by no later than June 29, 2020, 45 days after the original due date of its Quarterly Report.
The Company is supplementing the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and its subsequent Quarterly Reports on Form 10-Q with the following risk factor:
In December 2019, a novel strain of coronavirus SARS-CoV-2, the virus which causes COVID-19, was reported to have surfaced in Wuhan, China. Since then, the COVID-19 coronavirus has spread to multiple countries, including the United States. The impact of the COVID-19 coronavirus outbreak caused the temporary closures of our retail locations throughout Italy, suspension of professional sports competitions throughout the world negatively impacting our ability to offer sports gaming products, and could have a negative impact on our business.
In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and the related adverse public health developments, have adversely affected work forces, economies and financial markets globally. The outbreak caused the temporary closures of our physical locations where we provide our gaming services throughout Italy, of which some locations began to re-open on May 4, 2020, and the suspension of professional sports competitions throughout the world negatively impacting our ability to offer sports gaming products. The recent quarantines, the timing and length of containment and eradication solutions, travel restrictions, absenteeism by infected workers have an adversely impact our sales and operating results. In addition, the pandemic could result in an economic downturn that could impact the demand for our products. We expect this global pandemic will continue to have an impact on our revenue and our results of operations, the size and duration of which we are currently unable to predict.
In response to the spread of COVID-19 as well as public health directives and orders, we have implemented work-from-home policies to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from national and local government and health authorities. We implemented a number of measures to ensure employee safety and business continuity. We have closed our offices with our administrative employees continuing their work outside of our offices. Business travel has been suspended, and online and teleconference technology is used to meet virtually rather than in person. The effects of the governmental orders and our work-from-home policies have negatively impact productivity, disrupt our business and delay our progress in implementing our business plan, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.
In addition, the outbreak of the COVID-19 coronavirus could disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others in our office or other workplace, or due to quarantines. COVID-19 illness could also impact members of our Board of Directors resulting in absenteeism from meetings of the directors or committees of directors, and making it more difficult to convene the quorums of the full Board of Directors or its committees needed to conduct meetings for the management of our affairs.
The global outbreak of the COVID-19 coronavirus continues to rapidly evolve. The extent to which the COVID-19 outbreak may continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. We do not yet know the full extent of potential delays or impacts on our business, operations, or the global economy as a whole. While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could seriously harm our business.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains statements as to the Company’s beliefs and expectations of the outcome of future events that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Examples of these statements include, but are not limited to, statements regarding the anticipated impact of the COVID-19 outbreak on travel and the closing of our physical locations, the anticipated impact of such outbreak on our results of operations, and possible effect of the postponement and cancellation of professional sports events on our overall sports betting handle and revenues. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These risks and uncertainties include, but are not limited to, the effects of the COVID-19 outbreak, including on the demand for our group business (including government-imposed travel or restrictions on public gathering in our physical venues), and levels of consumer confidence in the safety of public venues as a result of the outbreak; the duration of the COVID-19 outbreak and severity of such outbreak in countries where we operate; the pace of recovery following the COVID-19 outbreak; the mitigating effect of our online business channel; our ability to implement cost containment and business recovery strategies; and the adverse effects of the COVID-19 outbreak on our business or the market price of our common stock and the risk factors described in Newgioco\’s Annual Report on Form 10-K for the year ended December 31, 2018 and our subsequent filings with the U.S. Securities and Exchange Commission, including subsequent periodic reports on Forms 10-Q and 8-K. Except as required by law, the Company does not undertake any obligation to release publicly any revisions to forward-looking statements made by it to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events.
About Newgioco Group, Inc. (OTCMKTS:EMGL)
Newgioco Group, Inc., formerly Empire Global Corp. is a licensed gaming operator. The Company offers Web-based and land-based gaming services in Italy. The Company’s product offering includes a range of online and offline lottery and casino gaming, as well as sports betting and online poker. The Company’s Website and shops offer gaming line-up, including sports betting, online casino, poker, bingo, skilled and interactive games, virtual sports and horse racing. Its sports betting offer both pre-live and live in-game betting opportunities for a range of sports. Its online casino offers casino games, live casino, poker, bingo and interactive skilled games. The Company offers poker games, such as Texas Hold’em and Omaha in both cash and tournament format. The Company has approximately 1,070 Web-based betting shops, over three corner and approximately two agency locations operating under its license.