Shares of Eros STX Global Corporation (NYSE:ESGC) have crashed today, down by 18% as of 11:20 a.m. EDT, after the company requested an extension to file its annual report with the SEC. It also provided investors with an update regarding its debt restructuring efforts.
The entertainment company, which produces TV and films, warned that it needed more time to scrutinize its books. Eros STX said that it expects to find material weaknesses in its internal controls for financial reporting, and that it is unsure when it will conclude its review.
“The Company is unable to file its Annual Report on Form 20-F for the fiscal year ended March 31, 2021 by the August 2, 2021 due date, without unreasonable effort or expense, primarily because the Company’s Audit Committee is currently conducting a formal internal review of certain accounting practices and internal controls related to its Eros subsidiaries,” Eros STX wrote in a regulatory filing. “Significant revenue from these subsidiaries may not have been appropriately recognized during the fiscal year ended March 31, 2020.”
The delay has created issues related to some of Eros STX’s debt, as the company has an outstanding debt that comes due within the next year and those credit agreements required Eros STX to deliver audited financial statements by July 31, 2021. The company says that it is negotiating with its lenders, attempting to secure a waiver and extension of the deadline.
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