[Part I: Financial Information](index=7&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Q1 2025 net income of **$1.0 million** reversed a prior loss, driven by a legal settlement and cost cuts despite **41.9% revenue decline** [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, cash was **$1.1 million** with a **$1.9 million** working capital deficit, assets and liabilities slightly decreased Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,050,402 | $859,271 | | Total Current Assets | $2,717,743 | $2,796,482 | | Total Assets | $6,063,855 | $6,268,221 | | Total Current Liabilities | $4,636,905 | $5,021,782 | | Total Liabilities | $4,646,970 | $5,042,219 | | Accumulated Deficit | $(90,748,910) | $(91,789,968) | | Total Stockholders' Equity | $1,416,885 | $1,226,002 | - The company reported a working capital deficit of **$1.9 million** as of March 31, 2025, calculated as Total Current Assets (**$2.72 million**) minus Total Current Liabilities (**$4.64 million**)[17](index=17&type=chunk)[33](index=33&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 revenue fell **41.9%**, but a **$1.0 million** net income resulted from a legal settlement and **47.3%** reduced operating expenses Q1 2025 vs. Q1 2024 Statement of Operations (Unaudited) | Financial Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $1,758,453 | $3,029,036 | (41.9)% | | Gross Profit | $1,293,067 | $2,362,409 | (45.3)% | | Loss from Operations | $(93,195) | $(1,215,324) | 92.3% | | Other Operating Income | $500,000 | $0 | N/A | | Net Income (Loss) | $1,022,613 | $(1,683,398) | N/A | | Basic and Diluted EPS | $0.33 | $(0.61) | N/A | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated **$0.3 million** in cash from operations in Q1 2025, ending the quarter with **$1.1 million** in cash and equivalents Q1 2025 vs. Q1 2024 Cash Flows (Unaudited) | Cash Flow Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $305,221 | $(373,670) | | Net cash used in financing activities | $(150,000) | $(50,000) | | Net increase (decrease) in cash | $191,131 | $(422,519) | | Cash and cash equivalents at end of period | $1,050,402 | $1,252,691 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail going concern doubts, a **$2.35 million** April 2025 private placement, and a **$0.5 million** legal settlement gain - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern within one year, citing the lack of available cash to fund operations[48](index=48&type=chunk) - In October 2023, the company sold its NASCAR License to iRacing for **$6.0 million**, recognizing a gain of **$0.5 million** in Q1 2025[64](index=64&type=chunk) - The company reached a settlement in the HC2 and Continental Complaint, resulting in a **$0.5 million** gain recorded as other operating income in Q1 2025[109](index=109&type=chunk) - Subsequent to the quarter end, on April 11, 2025, the company raised approximately **$2.5 million** in gross proceeds through a private placement of stock and a pre-funded warrant[136](index=136&type=chunk) - On April 15, 2025, Nasdaq confirmed that the company regained compliance with the minimum stockholders' equity requirement for continued listing[137](index=137&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A discusses **41.9%** revenue decline, **$1.0 million** net income from settlements and cost cuts, and ongoing going concern doubts [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q1 2025 revenues fell **41.9%**, but **$1.0 million** net income resulted from **47.3%** reduced operating expenses and legal settlements Revenue by Segment (Q1 2025 vs Q1 2024) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gaming | $1,758,453 | $3,029,036 | $(1,270,583) | (41.9)% | | Esports | $0 | $0 | $0 | 0% | | **Total** | **$1,758,453** | **$3,029,036** | **$(1,270,583)** | **(41.9)%** | - The decrease in Gaming segment revenue was primarily due to a **$1.5 million** drop in NASCAR-related revenues, as the company is no longer authorized to sell these titles starting in 2025[171](index=171&type=chunk) Operating Expenses (Q1 2025 vs Q1 2024) | Expense Category | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $97,701 | $250,386 | $(152,685) | (61.0)% | | Development | $601,953 | $1,063,357 | $(461,404) | (43.4)% | | General and administrative | $1,168,482 | $2,190,266 | $(1,021,784) | (46.7)% | | **Total Operating Expenses** | **$1,886,262** | **$3,577,733** | **$(1,691,471)** | **(47.3)%** | - Other operating income of **$0.5 million** in Q1 2025 represents the reimbursement for legal fees from the Innovate Settlement Agreement[183](index=183&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is critical with going concern doubts and a **$1.9 million** working capital deficit, despite a **$2.35 million** capital raise - Management concludes there is substantial doubt about the company's ability to continue as a going concern for at least 12 months, as current capital resources are insufficient to fund operations[188](index=188&type=chunk)[199](index=199&type=chunk) - In October 2024, the company reduced its workforce by approximately **23 individuals**, or **38%** of its worldwide employees, incurring a restructuring charge of about **$0.2 million**[37](index=37&type=chunk)[192](index=192&type=chunk) Liquidity Metrics | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,050,402 | $859,271 | | Working capital (deficiency) | $(1,919,162) | $(2,225,300) | - The company believes there is a substantial likelihood that its majority shareholder, Driven Lifestyle, will not fulfill future borrowing requests under the **$12 million** Line of Credit, making it a non-viable source of liquidity[74](index=74&type=chunk)[206](index=206&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that this item is not applicable for this reporting period - The company has indicated that this section is not applicable for this reporting period[217](index=217&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to unremediated material weaknesses - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025[220](index=220&type=chunk) - The ineffectiveness is due to ongoing material weaknesses, including: failure to maintain effective monitoring procedures, lack of sufficient accounting personnel, and inadequate independent review of complex accounting analyses[221](index=221&type=chunk) - No changes were made to internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[224](index=224&type=chunk) [Part II: Other Information](index=43&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits related to the company's operations [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with management believing outcomes are not reasonably likely to have a material adverse effect - The company states that while it is involved in routine legal proceedings, it does not expect them to have a material adverse effect on the business, directing readers to Note 9 for specifics[226](index=226&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) Critical risks include substantial doubt about going concern, unremediated internal control weaknesses, potential Nasdaq delisting, and limitations on future financing - The company's financial condition raises substantial doubt about its ability to continue as a going concern, with an accumulated deficit of **$90.7 million** as of March 31, 2025[228](index=228&type=chunk) - Identified material weaknesses in internal control over financial reporting persist, which could lead to inaccurate financial reporting and adversely affect the stock price[232](index=232&type=chunk) - The April 2025 Purchase Agreements restrict the company's ability to issue new stock for **4.5 months** and grant investors a right of first refusal on subsequent financings, potentially limiting future fundraising options[234](index=234&type=chunk) - Although compliance with Nasdaq's minimum stockholders' equity rule was regained in April 2025, failure to maintain it could lead to delisting, which would negatively impact stock liquidity and price[235](index=235&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - The company has a high concentration of revenue from a small number of customers. In Q1 2025, two customers accounted for **74.9%** and **10.6%** of revenue, respectively[239](index=239&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or share repurchases occurred during Q1 2025 beyond previously disclosed Form 8-K filings - No unregistered sales of equity securities occurred during Q1 2025 beyond what was already reported on Form 8-K[242](index=242&type=chunk) - The company did not purchase any of its Class A common stock during Q1 2025[243](index=243&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans or arrangements during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[246](index=246&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and key agreements incorporated by reference - The filing includes CEO and CFO certifications as required by the Exchange Act (Rule 13a-14(a) and 18 U.S.C. Section 1350)[247](index=247&type=chunk) - Key agreements filed or incorporated by reference include the April 11, 2025 Securities Purchase Agreement and the February 20, 2025 Settlement Agreement with the sellers of Studio397[247](index=247&type=chunk)

Core Viewpoint - Motorsport Games Inc. reported a mixed financial performance for Q1 2025, showing a significant decrease in revenue but an improvement in net income compared to the same period last year [4][5][11]. Financial Performance - Revenue for Q1 2025 was approximately $1.8 million, down from approximately $3.0 million in Q1 2024, representing a decrease of about 41.9% [4]. - Gross profit for the first quarter was $1.3 million, compared to $2.4 million in the prior year, with a gross profit margin decreasing to 73.5% from 78.0% [4]. - Net income for Q1 2025 was $1.0 million, an improvement of $2.7 million from a net loss of $1.7 million in Q1 2024, with net income per Class A common share at $0.33 compared to a net loss of $0.61 in the prior year [5][11]. - Adjusted EBITDA for Q1 2025 was $0.6 million, a significant improvement from an Adjusted EBITDA loss of $1.0 million in Q1 2024 [6]. Business Developments - The company closed a $2.5 million private placement led by Pimax, which is expected to enhance its financial outlook [2][17]. - A significant update for the Le Mans Ultimate game is planned for June 10, 2025, which will include new features and the final 2024 season content pack [3]. Cash Flow and Liquidity - As of March 31, 2025, the company had cash and cash equivalents of approximately $1.1 million, which increased to $3.1 million by April 30, 2025, primarily due to the private placement [12]. - The company generated an average positive cash flow from operations of approximately $0.1 million per month during Q1 2025, but anticipates a net cash outflow from operations in the foreseeable future as it continues to develop its product portfolio [12][20]. Strategic Initiatives - The company is exploring various options to address liquidity shortfalls, including potential equity and debt financing, asset sales, and cost reduction initiatives [14][18]. - A workforce reduction was implemented in October 2024, impacting approximately 38% of the company's employees, aimed at reducing operating expenses [15].

Core Viewpoint - Motorsport Games Inc. is scheduled to report its financial results for the first quarter of 2025 on May 9, 2025, after market close, followed by a conference call to discuss the results [1][6]. Company Overview - Motorsport Games is a developer and publisher of racing games and an esports ecosystem provider for official motorsport racing series, aiming to create authentic racing experiences [3]. - The company holds licenses for prominent racing series such as the 24 Hours of Le Mans and the FIA World Endurance Championship, with recent releases including Le Mans Ultimate in Early Access [3]. - Motorsport Games owns the rFactor 2 and KartKraft simulation platforms and powers F1® Arcade through a partnership with Kindred Concepts [3]. - The company is recognized as an award-winning esports partner for the 24 Hours of Le Mans, having established the Le Mans Virtual Series [3]. Financial Reporting Details - The financial results will be discussed in a conference call and webcast on May 9, 2025, at 5:00 p.m. ET, accessible via the company's investor relations website and by phone [1][2].

Core Viewpoint - Motorsport Games Inc. has regained compliance with the Nasdaq Stock Market's stockholders' equity requirement, indicating progress and momentum for the company [1][2]. Company Overview - Motorsport Games is a developer and publisher of racing games, including titles like Le Mans Ultimate, and is involved in the esports ecosystem for motorsport racing [3]. - The company is the officially licensed developer for major racing series such as the 24 Hours of Le Mans and the FIA World Endurance Championship [3]. - Motorsport Games also owns simulation platforms like rFactor 2 and KartKraft, with rFactor 2 serving as the official simulation platform for Formula E [3]. Recent Developments - The CEO, Stephen Hood, highlighted that regaining compliance with Nasdaq's equity requirement validates the company's progress and is supported by a recent strategic investment led by Pimax [2]. - The company is experiencing product momentum with Le Mans Ultimate and has introduced a new subscription service through RaceControl, alongside implementing cost-control measures [2].

Core Viewpoint - Motorsport Games Inc. is announcing a private placement offering for gross proceeds of approximately $2.5 million, aimed at improving its cash position and funding future product development, in partnership with Pimax Innovation Inc. [1][3][4] Group 1: Investment Details - The private placement offering is expected to close with gross proceeds of $2.4 million from most investors on April 11, 2025, with the remaining $100,000 expected to close on April 15, 2025 [2] - The purchase price for one share of Class A common stock was set at $1.10, while the pre-funded warrant was priced at $1.0999 per share, representing a premium of approximately 33% over the closing price as of April 10, 2025 [2] Group 2: Strategic Implications - The investment is anticipated to enhance the Company's cash position, fund working capital, and support general corporate expenses, while also aiding in compliance with Nasdaq's minimum stockholders' equity requirement [3] - The Purchase Agreement allows purchasers holding at least 50.1% interest to appoint a Class II director to the Company's board and a member of the management team, subject to board approval [3] Group 3: Leadership Statements - The CEO of Motorsport Games expressed satisfaction with the investment from Pimax, highlighting the potential synergies between the two companies in the VR gaming market [4] - Pimax's founder emphasized the importance of sim racing players in their community and the goal of enhancing user experience through tailored VR solutions [4] Group 4: Company Background - Motorsport Games is a developer and publisher of racing games, known for its simulation titles and esports ecosystem, including the recently released Le Mans Ultimate [6] - The Company is officially licensed for major motorsport series and aims to create a virtual racing ecosystem that engages fans and gamers [6]

Core Viewpoint - Motorsport Games Inc. is announcing a private placement offering to raise approximately $2.5 million, aimed at improving its cash position and funding future product development, in partnership with Pimax Innovation Inc. [1][3][4] Group 1: Private Placement Details - The private placement offering is expected to generate gross proceeds of approximately $2.5 million, with $2.4 million already closed on April 11, 2025, and the remaining $100,000 expected to close on April 15, 2025 [2][3]. - The offering includes 1,894,892 shares of Class A common stock at a purchase price of $1.10 per share and a pre-funded warrant to purchase up to 377,836 shares at an exercise price of $0.0001 per share, representing a premium of approximately 33% over the closing price as of April 10, 2025 [2][4]. Group 2: Strategic Implications - The investment is intended to enhance the company's cash position, fund working capital, and support general corporate expenses, while also aiding in compliance with Nasdaq's minimum stockholders' equity requirement [3]. - The Purchase Agreement allows investors holding at least 50.1% interest to appoint a Class II director to the board and an individual to the management team, subject to board approval [3]. Group 3: Partnership with Pimax - The partnership with Pimax is expected to create synergies, particularly in the realm of virtual reality gaming, enhancing the user experience for sim racing players [4]. - Both companies aim to leverage their strengths, with Motorsport Games focusing on realistic racing simulations and Pimax on high-end VR technology, to drive innovation in the growing market of immersive gaming [4][6].

Financial Data and Key Metrics Changes - Revenues for Q4 2024 were $2.0 million, an increase of $0.3 million or 13% compared to the same period in the prior year, driven by higher digital game sales from the release of Le Mans Ultimate [27] - Net loss for Q4 2024 was $2.9 million, a decrease of $5.6 million compared to net income of $2.7 million for the same period in the prior year [28] - Full year 2024 revenues were $8.7 million, up $1.8 million compared to the prior year, primarily due to $3.0 million in digital game and downloadable content sales [30] - Net loss for 2024 was $3.0 million, an improvement from $14.3 million in 2023 [30] - Adjusted EBITDA loss for 2024 was $3.9 million, an improvement from $9.3 million in 2023 [31] - Net cash used in operations for the year ended December 31, 2024, was approximately $3.2 million, with an average monthly cash burn of $0.3 million, down from $1.1 million in 2023 [32] Business Line Data and Key Metrics Changes - The launch of Le Mans Ultimate in February 2024 significantly contributed to revenue growth, with digital game sales being a primary driver [30] - The introduction of downloadable content (DLC) such as the 2024 Pack 3, which included popular car models and tracks, has boosted sales and player engagement [21] Market Data and Key Metrics Changes - The subscription service launched in December generated over $120,000 in gross revenues within the first 21 days, indicating strong early adoption [18] - The company reported nearly 6,000 active subscribers, showcasing potential for long-term monetization [19] Company Strategy and Development Direction - The company is focused on improving product quality while balancing aggressive cost reductions, aiming to reconnect with players and enhance brand perception [9][12] - Future opportunities include exploring console ports for PlayStation and Xbox, contingent on proving success on the PC platform [17] - The company is actively exploring additional funding options and strategic alternatives, including potential equity and debt financing [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's turnaround, emphasizing the importance of respect in the sim racing industry and the positive momentum gained from recent successes [36] - The company is optimistic about future growth opportunities, particularly in the underserved racing market [16] Other Important Information - A settlement with Luminis improved the company's financial position by $180,000 and cleared barriers to full ownership of Studio 397 [24] - A positive ruling in litigation with Innovate Corporation may alleviate some legal fee liabilities, enhancing stockholders' equity [25] Summary of Q&A Session - There were no questions during the Q&A session, and the call concluded without any formal inquiries [38]

Financial Data and Key Metrics Changes - Revenues for Q4 2024 were $2.0 million, an increase of $0.3 million or 13% compared to the same period in the prior year, driven by higher digital game sales from the release of Le Mans Ultimate [27] - Net loss for Q4 2024 was $2.9 million, a decrease of $5.6 million compared to net income of $2.7 million for the same period in the prior year [28] - Full year 2024 revenues were $8.7 million, up $1.8 million compared to the prior year, primarily due to $3.0 million in digital game and downloadable content sales [30] - Net loss for 2024 was $3.0 million, an improvement from $14.3 million in 2023 [30] - Adjusted EBITDA loss for 2024 was $3.9 million, an improvement from $9.3 million in 2023 [31] Business Line Data and Key Metrics Changes - Le Mans Ultimate has shown significant player engagement and sales growth, with updates leading to spikes in player numbers and sales [10][13] - The introduction of downloadable content (DLC) has driven uptake, with the 2024 Pack 3 being the most successful to date [21] Market Data and Key Metrics Changes - The subscription service launched in December generated over $120,000 in gross revenues within the first 21 days, with nearly 6,000 active subscribers [18][19] - Player retention is improving, indicating users are engaging longer with the product [14] Company Strategy and Development Direction - The company is focused on balancing cost reductions with product quality improvements, aiming to reconnect with players and enhance brand perception [8][12] - There are ongoing discussions with potential investors and partners for future projects, including console ports [17] - The company is exploring additional funding options and strategic alternatives to address liquidity concerns [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges faced but emphasizes a commitment to improving product quality and player engagement [9][10] - The company believes the racing market is underserved and sees potential for growth by investing in opportunities [16] - Management expresses confidence in the company's revitalized position and future growth prospects [36] Other Important Information - A settlement with Luminis improved the financial position by $180,000 and cleared barriers to full ownership of Studio 397 [24] - A positive ruling in litigation with Innovate Corporation could alleviate some legal fee liabilities [25] Summary of Q&A Session - There were no questions during the Q&A session, and the call concluded without formal inquiries [38]

Financial Performance - Q4 2024 revenues reached $2.0 million, a $0.3 million or 13% increase compared to $1.7 million in Q4 2023[5] - The company's Q4 2024 net loss was $2.9 million[5] - Adjusted EBITDA for Q4 2024 was ($2.5) million[5] - Full year 2024 revenues totaled $8.7 million, compared to $6.9 million in 2023[6] - Net loss attributable to Class A common stock was $0.94 per share in fiscal year 2024, compared to a net loss per share of $5.56 in fiscal year 2023[5] Operational Highlights - Le Mans Ultimate achieved 100,000 net unit sales in Q4 2024[5] - RaceControl launched a new subscription offering in December 2024[5] - Further updates to Le Mans Ultimate were released in February 2025, adding three more LMGT3 category cars[5] Liquidity Concerns - As of December 31, 2024, the company's cash and cash equivalents were approximately $0.9 million, increasing to $1.2 million as of February 28, 2025[9] - There is substantial doubt about the company's ability to continue as a going concern, as disclosed in its Form 10-K for the year ended December 31, 2024[9] - The company's average monthly net cash burn from operations was approximately $0.2 million during the year ended December 31, 2024[9]

Financial Outlook - Motorsport Games anticipates a net cash outflow from operations for the foreseeable future as it continues to develop its product portfolio and invest in new video game titles[10]. - The company expects to incur losses for the foreseeable future due to significant expenses related to product development and operational costs[10]. - The company has incurred significant losses since inception and expects to continue incurring losses for the foreseeable future, raising substantial doubt regarding its ability to continue as a going concern[19]. - The company requires additional capital to meet financial obligations, which may not be available on acceptable terms or at all[19]. - The company is focused on reducing its monthly net cash burn by implementing cost control initiatives and restructuring its business[10]. - There is a substantial likelihood that Driven Lifestyle Group LLC will not fulfill future borrowing requests under the $12 million Line of Credit[10]. - The company's operations may be affected by limits on borrowing capacity under the $12 million Line of Credit[19]. Revenue Generation Strategies - Motorsport Games intends to drive ongoing engagement and revenue through in-game purchases and extra content for its titles[11]. - The company plans to generate a portion of its revenues from advertising and sponsorship during esports events, but failure to attract advertisers could adversely affect revenues[21]. - The company plans to introduce new annualized sports franchise games, including those related to Le Mans, to expand its recurring revenue[11]. - The company aims to enhance its esports segment by organizing and facilitating tournaments for licensed racing games, with plans to expand beyond Le Mans[11]. - The company plans to continue developing new video game titles and organizing esports tournaments, with a focus on expanding its Esports segment beyond Le Mans[11]. Risks and Vulnerabilities - The sale of the NASCAR License is expected to materially adversely impact cash flows and results of operations, with no revenues anticipated from existing NASCAR products after December 31, 2024[10]. - The company relies on a limited number of franchises for a significant portion of its revenues and profits, making it vulnerable to shifts in consumer preferences[21]. - The business is highly concentrated in the racing game genre, and a shift in consumer preferences could negatively impact operating results[19]. - The ability to acquire and maintain licenses for racing series is crucial for revenue and profitability, with competition potentially increasing costs[21]. - The company faces risks related to its ability to maintain licenses for intellectual property, particularly in the racing genre, which could impact revenue and profitability[21]. - The company is subject to potential delisting from NASDAQ, which could affect the market price and liquidity of its Class A common stock[21]. Corporate Governance - Driven Lifestyle controls a significant portion of the company's Class A and Class B common stock, allowing it to exert significant control over business direction[21]. - The dual class structure of common stock may adversely affect the trading market for Class A common stock[21].