Motorsport Games Inc. — Form 8-K Summary
Business context and reporting period
This Form 8-K reports events occurring on or around March 26, 2021. The filing was signed and the share purchase agreement was dated April 1, 2021, creating a date inconsistency in the filing record. Motorsport Games is acquiring Studio397 BV, a developer associated with the rFactor 2 racing simulation platform.
Transaction and financial obligations
- Motorsport Games agreed to acquire 100% of Studio397 from Technology In Business B.V. for $16.0 million.
- The consideration consists of a $12.8 million closing payment and a $3.2 million deferred payment due on the first anniversary of closing.
- The deferred payment will be secured by a pledge of 20% of Studio397’s shares. If the deferred amount remains unpaid for 30 business days after notice, voting rights attached to the pledged shares may transfer to the seller.
- The filing does not provide revenue, profit, cash flow, margin, cash balance, total debt, or liquidity figures.
Material changes, conditions, and unusual items
- Closing was subject to customary conditions, including Studio397 obtaining unencumbered ownership of intellectual property and other rights related to rFactor 2, its brand, content, software, and derivative products.
- Closing was expected on or before April 30, 2021. Motorsport Games could terminate the agreement if conditions were not satisfied or waived by April 30, 2021 at 23:59 CET.
- Technology In Business agreed to fund Studio397 from the closing proceeds so Studio397 could settle royalty amounts owed to Image Space Incorporated under a December 2020 buy-out agreement.
- The acquisition creates a direct financial obligation for the deferred purchase price and may require substantial cash funding at closing; the filing does not specify the funding source.
Management compensation and equity awards
- The compensation committee granted Chief Financial Officer Jonathan New an option to purchase 3,077 shares of Class A common stock under the 2021 Equity Incentive Plan. The option vests in three equal annual installments beginning March 26, 2022; the exercise price is not provided in the filing text.
- The board approved a $300,000 annual bonus for Chief Executive Officer Dmitry Kozko for 2020. Mr. Kozko did not participate in or vote on the approval.
Investor verification points
- Verify whether the Studio397 acquisition closed, the final closing date, and whether the required intellectual-property transfers were completed.
- Verify how the $12.8 million closing payment and the $3.2 million deferred payment were financed.
- Review subsequent filings for the acquisition’s effect on revenue, expenses, cash flow, goodwill, intangible assets, and liquidity.
- Confirm the royalty settlement with Image Space Incorporated and any remaining obligations.
- Review the complete, partially redacted share purchase agreement for additional indemnities, covenants, restrictions, and termination provisions.
- Reconcile the March 26 event date with the April 1 agreement date and filing signature date.