Business Context and Reporting Period
Motorsport Games Inc. filed this Form 8-K regarding actions approved at its November 9, 2022 special meeting of stockholders. The filing was signed on November 10, 2022. It is a corporate-actions filing and does not report quarterly or annual operating results.
Key Financial and Capital Markets Information
- Reverse stock split: The board approved a 1-for-10 reverse split of the Company’s Class A and Class B common stock, effective at 12:01 a.m. Eastern time on November 10, 2022. The board had authority to select a ratio of up to 1-for-30 but used 1-for-10.
- Every 10 shares were combined into one share, with no change to par value per share. Fractional shares will be paid in cash based on the applicable Nasdaq closing trading price.
- Class A common stock continued trading on Nasdaq under the symbol MSGM on a reverse-split-adjusted basis. The post-split CUSIP is 62011B 201.
- The filing provides no revenue, profit, cash flow, margin, debt, liquidity, or other operating-financial metrics.
Material Changes and Corporate Actions
- Stockholders approved amendments allowing actions required or permitted to be taken by stockholders to be effected by written consent, both in the Certificate of Incorporation and the Bylaws.
- The Bylaws Amendment was executed on November 9, 2022, and the Certificate of Amendment was filed with the Delaware Secretary of State the same day.
- The 2021 Equity Incentive Plan was amended and restated on November 10, 2022. Shares authorized under the plan were proportionally reduced from 1,000,000 to 100,000, and outstanding awards and exercise prices were adjusted for the reverse split. No other plan amendments were reported.
Voting Results
| Proposal | For | Against | Abstentions | Broker Non-Votes |
|---|---|---|---|---|
| 1. Reverse stock split | 79,723,521 | 253,473 | 23,207 | 0 |
| 2. Written consent amendment to Certificate of Incorporation | 78,006,388 | 123,567 | 40,008 | 1,830,238 |
| 3. Written consent amendment to Bylaws | 78,003,879 | 125,926 | 40,158 | 1,830,238 |
Outlook, Risks, and Unusual Items
Management identified risks related to the reverse split, including possible further declines in the stock price, failure to broaden institutional or other investor interest, and failure to satisfy Nasdaq’s minimum closing bid-price requirement. The filing also identifies risks involving the Company’s ability to secure additional capital, continue as a going concern, respond to Nasdaq inquiries, regain compliance with Nasdaq listing rules, and identify new independent directors.
The filing contains no financial guidance. Forward-looking statements are subject to customary risks and uncertainties, and the Company disclaims an obligation to update them except as required by law.
Important Facts for Investors to Verify
- Confirm the effective date and 1-for-10 ratio of the reverse stock split and the resulting share count and trading price adjustments.
- Review the Certificate of Amendment and Bylaws Amendment for the precise governance changes.
- Review the amended equity plan for adjustments to authorized shares, outstanding awards, and exercise prices.
- Monitor Nasdaq listing compliance, including the minimum bid-price requirement and board-independence requirements.
- Review subsequent SEC filings for liquidity, capital-raising activity, going-concern disclosures, and any additional Nasdaq correspondence.