Motorsport Games(MSGM) - 2022 Q4 - Annual Report

Game Development and Releases - Motorsport Games anticipates the release of new games, including NASCAR, INDYCAR, British Touring Car Championship, and Le Mans titles in 2023 and 2024[12] - The company plans to release new products, including anticipated games for NASCAR, INDYCAR, British Touring Car Championship, and Le Mans in 2023 and 2024[12] Financial Performance and Projections - The company expects to achieve approximately $4 million in total annualized cost reductions by the end of 2023 as part of the 2022 Restructuring Program[13] - The company expects to continue incurring losses for the foreseeable future due to significant expenses[13] - The company has incurred significant losses since inception and expects to continue incurring losses for the foreseeable future, raising substantial doubt about its ability to continue as a going concern[18] - The company expects to continue generating a portion of its revenues from advertising and sponsorship during esports events, but faces challenges in attracting more advertisers and sponsors[20] - The company expects to continue incurring significant expenses, which will likely lead to ongoing losses[13] - The company has limited cash on hand to fund operations for the remainder of 2023, indicating a need for additional funding to continue operations[13] - The company requires additional capital to meet financial obligations, which may not be available on acceptable terms or at all[18] - The company has a borrowing capacity limit of $12 million under its Line of Credit, potentially affecting its ability to finance operations[18] Restructuring and Cost Management - The company plans to eliminate approximately 20% of its overhead costs worldwide as part of the 2022 Restructuring Program, aiming for total annualized cost reductions of approximately $4 million by the end of 2023[13] - The anticipated restructuring costs related to the 2022 Restructuring Program are estimated to fall within the range of $0.1 million to $0.3 million[14] - The company anticipates that total restructuring costs will fall within the previously estimated range of $0.1 million to $0.3 million[14] - The company is executing a 2022 Restructuring Program aimed at achieving cost reductions, but may face difficulties and delays that could impact expected benefits[17] Market and Audience Expansion - Motorsport Games plans to expand its audience base through traditional marketing and social media channels, including Facebook, Twitter, Twitch, and YouTube[12] - The company believes that its esports business has the potential to generate incremental revenues through media rights sales, merchandising, and sports betting[12] - Future revenue streams are expected to diversify, consisting of revenues from multiple games and franchises, reducing reliance on a single title[13] - The company projects ongoing engagement and incremental revenue from recurrent consumer spending on in-game purchases and extra content[13] - The company believes that the global adoption of portable and mobile gaming devices will lead to significant growth in portable and mobile gaming[13] Operational Challenges and Risks - Motorsport Games faces liquidity challenges, with expectations that additional funding will be required to continue operations beyond 2023[13] - The company is dependent on a single third-party distribution partner for retail channel distribution, making favorable negotiations critical for its business[18] - The ongoing COVID-19 pandemic has adversely impacted operations and may continue to do so, with uncertain effects on financial performance[18] - The company faces risks related to the ongoing war between Russia and Ukraine, which could negatively impact industry trends and consumer behavior[17] - The company is transitioning development staff from Russia to other countries, which may cause delays in new product launches[17] - The company is dependent on retaining key personnel and hiring strategically valuable personnel, which could affect its ability to achieve business plans[20] - The company relies heavily on a small number of franchises for a significant portion of revenues and profits, making it vulnerable to shifts in consumer preferences[18]