Lottery.com has received a notice from Nasdaq, warning that the company is at risk of being delisted from the market due to incompliance with Listing Rule 5605.
The notice was received on Monday, Mar. 13, as a result of Naila Chowdhry’s Mar. 9 resignation from the Board of Directors of the company and the Audit Committee and Compensation Committee of the Board of Directors.
Chowdhry resigned due to a ‘disagreement with the company on matters relating to the company’s corporate policies, operations, relationships and governance’, specifically with the current Board of Directors ‘regarding the number of independent and internal directors on the Board and the inability of the current Board’s ability to resolve urgent company issues’.
Her resignation letter also made accusations against Board members over alleged breaches of their fiduciary duties.
The Lottery.com Board has denied the allegations and stated its belief that all actions taken have been in the ‘best interests’ of all of the company and its stockholders, with legal guidance currently being sought on how to best respond to the allegations.
Notwithstanding, this has all amounted to a breach of Nasdaq Listing Rule 5605 (c)(2) which requires the Board to consist of at least three members, each of whom is an independent director under the Nasdaq Listing Rules and who meets heightened independence standards for Audit Committee members.
However, Lottery.com can regain compliance under Listing Rule 5605 (c) (4) by addressing this issue ‘until the earlier of the company’s next annual shareholders’ meeting or Mar. 9, 2024; or if the next annual shareholders’ meeting is held before Sept. 5, 2023…no later than Sept. 5, 2023’.
If Lottery.com fails to regain compliance by either of these periods, the firm will be delisted from Nasdaq.
This is not the first occasion whereby Lottery.com has been in breach of Nasdaq rules; similar events occurred last September when the departure of four Board members (Lisa Borders, Steven Cohen, William Thompson, and Tony DiMatteo) whittled the Board down to just a single figure – Richard Kivel.
Responding to the latest notice, Lottery.com announced: “While the company can provide no assurances as to timing, the company plans to identify a new independent Audit Committee member as soon as practicably possible to regain compliance with the Nasdaq Listing Rules.”