Item
1.01. |
Entry
into a Material Definitive Agreement. |
On
February 3, 2023, Motorsport Games Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase
Agreement”) with the purchasers listed on the signature pages thereto (the “Purchasers”), pursuant to which the Company
agreed to issue and sell to the Purchasers an aggregate of 232,188 shares (the “Registered Shares”) of the Company’s
Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), in a registered direct offering priced at-the-market
under Nasdaq rules (the “Offering”) for a purchase price of $17.39 per Registered Share.
Pursuant to the Purchase Agreement, for a period of
15 days from the closing date of the Offering, the Company and its subsidiaries will be restricted from issuing any shares of Class A
Common Stock (or Class A Common Stock equivalents) or filing any registration statement (other than (i) a resale registration statement
registering shares of Class A Common Stock previously issued to the Company’s parent, Motorsport Network, LLC, pursuant to debt-for-equity
exchange transactions or (ii) a registration statement to register equity securities issuable in connection with any Company stock or
option plan).
The
Company expects to receive aggregate gross proceeds from the Offering of approximately $4.03 million, before deducting placement agent
fees and other offering expenses. The Offering is expected to close on or about February 6, 2023, subject to the satisfaction of customary
closing conditions. The Company intends to use the net proceeds from the Offering for development of multiple games, working capital
and general corporate purposes.
H.C.
Wainwright & Co., LLC (“Wainwright”) acted as the exclusive placement agent for the Offering, pursuant to the engagement
letter with the Company, dated as of January 9, 2023, as amended on February 2, 2023 and February 3, 2023. Upon closing of the Offering,
the Company will pay Wainwright a cash transaction fee equal to 7.0% of the aggregate gross proceeds to the Company from the Offering,
non-accountable expenses of $25,000 and closing fees of $15,950. The Company also will issue to Wainwright (or its designees) warrants
to purchase up to 13,931 shares of Class A Common Stock (the “Wainwright Warrants”), which is equal to 6.0% of the aggregate
number of shares of Class A Common Stock placed in the Offering, at an exercise price of $21.738 per share (which represents 125% of
the purchase price per Registered Share) and will expire five years after the commencement of sales under the Offering.
The
Registered Shares are being issued pursuant to an effective registration statement on Form S-3 that the Company filed with the Securities
and Exchange Commission (“SEC”) on February 1, 2022 (File No. 333-262462) and became effective on February 10, 2022, and
a base prospectus and prospectus supplement thereunder.
The
representations, warranties and covenants contained in the Purchase Agreement and the Wainwright Warrants were made solely for the benefit
of the parties thereto and may be subject to limitations agreed upon by the contracting parties. The foregoing descriptions of the Purchase
Agreement and the Wainwright Warrants do not purport to be complete and are qualified in their entirety by reference to the full text
of the Purchase Agreement and the Wainwright Warrants, copies of which are filed as Exhibits 4.1 and 10.1 hereto, respectively, and incorporated
by reference herein.
A
copy of the legal opinion of Snell & Wilmer L.L.P. relating to the Registered Shares is attached as Exhibit 5.1 hereto.