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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 1, 2023

 

Motorsport Games Inc.
(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-39868   86-1791356

(State or other jurisdiction

of incorporation)  

 

(Commission

File Number)

  (I.R.S. Employer
Identification No.)

 

5972 NE 4th Avenue

Miami, FL

  33137
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (305) 507-8799

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Class A common stock, $0.0001 par value per share   MSGM   The Nasdaq Stock Market LLC
(The Nasdaq Capital Market)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 

 

Item 1.01.Entry into a Material Definitive Agreement.

 

Registered Direct Offering

 

On February 1, 2023, Motorsport Games Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with the purchaser listed on the signature page thereto (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser 183,020 shares (the “Registered Shares”) of the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), in a registered direct offering priced at-the-market under Nasdaq rules (the “Offering”) for a purchase price of $21.40 per Registered Share.

 

The Company expects to receive aggregate gross proceeds from the Offering of approximately $3.9 million, before deducting placement agent fees and other offering expenses. The Offering is expected to close on or about February 2, 2023, subject to the satisfaction of customary closing conditions. The Company intends to use the net proceeds from the Offering for development of multiple games, working capital and general corporate purposes.

 

H.C. Wainwright & Co., LLC (“Wainwright”) acted as the exclusive placement agent for the Offering, pursuant to the engagement letter with the Company, dated as of January 9, 2023. Upon closing of the Offering, the Company will pay Wainwright a cash transaction fee equal to 7.0% of the aggregate gross proceeds to the Company from the Offering, non-accountable expenses of $50,000 and closing fees of $15,950. The Company also will issue to Wainwright (or its designees) warrants to purchase up to 10,981 shares of Class A Common Stock (the “Wainwright Warrants”), which is equal to 6.0% of the aggregate number of shares of Class A Common Stock placed in the Offering, at an exercise price of $26.75 per share (which represents 125% of the purchase price per Registered Share) and will expire five years after the commencement of sales under the Offering.

 

The Registered Shares are being issued pursuant to an effective registration statement on Form S-3 that the Company filed with the Securities and Exchange Commission (“SEC”) on February 1, 2022 (File No. 333-262462) and became effective on February 10, 2022, and a base prospectus and prospectus supplement thereunder.

 

The representations, warranties and covenants contained in the Purchase Agreement and the Wainwright Warrants were made solely for the benefit of the parties thereto and may be subject to limitations agreed upon by the contracting parties. The foregoing descriptions of the Purchase Agreement and the Wainwright Warrants do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement and the Wainwright Warrants, copies of which are filed as Exhibits 4.1 and 10.1 hereto, respectively, and incorporated by reference herein.

 

A copy of the legal opinion of Snell & Wilmer L.L.P. relating to the Registered Shares is attached as Exhibit 5.1 hereto.

 

Debt-for-Equity Exchange Agreement

 

On February 1, 2023, the Company entered into a debt-for-equity exchange agreement (the “Exchange Agreement”) with Motorsport Network, LLC (“Motorsport Network”) whereby the Company issued to Motorsport Network 441,402 shares of Class A Common Stock (the “Acquired Shares”), which amount represents the aggregate number of shares of Class A Common Stock equal to $2,948,565.99 (the “Discharged Debt”), representing the Company’s remaining debt outstanding (including the principal and not yet paid interest thereon) under that certain promissory note dated April 1, 2020, as amended on November 23, 2020 (as amended, the “Line of Credit”), held by Motorsport Network, divided by $6.68, which is the lower of: (i) the Nasdaq Official Closing Price of the Class A Common Stock immediately preceding the signing of the Exchange Agreement, or (ii) the average Nasdaq Official Closing Price of the Class A Common Stock for the five trading days immediately preceding the signing of the Exchange Agreement. The Acquired Shares were issued in consideration for the cancellation of the Discharged Debt under the Line of Credit.

 

Under the Exchange Agreement, subject to conditions set forth therein, the Company agreed to file a registration statement with the Securities and Exchange Commission upon demand from Motorsport Network at any time within 60 days after date on which the transactions contemplated under the Exchange Agreement have been completed in order to register the resale of the Acquired Shares. The Exchange Agreement also granted certain piggyback registration rights to Motorsport Network.

 

Prior to the closing of the transactions contemplated under the Exchange Agreement, Motorsport Network beneficially owned 1,038,983 shares of Class A Common Stock, representing approximately 61.19% of the issued and outstanding shares of Class A Common Stock as of January 31, 2023. After the closing of the transactions contemplated under the Exchange Agreement and the Offering described above, Motorsport Network will hold approximately 63.74% of the issued and outstanding shares of Class A Common Stock. Motorsport Network also beneficially owns 700,000 shares of Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) of the Company, representing all of the issued and outstanding shares of Class B Common Stock. Based upon the related party nature of the Exchange Agreement with Motorsport Network, a special committee of Company’s Board of Directors (the “Board”) comprised of independent and disinterested directors unanimously approved the terms of the Exchange Agreement and the transactions contemplated by the Exchange Agreement and, based on the recommendation of the special committee, the Board unanimously approved the terms of the Exchange Agreement and the transactions contemplated by the Exchange Agreement.

 

 

 

 

The Acquired Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and cannot be offered or sold in the United States absent effective registration or an applicable exemption from registration requirements. The Company is relying on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and/or by Rule 506 of Regulation D promulgated thereunder and on similar exemptions under applicable state laws.

 

The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Exchange Agreement, which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.

 

Item 3.02.Unregistered Sales of Equity Securities.

 

The information set forth under Item 1.01 above regarding the issuance by the Company of the Acquired Shares to Motorsport Network as contemplated by the Exchange Agreement is incorporated herein by reference.

 

Item 7.01.Regulation FD Disclosure.

 

On February 1, 2023, the Company issued a press release announcing the Offering, which is attached hereto as Exhibit 99.1.

 

Also, on February 1, 2023, the Company issued a press release announcing the transactions contemplated under the Exchange Agreement, which is attached hereto as Exhibit 99.2.

 

The information in this Item 7.01, including Exhibits 99.1 and 99.2, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into any filing or other document under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings except as shall be expressly set forth by specific reference in such a filing or document. This report will not be deemed an admission as to the materiality of any information of the information contained in this Item 7.01, including Exhibits 99.1 and 99.2.

 

Item 9.01.Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.

  Description
     
4.1   Form of Wainwright Warrant
     
5.1   Opinion of Snell & Wilmer L.L.P.
     
10.1   Form of Securities Purchase Agreement, dated as of February 1, 2023, between Motorsport Games Inc. and the purchaser identified on the signature page thereto
     
10.2   Debt-For-Equity Exchange Agreement, dated as of February 1, 2023, between Motorsport Games Inc. and Motorsport Network, LLC
     
23.1  

Consent of Snell & Wilmer L.L.P. (included in Exhibit 5.1)

     
99.1   Press Release dated February 1, 2023
     
99.2   Press Release dated February 1, 2023
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Motorsport Games Inc.
     
Date: February 2, 2023 By: /s/ Dmitry Kozko

    Dmitry Kozko
    Chief Executive Officer

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.

 Description
    
4.1  Form of Wainwright Warrant
    
5.1  Opinion of Snell & Wilmer L.L.P. 
    
10.1  Form of Securities Purchase Agreement, dated as of February 1, 2023, between Motorsport Games Inc. and the purchaser identified on the signature page thereto
    
10.2  Debt-For-Equity Exchange Agreement, dated as of February 1, 2023, between Motorsport Games Inc. and Motorsport Network, LLC
    
23.1  Consent of Snell & Wilmer L.L.P. (included in Exhibit 5.1)
    
99.1  Press Release dated February 1, 2023
    
99.2  Press Release dated February 1, 2023
    
104  Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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