Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-262462
PROSPECTUS
SUPPLEMENT
(To
Prospectus Dated February 10, 2022)
144,366
Shares of Class A Common Stock
This
prospectus supplement relates to the issuance and sale of 144,366 shares of the Class A Common Stock, par value $0.0001 per share (“Common
Stock”), of Motorsport Games Inc. (“Company”, “Motorsport Games”, “us” or “we”)
to institutional investors (the “Investors”) pursuant to this prospectus supplement, the accompanying prospectus and a securities
purchase agreement between the Company and the Investors, dated as of February 2, 2023 (the “Purchase Agreement”).
Our
Common Stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “MSGM.” On February 1, 2023,
the closing sale price of our Common Stock as reported on the Nasdaq was $37.00.
As
of February 1, 2023, the aggregate market value of our Common Stock held by our non-affiliates was $24,139,651, based upon 652,423 shares
of our outstanding Common Stock held by non-affiliates at the per share price of $37.00, the closing sale price of our Common Stock on
Nasdaq on February 1, 2023. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities in a public offering
with a value exceeding more than one-third of our “public float” (i.e., the aggregate market value of our Common Stock held
by our non-affiliates) in any 12 calendar-month period so long as our public float remains below $75.0 million. During the 12 calendar
months prior to and including the date of this prospectus supplement (but excluding this offering), we have sold 374,640 shares of Common
Stock, raising gross proceeds of $4,653,944 in the aggregate, in reliance on General Instruction I.B.6 of Form S-3.
We
engaged H.C. Wainwright & Co., LLC as our exclusive placement agent to use its reasonable best efforts to solicit offers to purchase
shares of our securities in connection with this offering. The placement agent has no obligation to purchase any of the shares of our
securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. We have agreed to
pay the placement agent the placement agent fees set forth in the table below and to provide certain other compensation to the placement
agent. See “Plan of Distribution” beginning on page S-14 of this prospectus supplement for more information regarding these
arrangements.
Investing
in the offered securities involves a high degree of risk. See “Risk Factors” beginning on page S-12 of this prospectus supplement
and page 3 of the accompanying prospectus, and in the documents incorporated by reference herein and therein, for a discussion of information
that you should consider before investing in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal
offense.
| |
Per Share | | |
Total | |
Offering price | |
$ | 23.50 | | |
$ | 3,392,601 | |
Placement agent’s cash fees(1) | |
$ | 1.645 | | |
$ | 237,482 | |
Proceeds, before expenses, to us | |
$ | 21.855 | | |
$ | 3,155,119 | |
(1) | We
have agreed to pay the placement agent for certain of its expenses. In addition, we have
agreed to issue to the placement agent, or its designees, warrants to purchase a number of
shares of our Common Stock equal to 6.0% of the aggregate number of shares of Common Stock
sold in this offering. The warrants issued to the placement agent will have an exercise price
equal to $29.375, which is equal to 125% of the offering price per share. See “Plan
of Distribution” on page S-14 of this prospectus supplement for a description of the
compensation payable to the placement agent. |
We
expect that delivery of the shares of Common Stock being offered pursuant to this prospectus supplement and the accompanying prospectus
will be made on or about February 3, 2023, subject to satisfaction of customary closing conditions.
We
are an “emerging growth company” under applicable Securities and Exchange Commission rules and, as such, have elected to
comply with certain reduced public company disclosure requirements for this prospectus and future filings. See “Summary —
Emerging Growth Company.”
H.C.
Wainwright & Co.
The
date of this prospectus supplement is February 2, 2023.
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT
PROSPECTUS
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus is part of the registration statement on Form S-3 that we filed with the Securities and Exchange Commission (the “SEC”)
using a “shelf” registration process and consists of two parts. The first part is this prospectus supplement, which describes
the specific terms of this offering. The second part, the accompanying base prospectus, gives more general information, some of which
may not apply to this offering. Generally, when we refer only to the “prospectus,” we are referring to both parts combined.
If
information in this prospectus supplement is inconsistent with the accompanying base prospectus or with any document incorporated by
reference that was filed with the SEC before the date of this prospectus supplement, you should rely on this prospectus supplement. This
prospectus supplement, the accompanying prospectus and the documents incorporated into each by reference include important information
about us, the securities being offered and other information you should know before investing in our securities. You should also read
and consider information in the documents we have referred you to in the sections of this prospectus supplement entitled “Where
You Can Find Additional Information” and “Incorporation of Certain Information by Reference.”
You
should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus
and in any free writing prospectuses we may provide to you in connection with this offering. We have not, and the placement agent has
not, authorized any other person to provide you with any information that is different. If anyone provides you with different or inconsistent
information, you should not rely on it. We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where
offers and sales are permitted. The distribution of this prospectus supplement and the offering of securities covered hereby in certain
jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus supplement must
inform themselves about, and observe any restrictions relating to, the offering of securities covered hereby and the distribution of
this prospectus supplement outside the United States. This prospectus supplement does not constitute, and may not be used in connection
with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this prospectus supplement by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
This
prospectus supplement contains summaries of certain provisions contained in some of the documents described herein, but reference is
made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents.
Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to
the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under
the section entitled “Where You Can Find More Information.”
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document
that is incorporated by reference in this prospectus supplement or the accompanying prospectus were made solely for the benefit of the
parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should
not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate
only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing
the current state of our affairs.
Unless
the context indicates otherwise, as used in this prospectus supplement, the terms “us,” “our,” “Motorsport
Games,” “we,” the “company” and similar designations refer to Motorsport Games Inc., a Delaware corporation,
and its consolidated subsidiaries.
We
are not making an offer or sale of shares of our Common Stock in any jurisdiction where such offer or sale is not permitted. We are not
making any representation to you regarding the legality of an investment in our Common Stock by you under applicable laws. You should
consult with your own advisors as to legal, tax, business, financial and related aspects of an investment in our Common Stock.
This
prospectus supplement and the information incorporated herein by reference include trademarks, service marks and trade names owned by
us or other companies. All trademarks, service marks and trade names included or incorporated by reference into this prospectus supplement
and the information incorporated herein by reference are the property of their respective owners.
TRADEMARKS
This
document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade
names referred to in this prospectus supplement may appear without the ® or TM symbols, but such references are not intended to indicate,
in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks
and trade names. Motorsport Games does not intend its use or display of other companies’ trade names, trademarks or service marks
to imply a relationship with, or endorsement or sponsorship of it by, any other companies.
FORWARD-LOOKING
STATEMENTS
This
prospectus supplement, the accompanying prospectus and any free writing prospectus, including the information incorporated by reference
herein and therein, contains certain statements, which are not historical facts and are “forward-looking statements” within
the meaning of federal securities laws. These forward-looking statements are subject to certain risks, trends and uncertainties. Forward-looking
statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives,
strategies, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly
to historical or current facts. We use words, such as “could,” “would,” “may,” “might,”
“will,” “expect,” “likely,” “believe,” “continue,” “anticipate,”
“estimate,” “intend,” “plan,” “project” and other similar expressions to identify some
forward-looking statements, but not all forward-looking statements include these words. For example, forward-looking statements include
statements we make relating to:
| ● | our
future business, results of operations, financial condition and/or liquidity, including with
respect to the ongoing effects of Russia’s invasion of Ukraine, as well as the coronavirus
(“COVID-19”) pandemic; |
| ● | new
or planned products or offerings, including the anticipated timing of our new product launches
under our updated product roadmap, such as our anticipated release of INDYCAR, British Touring
Car Championship and Le Mans games in 2023 and 2024; |
| ● | our
intentions with respect to our mobile games, including expectations that we will continue
to focus on developing and further enhancing our multi-platform games for mobile phones,
as well as the anticipated timing of the release of our future mobile games; |
| ● | our
plans to strive to become a leader in organizing and facilitating esports tournaments, competitions,
and events for our licensed racing games as well as on behalf of third-party racing game
developers and publishers; |
| ● | our
expectations that the COVID-19 pandemic will not have a material impact on our future business
and operations; |
| ● | our
intention to expand our license arrangements to other internationally recognized racing series
and the platforms we operate on; |
| ● | our
expectation that having a broader product portfolio will improve our operating results and
provide a revenue stream that is less cyclical based on the release of a single game per
year; |
| ● | our
plans to drive ongoing engagement and incremental revenue from recurrent consumer spending
on our titles through in-game purchases and extra content; |
| ● | our
expectation that we will continue to derive significant revenues from sales of our products
to a very limited number of distribution partners; |
| ● | our
expectation that we will continue to invest in technology, hardware and software to support
our games and services, including with respect to security protections; |
| ● | our
belief that the global adoption of portable and mobile gaming devices leading to significant
growth in portable and mobile gaming is a continuing trend; |
| ● | our
intention to continue to look for opportunities to expand the recurring portion of our business; |
| ● | our
liquidity and capital requirements, including, without limitation, as to our ability to continue
as a going concern, our belief that we will not have sufficient cash on hand to fund our
operations for the remainder of 2022 based on the cash and cash equivalents available as
of October 31, 2022 and our average cash burn, our belief that additional funding will be
required in order to continue operations, our belief that there is a substantial likelihood
that Motorsport Network, LLC (“Motorsport Network”) may not fulfill our future
borrowing requests under a $12 million line of credit that it provides to us (the “Line
of Credit”), our expectation to use current borrowings under the $12 million Line of
Credit for general purposes and working capital, our belief that it will be necessary for
us to secure additional funds, whether through a variety of equity and/or debt financing
arrangements or similar transactions or implementing cost reductions through cost control
initiatives, to continue our existing business operations and to fund our obligations, our
expectation to generate additional liquidity through consummating one or more potential equity
and/or debt financings, achieving cost reductions by maintaining and enhancing cost control
initiatives, such as those that we expect to achieve through our previously announced organizational
restructuring (the “2022 Restructuring Program”), and/or adjusting our product
roadmap to reduce the near-term need for working capital, as well as statements regarding
our cash flows and anticipated uses of cash, as well as our belief that additional funding
in the form of potential equity and/or debt financing arrangements or similar transactions
are viable options to support our future liquidity needs, provided that such opportunities
can be obtained on terms that are commercially competitive and on terms acceptable to us; |
| ● | our
expectations that we will continue to incur losses for the foreseeable future as we continue
to incur significant expenses; |
| ● | our
expectations relating to future impairment of intangible assets; |
| ● | our
plans and intentions with respect to our remediation efforts to address the material weaknesses
in our internal control over financial reporting; |
| ● | our
belief that the outcome of all pending legal proceedings in the aggregate is not reasonably
likely to have a material adverse effect on our business, prospects, results of operations,
financial condition and/or cash flows, except as otherwise disclosed in the Q3 2022 Form
10-Q (as defined below), and that in light of the uncertainties involved in legal proceedings
generally, the ultimate outcome of a particular matter could be material to the Company’s
operating results for a particular period depending on, among other things, the size of the
loss or the nature of the liability imposed and the level of the Company’s income for
that particular period, including, without limitation, our beliefs regarding the merit of
any plaintiff’s allegations and the impact of any claims and litigation that we are
subject to; |
| ● | our
ability to utilize net operating loss carryforwards; |
| ● | our
expectations regarding the future impact of implementing management strategies, potential
acquisitions and industry trends; |
| ● | our
plans and intentions to regain compliance with the listing requirements of Nasdaq; |
| ● | our
intention to continue relying on exemptions from certain corporate governance requirements
of Nasdaq as a result of being a “controlled company” within the meaning of the
Nasdaq rules and our belief that we may decide in the future to avail ourselves of other
controlled company exemptions in accordance with Nasdaq rules; and |
| ● | our
expectations regarding the 2022 Restructuring Program, such as: (i) our expectations to eliminate
approximately 20% of our overhead costs worldwide; (ii) our expectations regarding the amount
and timing of the charges and payments related to the 2022 Restructuring Program; (iii) our
expectations that as a result of the 2022 Restructuring Program, we will deliver approximately
$4 million of total annualized cost reductions by the end of 2023, with the immediate headcount
cost reductions expected to deliver annualized cost reductions of approximately $2.5 million
by the end of 2022 and additional actions to be taken during 2022 expected to generate an
additional $1.5 million of annualized cost reductions by the end of 2023; (iv) our expectations
that total restructuring costs will fall within the previously estimated range of $0.1 million
to $0.3 million; and (v) our plans to continue our efforts to achieve further cost reductions. |
The
forward-looking statements contained in this prospectus supplement, the accompanying prospectus and any free writing prospectus, including
the information incorporated by reference herein and therein, are based on assumptions that we have made in light of our industry experience
and our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate
under the circumstances. As you read and consider this prospectus supplement, the accompanying prospectus and any free writing prospectus,
including the information incorporated by reference herein and therein, you should understand that these statements are not guarantees
of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions that are difficult
to predict, including, without limitation, sales of shares of Common Stock under the Purchase Agreement impacting the price of our Common
Stock, our inability to raise funds under the Purchase Agreement due to certain limitations under the Purchase Agreement, and less than
expected results from the proceeds raised from any transaction under the Purchase Agreement. Although we believe that these forward-looking
statements are based on reasonable assumptions, you should be aware that many factors could affect our actual operating and financial
performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements. Important
factors that could cause our actual results to differ materially from those projected in any forward-looking statements are discussed
in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021
Form 10-K”) and in “Risk Factors” in Part II, Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2022 (the “Q3 2022 Form 10-Q”), as updated in our subsequent filings with the SEC. In addition to factors that
may be described in our filings with the SEC, including this prospectus supplement, the accompanying prospectus and any free writing
prospectus, including the information incorporated by reference herein and therein, the following factors, among others, could cause
our actual results to differ materially from those expressed in any forward-looking statements made by us:
| ● | difficulties
and/or delays in accessing available liquidity, and other unanticipated difficulties in resolving
our continuing financial condition and ability to obtain additional capital to meet our financial
obligations, including, without limitation, difficulties in securing funding that is on commercially
acceptable terms to us or at all, such as our inability to complete in whole or in part any
potential debt and/or equity financing transactions or similar transactions, as well as any
ability to achieve cost reductions, including, without limitation, those which we expect
to achieve through the 2022 Restructuring Program; difficulties, delays or our inability
to efficiently manage our cash and working capital; higher than expected operating expenses;
adverse impacts to our liquidity position resulting from the higher interest rate and higher
inflationary environment; the unavailability of funds from anticipated borrowing sources;
the unavailability of funds from our inability to reduce or control costs, including, without
limitation, those which we expect to achieve through the 2022 Restructuring Program; lower
than expected operating revenues, cash on hand and/or funds available from anticipated borrowings
or funds expected to be generated from cost reductions resulting from the implementation
of cost control initiatives, such as through the 2022 Restructuring Program; and/or less
than anticipated cash generated by our operations; and/or adverse effects on our liquidity
resulting from changes in economic conditions (such as continued volatility in the financial
markets, whether attributable to COVID-19, Russia’s invasion of Ukraine or otherwise;
significantly higher rates of inflation, significantly higher interest rates and higher labor
costs; the impact of higher energy prices on consumer purchasing behavior, monetary conditions
and foreign currency fluctuations, tariffs, foreign currency controls and/or government-mandated
pricing controls, as well as in trade, monetary, fiscal and tax policies), political conditions
(such as military actions and terrorist activities) and pandemics and natural disasters;
and/or the unavailability of funds from (A) delaying the implementation of or revising certain
aspects of our business strategy; (B) reducing or delaying the development and launch of
new products and events; (C) reducing or delaying capital spending, product development spending
and marketing and promotional spending; (D) selling assets or operations; (E) seeking additional
capital contributions and/or loans from Motorsport Network, the Company’s other affiliates
and/or third parties; and/or (F) reducing other discretionary spending; |
| ● | difficulties,
delays or less than expected results in achieving our growth plans, objectives and expectations,
such as due to a slower than anticipated economic recovery and/or our inability, in whole
or in part, to continue to execute our business strategies and plans, such as due to less
than anticipated customer acceptance of our new game titles, our experiencing difficulties
or the inability to launch our games as planned, less than anticipated performance of the
games impacting customer acceptance and sales and/or greater than anticipated costs and expenses
to develop and launch our games, including, without limitation, higher than expected labor
costs; |
| ● | difficulties,
delays in or unanticipated events that may impact the timing and scope of new product launches,
such as due to difficulties or delays in using its product development personnel in Russia
due to Russia’s invasion of Ukraine and the related sanctions and/or more restrictive
sanctions rendering transacting in the region more difficult or costly and/or difficulties
and/or delays arising out of any resurgence of the ongoing and prolonged COVID-19 pandemic; |
| ● | less
than expected benefits from implementing our management strategies and/or adverse economic,
market and geopolitical conditions that negatively impact industry trends, such as significant
changes in the labor markets, an extended or higher than expected inflationary environment
(such as the impact on consumer discretionary spending as a result of significant increases
in energy and gas prices which have been increasing since early in 2020), a higher interest
rate environment, tax increases impacting consumer discretionary spending and or quantitative
easing that results in higher interest rates that negatively impact consumers’ discretionary
spending, or adverse developments relating to Russia’s invasion of Ukraine; |
| ● | delays
and higher than anticipated expenses related to the ongoing and prolonged COVID-19 pandemic; |
| ● | difficulties
and/or delays adversely impacting our ability (or inability) to maintain existing, and to
secure additional, licenses and other agreements with various racing series; |
| ● | difficulties
and/or delays adversely impacting our ability to successfully manage and integrate any joint
ventures, acquisitions of businesses, solutions or technologies; |
| ● | unanticipated
operating costs, transaction costs and actual or contingent liabilities; |
| ● | difficulties
and/or delays adversely impacting our ability to attract and retain qualified employees and
key personnel; |
| ● | adverse
effects of increased competition; |
| ● | changes
in consumer behavior, including as a result of general economic factors, such as increased
inflation, recessionary factors, higher energy prices and higher interest rates; |
| ● | difficulties
and/or delays adversely impacting our ability to protect our intellectual property; |
| ● | local,
industry and general business and economic conditions; |
| ● | unanticipated
adverse effects on our business, prospects, results of operations, financial condition, cash
flows and/or liquidity as a result of unexpected developments with respect to our legal proceedings; |
| ● | difficulties
and/or delays or unanticipated developments adversely impacting our ability to regain compliance
with the Nasdaq’s listing requirements; and/or |
| ● | difficulties,
delays or our inability to successfully complete the 2022 Restructuring Program, in whole
or in part, which could result in less than expected operating and financial benefits from
such actions, as well as delays in completing the 2022 Restructuring Program, which could
reduce the benefits realized from such activities; higher than anticipated restructuring
charges and/or payments and/or changes in the expected timing of such charges and/or payments;
and/or less than anticipated annualized cost reductions from the 2022 Restructuring Program
and/or changes in the timing of realizing such cost reductions, such as due to less than
anticipated liquidity to fund such activities and/or more than expected costs to achieve
the expected cost reductions. |
Additionally,
there are other risks and uncertainties described from time to time in the reports that we file with the SEC. Should one or more of these
risks or uncertainties materialize or should any of these assumptions prove to be incorrect, our actual operating and financial performance
may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking
statement contained in this prospectus supplement, the accompanying prospectus and any free writing prospectus, including the information
incorporated by reference herein and therein, to reflect events or circumstances after the date on which it is made or to reflect the
occurrence of anticipated or unanticipated events or circumstances, except as otherwise required by law. New factors that could cause
our business not to develop as we expect emerge from time to time, and it is not possible for us to predict all of them. Further, we
cannot assess the impact of each currently known or new factor on our results of operations or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
SUMMARY
The
following summary highlights information contained elsewhere in this prospectus supplement or incorporated by reference herein and does
not contain all the information that may be important to purchasers of our securities. Prospective purchasers of our securities should
carefully read this entire prospectus supplement and the accompanying prospectus, including the risks of investing in our securities
discussed under the heading “Risk Factors” herein and under similar headings in the accompanying base prospectus, and the
documents incorporated by reference herein and therein. Prospective purchasers of our securities should also carefully read the information
incorporated by reference in this prospectus supplement and the accompanying prospectus, including our financial statements, and the
exhibits to the registration statement of which the accompanying prospectus is a part.
Overview
Motorsport
Games is a leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the
world, including NASCAR, the iconic 24 Hours of Le Mans endurance race and the associated FIA World Endurance Championship, INDYCAR,
the British Touring Car Championship, KartKraft (karting simulation) and rFactor 2 (racing simulation). Through the support of our majority
stockholder, Motorsport Network, the mission of which is to be the leading, independent voice for the global motorsport and automotive
industries and their fans, Motorsport Games’ corporate mission is to create a virtual racing ecosystem. Our products and services
target a large and underserved global motorsport audience.
Started
in 2018 as a wholly-owned subsidiary of Motorsport Network, we develop and publish multi-platform racing video games including for game
consoles, PCs and mobile platforms through various retail and digital channels, including full-game and downloadable content.
Recent
Developments
Registered
Direct Offering
On
February 1, 2023, the we entered into a securities purchase agreement with the purchaser listed on the signature page thereto,
pursuant to which we agreed to issue and sell to such purchaser 183,020 shares of Common Stock in a registered direct offering
priced at-the-market under Nasdaq rules for a purchase price of $21.40 per share. The offering closed on February 2, 2023,
and the Company received aggregate gross proceeds from such offering of approximately $3.9 million, before deducting placement agent
fees and other offering expenses. The Company intends to use the net proceeds from such offering for development of multiple games, working
capital and general corporate purposes.
H.C.
Wainwright & Co., LLC (“H.C. Wainwright” or the “placement agent”) acted as the exclusive placement agent
for such offering pursuant to an engagement letter with the Company, dated as of January 9, 2023. Upon closing of such offering, the
Company paid H.C. Wainwright a cash transaction fee equal to 7.0% of the aggregate gross proceeds to the Company from such offering,
non-accountable expenses of $50,000 and closing fees of $15,950. The Company also issued to H.C. Wainwright’s designees warrants
to purchase up to 10,981 shares of Common Stock, which is equal to 6.0% of the aggregate number of shares of 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). Such warrants
expire five years after the commencement of sales under such offering.
The
shares were issued pursuant to the Company’s registration statement on Form S-3 filed with the SEC on February 1, 2022 (File
No. 333-262462) and became effective on February 10, 2022, and a base prospectus and prospectus supplement thereunder.
Debt
for Equity Exchanges
On
January 30, 2023, the Company entered into a debt-for-equity exchange agreement (the “Exchange Agreement”) with Motorsport
Network, whereby the Company issued 338,983 shares (the “Acquired Shares”) of Common Stock to Motorsport Network, which amount
represents the aggregate number of shares of Common Stock equal to $1,000,000 (the “Discharged Debt”), representing a portion
of the Company’s outstanding debt (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 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 SEC 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. 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.
On
February 1, 2023, the Company entered into a debt-for-equity exchange agreement (the “February 1 Exchange Agreement”) with
Motorsport Network, whereby the Company issued to Motorsport Network 441,402 shares of Common Stock (the “February 1 Acquired Shares”),
which amount represents the aggregate number of shares of Class A Common Stock equal to $2,948,565.99 (the “February 1 Discharged
Debt”), representing the Company’s remaining debt outstanding (including the principal and not yet paid interest thereon)
under the Line of Credit, 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 February 1 Exchange Agreement. The February 1 Acquired Shares
were issued in consideration for the cancellation of the February 1 Discharged Debt under the Line of Credit. Under the February 1 Exchange
Agreement, subject to conditions set forth therein, the Company agreed to file a registration statement with the SEC upon demand from
Motorsport Network at any time within 60 days after date on which the transactions contemplated under the February 1 Exchange Agreement
have been completed in order to register the resale of the February 1 Acquired Shares. The February 1 Exchange Agreement also granted
certain piggyback registration rights to Motorsport Network. The Acquired Shares have not been
registered under 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.
Corporate
History and Information
Motorsport
Gaming US LLC was organized as a limited liability company on August 2, 2018 under the laws of the State of Florida. On January 8, 2021,
Motorsport Gaming US LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport
Games Inc. in connection with our initial public offering. Effective as of January 8, 2021, 100% of the membership interests held by
the sole member of Motorsport Gaming US LLC, Motorsport Network, converted into an aggregate of (i) 7,000,000 shares of Class A common
stock of Motorsport Games Inc. and (ii) 7,000,000 shares of Class B common stock of Motorsport Games Inc., representing all of the outstanding
shares of Class A and Class B common stock immediately following the corporate conversion. On November 9, 2022, at a special meeting
of stockholders, our stockholders approved an amendment to our certificate of incorporation to effect a reverse split of our issued and
outstanding shares of Class A common stock and Class B common stock at a ratio of 1-for-10 (the “Reverse Stock Split”). Effective
with such stockholder approval, our board of directors approved the Reverse Stock Split at a ratio of 1-for-10, with the Reverse Stock
Split effective as of November 10, 2022.
Our
principal executive offices are located at 5972 NE 4th Avenue Miami, FL 33137, and our telephone number is (305) 507-8799. Our website
address is www.motorsportgames.com. None of the information contained on, or that may be accessed through, our website is a prospectus
or constitutes part of, or is otherwise incorporated into, this prospectus supplement. We have included our website address in this prospectus
supplement solely as an inactive textual reference.
Emerging
Growth Company
We
are an “emerging growth company”, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business
Startups Act (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the
auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved.
Further,
section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are
required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out
of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election
to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued
or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new
or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements
with certain other public companies difficult or impossible because of the potential differences in accounting standards used.
We
will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of Motorsport Games’ IPO, (b) in which Motorsport Games has a total annual gross revenue of at least $1.235 billion,
(c) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period, or
(d) the date on which Motorsport Games is deemed to be a large accelerated filer, which means the market value of Motorsport Games’
common stock that is held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter and
Motorsport Games is not eligible to use the requirements for smaller reporting companies under the revenue test for the definition of
“smaller reporting company” under Rule 12b-2 promulgated under the Exchange Act. References herein to “emerging growth
company” will have the meaning associated with it in the JOBS Act.
The
Offering
Issuer
|
|
Motorsport
Games Inc. |
|
|
|
Common
stock we are offering |
|
144,366
shares of Common Stock. Each share of Common Stock is being sold in this offering at a purchase price of $23.50. |
|
|
|
Common
Stock outstanding prior to this offering(1) |
|
2,322,380
shares of Common Stock |
|
|
|
Common
Stock to be outstanding after offering of Initial Purchase Amount(1) |
|
2,466,746
shares of Common Stock |
|
|
|
Use
of proceeds |
|
We
intend to use the net proceeds from this offering for general corporate purposes, which may include development of multiple games,
working capital and other business purposes. See “Use of Proceeds.” |
|
|
|
Risk
factors |
|
This
investment involves a high degree of risk. See “Risk Factors” on page S-12 of this prospectus supplement and the other
information included in, or incorporated by reference into, this prospectus supplement for a discussion of factors you should consider
carefully before making an investment decision. |
|
|
|
Symbol
on The Nasdaq Capital Market |
|
MSGM
|
(1) |
The
number of shares of Class A common stock outstanding immediately before this offering is based on 2,322,380 shares of Class A common
stock outstanding as of February 2, 2023 and excludes as of such date: |
|
● |
49,494
shares of our Class A common stock reserved for issuance under the options, some of which were granted pursuant to our 2021 Equity
Incentive Plan (the “2021 Plan”) and some of which were granted outside of the 2021 Plan but were subject to stockholder
approval that was previously obtained; |
|
|
|
|
● |
50,506
shares of our Class A common stock reserved for future issuance of equity awards under our 2021 Plan as of February 1, 2023; |
|
|
|
|
● |
10,981
shares of our Common Stock issued to the placement agent (or its designees) as compensation in connection with our registered offering
consummated on February 2, 2023, at an exercise price of $26.75 per share. |
Unless
otherwise indicated, all information in this prospectus supplement assumes no exercise of the outstanding options described in the bullets
above and no exercise of the warrants to purchase up to 8,662 shares of our Common Stock to be issued to the placement agent (or its
designees) as compensation in connection with this offering at an exercise price of $29.375 per share.
RISK
FACTORS
An
investment in our shares of Common Stock involves risks and uncertainties. You should carefully consider the risk factors incorporated
by reference to the 2021 Form 10-K, any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, and all other information
contained or incorporated by reference into this prospectus supplement, as updated by our subsequent filings under the Exchange
Act, and the risk factors and other information contained in this prospectus supplement, the accompanying prospectus and any free writing
prospectus before making an investment decision. The risks described in these documents are not the only ones we face. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. Past financial
performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or
trends in future periods. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow
could be materially adversely affected. This could cause the trading price of our securities to decline, resulting in a loss of all or
part of your investment. Please also carefully read the section titled “Cautionary Note Regarding Forward-Looking Statements.”
Risks
Relating to this Offering
Because
we will have broad discretion and flexibility in how the net proceeds from this offering are used, we may use the net proceeds in ways
in which you disagree .
We
intend to use the net proceeds from this offering for working capital purposes and to fund other general corporate purposes. See “Use
of Proceeds” on page S-13. We have not allocated specific amounts of the net proceeds from this offering for any of the foregoing
purposes. Accordingly, our management will have significant discretion and flexibility in applying the net proceeds of this offering.
You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity,
as part of your investment decision, to assess whether the net proceeds are being used appropriately. It is possible that the net proceeds
will be invested in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively
could have a material adverse effect on our business, financial condition, operating results and cash flow.
You
may experience future dilution as a result of future equity offerings or the exercise of stock options or warrants.
To
raise additional capital, we may in the future offer additional shares of our Common Stock at prices that may not be the same as the
price per share in this offering. The price per share at which we sell additional shares of our Common Stock in future transactions may
be higher or lower than the price per share paid by the Investors in this offering. To the extent that outstanding stock options or warrants
may be exercised, or other shares issued, you may experience further dilution.
Sales
of our common stock by stockholders may have an adverse effect on the then prevailing market price of our common stock.
Sales
of a substantial number of shares of our Common Stock in the public market following the offering could cause the market price of our
Common Stock to decline and could impair our ability to raise capital through the sale of additional equity securities. We cannot predict
the effect that future sales of our Common Stock or other equity-related securities would have on the market price of our common stock.
USE
OF PROCEEDS
We
estimate that the net proceeds from the sale of this offering, after deducting placement agent fees and estimated offering expenses payable
by us, will be approximately $3.0 million. We intend to use the net proceeds from the sale of the shares of Common Stock for general
corporate purposes, which may include the development of multiple games and other business purposes. The amounts and timing of our use
of proceeds will vary depending on a number of factors, including the amount of cash generated or used by our operations. As a result,
we will retain broad discretion in the allocation of the net proceeds of this offering.
DIVIDEND
POLICY
We
have never declared or paid any cash dividends on our capital stock. Our board of directors currently intends to retain any future earnings
to support its operations and to finance the growth and development of our business and does not intend to declare or pay cash dividends
on shares of our Common Stock for the foreseeable future. Any future determination to pay dividends will be made at the discretion of
our board of directors. Investors should not purchase shares of our Common Stock with the expectation of receiving cash dividends.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
We
are offering 144,366 shares of our Common Stock.
Authorized
Capital Stock
We
have authorized 107,000,000 shares of capital stock, of which 100,000,000 are shares of Common Stock, $0.0001 par value per share, 7,000,000
are shares of Class B common stock, $0.0001 par value per share, and 1,000,000 are shares of preferred stock, $0.0001 par value per share.
On February 2, 2023, there were 2,322,380 shares of Common Stock, 700,000 shares of Class B common stock, and zero shares of preferred
stock issued and outstanding.
Common
Stock
Our
common stock is listed on The Nasdaq Capital Market under the symbol “MSGM.”
The
Transfer Agent and Registrar for our common stock is Worldwide Stock Transfer, LLC.
See
“Description of Capital Stock” in our prospectus for more information regarding our shares of Common Stock.
PLAN
OF DISTRIBUTION
We
have engaged H.C. Wainwright to act as our exclusive placement agent to solicit offers to purchase the securities offered by this prospectus
supplement and accompanying prospectus. H.C. Wainwright is not purchasing or selling any securities, nor is it required to arrange for
the purchase and sale of any specific number or dollar amount of shares of Common Stock, other than to use its reasonable best efforts
to arrange for the sale of the shares of Common Stock by us. Therefore, we may not sell the entire amount of the shares of Common Stock
being offered. There is no minimum amount of proceeds that is a condition to closing of this offering. The offering price of the shares
of Common Stock we are offering was negotiated between us, the placement agent and the Investors, based on the trading of our Common
Stock prior to the offering, among other considerations. We entered into a securities purchase agreement directly with the Investors
for the purchase our shares of Common Stock in this offering and we will only sell to investors who have entered into the securities
purchase agreement with us. H.C. Wainwright may engage one or more sub-placement agents or selected dealers to assist with the offering.
We
expect to deliver the shares of Common Stock being offered pursuant to this prospectus supplement and accompanying prospectus on or about
February 3, 2023, subject to satisfaction of customary closing conditions.
Fees
and Expenses
The
following table show the per share and total placement agent cash fees we will pay in connection with the sale of the shares of Common
Stock in this offering assuming the purchase of all of the shares of Common Stock we are offering.
Per share placement agent fees | |
$ | 1.645 | |
Total placement agent fees | |
$ | 237,482.07 | |
We
have agreed to pay the placement agent a total cash fee equal to 7.0% of the gross proceeds of the offerings. We will also pay the placement
agent $25,000 for non-accountable expense in connection with the offerings and clearing expenses in the amount of $15,950.
We
estimate the total offering expenses of the offering that will be payable by us, excluding the placement agent fees and expenses, will
be approximately $0.1 million. After deducting the placement agent fees and our estimated offering expenses, we expect the net proceeds
from this offering to be approximately $3.0 million.
Placement
Agent Warrants
Pursuant
to an engagement letter with H.C. Wainwright, we have agreed to issue warrants to H.C. Wainwright, or its designees, warrants to purchase
up to 8,662 shares of Common Stock (the “Placement Agent Warrants”), which is equal to 6.0% of the aggregate number of shares
of Common Stock being offered pursuant to this prospectus supplement and accompanying prospectus. The Placement Agent Warrants will have
an exercise price of $29.375 per share, which is equal to 125% of the offering price per share, and will terminate on February 2, 2028,
which is five years from the commencement of the sales pursuant to this offering.
Lock-Up
Agreement
On
February 3, 2023, Motorsport Network and H.C. Wainwright, entered into a lock up agreement pursuant to which Motorsport Network agreed,
for 30 days after February 3, 2023, to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into
any transaction which is designed to, or might reasonably be expected to, result in the disposition of,, any shares of Common Stock of
the Company or securities convertible, exchangeable or exercisable into, shares of Common Stock of the Company beneficially owned, held
or hereafter acquired by Motorsport Network in connection with any debt to equity exchange. Such restriction is subject to customary
carve outs.
Other
Relationships
From
time to time, the placement agent may provide in the future various advisory, investment and commercial banking and other services to
us in the ordinary course of business, for which they have received and may continue to receive customary fees and commissions. H.C.
Wainwright acted as our placement agent for the registered direct offering consummated on February 2, 2023, for which it received compensation.
However, except as disclosed in this prospectus supplement, we have no present arrangements with Wainwright for any further services.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Worldwide Stock Transfer, LLC.
Nasdaq
Listing
Our
common stock is listed on the Nasdaq Capital Market under the symbol “MSGM.”
Indemnification
We
have agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act, or to contribute
to payments the placement agent may be required to make with respect to any of these liabilities.
Regulation
M
The
placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees received
by it and any profit realized on the sale of the securities by it while acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. The placement agent will be required to comply with the requirements of the Securities Act and
the Exchange Act, including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may
limit the timing of purchases and sales of our securities by the placement agent. Under these rules and regulations, the placement agent
may not (i) engage in any stabilization activity in connection with our securities and (ii) bid for or purchase any of our securities
or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed
their participation in the distribution.
LEGAL
MATTERS
The
validity of the Common Stock being offered hereby was passed upon by Snell & Wilmer L.L.P., Los Angeles, California.
EXPERTS
The
audited financial statements as of and for the year ended December 31, 2021 incorporated by reference in the accompanying prospectus
have been so incorporated by reference in reliance upon the report of Grant Thornton LLP, independent registered public accountants,
upon the authority of said firm as experts in accounting and auditing.
The
audited financial statements as of and for the year ended December 31, 2020 incorporated by reference in the accompanying prospectus
have been so incorporated by reference in reliance upon the report of Dixon Hughes Goodman LLP, independent registered public accountants,
upon the authority of said firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus supplement and the accompanying prospectus are part of a registration statement we filed with the SEC. This prospectus supplement
does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further
information with respect to us and the securities we are offering under this prospectus supplement, we refer you to the registration
statement and the exhibits and schedules filed as a part of the registration statement. Neither we nor any agent, underwriter or dealer
has authorized any person to provide you with different information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this prospectus supplement is accurate as of any date other
than the date on the front page of this prospectus supplement, regardless of the time of delivery of this prospectus or any sale of the
securities offered by this prospectus supplement.
We
are subject to the information reporting requirements of the Exchange Act and we are required to file reports, proxy statements and other
information with the SEC. These reports, proxy statements, and other information are available for inspection and copying at the SEC’s
website at www.sec.gov. We also maintain a website at www.motorsportgames.com, at which you may access these materials
free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained
on or accessible through our website is not a part of this prospectus supplement, and the inclusion of our website address in this prospectus
supplement is an inactive textual reference only.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
SEC
rules permit us to incorporate information by reference into this prospectus supplement. This means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to
be part of this prospectus supplement, except for information superseded by information contained in this prospectus supplement or in
any subsequently filed incorporated document. This prospectus supplement incorporates by reference the documents set forth below that
we have previously filed with the SEC, other than information in such documents that is deemed to be furnished and not filed. These documents
contain important information about us and our business and financial condition. Any report or information within any of the documents
referenced below that is furnished, but not filed, shall not be incorporated by reference into this prospectus supplement.
|
● |
the
Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 30, 2022; |
|
● |
the
information specifically incorporated by reference into the 2021 Form 10-K from our Definitive Proxy Statement on Schedule 14A,
filed with the SEC on April 27, 2022; |
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● |
our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, filed with the
SEC on May 16, 2022, August 10, 2022 and November 18, 2022, respectively; |
|
● |
our
Current Reports on Form 8-K, filed with the SEC on January 10, 2022, January 21, 2022, February 10, 2022, March 2, 2022, April 28, 2022, June 9, 2022, June 22, 2022, July 22, 2022, September 8, 2022 (other than with respect to Item 7.01 and Exhibit 99.1), September 15, 2022, October 14, 2022, October 21, 2022, November 10, 2022 (other than with respect to Item 7.01 and Exhibits 99.1 and 99.2),
November 14, 2022, November 18, 2022 (other than with respect to Items 2.02 and 7.01 and Exhibits 99.1 and 99.2), November 29, 2022,
December 9, 2022 (other than with respect to Item 7.01 and Exhibit 99.1), December 9, 2022 (other than with respect to Item 7.01
and Exhibit 99.1), December 27, 2022, January 13, 2023, January 18, 2023, January 27, 2023, January 30, 2023 (other than with respect
to Item 7.01 and Exhibit 99.1), and February 2, 2023 (other than with respect to Item 7.01 and Exhibits 99.1 and 99.2); and |
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● |
the
description of our Class A common stock set forth in our Registration Statement on Form 8-A (File No. 001-39868), filed with the
SEC on January 7, 2021, including any amendment or report filed for the purpose of updating such description. |
All
documents that we file (but not documents or parts of documents that we furnish) pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act (i) after the date of the initial filing of the registration statement of which this prospectus supplement is a part and
prior to effectiveness of the registration statement and (ii) after the effectiveness of the registration statement but prior to the
termination of the offering of the securities covered by this prospectus supplement, shall be deemed to be incorporated by reference
into this prospectus supplement.
Any
statement contained herein or in a document incorporated or deemed to be incorporated by reference into this prospectus supplement shall
be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus
supplement, or in any other subsequently filed document which also is or is deemed to be incorporated by reference into this prospectus
supplement, modifies or supersedes such earlier statement. Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus supplement.
We
will furnish without charge to each person, including any beneficial owner, to whom a prospectus supplement is delivered, upon written
or oral request, a copy of any or all of the documents incorporated by reference in this prospectus supplement, including exhibits to
these documents. Any such request may be made by writing or calling us at the following address or phone number:
Motorsport
Games Inc.
5972
NE 4th Avenue
Miami,
FL 33137
Attention:
Corporate Secretary
(305)
507-8799
PROSPECTUS
$100,000,000
Class A Common Stock
Preferred Stock
Warrants
Subscription Rights
Units
and
7,000,000
Shares of Class A Common Stock Offered by Selling Stockholder
We
may offer and sell, from time to time in one or more offerings, up to an aggregate amount of $100,000,000 of our Class A common stock,
preferred stock, warrants, subscription rights and units, in any combination. In addition, the selling stockholder named in this prospectus
may offer and sell, from time to time, up to 7,000,000 shares of our Class A common stock under this prospectus. We will not receive
any of the proceeds from the sale of our Class A common stock by the selling stockholder.
This
prospectus provides you with a general description of the securities offered. Each time we, and if applicable the selling stockholder,
offer and sell securities, we or the selling stockholder will file a prospectus supplement to this prospectus that contains specific
information about the offering and, if applicable, the amounts, prices and terms of the securities. Such supplements may also add, update
or change information contained in this prospectus. You should carefully read this prospectus and the applicable prospectus supplement
before you invest in any of our securities.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. In addition, the selling stockholder may offer
and sell shares of our Class A common stock from time to time, together or separately. If any underwriters, dealers or agents are involved
in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount arrangement between
or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus supplement. See the
sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution” for more information.
No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms
of the offering of such securities.
Our
Class A common stock is listed on the Nasdaq Capital Market under the symbol “MSGM.” On January 27, 2022, the last
reported sale price of our Class A common stock on the Nasdaq Capital Market was $3.40 per share.
As
of January 27, 2022, the aggregate market value of our outstanding Class A common stock held by non-affiliates was approximately
$15.7 million based on 4,605,564 shares of Class A common stock held by non-affiliates on such date, and based on the last
reported sale price of our Class A common stock on the Nasdaq Capital Market on such date of $3.40 per share. Pursuant to General
Instruction I.B.6 of Form S-3, in no event will we sell securities pursuant to this prospectus with a value of more than one-third of
the aggregate market value of our Class A common stock held by non-affiliates in any 12-month period, so long as the aggregate market
value of our Class A common stock held by non-affiliates is less than $75 million. During the prior 12 calendar month period ending on,
and including, the date of this prospectus, we have not sold any securities pursuant to General Instruction I.B.6 of Form S-3.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities
Act”), and are subject to reduced public company reporting requirements.
INVESTING
IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” ON PAGE 3 OF THIS PROSPECTUS AND ANY SIMILAR SECTION
CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is February 10, 2022.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the “SEC”)
using a “shelf” registration process. By using a shelf registration statement, we may sell securities described in this prospectus
from time to time and in one or more offerings up to an aggregate dollar amount of $100,000,000. This prospectus provides you with a
general description of our securities that we may offer, which is not meant to be a complete description of each of the securities.
In
addition, under this shelf registration process, the selling stockholder named herein may, from time to time, sell shares of our Class
A common stock offered by them described in this prospectus. We will not receive any proceeds from the sale by such selling stockholder
of such shares of our Class A common stock.
To
the extent required by applicable law, each time we or the selling stockholder sell securities, we or the selling stockholder will provide
you with this prospectus and, to the extent required, a prospectus supplement that will contain more information about the specific terms
of the offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information
relating to these offerings. The prospectus supplement may also add, update or change information contained in this prospectus with respect
to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement,
you should rely on the prospectus supplement. Before purchasing any securities, you should carefully read both this prospectus and the
applicable prospectus supplement, together with the additional information described under the headings “Where You Can Find More
Information” and “Incorporation of Certain Information by Reference.”
Neither
we, nor the selling stockholder, have authorized anyone to provide you with any information or to make any representations other than
those contained in this prospectus, any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of
us or to which we have referred you. We and the selling stockholder take no responsibility for, and can provide no assurance as to the
reliability of, any other information that others may give you. We and the selling stockholder will not make an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and
the applicable prospectus supplement to this prospectus is accurate as of the date on its respective cover, and that any information
incorporated by reference is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our
business, financial condition, results of operations and prospects may have changed since those dates.
Unless
the context requires otherwise, references in this prospectus to the “Company,” “we,” “us” and “our”
refer to Motorsport Games Inc., a Delaware corporation, and its consolidated subsidiaries.
PROSPECTUS
SUMMARY
This
summary highlights selected information appearing elsewhere in this prospectus or incorporated by reference in this prospectus, and does
not contain all of the information that you need to consider in making your investment decision. You should carefully read the entire
prospectus, the applicable prospectus supplement and any related free writing prospectus, including the risks of investing in our securities
discussed under the heading “Risk Factors” contained in the applicable prospectus supplement and any related free writing
prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus. You should also
carefully read the information incorporated by reference into this prospectus, including our financial statements, and the exhibits to
the registration statement of which this prospectus is a part.
Company
Overview
Motorsport
Games is a leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the
world, including NASCAR, the iconic 24 Hours of Le Mans endurance race and the associated FIA World Endurance Championship, the British
Touring Car Championship, INDYCAR and others. Through the support of our majority stockholder, Motorsport
Network, LLC (“Motorsport Network”), whose mission is to be the leading, independent voice for the global motorsport
and automotive industries and their fans, Motorsport Games’ corporate mission is to create the preeminent motorsport gaming and
esports entertainment ecosystem by delivering the highest quality, most sophisticated and innovative experiences for racers, gamers and
fans of all ages. Our products and services target a large and underserved global motorsport audience.
Started
in 2018 as a wholly-owned subsidiary of Motorsport Network, we develop and publish multi-platform racing video games including for game
consoles, personal computers (PCs) and mobile platforms through various retail and digital channels, including full-game and downloadable
content (sometimes known as “games-as-a-service”). Since our formation, our NASCAR video games have sold over one million
copies for game consoles and PCs.
Corporate
Information
Motorsport
Gaming US LLC was organized as a limited liability company on August 2, 2018 under the laws of the State of Florida. On January 8, 2021,
Motorsport Gaming US LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport
Games Inc. in connection with our initial public offering. Effective as of January 8, 2021, 100% of the membership interests held by
the sole member of Motorsport Gaming US LLC, Motorsport Network, converted into an aggregate of (i) 7,000,000 shares of Class A common
stock of Motorsport Games Inc. and (ii) 7,000,000 shares of Class B common stock of Motorsport Games Inc., representing all of the outstanding
shares of Class A and Class B common stock immediately following the corporate conversion.
Our
principal executive offices are located at 5972 NE 4th Avenue Miami, FL 33137, and our telephone number is (305) 507-8799. Our website
address is www.motorsportgames.com. None of the information contained on, or that may be accessed through, our website is a prospectus
or constitutes part of, or is otherwise incorporated into, this prospectus.
Securities
That May Be Offered
Issuer |
Motorsport
Games Inc., a Delaware corporation
|
Securities
Offered |
|
Primary
Securities Offered |
We
may offer up to $100,000,000 of:
●
Class A common stock;
●
preferred stock;
●
warrants;
●
subscription rights; and
●
units.
We
may also offer securities of the types listed above that are convertible or exchangeable into one or more of the securities listed
above.
|
Secondary
Securities Offered |
The
selling stockholder may offer up to 7,000,000 shares of our Class A common stock.
|
Use
of Proceeds |
|
Primary
Offering |
We
intend to use the net proceeds from the sale of any securities offered by us for general
corporate purposes, which includes working capital, potential acquisitions, retirement of
debt and other business opportunities, unless otherwise indicated in the applicable prospectus
supplement.
|
Secondary
Offering |
We
will not receive any proceeds from the sale of the shares of our Class A common stock by
the selling stockholder
|
Risk
Factors |
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning
on page 3 of this prospectus, and any other risk factors described in a prospectus supplement
and in the documents incorporated herein and therein by reference, for a discussion of certain
factors that you should carefully consider before deciding to invest in our securities.
|
Nasdaq
Capital Market Trading Symbol |
MSGM |
RISK
FACTORS
Investing
in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should consider carefully
the risks and uncertainties described under the heading “Risk Factors” contained in the applicable prospectus supplement
and any related free writing prospectus, and discussed under the section entitled “Risk Factors” contained in our most recent
Annual Report on Form 10-K and in our most recent Quarterly Report on Form 10-Q, as well as any amendments thereto reflected in subsequent
filings with the SEC, which are incorporated by reference into this prospectus in their entirety, together with other information in
this prospectus, the documents incorporated by reference and any free writing prospectus that we may authorize for use in connection
with this offering. The risks described in these documents are not the only ones we face, but those that we consider to be material.
There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse
effects on our future results. Past financial performance may not be a reliable indicator of future performance, and historical trends
should not be used to anticipate results or trends in future periods. If any of these risks actually occurs, our business, financial
condition, results of operations or cash flow could be seriously harmed. This could cause the trading price of our securities to decline,
resulting in a loss of all or part of your investment. Please also carefully read the section below entitled “Special Note Regarding
Forward-Looking Statements.”
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, each prospectus supplement and the information incorporated by reference in this prospectus and each prospectus supplement
contain “forward-looking statements” within the meaning of federal securities laws, including statements that involve expectations,
plans or intentions, such as, but not limited to, those relating to:
| ● | our
future business, results of operations, financial condition and/or liquidity, including with
respect to the ongoing effects of the COVID-19 pandemic; |
| ● | new
or planned products or offerings; |
| ● | our
intention to expand our license arrangements to other internationally recognized racing series
and the platforms we operate on; |
| ● | our
expectation that having a broader product portfolio will improve our operating results and
provide a revenue stream that is less cyclical based on the release of a single game per
year; |
| ● | our
plans to drive ongoing engagement and incremental revenue from recurrent consumer spending
on our titles through in-game purchases and extra content; |
| ● | our
expectation that we will continue to derive significant revenues from sales of our products
to a very limited number of distribution partners; |
| ● | our
belief that additions to our existing portfolio of games centered around popular licensed
racing series will provide us the opportunity to further grow our esports business by having
more titles to produce our esports events; |
| ● | our
expectation that we will continue to invest in technology, hardware and software to support
our games and services, including with respect to security protections; |
| ● | our
intention to continue to look for opportunities to expand the recurring portion of our business; |
| ● | our
belief that we may choose to raise additional funds at any time through equity or debt financing
arrangements, which may or may not be needed for additional working capital, capital expenditures
or other strategic investments, as well as our cash flows and anticipated uses of cash; |
| ● | our
beliefs regarding the impact of any claims and litigation that we are subject to; |
| ● | potential
acquisitions; and |
We
use words such as “could,” “would,” “may,” “might,” “will,” “expect,”
“likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,”
“plan,” “project” and other similar expressions to identify some forward-looking statements, but not all forward-looking
statements include these words. Forward-looking statements are based on assumptions that we have made in light of our industry experience
and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate
under the circumstances. You are cautioned that these statements are not guarantees of performance or results. They involve risks, uncertainties
(many of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable
assumptions, you should be aware that many factors could affect our actual operating and financial performance and cause our performance
to differ materially from the performance anticipated in the forward-looking statements. We discuss in greater detail many of these risks
in the applicable prospectus supplement, in any free writing prospectuses we may authorize for use in connection with a specific offering,
in our most recent annual report on Form 10-K and in our most recent quarterly report on Form 10-Q, as well as any amendments thereto,
and in our subsequent filings with the SEC, which are incorporated by reference into this prospectus in their entirety. These include,
but are not limited to, the following principal risks:
| ● | If
we do not consistently deliver popular products or if consumers prefer competing products,
our business may be negatively impacted. |
| ● | Our
business and products are highly concentrated in the racing game genre, and our operating
results may suffer if consumer preferences shift away from this genre. |
| ● | If
we do not provide high-quality products in a timely manner, our business operations, financial
performance, financial condition, liquidity, cash flows and/or results of operations may
be negatively impacted. |
| ● | The
ongoing and prolonged COVID-19 pandemic has impacted our operations and could continue to
adversely affect our business operations, financial performance, financial condition, liquidity,
cash flows and/or results of operations, the extent of which is uncertain and difficult to
predict. |
| ● | Declines
in consumer spending and other adverse changes in the economy could have a material adverse
effect on our business, financial condition, liquidity, cash flows and/or operating results. |
| ● | We
depend on a relatively small number of franchises for a significant portion of our revenues
and profits. |
| ● | Our
ability to acquire and maintain licenses to intellectual property, especially for sports
titles, affects our revenues and profitability. |
| ● | The
importance of retail sales to our business exposes us to the risks of that business model. |
| ● | We
primarily depend on a single third-party distribution partner to distribute our games for
the retail channel, and our ability to negotiate favorable terms with such partner and its
continued willingness to purchase our games is critical for our business. |
| ● | We
plan to continue to generate a portion of our revenues from advertising and sponsorship during
our esports events. If we are unable to attract more advertisers and sponsors to our gaming
platform, tournaments or competitions, our revenues may be adversely affected. |
| ● | We
are reliant on the retention of certain key personnel and the hiring of strategically valuable
personnel, and we may lose or be unable to hire one or more of such personnel, which could
adversely affect our ability to achieve our business plans and financial objectives. |
| ● | The
success of our business relies heavily on our marketing and branding efforts, and these efforts
may not be accepted by consumers to the extent we planned. |
| ● | If
we do not adequately address the shift to mobile device technology by our customers, operating
results could be harmed and our financial performance, financial condition, liquidity, cash
flows and/or growth plans could be negatively affected. |
| ● | Failure
to adequately protect our intellectual property, technology and confidential information
could harm our business and operating results. |
| ● | Motorsport
Network controls more than a majority of our Class A common stock and holds all of
Class B common stock and therefore it has the ability to exert significant control over the
direction of our business, which could prevent other stockholders from influencing significant
decisions regarding our business plans and other matters. |
| ● | If
we are no longer controlled by or affiliated with Motorsport Network, we may be unable to
continue to benefit from that relationship, which may adversely affect our operations and
have a material adverse effect on us and our financial performance, financial condition,
liquidity and/or cash flows. |
| ● | We
have incurred significant losses since our inception, and we may continue to experience losses
in the future, which could adversely impact our ability to invest in new product development,
marketing, advertising and other activities that are important to achieving our business
plans and financial objectives. |
| ● | Our
limited operating history makes it difficult to evaluate our current business and future
prospects, and we may not be able to effectively grow our business or implement our business
strategies. |
| ● | We
are an emerging growth company and a smaller reporting company, and we cannot be certain
if the reduced disclosure requirements applicable to us will make our Class A common stock
less attractive to investors. |
| ● | The
dual class structure of our common stock may adversely affect the trading market for our
Class A common stock. |
| ● | Higher
than anticipated payments, costs, expenses and liabilities or other unanticipated consequences
arising from pending or future litigation. |
| ● | Less
than expected liquidity or the unavailability of additional sources of funds from equity
or debt financing arrangements, from less than anticipated cash generated by our operations,
from less than expected availability of funds under the promissory note from Motorsport Network,
from higher than expected operating expenses (such as higher than expected capital expenditures,
debt service payments and costs, cash tax payments, acquisitions, joint ventures and/or licensing
arrangements, costs related to litigation, advertising, promotional and marketing activities
or for product sales returns by our customers or otherwise), from the inability to efficiently
manage cash and working capital and/or from macroeconomic trends, such as higher inflation
and interest rates and taxes. |
Also,
these forward-looking statements represent our estimates and assumptions only as of the date of the document containing the applicable
statement. Unless required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information
or future events or developments. Thus, you should not assume that actual events are bearing out as expressed or implied in such forward-looking
statements. You should read this prospectus, any applicable prospectus supplement, together with the documents we have filed with the
SEC that are incorporated by reference and any free writing prospectus that we may authorize for use in connection with this offering
completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all
of the forward-looking statements in the foregoing documents by these cautionary statements.
USE
OF PROCEEDS
Unless
otherwise indicated in the applicable prospectus supplement, we intend to use the net proceeds from our sale of securities offered by
this prospectus for general corporate purposes, which includes working capital, potential acquisitions, retirement of debt and other
business opportunities. The timing and amount of our actual expenditures will be based on many factors; therefore, unless otherwise indicated
in the prospectus supplement, our management will have broad discretion to allocate the net proceeds of our offerings. The specific allocations
of the proceeds we receive from our sale of our securities will be described in the applicable prospectus supplement.
We
will not receive any proceeds from the sale of the shares of our Class A common stock by the selling stockholder.
DESCRIPTION
OF CAPITAL STOCK
General
Our
authorized capital stock consists of 100,000,000 shares of Class A common stock, par value $0.0001 per share, 7,000,000 shares of
Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. As of the
date of this prospectus, we had 11,673,587 shares of Class A common stock and 7,000,000 shares of Class B common stock
outstanding and no shares of preferred stock outstanding.
The
following summary description of our capital stock is based on the provisions of our certificate of incorporation, our bylaws and the
applicable provisions of the Delaware General Corporation Law (the “DGCL”). This description is not complete and is subject
to, and qualified in its entirety by reference to, our certificate of incorporation and our bylaws, each of which is incorporated by
reference as an exhibit to the registration statement of which this prospectus forms a part, and the DGCL. You should read our certificate
of incorporation, our bylaws and the applicable provisions of the DGCL for a complete statement of the provisions described below and
for other provisions that may be important to you. For information on how to obtain copies of our certificate of incorporation and our
bylaws, see “Where You Can Find Additional Information.”
Common
Stock
Prior
to January 8, 2021, we operated as a Florida limited liability company under the name Motorsport Gaming US LLC. On January 8, 2021, Motorsport
Gaming US LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport Games Inc.
Effective
as of January 8, 2021, 100% of the membership interests held by the sole member of Motorsport Gaming US LLC, Motorsport Network, converted
into an aggregate of (i) 7,000,000 shares of Class A common stock of Motorsport Games Inc. (the “MSN Initial Class A Shares”)
and (ii) 7,000,000 shares of Class B common stock of Motorsport Games Inc., representing all of the outstanding shares of Class A and
Class B common stock immediately following the corporate conversion. Motorsport Network is the only holder of shares of our Class B common
stock and does not have any transfer, conversion, registration or economic rights with respect to such shares of Class B common stock.
In the event Motorsport Network or its affiliates relinquish beneficial ownership of any of the MSN Initial Class A Shares at any time,
one share of Class B common stock held by Motorsport Network will be cancelled for each such MSN Initial Class A Share no longer beneficially
owned by Motorsport Network or its affiliates. Any pledge of MSN Initial Class A Shares by Motorsport Network or its affiliates will
not constitute a relinquishment of such beneficial ownership. The MSN Initial Class A Shares and shares of Class B common stock held
by Motorsport Network will be adjusted in equal proportions for any stock dividend, stock split or similar transaction undertaken by
the Company.
Voting
Rights
Holders
of our Class A common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and holders
of our Class B common stock are entitled to 10 votes for each share held on all matters submitted to a vote of stockholders. The holders
of our Class A common stock and Class B common stock will vote together as a single class, unless otherwise required by law. Under our
certificate of incorporation, approval of the holders of a majority of the Class B common stock will be required to increase or decrease
the number of authorized shares of our Class B common stock, and the approval of two-thirds of the Class B common stock will be required
to amend or repeal, or adopt any provision inconsistent with, or otherwise alter, any provision of our certificate of incorporation that
modifies the voting, par value, conversion or other rights, powers, preferences, special rights, privileges or restrictions of the Class
B common stock. In addition, Delaware law could require either holders of our Class A common stock or our Class B common stock to vote
separately as a single class in the following circumstances:
| ● | if
we were to seek to amend our certificate of incorporation to increase or decrease the aggregate
number of authorized shares or par value of a class of stock, then that class would be required
to vote separately to approve the proposed amendment; and |
| ● | if
we were to seek to amend our certificate of incorporation in a manner that alters or changes
the powers, preferences or special rights of a class of stock in a manner that affected its
holders adversely, then that class would be required to vote separately to approve the proposed
amendment. |
Dividends
Subject
to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of shares of Class A common stock
are entitled to dividends when and as declared by our board of directors from funds legally available therefor if, as and when determined
by our board of directors in its sole discretion, subject to provisions of law and any provision of our certificate of incorporation,
as amended from time to time. The holder of Class B common stock will not be entitled to receive any dividends with respect to the shares
of Class B common stock, except dividends payable in shares of Class B common stock or rights to acquire shares of Class B common stock
that may be declared and paid to the holder of Class B common stock to proportionally adjust for dividends payable in shares of Class
A common stock or rights to acquire shares of Class A common stock that are declared and paid to the holders of Class A common stock.
Liquidation
In
the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our Class A common stock
and any participating preferred stock outstanding at that time will be entitled to share ratably in the net assets legally available
for distribution to stockholders after the payment of or provision for all of our debts and other liabilities, and the preferential rights
of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock. The holder of Class B common stock
will not be entitled to receive any liquidation distributions with respect to the shares of Class B common stock.
Fully
Paid and Non-Assessable
All
outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable.
Other
Matters
There
are no preemptive, conversion or redemption privileges, nor sinking fund provisions with respect to our common stock.
Preferred
Stock
Our
board of directors has the authority, subject to limitations prescribed by Delaware law, to issue up to 1,000,000 shares of preferred
stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation,
powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case
without further vote or action by our stockholders. Our board of directors can also increase or decrease the number of shares of any
series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by
our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility
in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring
or preventing a change in control of our Company and might adversely affect the market price of our common stock and the voting and other
rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock.
We
will fix the designations, voting powers, preferences and rights of the preferred stock of each series we issue under this prospectus,
as well as the qualifications, limitations or restrictions thereof, in the certificate of designation relating to that series. We will
file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that
we file with the SEC, the form of any certificate of designation that contains the terms of the series of preferred stock we may offer.
We will describe in the applicable prospectus supplement the terms of the series of preferred stock that we may offer, including, to
the extent applicable:
| ● | the
title and stated value; |
| ● | the
number of shares we may offer; |
| ● | the
liquidation preference per share; |
| ● | the
dividend rate, period and payment date and method of calculation for dividends; |
| ● | whether
dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends
will accumulate; |
| ● | the
procedures for any auction and remarketing, if applicable; |
| ● | the
provisions for a sinking fund, if applicable; |
| ● | the
provisions for redemption or repurchase, if applicable, and any restrictions on our ability
to exercise those redemption and repurchase rights; |
| ● | any
listing of the preferred stock on any securities exchange or market; |
| ● | whether
the preferred stock will be convertible into our common stock, and, if applicable, the conversion
price, or how it will be calculated, and the conversion period; |
| ● | whether
the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange
price, or how it will be calculated, and the exchange period; |
| ● | voting
rights of the preferred stock; |
| ● | preemptive
rights, if any; |
| ● | restrictions
on transfer, sale or other assignment; |
| ● | whether
interests in the preferred stock will be represented by depositary shares; |
| ● | a
discussion of material U.S. federal income tax considerations applicable to the preferred
stock; |
| ● | the
relative ranking and preferences of the preferred stock as to dividend rights and rights
if we liquidate, dissolve or wind up our affairs; |
| ● | any
limitations on the issuance of any class or series of preferred stock ranking senior to or
on a parity with the series of preferred stock as to dividend rights and rights if we liquidate,
dissolve or wind up our affairs; and |
| ● | any
other specific terms, preferences, rights or limitations of, or restrictions on, the preferred
stock. |
Anti-Takeover
Provisions
Certain
provisions of Delaware law, as well as our certificate of incorporation and our bylaws, may have the effect of delaying, deferring or
discouraging another person from acquiring control of us. These provisions include the items described below. They are also designed,
in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits
of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of
discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.
Delaware
Law
We
are subject to the provisions of Section 203 of the DGCL, which generally prohibits a public Delaware corporation from engaging in a
“business combination” with an “interested stockholder” for a period of three years after the date of the transaction
in which the person became an interested stockholder, unless:
| ● | the
business combination or transaction which resulted in the stockholder becoming an interested
stockholder was approved by the board of directors prior to the time that the stockholder
became an interested stockholder; |
| ● | upon
consummation of the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding shares owned by directors who
are also officers of the corporation and shares owned by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer; or |
| ● | at
or subsequent to the time the stockholder became an interested stockholder, the business
combination was approved by the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the affirmative vote of at least
two-thirds of the outstanding voting stock which is not owned by the interested stockholder. |
In
general, Section 203 of the DGCL defines a “business combination” to include mergers, asset sales and other transactions
resulting in financial benefit to a stockholder and an “interested stockholder” as a person who, together with affiliates
and associates, owns, or within three years did own, 15% or more of the corporation’s outstanding voting stock.
A
Delaware corporation may “opt out” of these provisions with an express provision in its original certificate of incorporation
or an express provision in its certificate of incorporation or bylaws resulting from an amendment approved by at least a majority of
the outstanding voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control
attempts of us may be discouraged or prevented. These provisions may have the effect of delaying, deferring or preventing changes in
control of our Company.
Certificate
of Incorporation and Bylaw Provisions
Our
certificate of incorporation and our bylaws include a number of provisions that could deter hostile takeovers or delay or prevent changes
in control of our board of directors or management team, including the following:
Dual
Class Stock
As
described above in “—Common Stock—Voting,” our certificate of incorporation provides for a dual class common
stock structure, which will provide the holder of Class B common stock with significant influence over matters requiring stockholder
approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our Company or
its assets.
Each
share of Class A common stock is entitled to one vote, while each share of Class B common stock is entitled to ten votes. Motorsport
Network is the only holder of shares of our Class B common stock and does not have any transfer, conversion, registration or economic
rights with respect to such shares of Class B common stock. In the event Motorsport Network or its affiliates relinquish beneficial ownership
of any of the MSN Initial Class A Shares at any time, one share of Class B common stock held by Motorsport Network will be cancelled
for each such MSN Initial Class A Share no longer beneficially owned by Motorsport Network or its affiliates. Any pledge of MSN Initial
Class A Shares by Motorsport Network or its affiliates will not constitute a relinquishment of such beneficial ownership. The MSN Initial
Class A Shares and shares of Class B common stock held by Motorsport Network will be adjusted in equal proportions for any stock dividend,
stock split or similar transaction undertaken by the Company.
Board
of Directors Vacancies
Our
certificate of incorporation and bylaws authorize only our board of directors to fill vacant directorships, including newly created seats.
In addition, the number of directors constituting our board of directors will be permitted to be set only by a resolution adopted by
a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board
of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes
it more difficult to change the composition of our board of directors and promotes continuity of management.
Stockholder
Action; Special Meeting of Stockholders
Our
certificate of incorporation and bylaws provide that special meetings of our stockholders may be called only by a majority of our board
of directors, the chairperson of our board of directors, our Chief Executive Officer or our President, thus prohibiting a stockholder
from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or
for stockholders controlling a majority of our capital stock to take any action, including the removal of directors.
Advance
Notice Requirements for Stockholder Proposals and Director Nominations
Our
bylaws provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate
candidates for election as directors at our annual meeting of stockholders. Our bylaws also specify certain requirements regarding the
form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual
meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not
followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies
to elect any potential acquirer’s own slate of directors or otherwise attempting to obtain control of our Company.
Removal
of Directors
Our
certificate of incorporation provides that directors may only be removed for cause and upon the affirmative vote of a majority of the
outstanding voting power of our capital stock voting together as a single class.
No
Cumulative Voting
The
DGCL provides that stockholders are not entitled to cumulate votes in the election of directors unless a corporation’s certificate
of incorporation provides otherwise. Our certificate of incorporation does not provide for cumulative voting.
Amendment
of Charter and Bylaw Provisions
Amendments
to our certificate of incorporation will require the approval of two-thirds of the outstanding voting power of our common stock. Our
certificate of incorporation and bylaws provide that approval of stockholders holding two-thirds of our outstanding voting power voting
as a single class is required for stockholders to amend or adopt any provision of our bylaws.
Issuance
of Undesignated Preferred Stock
Our
board of directors has the authority, without further action by our stockholders, to issue shares of undesignated preferred stock with
rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized
but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain
control of us by means of a merger, tender offer, proxy contest or other means.
Limits
on Ability of Stockholders to Act by Written Consent
Our
certificate of incorporation and bylaws provide that our stockholders may not act by written consent. This limit on the ability of our
stockholders to act by written consent may lengthen the amount of time required to take stockholder actions. As a result, no stockholder,
regardless of how large its holdings of our stock are, would be able to amend our bylaws or remove directors without holding a stockholders’
meeting.
Board
Classification
Our
board of directors is divided into two classes, with an alternating class being elected each year by our stockholders. The directors
in each class will serve for a two-year term. A third party may be discouraged from making a tender offer or otherwise attempting to
obtain control of us because it is more difficult and time-consuming for stockholders to replace a majority of the directors on a classified
board.
Exclusive
Forum
Our
certificate of incorporation and bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest
extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action
asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, (iii) any action
asserting a claim against us arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws or (iv) any
action asserting a claim that is governed by the internal affairs doctrine, shall be the Court of Chancery of the State of Delaware;
provided that the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or any other claim for which the federal courts have exclusive jurisdiction;
and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject
matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. Our certificate of
incorporation and bylaws also provide that the federal district courts of the United States of America will be the exclusive forum for
the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents arising
under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have
notice of and consented to this provision. Although we believe these provisions benefit us by providing increased consistency in the
application of Delaware law for the specified types of actions and proceedings, these provisions may have the effect of discouraging
lawsuits against us or our directors and officers. There is uncertainty as to whether a court would enforce such provisions, and the
enforceability of similar choice of forum provisions in other companies’ charter documents has been successfully challenged in
legal proceedings. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may
nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance
that such provisions will be enforced by a court in those other jurisdictions. We note that investors cannot waive compliance with the
federal securities laws and the rules and regulations thereunder.
Transfer
Agent and Registrar
The
transfer agent and registrar for our Class A common stock is Worldwide Stock Transfer, LLC. The transfer agent’s address is One
University Plaza, Suite 505, Hackensack, New Jersey 07601 and its telephone number is (201) 820-2008.
Listing
Our
Class A common stock is listed on the Nasdaq Capital Market under the trading symbol “MSGM.”
DESCRIPTION
OF WARRANTS
We
may issue warrants for the purchase of shares of our Class A common stock or preferred stock or a combination thereof. We may issue warrants
independently or together with other securities, and the warrants may be attached to or separate from any offered securities. Each series
of warrants would be issued under a separate warrant agreement to be entered into between us and the investors or a warrant agent. The
following summary of material provisions of the warrants and warrant agreements are subject to, and qualified in their entirety by reference
to, all the provisions of the warrant agreement and warrant certificate applicable to a particular series of warrants. The terms of any
warrants offered under a prospectus supplement may differ from the terms described below. We urge you to read the applicable prospectus
supplement and any related free writing prospectus, as well as the complete warrant agreements and warrant certificates that contain
the terms of the warrants.
The
particular terms of any issue of warrants would be described in the prospectus supplement relating to the issue. Those terms may include:
| ● | the
number of shares of Class A common stock or preferred stock purchasable upon the exercise
of warrants to purchase such shares and the price at which such number of shares may be purchased
upon such exercise; |
| ● | the
designation, stated value and terms (including, without limitation, liquidation, dividend,
conversion and voting rights) of the series of preferred stock purchasable upon exercise
of warrants to purchase preferred stock; |
| ● | the
date, if any, on and after which the warrants and the related preferred stock or Class A
common stock would be separately transferable; |
| ● | the
terms of any rights to redeem or call the warrants; |
| ● | the
date on which the right to exercise the warrants would commence and the date on which the
right would expire; |
| ● | a
discussion of certain U.S. federal income tax consequences applicable to the warrants; and |
| ● | any
additional terms of the warrants, including terms, procedures, and limitations relating to
the exchange, exercise and settlement of the warrants. |
Until
any warrants to purchase shares of our Class A common stock or preferred stock are exercised, the holders of the warrants would not have
any rights of holders of the underlying Class A common stock or preferred stock, including any rights to:
| ● | vote,
consent or receive dividends; |
| ● | receive
notice as stockholders with respect to any meeting of stockholders for the election of our
directors or any other matter; or |
| ● | exercise
any rights as stockholders of the Company. |
DESCRIPTION
OF SUBSCRIPTION RIGHTS
We
may issue subscription rights to purchase shares of our Class A common stock or preferred stock or a combination thereof. These subscription
rights may be issued independently or together with any other security offered by us and may or may not be transferable by the securityholder
receiving the subscription rights in such offering. In connection with any offering of subscription rights, we may enter into a standby
arrangement with one or more underwriters or other investors pursuant to which the underwriters or other investors may be required to
purchase any securities remaining unsubscribed for after such offering.
The
prospectus supplement and any incorporated documents relating to any rights that we offer would include specific terms relating to the
offering, including, among other matters:
| ● | the
date of determining the securityholders entitled to the rights distribution; |
| ● | the
price, if any, for the subscription rights; |
| ● | the
exercise price payable for the Class A common stock, preferred stock or other securities
upon the exercise of the subscription right; |
| ● | the
number of subscription rights issued to each securityholder; |
| ● | the
amount of Class A common stock, preferred stock, depositary shares or other securities that
may be purchased per each subscription right; |
| ● | any
provisions for adjustment of the amount of securities receivable upon exercise of the subscription
rights or of the exercise price of the subscription rights; |
| ● | the
extent to which the subscription rights would be transferable; |
| ● | the
date on which the right to exercise the subscription rights would commence, and the date
on which the subscription rights would expire; |
| ● | the
extent to which the subscription rights may include an over-subscription privilege with respect
to unsubscribed securities; |
| ● | the
material terms of any standby underwriting or purchase arrangement entered into by us in
connection with any offering of subscription rights; |
| ● | a
discussion of certain U.S. federal income tax consequences applicable to any rights offering;
and |
| ● | any
other terms of the subscription rights, including the terms, procedures and limitations relating
to the transferability, exchange and exercise of the subscription rights. |
DESCRIPTION
OF UNITS
We
may issue units consisting of any combination of the other types of securities offered under this prospectus in one or more series. We
may evidence each series of units by unit certificates that we would issue under a separate agreement. We may enter into unit agreements
with a unit agent. We would indicate the name and address of the unit agent in the applicable prospectus supplement relating to a particular
series of units.
The
following description, together with the additional information included in any applicable prospectus supplement, summarizes the general
features of the units that we may offer under this prospectus. You should read any prospectus supplement and any free writing prospectus
that we may authorize to be provided to you related to the series of units being offered, as well as the complete unit agreements that
contain the terms of the units. Specific unit agreements would contain additional important terms and provisions. We would file as an
exhibit to the registration statement of which this prospectus is a part, or would incorporate by reference from another report that
we file with the SEC, the form of each unit agreement relating to units offered under this prospectus.
If
we offer any units, certain terms of that series of units would be described in the applicable prospectus supplement, including, without
limitation, the following, as applicable:
| ● | the
title of the series of units; |
| ● | identification
and description of the separate constituent securities comprising the units; |
| ● | the
price or prices at which the units would be issued; |
| ● | the
date, if any, on and after which the constituent securities comprising the units would be
separately transferable; |
| ● | a
discussion of certain U.S. federal income tax considerations applicable to the units; and |
| ● | any
other terms of the units and their constituent securities. |
SELLING
STOCKHOLDER
Unless
the context otherwise requires, as used in this prospectus, “selling stockholder” includes Motorsport Network and its pledgees,
donees, transferees, assignees and others who later come to hold some or all of the Class A common stock being offered by the selling
stockholder pursuant to this prospectus. We have prepared this prospectus to allow the selling stockholder to sell or otherwise dispose
of, from time to time, up to 7,000,000 shares of our Class A common stock. We will not receive any proceeds from the sale of shares by
the selling stockholder.
Prior
to January 8, 2021, we operated as a Florida limited liability company under the name Motorsport Gaming US LLC. On January 8, 2021, Motorsport
Gaming US LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport Games Inc.
Effective
as of January 8, 2021, 100% of the membership interests held by the sole member of Motorsport Gaming US LLC, Motorsport Network, converted
into an aggregate of (i) 7,000,000 shares of Class A common stock of Motorsport Games Inc. and (ii) 7,000,000 shares of Class B common
stock of Motorsport Games Inc., representing all of the outstanding shares of Class A and Class B common stock immediately following
the corporate conversion. Motorsport Network is the only holder of shares of our Class B common stock and does not have any transfer,
conversion, registration or economic rights with respect to such shares of Class B common stock. In the event Motorsport Network or its
affiliates relinquish beneficial ownership of any of the MSN Initial Class A Shares at any time, one share of Class B common stock held
by Motorsport Network will be cancelled for each such MSN Initial Class A Share no longer beneficially owned by Motorsport Network or
its affiliates. Any pledge of MSN Initial Class A Shares by Motorsport Network or its affiliates will not constitute a relinquishment
of such beneficial ownership. The MSN Initial Class A Shares and shares of Class B common stock held by Motorsport Network will be adjusted
in equal proportions for any stock dividend, stock split or similar transaction undertaken by the Company.
The
following table sets forth, as of the date of this prospectus, certain information regarding the
beneficial ownership of our common stock by the selling stockholder and the shares of our Class A common stock being offered by the selling
stockholder pursuant to this prospectus. The applicable percentage ownership of common stock
is based on approximately 11,673,587 shares of Class A common stock and 7,000,000 shares of Class B common stock outstanding
as of February 1, 2022. Beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act and Rule 13d-3
thereunder.
See
the section entitled “Certain Relationships and Related Transactions” in
our definitive proxy statement on Schedule 14A filed with the SEC on April 26, 2021, which is incorporated
by reference into this prospectus, for a description of material relationships between us and the selling stockholder.
The
information in the table is supplied by the selling stockholder. We cannot advise you as to whether the selling stockholder will in fact
sell any or all of such shares of Class A common stock. In addition, the selling stockholder may have sold, transferred or otherwise
disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, the shares of our Class A common stock
in transactions exempt from the registration requirements of the Securities Act after the date on which it provided the information set
forth in the table below.
| |
Shares Beneficially Owned | | |
| | |
Shares Beneficially Owned After Sale of All Class A Shares Offered Hereby by Selling Stockholder |
| |
Class A | | |
Class B | | |
| | |
| | |
Class A | |
Class B | |
| |
Name of Selling Stockholder | |
Shares | | |
% | | |
Shares | | |
% | | |
% of Total Voting Power(1) | | |
Maximum Number of Class A Shares Offered | | |
Shares | |
% | | |
Shares | |
% | | |
% of Total Voting Power(1) | |
Motorsport Network, LLC(2) | |
| 7,000,000 | | |
| 59.96 | % | |
| 7,000,000 | | |
| 100 | % | |
| 94.28 | % | |
| 7,000,000 | | |
— | |
| — | % | |
— | |
| — | % | |
| — | % |
| (1) | Percentage
of total voting power represents voting power with respect to all shares of our Class A and
Class B common stock, as a single class. Each share of Class A common stock is entitled to
one vote, and each share of Class B common stock is entitled to ten votes. |
| (2) | Mike
Zoi is the manager of Motorsport Network and has sole voting and dispositive power with respect
to the shares held by Motorsport Network. |
PLAN
OF DISTRIBUTION
Primary
Offering
We
may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or a combination
of these methods or through underwriters or dealers, through agents and/or directly to one or more purchasers. The securities may be
distributed from time to time in one or more transactions:
| ● | at
a fixed price or prices, which may be changed; |
| ● | at
market prices prevailing at the time of sale; |
| ● | at
prices related to such prevailing market prices; or |
Each
time that we sell securities covered by us under this prospectus, we will provide a prospectus supplement or supplements that will describe
the method of distribution and set forth the terms and conditions of the offering of such securities, including the offering price of
the securities and the proceeds to us, if applicable.
Offers
to purchase the securities being offered by us under this prospectus may be solicited directly. Agents may also be designated to solicit
offers to purchase the securities offered by us from time to time. Any agent involved in our offer or sale of our securities will be
identified in a prospectus supplement.
If
a dealer is utilized in the sale of the securities being offered by us under this prospectus, the securities will be sold to the dealer,
as principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of
resale.
If
an underwriter is utilized in the sale of the securities being offered by us under this prospectus, an underwriting agreement will be
executed with the underwriter at the time of sale and the name of any underwriter will be provided in the prospectus supplement that
the underwriter will use to make resales of the securities to the public. In connection with our sale of the securities, we or the purchasers
of securities for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions.
The underwriter may sell the securities to or through dealers, and those dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters and/or commissions from the purchasers for which they may act as agent. Unless otherwise indicated
in a prospectus supplement, an agent will be acting on a best efforts basis and a dealer will purchase securities offered by us as a
principal, and may then resell the securities at varying prices to be determined by the dealer.
Any
compensation paid to underwriters, dealers or agents in connection with our offering of the securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers will be provided in the applicable prospectus supplement. Underwriters,
dealers and agents participating in the distribution of the securities offered by us may be deemed to be underwriters within the meaning
of the Securities Act, and any discounts and commissions received by them and any profit realized by them on resale of the securities
offered by us may be deemed to be underwriting discounts and commissions. We may enter into agreements to indemnify underwriters, dealers
and agents against civil liabilities, including liabilities under the Securities Act, or to contribute to payments they may be required
to make in respect thereof and to reimburse those persons for certain expenses.
Any
Class A common stock offered by us would be listed on the Nasdaq Capital Market, but any other securities offered by us may or may not
be listed on a national securities exchange. To facilitate our offering of securities, certain persons participating in the offering
may engage in transactions that stabilize, maintain or otherwise affect the price of the securities. This may include over-allotments
or short sales of the securities, which involve the sale by persons participating in the offering of more securities than were sold to
them. In these circumstances, these persons would cover such over-allotments or short positions by making purchases in the open market
or by exercising their over-allotment option, if any. In addition, these persons may stabilize or maintain the price of the securities
offered by us by bidding for or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed
to dealers participating in the offering may be reclaimed if such securities sold by them are repurchased in connection with stabilization
transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities offered by us at a
level above that which might otherwise prevail in the open market. These transactions may be discontinued at any time.
We
may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In
addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If the applicable prospectus supplement so indicates, in connection with those derivatives, the
third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions.
If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related
open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings
of stock. The third party in such sale transactions would be an underwriter and, if not identified in this prospectus, would be named
in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a
financial institution or other third party that in turn may sell the securities short using this prospectus and an applicable prospectus
supplement. Such financial institution or other third party may transfer its economic short position to investors in our securities or
in connection with a concurrent offering of other securities by us.
The
specific terms of any lock-up provisions in respect of any given offering will be described in the applicable prospectus supplement.
The
underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business for
which they receive compensation.
Secondary
Offering
The
selling stockholder, including its pledgees, donees, transferees, assignees and others who later come to hold some or all of the Class
A common stock being offered by the selling stockholder pursuant to this prospectus, may from time to time offer some or all of the shares
of Class A common stock covered by this prospectus. To the extent required, this prospectus may be amended and supplemented from time
to time to describe a specific plan of distribution.
We
will not receive any proceeds from the sale of shares by the selling stockholder. The selling stockholder may sell the shares of Class
A common stock covered by this prospectus from time to time, and may also decide not to sell all or any of the shares of Class A common
stock that it is allowed to sell under this prospectus. The selling stockholder will act independently of us in making decisions regarding
the timing, manner and size of each sale. These dispositions may be at fixed prices, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices, at varying prices determined at the time of sale, or at privately negotiated prices.
Sales may be made by the selling stockholder in one or more types of transactions, which may include:
| ● | purchases
by underwriters, dealers and agents who may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling stockholder and/or the purchasers
of the shares of Class A common stock for whom they may act as agent; |
| ● | one
or more block transactions, including transactions in which the broker or dealer so engaged
will attempt to sell the shares of Class A common stock as agent but may position and resell
a portion of the block as principal to facilitate the transaction, or in crosses, in which
the same broker acts as an agent on both sides of the trade; |
| ● | ordinary
brokerage transactions or transactions in which a broker solicits purchases; |
| ● | purchases
by a broker-dealer or market maker, as principal, and resale by the broker-dealer for its
account; |
| ● | the
pledge of shares of Class A common stock for any loan or obligation, including pledges to
brokers or dealers who may from time to time effect distributions of shares of Class A common
stock; |
| ● | short
sales or transactions to cover short sales relating to the shares of Class A common stock; |
| ● | one
or more exchanges or over-the-counter market transactions; |
| ● | through
distribution by the selling stockholder or its successor in interest to its members, general
or limited partners or shareholders (or their respective members, general or limited partners
or shareholders); |
| ● | privately
negotiated transactions; |
| ● | the
writing of options, whether the options are listed on an options exchange or otherwise; |
| ● | distributions
to creditors and equity holders of the selling stockholder; and |
| ● | any
combination of the foregoing, or any other available means allowable under applicable law. |
The
selling stockholder may also resell all or a portion of its Class A common stock in open market transactions in reliance upon Rule 144
under the Securities Act, provided it meets the criteria and conforms to the requirements of Rule 144.
The
selling stockholder may enter into sale, forward-sale and derivative transactions with third parties, or may sell securities not covered
by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection
with those sale, forward-sale or derivative transactions, the third parties may sell securities covered by this prospectus or the applicable
prospectus supplement, including in short sale transactions and by issuing securities that are not covered by this prospectus, but are
exchangeable for or represent beneficial interests in the Class A common stock. The third parties also may use shares received under
those sale, forward-sale or derivative arrangements or shares pledged by the selling stockholder or borrowed from the selling stockholder
or others to settle such third-party sales or to close out any related open borrowings of Class A common stock. The third parties may
deliver this prospectus in connection with any such transactions. Any third party in such sale transactions will be an underwriter and
will be identified in the applicable prospectus supplement (or a post-effective amendment to the registration statement of which this
prospectus is a part).
In
addition, the selling stockholder may engage in hedging transactions with broker-dealers in connection with distributions of Class A
common stock or otherwise. In those transactions, broker-dealers may engage in short sales of securities in the course of hedging the
positions they assume with the selling stockholder. The selling stockholder may also sell securities short and redeliver securities to
close out such short positions. The selling stockholder may also enter into option or other transactions with broker-dealers which require
the delivery of securities to the broker-dealer. The broker-dealer may then resell or otherwise transfer such securities pursuant to
this prospectus. The selling stockholder also may loan or pledge shares, and the borrower or pledgee may sell or otherwise transfer the
Class A common stock so loaned or pledged pursuant to this prospectus or under Rule 144. Such borrower or pledgee also may transfer those
shares of Class A common stock to investors in our securities or the selling stockholder’s securities or in connection with the
offering of other securities not covered by this prospectus.
To
the extent necessary, we may amend or supplement this prospectus from time to time to describe a specific plan of distribution. We will
file a supplement to this prospectus, if required, upon being notified by the selling stockholder that any material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade, offering or a purchase by a broker or dealer. The applicable
prospectus supplement will set forth the specific terms of the offering of securities, including:
| ● | the
name of the selling stockholder and the participating broker-dealer; |
| ● | the
number of shares of Class A common stock offered; |
| ● | the
price of such Class A common stock; |
| ● | the
proceeds to the selling stockholder from the sale of such Class A common stock; |
| ● | the
names of the underwriters or agents, if any; |
| ● | any
underwriting discounts, agency fees or other compensation to underwriters or agents; and |
| ● | any
discounts or concessions allowed or paid to dealers. |
In
connection with sales of Class A common stock covered hereby, the selling stockholder and any underwriter, broker-dealer or agent and
any other participating broker-dealer that executes sales for the selling stockholder may be deemed to be an “underwriter”
within the meaning of the Securities Act. Accordingly, any profits realized by the selling stockholder and any compensation earned by
such underwriter, broker-dealer or agent may be deemed to be underwriting discounts and commissions. Because the selling stockholder
may be deemed to be an “underwriter” under the Securities Act, the selling stockholder must deliver this prospectus and any
prospectus supplement in the manner required by the Securities Act. This prospectus delivery requirement may be satisfied through the
facilities of the Nasdaq Capital Market in accordance with Rule 153 under the Securities Act.
We
or the selling stockholder may agree to indemnify any underwriters, broker-dealers and agents against or contribute to any payments the
underwriters, broker-dealers or agents may be required to make with respect to, civil liabilities, including liabilities under the Securities
Act. Underwriters, broker-dealers and agents and their affiliates are permitted to be customers of, engage in transactions with, or perform
services for us and our affiliates or the selling stockholder or its affiliates in the ordinary course of business.
The
selling stockholder will be subject to applicable provisions of Regulation M of the Exchange Act and the rules and regulations thereunder,
which provisions may limit the timing of purchases and sales of any of the Class A common stock by the selling stockholder. Regulation
M may also restrict the ability of any person engaged in the distribution of the Class A common stock to engage in market-making activities
with respect to the Class A common stock. These restrictions may affect the marketability of such Class A common stock.
In
order to comply with applicable securities laws of some states, the Class A common stock may be sold in those jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the Class A common stock may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirements is available.
In addition, any Class A common stock of the selling stockholder covered by this prospectus that qualifies for sale pursuant to Rule
144 under the Securities Act may be sold in open market transactions under Rule 144 rather than pursuant to this prospectus.
To
the extent required, this prospectus may be amended and/or supplemented from time to time to describe a specific plan of distribution.
LEGAL
MATTERS
The
validity of the securities being offered hereby will be passed upon for us by Snell & Wilmer L.L.P., Los Angeles, California. Additional
legal matters may be passed upon for us, the selling stockholder or any underwriters, dealers or agents, by counsel named in the applicable
prospectus supplement.
EXPERTS
The consolidated financial statements of Motorsport
Gaming US LLC and subsidiaries as of December 31, 2020 and 2019 and for the fiscal years then ended, have been audited by Dixon
Hughes Goodman LLP, independent registered public accounting firm, as set forth in their report thereon, included in Motorsport Games
Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and incorporated herein by reference. Such consolidated
financial statements have been incorporated herein by reference in reliance upon such report given on the authority of such firm as experts
in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that contains
reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The
address of that website is http://www.sec.gov.
This
prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of the
information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Other
documents establishing the terms of the offered securities are or may be filed as exhibits to the registration statement. Statements
in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by
reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant
matters. You may obtain a copy of the registration statement through the SEC’s website, as provided above.
We
maintain a website at www.motorsportgames.com. None of the information contained on, or that may be accessed through, our website
is a prospectus or constitutes part of, or is otherwise incorporated into, this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can disclose
important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference
is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically update and supersede
that information. Any statement contained in this prospectus or a previously filed document incorporated by reference will be deemed
to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or a subsequently
filed document incorporated by reference modifies or replaces that statement.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been
filed with the SEC:
| ● | our
Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”),
filed with the SEC on March 24, 2021; |
| ● | our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, filed with the SEC on May 17, 2021, August 11, 2021 and November 4, 2021, respectively; |
| ● | our
Current Reports on Form 8-K, filed with the SEC on January 15, 2021, January 27, 2021, February 18, 2021, February 19, 2021, March 3, 2021, March 12, 2021, March 15, 2021, March 22, 2021,
April 1, 2021, April 2, 2021, April 20, 2021, April 22, 2021, June 21, 2021, July 15, 2021
(other than with respect to Item 7.01 and Exhibit 99.1), August 25, 2021, September 7, 2021, January 10, 2022 and January 21, 2022; |
| ● | the
information specifically incorporated by reference in the 2020 Form 10-K from our Definitive
Proxy Statement on Schedule 14A, filed with the SEC on April 26, 2021; and |
| ● | the
description of our Class A common stock set forth in our Registration Statement on Form 8-A
(File No. 001-39868), filed with the SEC on January 7, 2021, including any amendment or report
filed for the purpose of updating such description. |
All
reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering, but excluding any information furnished to, rather than filed with, the SEC, will also be incorporated by reference
into this prospectus and deemed to be part of this prospectus from the date of the filing of such reports and documents.
We
will furnish without charge to each person, including any beneficial owner, to whom a prospectus is delivered, upon written or oral request,
a copy of any or all of the documents incorporated by reference into this prospectus but not delivered with the prospectus, including
exhibits that are specifically incorporated by reference into such documents. You should direct any requests for documents to:
Motorsport
Games Inc.
5972
NE 4th Avenue
Miami,
FL 33137
Attention:
Corporate Secretary
(305)
507-8799
144,366
Shares of Class A Common Stock
PROSPECTUS
SUPPLEMENT
February
2, 2023
Motorsport Games (NASDAQ:MSGM)
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