Motorsport Games(US:MSGM)2024-04-01 17:18Financial Performance and 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[12]. - The company expects to incur losses for the foreseeable future due to significant expenses related to product development and operational costs[12]. - The anticipated revenue from existing NASCAR products is expected to decline over time following the sale of the NASCAR License, significantly altering the company's risk profile[12]. - 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[21]. - The company requires additional capital to meet financial obligations, which may not be available on acceptable terms[21]. - The company expects to continue incurring significant expenses, impacting its financial performance and liquidity[12]. Funding and Liquidity - Motorsport Games plans to explore additional funding options, including potential equity and/or debt financing arrangements, to address liquidity shortfalls[12]. - The company plans to negotiate and implement equity financing transactions to regain compliance with NASDAQ listing requirements[13]. - There is a substantial likelihood that Driven Lifestyle Group LLC will not fulfill future borrowing requests under the $12 million Line of Credit[12]. - The company is limited by a $12 million Line of Credit, potentially affecting its ability to finance operations[21]. - The company does not intend to declare dividends in the foreseeable future, focusing instead on improving its liquidity position[13]. - The company is exploring strategic alternatives, including potential equity and/or debt financing arrangements, to address liquidity shortfalls[12]. Business Strategy and Development - The company aims to organize the 2024/25 Le Mans Virtual Series, with plans for further adjustments to its product roadmap due to liquidity constraints[12]. - The company plans to continue generating revenue from advertising and sponsorship during esports events, but may face challenges in attracting more advertisers and sponsors[23]. - The company intends to expand its esports segment beyond Le Mans, aiming to enhance engagement and revenue through in-game purchases and extra content[13]. - The company believes that its esports business has the potential to generate incremental revenues through media rights sales and merchandising as the audience grows[13]. - The company plans to organize the 2024/25 Le Mans Virtual Series, indicating ongoing product development efforts[12]. Market Risks and Dependencies - The company is highly dependent on a small number of franchises for a significant portion of its revenues and profits[23]. - The business is highly concentrated in the racing game genre, and a shift in consumer preferences could negatively impact operating results[21]. - The company relies on a single third-party distribution partner for retail channel distribution, making favorable negotiations critical for its business[23]. - The ability to acquire and maintain licenses for intellectual property, especially for sports titles, is critical for revenues and profitability[23]. - The company faces risks related to the retention of key personnel, which could adversely affect its ability to achieve business plans[23]. - The dual class structure of the company's common stock may adversely affect the trading market for its Class A common stock[23].