Virginia Casino Developer Faces Stock Exchange Delisting

Maryland-based Urban One, one of the developers of a Richmond, Virginia casino resort, could be delisted by NASDAQ for noncompliance with federal reporting rules. A referendum on the casino, rejected by voters in 2021, will occur November 7

Virginia Casino Developer Faces Stock Exchange Delisting

On November 7 in Richmond, Virginia, voters will have a second chance to determine if the city will host the casino they narrowly rejected in 2021. But Urban One, which would develop the Richmond Grand Resort and Casino with Churchill Downs, could be delisted by NASDAQ due to failure to comply with federal financial reporting requirements.

According to WRIC, Harris Financial Group Managing Partner Jamie Cox said, “In general, when a company gets a delisting notice or gets put on notice that they’re potentially going to be delisted, that means that it’s sort of the end of the line of a series of missteps over the past six or seven months.” He said financial reporting procedures are designed to protect investors and help them make informed decisions.

“It’s an important feature of markets in the United States to have that trust and competence that financial statements are timely filed and accurate,” Cox said.

According to Maryland-based Urban One’s website, the company received its first notification of noncompliance from NASDAQ in April after it missed the deadline for filing its 2022 annual financial report. Urban One also missed the deadline for filing its 2023 first quarter report and received another notice of noncompliance in May.

In order to regain compliance, Urban One submitted a plan to NASDAQ, including extending the deadline for filing its delinquent reports by September 27. Urban One also missed that deadline, leading to the start of the delisting process.

Urban One said the reporting delays were due to accounting errors associated with investing in the Richmond Casino in 2021 plus errors “with regard to the timing of expense recognition of non-cash stock-based compensation.” By requesting a hearing before the NASDAQ Hearing Panels, no delisting action will be taken against Urban One before October 20 and an extension could be granted through March 23.

In a statement to CBS 6, an Urban One spokesperson said the company would complete the filings and regain compliance. It read, “This event does not impact our day-to-day business. We remain in a strong financial position and last week updated our financial guidance for the year. Our commitment to our investors, to our millions of viewers and listeners and to our Richmond resort casino project remain unchanged.”

Cox said Urban One does appear to be taking action to correct the issue, such as firing its former public accounting firm. He said, “It’s not like the company is sitting there doing nothing. They’re trying their best to make the case that there was some legitimate reason for the issues at hand, and we all hope that that’s the case.”

But, he noted, delisting could impact the casino project and investor confidence. He told WRIC, “It does really raise a lot of red flags when you have this type of reporting irregularity for such an extended period. This is not something that just came up yesterday. What it does is it shines a big bright light on the project as a whole, because one of the major players is having difficulty with its financial reporting, and one way or another, that’s not a good thing.”

He continued, “Filing financial statements, and doing it timely, is not something that most publicly traded companies have difficulty with. And that’s not to say that any one company should be taken as guilty until proven innocent, but it certainly does make an investor wonder whether or not that company has some issues that are beneath the surface that may not have been previously disclosed.”

A spokesman for Churchill Downs told CBS 6 that the situation “does not have any bearing” on the casino project or the voter referendum, and that all questions should be directed to Urban One.