Motorsport Video games Reviews First Quarter 2022 Monetary

Date:


MIAMI, Would possibly 16, 2022 (GLOBE NEWSWIRE) — Motorsport Video games Inc. (NASDAQ: MSGM) (“Motorsport Video games” or the “Corporate”) as of late reported monetary effects for its first quarter ended March 31, 2022 (“Q1 2022”). The Corporate has additionally posted to the Corporate’s investor family members website online a Q1 2022 Quarter Finish Evaluation video and a Q1 2022 profits slide deck, which spotlight positive key milestones that passed off within the duration, in addition to an up to date Investor Presentation.

Dmitry Kozko, Leader Govt Officer of Motorsport Video games, commented, “In Q1 2022, we endured our product and content material releases. We introduced the overall unlock of our KartKraft karting simulation to PC, in addition to a consumer enjoy replace to our rFactor 2 racing simulation recreation that was once undoubtedly gained via our target market. In January 2022, our esports staff delivered the sequel to the 24 Hours of Le Mans Digital as a world-class tournament, and in February 2022 we held the inaugural 2022 INDYCAR Professional-Problem. Video games and esports projects have been additionally reinforced via increasing our courting with System E, and we have been decided on via Kindred Ideas to energy their subsequent technology racing simulation enjoy for System 1 the usage of our rFactor 2 platform.”

Kozko added, “Whilst we proceed to discover more than one investment choices to unravel our going worry {qualifications}, we stay assured in our skill to ship in opposition to our product roadmap.”

First Quarter 2022 Trade Replace

  • Le Mans Digital Sequence Grand Finale. The Corporate held the 2-day grand finale esports tournament for the 5-round 2021/22 Le Mans Digital Sequence in January 2022, bringing in combination 50 automobiles with 200 drivers from 39 other nations. The collection was once adopted via greater than 81 million enthusiasts throughout are living television, virtual streaming and social media platforms.
  • Legitimate KartKraft Release in January 2022. The Corporate formally introduced its first KartKraft racing recreation in January 2022 after obtaining the highbrow belongings, property and code from authentic developer, Black Delta, in March 2021.
  • rFactor 2 Person Interface Refresh and Content material Updates. The Corporate launched a brand new, more uncomplicated to navigate Person Interface for rFactor 2 in January 2022. Moreover, the Corporate started liberating a normal cadence of quarterly content material updates to supply gamers with probably the most tough product providing for his or her digital racing wishes. The Corporate expects the updates to redesign and enhance each its rFactor 2 platform and consumer enjoy.
  • INDYCAR 2022 Esports Professional-Problem. The Corporate held the inaugural 2022 INDYCAR Esports Professional-Problem in February 2022, that includes present NTT INDYCAR SERIES drivers, together with reigning champion Alex Palou, 4-time Indianapolis 500 champion Helio Castroneves and 2-time collection champion Josef Newgarden, making it the primary legitimate INDYCAR-branded esports tournament because the Corporate entered into the long-term license in July 2021 to supply INDYCAR digital racing collection.
  • rFactor 2 Racing Simulation Platform Decided on To Energy Subsequent-Stage System 1 Aggressive Socializing Enjoy. Adam Breeden, the pioneer of aggressive socializing within the U.Okay., decided on rFactor 2 because the racing simulation platform for the newly-formed Kindred Ideas – a groundbreaking, immersive, cutting-edge F1® racing simulation enjoy, gamified for a mass target market.
  • rFactor 2 Turned into the Legitimate SIM Racing Platform of System E. The Corporate applied System E content material, together with its drivers and groups, into rFactor 2. rFactor 2 now options each season of System E since 2018 and allows racing on many high-fidelity circuits throughout the collection. The System E content material pack was once up to date in March 2022 and is to be had to buy for all customers of rFactor 2. As well as, System E introduced its Boost up Esports collection powered via rFactor 2’s in-game competitions platform, and rFactor 2 will energy the System E Gaming Enviornment at long run esports races and occasions permitting gamers to enjoy the joys of the ABB FIA System E Global Championship in esports venues everywhere in the international.

Monetary Effects for the 3 Months Ended March 31, 2022

Revenues for Q1 2022 have been $3.3 million, as in comparison to $2.5 million for Q1 2021. The $0.8 million, or 34%, quarter-over-quarter build up displays upper gaming gross sales of $0.5 million in Q1 2022, basically from rFactor 2. Q1 2022 esports revenues greater via $0.3 million, basically from the 24 Hours of Le Mans esports tournament held in January 2022.

Jon New, Leader Monetary Officer of Motorsport Video games, commented, “It’s nice to look each the expansion of revenues in every of our Gaming and esports segments and the greater variety of our income flow, with rFactor 2 and esports contributing 27% of overall revenues for the quarter. Our marketing strategy to extend and diversify our income flow is starting to force advanced top-line monetary efficiency.” 

Q1 2022 web loss was once $16.0 million, as in comparison to Q1 2021 web lack of $14.1 million. The $1.9 million build up in web loss was once basically because of a non-cash $9.3 million write-down of goodwill and intangible property. This was once basically pushed via revisions to the product roadmap throughout Q1 2022, leading to adjustments to the scope and timing of latest product releases, in addition to adjustments within the worth of the Corporate’s marketplace capitalization throughout the primary quarter of 2022. A $1.2 million build up in Q1 2022 construction expenditures, and a $0.7 million build up in gross sales and advertising and marketing spend additional contributed to the Q1 2022 greater web loss. The will increase in bills described above have been partly offset via a $11.3 million aid generally and administrative bills and a $1.4 million aid in positive aspects from fairness approach investments.

The Q1 2022 lower of $11.3 million generally and administrative bills was once basically because of an $11.9 million aid in non-recurring IPO bills that have been incurred in Q1 2021, together with IPO bonuses and stock-based reimbursement.

Q1 2022 Adjusted EBITDA loss(1) was once $5.6 million, as in comparison to Q1 2021 Adjusted EBITDA lack of $2.8 million. The $2.7 million build up in Q1 2022 Adjusted EBITDA loss(1) was once basically pushed via the similar components because the greater Q1 2022 web loss, upper Q1 2022 passion and amortization and Q1 2021 had extra non-operational add-backs with Q1 2021 IPO connected bills (together with stock-based reimbursement).

The next desk supplies a reconciliation from web loss to Adjusted EBITDA(1) for Q1 2022 and Q1 2021, respectively:

    3 Months Ended
March 31, 2022
    3 Months Ended
March 31, 2021
 
Web Loss   $ (15,967,045 )   $ (14,085,424 )
Hobby expense, web     201,596       119,539  
Depreciation and Amortization     577,514       136,600  
EBITDA     (15,187,935 )     (13,829,285 )
IPO-related bills           2,947,192  
Acquisition-related bills     1,250       330,479  
Impairment of goodwill and intangible property     9,279,322        
Achieve due to fairness approach funding           (1,370,837 )
Inventory-based reimbursement     353,030       9,076,916  
Adjusted EBITDA   $ (5,554,333 )   $ (2,845,535 )

Money Go with the flow and Liquidity

For Q1 2022, the Corporate had detrimental coins flows from operations of roughly $5.6 million. The Corporate expects to proceed to have detrimental working coins flows for the foreseeable long run, because it continues to incur bills to expand new recreation franchises. The Corporate’s present coins readily available can be inadequate to fund its minimal liquidity necessities for a minimum of the following 365 days and can want to be supplemented with further debt and/or fairness financing, coins generated via price keep an eye on projects, and/or further adjustments to its product roadmap to cut back running capital necessities.

The Corporate’s long run liquidity and capital necessities come with price range to beef up the deliberate prices to perform its industry, together with quantities required to fund running capital, beef up the advance and creation of latest merchandise, handle present recreation titles and likely capital expenditures. The adequacy of the Corporate’s to be had price range typically will depend on many components, together with its skill to effectively expand consumer-preferred new merchandise or improvements to its present merchandise, endured construction and growth of the Corporate’s esports platform and its skill to collaborate with and/or gain different corporations or applied sciences to support or supplement the Corporate’s product and repair choices.

The Corporate is lately in quest of further price range via quite a lot of preparations mentioned above, and thru keeping up and embellishing sturdy price controls. There may also be no assurances that the assets of liquidity referred to above will give you the Corporate with enough liquidity to satisfy its ongoing coins necessities as, amongst different issues, the Corporate’s liquidity may also be impacted via various components, together with the Corporate’s stage of gross sales and expenditures, in addition to accounts receivable, gross sales allowances, pay as you go production bills and amassed bills.

(1)Use of Non-GAAP Monetary Measures

Adjusted EBITDA (the “Non-GAAP Measure”) isn’t a monetary measure outlined via U.S. typically authorized accounting ideas (“U.S. GAAP”). See the reconciliations of the Non-GAAP Measure to its maximum immediately similar U.S. GAAP measure within the monetary desk above.

Adjusted EBITDA, a measure utilized by control to evaluate the Corporate’s working efficiency, is outlined as EBITDA, which is web loss plus passion (source of revenue) expense, depreciation and amortization, much less source of revenue tax receive advantages (if any), adjusted to exclude: (i) IPO-related bills; (ii) acquisition connected bills; (iii) achieve due to fairness approach funding because of the purchase of extra fairness passion in Le Mans Esports Sequence Ltd.; (iv) stock-based reimbursement bills; (v) impairment of goodwill and intangible property, and (vi) different fees or positive aspects because of non-recurring occasions. 

The Corporate makes use of the Non-GAAP Measure to control its industry and assessment its monetary efficiency, as Adjusted EBITDA gets rid of pieces that have an effect on comparison between sessions that the Corporate believes aren’t consultant of its core ongoing working industry. Moreover, control believes that the usage of the Non-GAAP Measure turns out to be useful to its buyers as it complements buyers’ working out and evaluate of the Corporate’s normalized working efficiency and facilitates comparisons to prior sessions and its competition’ effects (who would possibly outline Adjusted EBITDA another way).

The Non-GAAP Measure isn’t a identified time period underneath U.S. GAAP and does no longer purport to be a substitute for income, source of revenue/loss from operations, web (loss) source of revenue, or coins flows from operations or as a measure of liquidity or every other efficiency measure derived in line with U.S. GAAP. Moreover, the Non-GAAP Measure isn’t meant to be a measure of unfastened coins flows to be had for control’s discretionary use, because it does no longer believe positive coins necessities, comparable to passion bills, tax bills, running capital necessities and debt carrier necessities. The Non-GAAP Measure has obstacles as an analytical device, and buyers must no longer believe it in isolation or as an alternative choice to the Corporate’s effects as reported underneath U.S. GAAP. Control compensates for the constraints of the usage of non-GAAP monetary measures via the usage of them to complement U.S. GAAP effects to supply a extra entire working out of the criteria and tendencies affecting the industry than could be introduced via the usage of best measures in line with U.S. GAAP. As a result of no longer all corporations use similar calculations, the Corporate’s measures might not be similar to different in a similar way titled measures of different corporations. Reconciliations of the Non-GAAP Measure to web loss, its maximum immediately similar monetary measure, calculated and introduced in line with U.S. GAAP, are introduced within the desk above.

Convention Name and Webcast Main points

The Corporate will host a convention name and webcast at 5:00 p.m. ET as of late, Would possibly 16, 2022, to speak about its monetary effects. The are living convention name may also be accessed via dialing 1-800-786-6104 from the U.S. or 1-416-981-9029. On the other hand, individuals would possibly get admission to the are living webcast at the Motorsport Video games Investor Members of the family website online at https://ir.motorsportgames.com underneath “Occasions.”

About Motorsport Video games

Motorsport Video games, a Motorsport Community corporate, combines cutting edge and attractive video video games with thrilling esports competitions and content material for racing enthusiasts and avid gamers around the world. The Corporate is the formally approved online game developer and writer for iconic motorsport racing collection throughout PC, PlayStation, Xbox, Nintendo Transfer and cell, together with NASCAR, INDYCAR, 24 Hours of Le Mans and the British Traveling Automobile Championship (“BTCC”). Motorsport Video games is an award-winning esports spouse of selection for twenty-four Hours of Le Mans, System E, BTCC, the FIA Global Rallycross Championship and the eNASCAR Warmth Professional League, amongst others.

For more info about Motorsport Video games consult with: www.motorsportgames.com.

Ahead-Taking a look Statements

Positive statements on this press unlock, the connected convention name and webcast which aren’t ancient info are forward-looking statements throughout the that means of Segment 27A of the Securities Act of 1933, as amended, and Segment 21E of the Securities Change Act of 1934, as amended, and are supplied pursuant to the protected harbor provisions of the Personal Securities Litigation Reform Act of 1995. Any statements on this press unlock, the connected convention name and webcast that aren’t statements of ancient reality could also be deemed forward-looking statements. Phrases comparable to “proceed,” “will,” “would possibly,” “may just,” “must,” “be expecting,” “anticipated,” “plans,” “intend,” “await,” “consider,” “estimate,” “expect,” “doable,” and identical expressions are meant to spot such forward-looking statements. Those forward-looking statements come with, however aren’t restricted to, statements regarding: (i) Motorsport Video games’ long run industry, long run result of operations and/or monetary situation; (ii) the predicted long run have an effect on of latest or deliberate merchandise or choices and the timing of launching such merchandise and choices, together with, with out limitation our trust that we will be able to ship in opposition to our product roadmap, our expectancies that our rFactor 2 updates will revamp and enhance each our rFactor 2 platform and consumer enjoy and our expectancies that rFactor 2 will energy the System E Gaming Enviornment at long run esports races and occasions and make allowance gamers to enjoy the joys of the ABB FIA System E Global Championship in esports venues everywhere in the international; (iii) the predicted long run have an effect on of imposing control methods and the have an effect on of different trade tendencies, together with, with out limitation our skill to execute a industry continuity plan and adapt to traits real-time, in addition to our marketing strategy to extend and diversify our income flow; (iv) the power of the Corporate to fund long run construction and working bills, together with, with out exception our expectation that the Corporate will proceed to have detrimental working coins flows for the foreseeable long run, as we proceed to incur bills to expand new recreation franchises; and (v) our liquidity and capital necessities, together with, with out limitation, our skill to proceed as a going worry, our trust that our present coins readily available might not be enough to fund our liquidity necessities for a minimum of the following 365 days, our trust that it is going to be important for us to protected further price range to proceed our present industry operations, together with any references to our present $12 million line of credit score with our dad or mum corporate, Motorsport Community, and to fund our duties, together with, with out limitation, the Corporate’s expectation to complement its liquidity via further debt and/or fairness financing, coins generated via price keep an eye on projects, and/or further adjustments to our product roadmap to cut back running capital necessities, in addition to statements referring to our coins flows and expected makes use of of money. All forward-looking statements contain vital dangers and uncertainties that might motive precise effects to vary materially from the ones expressed or implied within the forward-looking statements, lots of which can be typically out of doors the keep an eye on of Motorsport Video games and are tough to expect. Examples of such dangers and uncertainties come with, however aren’t restricted to: (i) difficulties, delays or not up to anticipated leads to reaching the Corporate’s enlargement plans, goals and expectancies, comparable to because of a slower than expected financial restoration and/or the Corporate’s incapacity, in complete or partially, to proceed to execute its industry methods and plans, comparable to because of not up to expected buyer acceptance of the Corporate’s new recreation titles, the Corporate’s experiencing difficulties or the shortcoming to release its video games as deliberate, not up to expected efficiency of the video games impacting buyer acceptance and gross sales and/or more than expected prices and bills to expand and release its video games, together with, with out limitation, upper than anticipated exertions prices and, along with the criteria set forth in (ii) via (iv) under, the Corporate’s proceeding monetary situation and skill to procure further debt or fairness financing to satisfy its liquidity necessities, such because the going worry qualification at the Corporate’s annual audited monetary statements posing difficulties in acquiring new financing on phrases appropriate to the Corporate, or in any respect; (ii) difficulties, delays in or unanticipated occasions that can have an effect on the timing and scope of latest product launches, comparable to because of difficulties or delays in the usage of its product construction staff in Russia because of the Russia invasion of Ukraine and the connected sanctions and/or extra restrictive sanctions rendering transacting within the area tougher or expensive and/or difficulties and/or delays bobbing up out of any resurgence of the continued and extended COVID-19 pandemic; (iii) not up to anticipated advantages from imposing the Corporate’s control methods and/or opposed financial, marketplace and geopolitical stipulations that negatively have an effect on trade tendencies, comparable to vital adjustments within the exertions markets, a longer or upper than anticipated inflationary setting (such because the have an effect on on user discretionary spending on account of vital will increase in power and fuel costs which were expanding since early in 2020), a better rate of interest setting, tax will increase impacting user discretionary spending and or quantitative easing that leads to upper rates of interest that negatively have an effect on shoppers’ discretionary spending, or opposed traits in relation to the Russia invasion of Ukraine; and/or (iv) difficulties and/or delays in resolving our liquidity place, and different unanticipated difficulties in resolving our proceeding monetary situation and skill to procure further capital to satisfy our liquidity wishes, together with with out limitation, difficulties in securing investment this is on commercially appropriate phrases to us or in any respect, comparable to our incapacity to finish in complete or partially any doable debt and/or fairness financing transactions, in addition to any incapacity to succeed in price discounts and/or not up to anticipated availability of price range underneath its $12 million line of credit score from Motorsport Community. Elements rather than the ones referred to above may just additionally motive Motorsport Video games’ effects to vary materially from anticipated effects. Further examples of such dangers and uncertainties come with, however aren’t restricted to: (i) delays and better than expected bills associated with the continued and extended COVID-19 pandemic, any resurgence of COVID-19 and the Russia invasion of Ukraine; (ii) Motorsport Video games’ skill (or incapacity) to handle present, and to protected further, licenses and different agreements with quite a lot of racing collection; (iii) Motorsport Video games’ skill to effectively organize and combine any joint ventures, acquisitions of companies, answers or applied sciences; (iv) unanticipated working prices, transaction prices and precise or contingent liabilities; (v) the power to draw and retain certified workers and key staff; (vi) opposed results of greater pageant; (vii) adjustments in user habits, together with on account of basic financial components, comparable to greater inflation, upper power costs and better rates of interest; (viii) Motorsport Video games’ skill to give protection to its highbrow belongings; and/or (ix) native, trade and basic industry and financial stipulations. Further components that might motive precise effects to vary materially from the ones expressed or implied within the forward-looking statements may also be present in Motorsport Video games’ filings with the SEC, together with its Annual File on Shape 10-Okay for the fiscal 12 months ended December 31, 2021, its Quarterly Reviews on Shape 10-Q filed with the SEC throughout 2022, in addition to in its next filings with the SEC. Motorsport Video games anticipates that next occasions and traits would possibly motive its plans, intentions and expectancies to switch. Motorsport Video games assumes no legal responsibility, and it in particular disclaims any goal or legal responsibility, to replace any forward-looking statements, whether or not on account of new knowledge, long run occasions or another way, excluding as expressly required via legislation. Ahead-looking statements talk best as of the date they’re made and must no longer be relied upon as representing Motorsport Video games’ plans and expectancies as of any next date.

Web page and Social Media Disclosure

Traders and others must observe that we announce subject material monetary knowledge to our buyers the usage of our investor family members website online (ir.motorsportgames.com), SEC filings, press releases, public convention calls and webcasts. We use those channels, in addition to social media and blogs, to be in contact with our buyers and the general public about our corporate and our merchandise. It’s conceivable that the tips we submit on our internet sites, social media and blogs may well be deemed to be subject material knowledge. Subsequently, we inspire buyers, the media and others excited about our corporate to study the tips we submit on the internet sites, social media channels and blogs, together with the next (which checklist we will be able to replace every so often on our investor family members website online):

Web pages   Social Media
motorsportgames.com   Twitter: @msportgames & @traxiongg
     
traxion.gg   Instagram: msportgames & traxiongg
     
motorsport.com   Fb: Motorsport Video games & traxiongg
     
    LinkedIn: Motorsport Video games
     
    Twitch: traxiongg
     
    Reddit: traxiongg

The contents of those internet sites and social media channels aren’t a part of, nor will they be included via reference into, this press unlock.

Contacts:

Traders:
Ashley DeSimone
Ashley.DeSimone@icrinc.com

Media:
ASTRSK PR
motorsportgames@astrskpr.com

Appendix:

The next desk supply a comparative abstract of the Corporate’s monetary effects for the sessions introduced:

MOTORSPORT GAMES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

    3 Months Ended
March 31,
 
    2022     2021  
Revenues   $ 3,321,789     $ 2,474,132  
Value of revenues     2,013,806       781,808  
Gross benefit     1,307,983       1,692,324  
                 
Running bills:                
Gross sales and advertising and marketing     1,688,449       1,024,218  
Construction     2,404,338       1,250,362  
Normal and administrative     3,423,153       14,764,038  
Impairment of goodwill     4,788,268        
Impairment of intangible property     4,491,054        
Depreciation and amortization     116,071       30,775  
Overall working bills     16,911,333       17,069,393  
Loss from operations     (15,603,350 )     (15,377,069 )
Hobby expense     (201,596 )     (119,539 )
Achieve due to fairness approach funding           1,370,837  
Different source of revenue, web     (162,099 )     40,347  
Web loss     (15,967,045 )     (14,085,424 )
Much less: Web loss due to non-controlling passion     (829,428 )     (273,450 )
Web loss due to Motorsport Video games Inc.   $ (15,137,617 )   $ (13,811,974 )
                 
Web loss due to Magnificence A commonplace inventory in step with proportion:                
Fundamental and diluted   $ (1.30 )   $ (1.30 )
                 
Weighted-average stocks of Magnificence A commonplace inventory remarkable:                
Fundamental and diluted     11,668,160       10,637,065  



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