Motorsport Games Reports Second Quarter 2022 Financial

MIAMI, Aug. 10, 2022 (GLOBE NEWSWIRE) — Motorsport Games Inc. (NASDAQ: MSGM) (“Motorsport Games” or the “Company”) in the present day reported monetary outcomes for its second quarter ended June 30, 2022 (“Q2 2022”). The Company has additionally posted to the Company’s investor relations website a Q2 2022 Quarter End Review video and a Q2 2022 earnings slide deck, which spotlight sure key milestones that occurred within the interval, in addition to an up to date Investor Presentation.

Dmitry Kozko, Chief Executive Officer of Motorsport Games, commented, “In Q2 2022, Motorsport Games continued its product and content releases to best deliver against our product roadmap. Within rFactor 2, we released new features and official BTCC content for our fans to enjoy. A promotional plan was announced, helping guide us further along in the lead up to the 2024 release of the official BTCC game. Our growing esports initiatives were further bolstered by the announcement of this year’s 2022/23 Le Mans Virtual Series schedule, which has continued to grow in stature, recognition and scale since the inaugural event. Lastly, we’ve delivered the highly anticipated next-gen console update for NASCAR 21: Ignition for our players on Xbox Series S and X, as well as PlayStation 5.”

Kozko added, “While we continue to explore multiple funding options to provide the Company sufficient liquidity to develop our products, we remain confident in our ability to deliver against our product roadmap.”

Second Quarter 2022 Business Update

Financial Results for the Three Months Ended June 30, 2022

Revenues for Q2 2022 have been $2.0 million, as in comparison with $2.2 million for Q2 2021. The $0.2 million, or 10%, quarter-over-quarter lower displays $0.3 million decrease gaming gross sales, partially offset by a $0.1 million improve in esports revenues, primarily from the 24 Hours of Le Mans esports occasion held in January 2022.

Q2 2022 web loss was $7.5 million, a $1.5 million improve in comparison with the Q2 2021 web lack of $6.0 million. The improve in web loss was pushed by: (i) a $0.9 million improve in Q2 2022 improvement expenditures; (ii) a $0.8 million improve in gross sales and advertising and marketing spend (iii) a $0.6 million improve in overseas foreign money losses; (iv) a $0.2 million lower in gross revenue (v) a $0.2 million improve in curiosity expense (vi) a $0.1 million improve in impairment; and (vii) a $0.1 million improve in depreciation and amortization. The will increase in Q2 2022 bills described above have been partially offset by a $1.4 million discount generally and administrative bills pushed primarily by a $1.1 million fee in Q2 2021 for the settlement of sure inventory appreciation rights.

Q2 2022 Adjusted EBITDA loss⁽¹⁾ was $4.9 million, a $1.2 million improve in loss when in comparison with Q2 2021 Adjusted EBITDA lack of $3.7 million. The improve in Adjusted EBITDA loss⁽¹⁾ was primarily pushed by the identical components inflicting the rise in Q2 2022 web loss. 

The following desk offers a reconciliation from web loss to Adjusted EBITDA⁽¹⁾ for Q2 2022 and Q2 2021, respectively:

Financial Results for the Six Months Ended June 30, 2022

Revenues have been $5.3 million and $4.7 million for the six months ended June 30, 2022 and 2021, respectively, a rise of $0.6 million, or 13%, interval over interval. For the six months ended June 30, 2022, revenues from our Gaming Segment elevated $0.2 million, or 5%, to $4.9 million, in comparison with $4.7 million for the six months ended June 30, 2021, whereas revenues from our Esport Segment elevated by $0.4 million for the six months ended June 30, 2022, when in comparison with the six months ended June 30, 2021. The improve in our Gaming section revenues in comparison with the 2021 interval was primarily because of $0.7 million in greater sport gross sales and a rise of $0.6 million in further revenues earned by means of the event of simulation platforms utilizing our rFactor 2 platform for third events. These will increase have been partially offset by $1.1 million in retail pricing concessions. The improve in our Esport Segment revenues was primarily pushed by the 24 Hours of Le Mans esports occasion held in January 2022.

The web loss for the six months ended June 30, 2022 was $23.5 million, a rise of $3.5 million when in comparison with the $20.0 million web loss for the six months ended June 30, 2021. The improve in web loss was pushed by: (i) a $9.4 million improve in goodwill and intangible asset impairment; (ii) a $2.0 million improve in improvement expenditures; (iii) a $1.5 million improve in gross sales and advertising and marketing spend; (iv) a $1.4 million lower in positive factors from fairness methodology investments; (v) a $0.9 million improve in overseas foreign money losses; (vi) a $0.6 million lower in gross revenue; and (vii) a $0.2 million improve in curiosity expense. These will increase have been offset by $12.7 million of decrease normal and administrative expense. 

For the six months ended June 30, 2022, Adjusted EBITDA loss⁽¹⁾ was $10.5 million, a $4.0 million improve, when in comparison with the $6.5 million Adjusted EBITDA loss for the six months ended June 30, 2021. The improve in Adjusted EBITDA loss⁽¹⁾ was primarily pushed by the identical components as the rise in web loss for the six months ended June 30, 2022, when in comparison with the six months ended June 30, 2021.

The following desk offers a reconciliation from web loss to Adjusted EBITDA⁽¹⁾ for the six months ended June 30, 2022 and the six months ended June 30, 2021:

Cash Flow and Liquidity

For the six months ended June 30, 2022, the Company had adverse money flows from operations of roughly $12.0 million. The Company expects to proceed to have adverse working money flows for the foreseeable future, because it continues to incur bills to develop new sport franchises. The Company’s present money available will likely be inadequate to fund its minimal liquidity necessities for at the least the subsequent 12 months and can must be supplemented with further debt and/or fairness financing, money generated by price management initiatives, and/or further adjustments to our product roadmap to cut back working capital necessities.

The Company’s future liquidity and capital necessities embody funds to assist the deliberate prices to function its business, together with quantities required to fund working capital, assist the event and introduction of latest merchandise, preserve present sport titles and sure capital expenditures. The adequacy of the Company’s out there funds usually relies on many components, together with its capacity to efficiently develop consumer-preferred new merchandise or enhancements to its present merchandise, continued improvement and enlargement of the Company’s esports platform and its capacity to collaborate with and/or purchase different firms or applied sciences to reinforce or complement the Company’s product and repair choices. 

The Company is at present in search of further funds by means of a wide range of preparations and thru sustaining and enhancing robust price controls. There may be no assurances that the sources of liquidity referred to above will present the Company with ample liquidity to fulfill its ongoing money necessities as, amongst different issues, the Company’s liquidity may be impacted by quite a lot of components, together with the Company’s stage of gross sales and expenditures, in addition to accounts receivable, gross sales allowances, pay as you go manufacturing bills and accrued bills.

⁽¹⁾Use of Non-GAAP Financial Measures

Adjusted EBITDA (the “Non-GAAP Measure”) isn’t a monetary measure outlined by U.S. usually accepted accounting rules (“U.S. GAAP”). See the reconciliations of the Non-GAAP Measure to its most straight comparable U.S. GAAP measure within the monetary tables above.

Adjusted EBITDA, a measure utilized by administration to evaluate the Company’s working efficiency, is outlined as EBITDA, which is web (loss) plus curiosity (earnings) expense, depreciation and amortization, much less earnings tax profit (if any), adjusted to exclude: (i) IPO-related bills; (ii) acquisition associated bills; (iii) achieve attributable to fairness methodology funding ensuing from the acquisition of further fairness curiosity in Le Mans Esports Series Ltd.; (iv) stock-based compensation bills; (v) impairment of goodwill and intangible property; and (vi) different prices or positive factors ensuing from non-recurring occasions.

The Company makes use of the Non-GAAP Measure to handle its business and consider its monetary efficiency, as Adjusted EBITDA eliminates gadgets that have an effect on comparability between durations that the Company believes should not consultant of its core ongoing working business. Additionally, administration believes that utilizing the Non-GAAP Measure is beneficial to its traders as a result of it enhances traders’ understanding and evaluation of the Company’s normalized working efficiency and facilitates comparisons to prior durations and its rivals’ outcomes (who might outline Adjusted EBITDA otherwise).

The Non-GAAP Measure isn’t a acknowledged time period beneath U.S. GAAP and doesn’t purport to be an alternative choice to income, earnings/loss from operations, web (loss) earnings, or money flows from operations or as a measure of liquidity or every other efficiency measure derived in accordance with U.S. GAAP. Additionally, the Non-GAAP Measure isn’t meant to be a measure of free money flows out there for administration’s discretionary use, because it doesn’t contemplate sure money necessities, resembling curiosity funds, tax funds, working capital necessities and debt service necessities. The Non-GAAP Measure has limitations as an analytical software, and traders mustn’t contemplate it in isolation or as an alternative choice to the Company’s outcomes as reported beneath U.S. GAAP. Management compensates for the constraints of utilizing non-GAAP monetary measures by utilizing them to complement U.S. GAAP outcomes to offer a extra full understanding of the components and developments affecting the business than can be introduced by utilizing solely measures in accordance with U.S. GAAP. Because not all firms use an identical calculations, the Company’s measures will not be similar to different equally titled measures of different firms. Reconciliations of the Non-GAAP Measure to web loss, its most straight comparable monetary measure, calculated and introduced in accordance with U.S. GAAP, are introduced within the desk above.

Conference Call and Webcast Details

The Company will host a convention name and webcast at 5:00 p.m. ET in the present day, August 10, 2022, to debate its monetary outcomes. The stay convention name may be accessed by dialing 1-877-407-0784 from the U.S. or 1-201-689-8560. Alternatively, individuals might entry the stay webcast on the Motorsport Games Investor Relations web site at https://ir.motorsportgames.com beneath “Events.”

About Motorsport Games

Motorsport Games, a Motorsport Network firm, combines modern and fascinating video video games with thrilling esports competitions and content material for racing followers and avid gamers across the globe. The Company is the formally licensed online game developer and writer for iconic motorsport racing collection throughout PC, PlayStation, Xbox, Nintendo Switch and cell, together with NASCAR, INDYCAR, 24 Hours of Le Mans and the British Touring Car Championship (“BTCC”). Motorsport Games is an award-winning esports accomplice of selection for twenty-four Hours of Le Mans, Formula E, BTCC, the FIA World Rallycross Championship and the eNASCAR Heat Pro League, amongst others.

For extra details about Motorsport Games go to: www.motorsportgames.com. 

Forward-Looking Statements

Certain statements on this press launch, the associated convention name and webcast which aren’t historic info are forward-looking statements throughout the that means of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are supplied pursuant to the secure harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements on this press launch, the associated convention name and webcast that aren’t statements of historic truth could also be deemed forward-looking statements. Words resembling “continue,” “will,” “may,” “could,” “should,” “expect,” “expected,” “plans,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” and comparable expressions are meant to determine such forward-looking statements. These forward-looking statements embody, however should not restricted to, statements regarding: (i) Motorsport Games’ future business, future outcomes of operations and/or monetary situation; (ii) the anticipated future influence of latest or deliberate merchandise or choices and the timing of launching such merchandise and choices, together with, with out limitation our perception that we’ll ship towards our product roadmap, our expectation to launch the official BTCC sport in 2024 and the subsequent KartKraft launch on one of many consoles in 2023; (iii) the anticipated future influence of implementing administration methods and the influence of different business developments, together with, with out limitation our capacity to execute a business continuity plan and adapt to developments real-time, in addition to our business plan to extend and diversify our income stream; (iv) our expectation that the Company will proceed to have adverse working money flows for the foreseeable future, as we proceed to incur bills to develop new sport franchises; and (v) our liquidity and capital necessities, together with, with out limitation, our capacity to proceed as a going concern, our perception that our present money available is not going to be ample to fund our liquidity necessities for at the least the subsequent 12 months and our expectation to complement liquidity with further debt and/or fairness financing, money generated by price management initiatives, and/or further adjustments to our product roadmap to cut back working capital necessities, in addition to statements relating to our money flows and anticipated makes use of of money. All forward-looking statements contain vital dangers and uncertainties that might trigger precise outcomes to vary materially from these expressed or implied within the forward-looking statements, lots of that are usually exterior the management of Motorsport Games and are troublesome to foretell. Examples of such dangers and uncertainties embody, however should not restricted to: (i) difficulties, delays or lower than anticipated leads to attaining the Company’s development plans, aims and expectations, resembling because of a slower than anticipated financial restoration and/or the Company’s lack of ability, in entire or partially, to proceed to execute its business methods and plans, resembling because of lower than anticipated buyer acceptance of the Company’s new sport titles, the Company’s experiencing difficulties or the shortcoming to launch its video games as deliberate, lower than anticipated efficiency of the video games impacting buyer acceptance and gross sales and/or better than anticipated prices and bills to develop and launch its video games, together with, with out limitation, greater than anticipated labor prices and, along with the components set forth in (ii) by means of (iv) under, the Company’s persevering with monetary situation and skill to acquire further debt and/or fairness financing to fulfill its liquidity necessities, such because the going concern qualification on the Company’s annual audited monetary statements posing difficulties in acquiring new financing on phrases acceptable to the Company, or in any respect; (ii) difficulties, delays in or unanticipated occasions that will influence the timing and scope of latest product launches, resembling because of difficulties or delays in utilizing its product improvement personnel in Russia as a result of Russia invasion of Ukraine and the associated sanctions and/or extra restrictive sanctions rendering transacting within the area tougher or expensive and/or difficulties and/or delays arising out of any resurgence of the continuing and extended COVID-19 pandemic; (iii) lower than anticipated advantages from implementing the Company’s administration methods and/or opposed financial, market and geopolitical situations that negatively influence business developments, resembling vital adjustments within the labor markets, an prolonged or greater than anticipated inflationary atmosphere (such because the influence on shopper discretionary spending on account of vital will increase in vitality and fuel costs which have been rising since early in 2020), the next rate of interest atmosphere, tax will increase impacting shopper discretionary spending and or quantitative easing that leads to greater rates of interest that negatively influence shoppers’ discretionary spending, or opposed developments regarding the Russia invasion of Ukraine; (iv) better than anticipated adverse working money flows resembling because of greater than anticipated improvement prices, greater rates of interest and/or greater inflation; and/or (v) difficulties and/or delays in resolving our liquidity and capital necessities, together with with out limitation, difficulties in securing funding that’s on commercially acceptable phrases to us or in any respect, resembling our lack of ability to finish in entire or partially any potential debt and/or fairness financing transactions, in addition to any lack of ability to attain price reductions. Factors apart from these referred to above might additionally trigger Motorsport Games’ outcomes to vary materially from anticipated outcomes. Additional examples of such dangers and uncertainties embody, however should not restricted to: (i) delays and better than anticipated bills associated to the continuing and extended COVID-19 pandemic, any resurgence of COVID-19 and the Russia invasion of Ukraine; (ii) Motorsport Games’ capacity (or lack of ability) to take care of present, and to safe further, licenses and different agreements with varied racing collection; (iii) Motorsport Games’ capacity to efficiently handle and combine any joint ventures, acquisitions of companies, options or applied sciences; (iv) unanticipated working prices, transaction prices and precise or contingent liabilities; (v) the flexibility to draw and retain certified staff and key personnel; (vi) opposed results of elevated competitors; (vii) adjustments in shopper conduct, together with on account of normal financial components, resembling elevated inflation, greater vitality costs and better rates of interest; (viii) Motorsport Games’ lack of ability to guard its mental property; and/or (ix) native, business and normal business and financial situations. Additional components that might trigger precise outcomes to vary materially from these expressed or implied within the forward-looking statements may be present in Motorsport Games’ filings with the SEC, together with its Annual Report on Form 10-Ok for the fiscal yr ended December 31, 2021, its Quarterly Reports on Form 10-Q filed with the SEC throughout 2022, in addition to in its subsequent filings with the SEC. Motorsport Games anticipates that subsequent occasions and developments might trigger its plans, intentions and expectations to alter. Motorsport Games assumes no obligation, and it particularly disclaims any intention or obligation, to replace any forward-looking statements, whether or not on account of new data, future occasions or in any other case, besides as expressly required by legislation. Forward-looking statements communicate solely as of the date they’re made and shouldn’t be relied upon as representing Motorsport Games’ plans and expectations as of any subsequent date. 

Website and Social Media Disclosure

Investors and others ought to word that we announce materials monetary data to our traders utilizing our investor relations web site (ir.motorsportgames.com), SEC filings, press releases, public convention calls and webcasts. We use these channels, in addition to social media and blogs, to speak with our traders and the general public about our firm and our merchandise. It is feasible that the data we publish on our web sites, social media and blogs might be deemed to be materials data. Therefore, we encourage traders, the media and others occupied with our firm to assessment the data we publish on the web sites, social media channels and blogs, together with the next (which checklist we’ll replace once in a while on our investor relations web site):

The contents of those web sites and social media channels should not a part of, nor will they be included by reference into, this press launch.

Contacts:

Investors:
[email protected] 

Media:
ASTRSK PR
[email protected]

Appendix:

The following desk present a comparative abstract of the Company’s monetary outcomes for the durations introduced:

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

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