Monstrous PSA: For all y'all dirty cheapskates outlawing the world way out there in the local Dirt Racing sticks, both the standard & ultimate editions of World of Outlaws: Dirt Racing are currently on sale for
PS4/PS5. But not
XBOX or
Switch (yet?) because iReasons. As I was
muddily impressed by the 2 hour trial, I'm tempted to become a Renegade Outlaw. But without '
Three-time Chili Bowl champion Christopher Bell [who] will serve as the Pre-Order Exclusive driver for the Switch edition' why even bother. Free the Chilli Bowl Bell! Sale lasts until August 28, best wait for new title details, compare & contrast before signing on the dirt flecked button line. As for the post by
@ILikeFeet I'm well up for a Farming Sims F1 Cross Over Game.
Q2 earning calls provided details about the % uptake on the first DLC pack & Season Pass from the earnings call, plus talk of news on an optional subscription services arriving shortly.
“Despite Le Mans Ultimate still operating within this early access phase, the uptake for this new content has been encouraging,” stated Hood.
“In terms of the overall sales of this DLC content, I’m happy to report that already around 13% of Le Mans Ultimate users have purchased this content, once again, underlining the community sentiment surrounding the product. All of this has been achieved with no paid marketing budget,” he continued.
“We had anticipated the Season Pass to account for five to 10% of purchases, whereas, in reality, as of today, it counts for around 46% of purchases.”
Note: traxion.gg [still] has a deal in place for sponsored content with its former owner, Motorsport Games
13% bought DLC overall, of which 46% were for the Season Pass. Don't have the latest game sales numbers but if we use the 79,000 sales number from the end of
Q1 FY24 as a baseline.
EARLY ACCESS: February 19, 2024
18,000: 'Within 36 hours'
55,000: February 28, 2024
79,000: March 31, 2024
Content included in 2024 Pack 1 - (release date 23rd July)
• Autodromo Internazionale Enzo e Dino Ferrari (Imola Circuit)
• Lamborghini SC63
• Peugeot 9X8 (2024 spec)
• Pack 1 - July 2024 - Imola, Peugeot 9X8 (2024 spec), Lamborghini SC63
• Pack 2 - Expected September/October 2024 - 1 track / 2 Hypercars
• Pack 3 - Expected December 2024 - 1 track / 3 GT3
• Pack 4 - Expected Q1 2025 - 1 track / 4 GT3
79,000 / 100 = 790
x 13 =
10,270
10,270 / 100 = 102.7
x 46 =
4724.2
(10,270 - 4724 = 5.546 bought the first DLC pack separately)
$12.99 x 5.546 = $72,042.54
$49.99 x 4724 = $236,152.75
=
$308,195.29
If Gabe got 30% then lets divide by 100 & multiply by 70 to get a very rough figure (due to regional pricing) of
$215,736.703 with the actual total being higher based on full game sales beyond the 79,000 that have been announced. Maybe sales numbers will be forthcoming in future (Q3?) but for now let's (finally) end with select excerpts from the Q2 FY24 SEC Filings:
Liquidity and Going Concern
The Company had net income of $0.4 million and negative cash flows from operations of $1.4 million for the six months ended June 30, 2024. As of June 30, 2024, the Company had an accumulated deficit of $86.4 million and cash and cash equivalents of $0.5 million, which increased to $1.3 million as of July 31, 2024. The increase in cash and cash equivalents was primarily due to $0.9 million in net proceeds received from a registered direct offering transaction that closed on July 29, 2024. During the three months ended June 30, 2024, the Company settled its outstanding licensing liabilities with INDYCAR LLC and BARC (TOCA) LIMITED for $0.4 million and $0.2 million, respectively.
For the six months ended June 30, 2024, the Company experienced an average net cash burn from operations of approximately $0.2 million per month, and while it has taken, and continues to take measures to reduce its costs, the Company expects to continue to have a net cash outflow from operations for the foreseeable future as it continues to develop its product portfolio and invest in developing new video game titles.
On July 29, 2024, the Company closed on a registered direct offering transaction with H.C. Wainwright & Co., LLC acting as the exclusive placement agent, which raised $1 million in gross proceeds. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.
(page 6)
Correction of an Immaterial Error in Previously Issued Financial Statements
The Company has revised the presentation of net loss attributable to the non-controlling interest in the joint venture with Automobile Club de l’Ouest discussed in Note 9 – Commitments and Contingencies, to correct an immaterial error in the presentation of related the non-controlling interest. This correction increased net loss and comprehensive loss attributable to non-controlling interests, decreased net loss and comprehensive loss attributable to Motorsport Games, Inc. by $350,059 and decreased net loss per Class A common share attributable to Motorsport Games Inc. by $0.13 for the three months ended March 31, 2024. It decreased net loss and comprehensive loss attributable to non-controlling interests, increased net loss and comprehensive loss attributable to Motorsport Games, Inc. by $216,019 and increased net loss per Class A common share attributable to Motorsport Games Inc. by $0.08 for the three months ended March 31, 2023. This correction decreased net loss and comprehensive loss attributable to non-controlling interests, increased net loss and comprehensive loss attributable to Motorsport Games, Inc. by $41,065 and increased net loss per Class A common share attributable to Motorsport Games Inc. by $0.02 for the three months ended June 30, 2023. This correction also decreased net loss and comprehensive loss attributable to non-controlling interests, increased net loss and comprehensive loss attributable to Motorsport Games, Inc. by $257,084 and increased net loss per Class A common share attributable to Motorsport Games Inc. by $0.11 for the six months ended June 30, 2023. Furthermore, this correction decreased stockholders’ deficit attributable to non-controlling interests and decreased stockholders’ equity attributable to Motorsport Games Inc. by $411,535 as of December 31, 2023.
(page 9)
NOTE 3 – INTANGIBLE ASSETS
In October 2023, the Company sold its NASCAR licensed rights under that certain Second Amended and Restated Distribution and License Agreement with NASCAR Team Properties (the “NASCAR License”) to iRacing.com Motorsport Simulations, LLC (“iRacing”). As consideration for such sale and assignment of the NASCAR License and all rights related thereto (the “Assignment”), iRacing paid the Company $5.0 million at closing of the transactions contemplated by the Assignment. In addition, iRacing is obligated under the Assignment to pay the Company an additional (i) $0.5 million payable on the date that is 6 months following such closing, which was paid by iRacing in April 2024 and (ii) $0.5 million on the earlier of such date when all NASCAR games have been removed by the Company from the websites, smart phone applications or other digital portal engaging in sales or providing access to the NASCAR games, including without limitation Xbox, PlayStation and Switch and all other domain names, web addresses and websites used by the Company in the its business (collectively, the “Business Platforms”), or December 31, 2024, provided that all NASCAR games have been removed by the Company from the Business Platforms, and in any event, no earlier than such date that is one year following the closing of the Assignment.
(page 12)
NOTE 6 – RELATED PARTY TRANSACTIONS
In addition to the $12 million Line of Credit, the Company had other related party receivables and payables outstanding as of June 30, 2024 and December 31, 2023. Specifically, the Company owed approximately $0.1 million to its related parties as a related party payable as of June 30, 2024 and December 31, 2023. During each of the six months ended June 30, 2024 and 2023, approximately $1.0 million was paid to related parties in settlement of related party payables. The Company’s corporate headquarters, located in Miami, Florida and consisting of approximately 2,000 square feet of office space, are owned by Driven Lifestyle and are used rent-free by the Company.
On May 3, 2024 (but effective as of October 1, 2023), the Company entered into a new lease agreement with Lemon City Group, LLC, an entity controlled by Driven Lifestyle, for approximately 800 square feet of storage space located in Miami, Florida. The term of the lease is nine months, with a commencement date of October 1, 2023, consistent with the Company’s initial date of occupancy, and expiring on June 30, 2024, terminable with a 60-day written notice with no penalty. The base rent from the lease commencement date through June 30, 2024 is fixed at approximately $1,800 per month. The Company extended the lease for two additional months through August 31, 2024.
Backoffice Services Agreement
On March 23, 2023 (but effective as of January 1, 2023), the Company entered into a new Backoffice Services Agreement with Driven Lifestyle (the “Backoffice Services Agreement”) following the expiration of the Company’s prior services agreement with Driven Lifestyle. Pursuant to the Backoffice Services Agreement, Driven Lifestyle will provide accounting, payroll and benefits, human resources and other back-office services on a full-time basis to support the Company’s business functions. The term of the Backoffice Services Agreement is 12 months from the effective date. The term will automatically renew for successive 12-month terms unless either party provides written notice of nonrenewal at least 30 days prior to the end of the then current term. The Backoffice Services Agreement may be terminated by either party at any time with 60 days prior notice. Pursuant to the Backoffice Services Agreement, the Company is required to pay a monthly fee to Driven Lifestyle of $17,500. For the six months ended June 30, 2024, the Company incurred $105,000 in fees in connection with the Backoffice Services Agreement, and $52,500 for the three months ended June 30, 2024, which is presented in general and administrative expenses within the condensed consolidated statements of operations.
On August 8, 2024 (but effective as of July 1, 2024), the Company amended its Backoffice Services Agreement with Driven Lifestyle (the “Amended Backoffice Services Agreement”). Pursuant to the Amended Backoffice Services Agreement, Driven Lifestyle will provide office space, accounting, payroll and benefits, human resources and other back-office services on a full-time basis to support the Company’s business functions. The term of the Amended Backoffice Services Agreement is 12 months from the effective date. The term will automatically renew for successive 12-month terms unless either party provides written notice of nonrenewal at least 30 days prior to the end of the then current term. The Amended Backoffice Services Agreement may be terminated by either party at any time with 60 days prior notice. Pursuant to the Amended Backoffice Services Agreement, the Company is required to pay a monthly fee to Driven Lifestyle of $12,500.
(page 14)
Rent free is good, but as for the rest, privately owned parent company ought to stop taking money out of the publicly listed group company & let them focus on hiring staff needed to launch the game on multi-platforms. It can be sold full price to more people & this will lead to a higher share price. Not huge amounts but it all adds up for what is now a small operation.
Epic License Agreement
On August 11, 2020, the Company entered into a licensing agreement with Epic Games International (“Epic”) for worldwide licensing rights to Epic’s proprietary computer program known as the Unreal Engine 4. Pursuant to the agreement, upon payment of the initial license fee described below, the Company was granted a nonexclusive, non-transferable and terminable license to develop, market and sublicense (under limited circumstances and subject to conditions of the agreement) certain products using the Unreal Engine 4 for its next generation of games.
The Company will pay Epic a license fee royalty payment equal to 5% of product revenue, as defined in the licensing agreement. During the six months ended June 30, 2024, the Company paid royalties to Epic of approximately $15,000 under the agreement. Pursuant to the terms of the agreement, the Company has the right to actively develop new or existing authorized products during a 5-year period ending on August 11, 2025.
(page 18)
15,000 / 5 = 3000
x 100 =
300,000
This was $13.000 after three months ending March 31, 2024 so its paid an additional $2,000 meaning 2,000 / 5 = 400 x 100 = $40,000 paid in royalties to Epic Games during Q2 2024. I think. I dunno! Somehow managed to mess up the sums in the Q1 FY24 report OP (which I've edited to amend). Please let me know confirm if any figures I'm post are incorrect.
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License Commitments
...On April 12, 2024, the Company entered into a settlement agreement (the “BARC Settlement Agreement”) with BARC for settlement of the remaining liability in connection with the Prior BTCC License. Pursuant to the BARC Settlement Agreement, the Company and BARC, without admitting any liabilities, agreed that the Prior BTCC License Agreement was terminated without any liabilities and that any and all royalties and/or any other sums whatsoever were forgiven by BARC and discharged in their entirety in consideration of (i) the Company’s one-time payment of $225,000 to BARC and (ii) the Company and BARC entering, effective as of April 12, 2024, into a new License Agreement to use certain licensed intellectual property related to, themed as, or containing the British Touring Car Championship (the “New BTCC License Agreement). Pursuant to the BARC Settlement Agreement, the Company recognized a gain of $0.6 million which is included in gain from settlement of license liabilities on the condensed consolidated statements of operations for the three and six months ended June 30, 2024.
On April 12, 2024, the Company and BARC entered into the New BTCC License Agreement. Pursuant to the New BTCC License Agreement, BARC granted the Company a non-exclusive license to use the “British Touring Car Championship,” “BTCC” and (insofar only as this is included in the title of the British Touring Car Championship) certain title sponsor logos, the title “British Touring Car Championship,” “BTCC” and other related intellectual property rights described in the New BTCC License Agreement (collectively, the Licensed IP”) for the official Licensed IP downloadable content purchased for the rFactor 2 video game digitally sold and distributed through the Steam store (including, but not limited to purchases through Licensee’s RaceControl storefront) (the “Products”), including the Products’ development, manufacturing, marketing, publicity, advertisement, promotion, distribution, publicizing, broadcasting, streaming, making available and/or selling worldwide, continued commercial exploitation of the Products, including the right to use, modify and improve the Products developed using the Licensed IP. As consideration for the license under the New BTCC License Agreement, the Company will be obligated to pay BARC an annual royalty in the amount of 50% of Adjusted Gross Annual Sales (as defined in the New BTCC License Agreement) of official Company’s downloadable Products purchased for the rFactor 2 video game digitally sold and distributed through the Steam store during the term of the New BTCC License Agreement. The term of the New BTCC License Agreement expires on December 31, 2026. The New BTCC License Agreement further provides that, during the term of New BTCC License Agreement, the Company and BARC agree to negotiate in good faith the options for the Company to develop an official British Touring Car Championship video game and one or more esports competitions based upon the British Touring Car Championship.
(page 19)
It's the only reason I'm doing all this sleuthing, to uncover the government conspiracy led to the abduction of a Studio 397 developed BTCC game. Not saying it was Aliens, but it was Aliens.
On May 17, 2024, the Company entered into a Settlement Agreement and License with INDYCAR (“the INDYCAR Agreement”). The INDYCAR Agreement resolved any and all disputes between the Company and INDYCAR with respect to the termination of (i) the License Agreement, dated July 13, 2021, by and between INDYCAR and the Company with respect to INDYCAR SERIES racing series related gaming products (the “IndyCar Products License”) and (ii) the License Agreement, dated July 13, 2021, by and between INDYCAR and the Company with respect to INDYCAR SERIES racing series related esports events (the “IndyCar Events License,” together with the IndyCar Products License, the “Prior License Agreements”). Pursuant to the INDYCAR Agreement, subject to the satisfaction of the conditions to the effectiveness of the Agreement (as described below), the Company and INDYCAR agreed that the Company’s liabilities under the Prior License Agreements, including any and all royalties and/or any other sums or liabilities of any kind whatsoever were forgiven by INDYCAR and discharged in their entirety in consideration of the Company’s payment to INDYCAR of $250,000 on the date of the Agreement and $150,000 within 30 days following the date of execution of the Agreement. The Agreement became effective upon satisfaction of (i) the Company’s payment to INDYCAR of $250,000 on the date of the Agreement and (ii) the Company’s payment of $150,000 to INDYCAR within 30 days following the date of execution of the Agreement. Both $250,000 and $150,000 were paid to INDYCAR by the Company in May 2024. Pursuant to the INDYCAR Agreement, the Company recognized a gain of $2.5 million which is included in gain from settlement of license liabilities on the condensed consolidated statements of operations for the three and six months ended June 30, 2024.
Further, as of the effective date of the INDYCAR Agreement, the Company granted to INDYCAR a royalty-free, perpetual, irrevocable, exclusive, transferable, and sublicensable, right and license throughout the world (the “License”) to use the licensed intellectual property described in the Agreement (the “Licensed Intellectual Property”) for the purpose of developing, marketing, distributing and selling esports series and esports events related to, themed as, or containing the INDYCAR SERIES racing series and/or motorsports and/or racing (including without limitation simulation style) video gaming products related to, themed as or containing the INDYCAR SERIES racing series, on current and future versions of consoles, PCs, smart TVs, mobile applications, gaming subscription services, cloud gaming, cloud streaming, handheld products and other new generation formats. In addition, the Company agreed to provide INDYCAR from the effective date of the Agreement to December 31, 2024, upon request by INDYCAR, with up to 50 hours free-of-charge consulting services to facilitate the transition of the INDYCAR series game development using the Licensed Intellectual Property to the software developer of INDYCAR’s choice.
(page 20)
INDYCAR got paid & full rights. Doubt it would've agreed to a December 31, 2024 deadline for consultancy work if it didn't have a new developer/publishing deal ready to start work on it.
Purchase Commitment Liabilities
On April 20, 2021, the Company acquired 100% of the share capital of Studio 397 B.V. (“Studio397”) from Luminis International B.V. and Technology In Business B.V. (collectively, the “Sellers”). The purchase price originally consisted of (i) $12.8 million paid at closing and (ii) $3.2 million payable April 2022 on the first anniversary of closing, as deferred consideration (the “Deferred Payment”). On April 22, 2022 and July 21, 2022, the Company entered into certain letter agreements with the Sellers pursuant to which, among other things, the Deferred Payment installment amount due to be paid by the Company on the first anniversary of closing was reduced from $3.2 million to $1 million with the remaining $2.2 million to be settled in installments of: $330,000 to be paid on July 31, 2022; for the period August 15, 2022, through December 15, 2022 monthly installments of $100,000; and for the period beginning on January 15, 2023, monthly installments of $150,000 until the remaining Deferred Payment amount is satisfied. The letter agreements also call for 15% interest on the Deferred Payment balance effective on July 19, 2022. The remaining principal balance of the Deferred Payment as of June 30, 2024 was $0.6 million with unpaid accrued interest of $0.3 million.
(page 21)
Remains unchanged since Q1 FY24 so putting this payment off until the other more pressing financial issues are being resolved. But at some point, gotta pony up the S397 acquiring cash.
About Motorsport Games
On October 3, 2023, we sold our NASCAR licensed rights under that certain Second Amended and Restated Distribution and License Agreement with NASCAR Team Properties (“NTP”) (the “NASCAR License”) to iRacing.com Motorsport Simulations, LLC. Prior to the sale of our NASCAR License, we had been the official video game developer and publisher for the NASCAR video game racing franchise and had the exclusive right to create and organize esports leagues and events for NASCAR using our NASCAR racing video games, in each case, subject to certain limited exceptions. Concurrently with the sale of our NASCAR License, we entered into an agreement with NTP pursuant to which we have a limited non-exclusive right and license to, among other things, sell our NASCAR games and DLCs that are currently in our product portfolio through December 31, 2024 (the “NASCAR New Limited License”). For the three months ended June 30, 2024 and 2023, 55.0% and 77.7% of our total revenue, respectively, was generated from sales of our NASCAR racing video games.
(page 24)
Hardware Platforms
We derive most of our revenue from the sale of products made for PCs and video game consoles manufactured by third parties, such as Sony Interactive Entertainment Inc.’s (“Sony”) PlayStation and Microsoft Corporation’s (“Microsoft”) Xbox consoles, which comprised approximately 88.4% and 84.2% of our total revenue for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, the sale of products for Microsoft Windows via Steam comprised approximately 48.1% and 23.4% of our total revenue, respectively, and the sale of products for mobile platforms comprised approximately 1.8% and 5.2% of our total revenue, respectively. The success of our business is dependent upon consumer acceptance of video game console/PC platforms and continued growth in the installed base of these platforms. When new hardware platforms are introduced, such as those released by Sony and Microsoft in November 2020, demand for interactive entertainment used on older platforms typically declines, which may negatively affect our business during the market transition to the new consoles. The latest generation of Sony and Microsoft consoles provide “backwards compatibility” (i.e., the ability to play games for the previous generation of consoles), which could mitigate the risk of such a decline. However, we cannot be certain how backwards compatibility will affect demand for our products.
Digital Business
Players increasingly purchase our games as digital downloads, as opposed to purchasing physical discs. All of our titles that are available through retailers as packaged goods products are also available through direct digital download. For each of the six months ended June 30, 2024, and 2023, approximately 88.4% and 84.2% of our revenue from sales of video games for game consoles and PCs was through digital channels. We believe this trend of increasing direct digital downloads is primarily due to benefits relating to convenience and accessibility that digital downloads provide. In addition, as part of our digital business strategy, we aim to drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles through in-game purchases and extra content.
(page 26)
Formatting of the Q2 SEC Filing differs from
Q1 SEC Filing. Sneakily the staff numbers aren't included as they were on page 25 of the previous report (quoted below). Boo! Unless it is mentioned in either another financial document that I've missed or during the latest earnings call, I don't know if there has been any changes in this regard (TLDR: they should hire more!)
As of March 31, 2024, we have a total headcount of 65 people, made up of 46 full-time employees, including 51 dedicated to game development, to continue developing our expanded product offerings.
Back to page 26 of this filing, I'm
confused.com by these percentages of 88.4% & 84.2% when page 26 of the
Q1 SEC Filing has 49% & 57%. Is it meant to be 48.4% & 44.2%?
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We depend on a relatively small number of franchises for a significant portion of our revenues and profits.
We follow a franchise model and a significant portion of our revenues has historically been derived from products based on a relatively small number of popular franchises, including our NASCAR products, which have historically accounted for the majority of our revenue. For the years ended December 31, 2023 and 2022, revenues associated with our NASCAR franchise accounted for approximately 71.6% and 62.9% of our total revenue, respectively. Revenues associated with our NASCAR franchise accounted for approximately 51.6% and 67.5% of our total revenue for the six months ended June 30, 2024 and 2023, respectively. Following the sale of our NASCAR License and the execution of the NASCAR New Limited License, which allows us to sell our NASCAR games and DLCs that are currently in our product portfolio through December 31, 2024, we anticipate the amount of revenue to be generated by our existing NASCAR products to decline over time and to cease after December 31, 2024.
During the three months ended June 30, 2024, three customers accounted for 23.6%, 20.5% and 41.2% of our revenue and during the six months ended June 30, 2024, the same three customers accounted for 21.2%, 20.6% and 47.3% of our revenue. In addition, the same customers represented 28.7%, 31.1% and 30.8% of our accounts receivable at June 30, 2024.
(page 42)
NASCAR revenue was 49% in Q1 FY24 & 55% in Q2 FY24 but 51.6% for the 1H combined in FY24. Maybe it is possible to work out the customers from the various percentages but the main point is that even with the launch of LE MANS ULTIMATE improving the overall percentage of revenue from Steam (plus revenue from rFactor 2, KART KRAFT, bearing in mind of course the NASCAR titles are on Steam as well), it just goes to show two things. NASCAR back catalogue sales overall are still very important. Also, the revenue from sales of the console versions of the NASCAR titles represent a large source of revenue set to be lost on December 31, 2024. Forza Horizon 4 type end of life sale before delisting to help in Q3 & especially Q4 FY24?
Motorsport Games has to put itself in a more sustainable financial position by the end of this year. But that means [BROKEN RECORD] having enough staff at Studio 397 to work on LE MANS ULTIMATE so complete the work necessary to launch version 1.0 on console/PC at full price alongside the final part of the Season Pass in Early 2025. [/BROKEN RECORD] Agreed?
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game suspended. BTCC calls TOCA time.
