Motorsport Games(MSGM)2025-03-20 20:11Financial 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[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].