Motorsport Games Inc. — Form 8-K Summary
Business Context and Reporting Period
On April 20, 2021, Motorsport Games Inc. completed the acquisition of 100% of the share capital of Studio397 BV from Technology In Business B.V. The transaction expands Motorsport Games’ technology and development capabilities through Studio397’s rFactor Technology platform. This current report was signed and filed on April 22, 2021.
Transaction Terms and Key Financial Information
| Item | Details |
|---|---|
| Total purchase price | $16.0 million |
| Payment at closing | $12.8 million |
| Deferred payment | $3.2 million payable on the first anniversary of closing |
| Security for deferred payment | Pledge of 20% of Studio397’s shares; voting rights may transfer to TIB if the deferred payment is not made within 30 business days after notice of nonpayment |
| Funding of Studio397 obligations | TIB agreed to fund Studio397 from closing proceeds so Studio397 could settle royalty amounts owed to Image Space Incorporated |
The filing does not provide revenue, profit, cash flow, margin, debt, liquidity, purchase-accounting allocation, or pro forma financial information.
Material Changes and Related Arrangements
- Studio397 became a wholly owned subsidiary of Motorsport Games.
- Before the acquisition, Motorsport Games had entered into a software development and license agreement with Studio397 for integration of rFactor Technology into the next-generation NASCAR console game, NASCAR NXT, and potential sequels.
- The license includes one-time and platform-specific license fees, as well as monthly development fees tied to milestones. The filing does not disclose the amounts of these fees.
- The Company and Luminis International BV had previously entered into a right of first refusal covering certain potential sales of Studio397 shares or assets that could result in a change of control or affect specified agreements.
- The filing states that the license and right of first refusal were unrelated to determining the purchase price.
Outlook, Risks, Contingencies, and Unusual Items
- The deferred purchase price creates a future cash obligation of $3.2 million due approximately one year after closing.
- The pledged-share arrangement could result in TIB receiving voting rights over 20% of Studio397’s shares if the deferred payment is not timely made after notice.
- Future costs may arise under the development and license agreement, including milestone-based development fees and additional platform license fees.
- The filing does not provide management guidance, quantified synergies, expected financial contribution from Studio397, or an updated outlook.
Important Facts for Investors to Verify
- Confirm the funding source and cash impact of the $12.8 million closing payment.
- Review subsequent filings for payment or refinancing of the $3.2 million deferred obligation.
- Assess the purchase-price allocation, goodwill, intangible assets, and any acquisition-related charges when disclosed in financial statements.
- Review the economic terms and milestone status of the NASCAR NXT development and license arrangement.
- Monitor Studio397’s contribution to revenue, operating results, cash flow, and liquidity in subsequent reporting periods.