The warning comes as the Global Nasdaq Exchange notified markets that, on 20 December, Marcum LLP had resigned as the independent auditor of Codere Online, a company that has yet to file its corporate accounts for the year ending 31 December 2023.
Marcum resigned as it could not complete certain audit procedures, citing its failure to gather “sufficient audit evidence” due to general IT control deficiencies stemming from Codere Online’s use of third-party platforms.
The auditor noted that Codere Online had insufficient internal controls to mitigate deficiencies related to its management of corporate accounts.
Nasdaq observed that, in previous filings, Codere reported material weaknesses in internal controls over financial reporting for 2021 and 2022.
Corporate liabilities are related to a lack of adequate technical accounting and supervisory personnel with the required expertise and training. In addition, Codere has admitted to a failure to implement effective internal controls over both internal and outsourced business processes and systems, as well as insufficient controls over cybersecurity processes outsourced to the Codere Group.
At the close of 2024, Codere Online appointed MaloneBailey, LLP as its new independent registered public accounting firm, reassuring investors that it will comply with requirements to maintain its Nasdaq status.
Management has appealed the delisting notice and has a scheduled hearing with Nasdaq on 16 January 2025, during which it will seek an extension to complete its audit. Codere Online notes that auditing duties were disrupted by its parent company, Codere SA, being granted a 90% reduction of debt by existing bondholders.
Investors remain cautious, particularly as the law firm Pomerantz LLP investigates Codere Online for alleged securities fraud and unlawful business practices.
In its Q3 trading update, Codere Online upgraded its corporate targets, expecting to finish 2024 at the upper end of its guidance for net gaming revenue (€205–215 million) and adjusted EBITDA (€2.5–7.5 million).
Codere leadership has highlighted significant operational improvements, including better cost controls, reduced interest expenses, and enhanced cash generation. CEO Aviv Sher and CFO Oscar Iglesias have expressed confidence in the company’s ability to recover and meet its financial and operational goals.
Iglesias emphasised the company’s steady progress, stating: “Beyond the significant top-line growth, we generated €1.5 million of adjusted EBITDA and €3.5 million in cash during Q3. This is now the third consecutive quarter of positive adjusted EBITDA.”
The outcome of Codere’s appeal with Nasdaq on 16 January 2025 will likely determine whether the company can stabilise its position as a Nasdaq-listed enterprise and fully capitalise on its financial turnaround.
Dingnews.com 07/01/2025