UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE
14A
(Rule14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
| Filed
by the Registrant ☒ |
|
Filed
by a Party other than the Registrant ☐ |
Check
the appropriate box:
| ☐ |
Preliminary
Proxy Statement |
| ☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) |
| ☒ |
Definitive
Proxy Statement |
| ☐ |
Definitive
Additional Materials |
| ☐ |
Soliciting
Material under §240.14a-12 |
MOTORSPORT
GAMES INC.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
| ☒ |
No
fee required. |
| ☐ |
Fee
paid previously with preliminary materials |
| ☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules14a-6(i)(1) and 0-11 |
MOTORSPORT
GAMES INC.
2025
Annual MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, April 25, 2025
Dear
Stockholders:
You
are cordially invited to attend the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) of Motorsport
Games Inc., a Delaware corporation (the “Company”), to be held on April 25, 2025, at 11:00 a.m. local time,
at the Company’s corporate headquarters, located at 5972 NE 4th Avenue, Miami, Florida 33137.
At
the Annual Meeting, you will be asked:
| |
1. |
to
elect two Class I directors of the Company to serve for a two-year term expiring in 2027 (Proposal No. 1); |
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|
|
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2. |
to approve an amendment to the Amended and Restated Motorsport Games Inc.
2021 Equity Incentive Plan (the “Incentive Plan”) to increase the number of shares of the Company’s Class
A common stock, par value $0.0001 per share (the “Class A common stock”) available for awards under the Incentive
Plan by 200,000 shares (Proposal No. 2); |
| |
|
|
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3. |
to
ratify the selection of Grassi & Co., CPAs, P.C. as the Company’s independent registered public accounting firm for the
year ending December 31, 2025 (Proposal No. 3); |
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|
|
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4. |
to
approve the exercise of the warrants issued by the Company on July 29, 2024 to purchase up to an aggregate of 949,310 shares of Class
A common stock under applicable rules and regulations of the Nasdaq Stock Market LLC (“Nasdaq”) (Proposal No.
4); |
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|
|
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5. |
to
approve a proposal to adjourn the Annual Meeting to a later date, if necessary or appropriate, to permit further solicitation and
vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of Proposal No.
4 (Proposal No. 5). |
A
Proxy Statement describing these matters to be acted upon at the Annual Meeting is attached, along with the Notice of 2025 Annual Meeting,
a copy of our Annual Report for the year ended December 31, 2024, and a proxy card or voting instruction form, as applicable. No other
matters will be considered at the Annual Meeting.
YOUR
VOTE IS IMPORTANT
On
or about March 21, 2025, we will commence mailing the proxy materials, including the Proxy Statement. The close of business on
March 11, 2025 has been fixed as the record date for the determination of stockholders of the Company entitled to notice of, and to vote
at, the Annual Meeting. Only stockholders of record at the close of business on March 11, 2025 are entitled to notice of, and to vote
at, the Annual Meeting and any adjournment or postponement thereof.
The
enclosed proxy card or voting instruction form, as applicable, will entitle you to vote your shares on the matters presented at the Annual
Meeting, even if you are unable to attend in person. Please mark the proxy card to indicate your vote, date and sign the proxy card and
return it in the enclosed envelope as soon as possible for receipt prior to the Annual Meeting, or follow the instructions in the accompanying
proxy materials to vote via the internet. Regardless of the number of shares you own, please be sure you are represented at the Annual
Meeting either by attending in person or by returning your proxy by mail or voting on the internet as soon as possible.
Our
Board recommends that you vote “FOR” each of the nominees and “FOR” Proposal Nos. 2–5.
Our
Board is deeply committed to the Company, its stockholders and enhancing stockholder value and we thank you for your ongoing support
and continued interest in Motorsport Games.
| |
Sincerely, |
| |
|
| |
/s/ Stephen
Hood |
| |
Stephen
Hood
Chief
Executive Officer and President |
| |
Miami,
Florida |
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March
21, 2025 |
MOTORSPORT
GAMES INC.
Notice
of 2025 Annual Meeting of Stockholders
TO BE HELD ON FRIDAY, APRIL 25, 2025, AT 11:00 A.M.
LOCAL
TIME
TO
OUR STOCKHOLDERS:
NOTICE
IS HEREBY GIVEN that the 2025 Annual Meeting of Stockholders
(the “Annual Meeting”) of Motorsport Games Inc., a Delaware corporation (the “Company”),
will be held on Friday, April 25, 2025, at 11:00 a.m. local time, at the Company’s corporate headquarters, located at 5972 NE 4th
Avenue, Miami, Florida 33137, to consider the following matters, as more fully described in the proxy statement accompanying this notice:
| |
1. |
to
elect two Class I directors of the Company to serve for a two-year term expiring in 2027 (Proposal No. 1); |
| |
|
|
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2. |
to approve an amendment to the Amended and Restated Motorsport Games Inc.
2021 Equity Incentive Plan (the “Incentive Plan”) to increase the number of shares of the Company’s Class
A common stock, par value $0.0001 per share (the “Class A common stock”) available for awards under the Incentive
Plan by 200,000 shares (Proposal No. 2); |
| |
|
|
| |
3. |
to
ratify the selection of Grassi & Co., CPAs, P.C. as the Company’s independent registered public accounting firm for the
year ending December 31, 2025 (Proposal No. 3); |
| |
|
|
| |
4. |
to
approve the exercise of the warrants issued by the Company on July 29, 2024 to purchase up to an aggregate of 949,310 shares of Class
A common stock, under applicable rules and regulations of the Nasdaq Stock Market LLC (“Nasdaq”) (Proposal
No. 4); |
| |
|
|
| |
5. |
to
approve a proposal to adjourn the Annual Meeting to a later date, if necessary or appropriate, to permit further solicitation and
vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of Proposal No.
4 (Proposal No. 5). |
Stockholders
of record at the close of business on March 11, 2025 are entitled to notice of and to vote at our Annual Meeting and any adjournment
or postponement thereof. All stockholders are cordially invited to attend the Annual Meeting in person.
On
or about March 21, 2025, we will commence mailing this proxy statement, along with a copy of our Annual Report for the year ended
December 31, 2024, and a proxy card or voting instruction form, as applicable. This Notice of Annual Meeting of Stockholders, the proxy
statement, our annual report, and the form of proxy card are available at www.proxyvote.com.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FRIDAY, APRIL 25, 2025
YOUR
VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE SUBMIT A PROXY TO HAVE YOUR SHARES VOTED AS
PROMPTLY AS POSSIBLE BY USING THE INTERNET, OR BY SIGNING, DATING AND RETURNING BY MAIL THE PROXY CARD ENCLOSED WITH THE PROXY MATERIALS.
IF YOU DO NOT RECEIVE THE PROXY MATERIALS IN PRINTED FORM AND WOULD LIKE TO SUBMIT A PROXY BY MAIL, YOU MAY REQUEST A PRINTED COPY OF
THE PROXY MATERIALS (INCLUDING THE PROXY card and the annual report), AND SUCH MATERIALS WILL BE SENT TO YOU.
Our
Board recommends that you vote “FOR” each of the nominees and “FOR” Proposal Nos. 2–5.
| |
BY
ORDER OF THE BOARD OF DIRECTORS |
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|
| |
Sincerely, |
| |
|
| |
/s/
Stephen Hood |
| |
Stephen
Hood
Chief
Executive Officer and President |
| |
|
| Miami,
Florida |
|
| March
21, 2025 |
|
Table
of Contents
MOTORSPORT
GAMES INC.
5972 NE 4th Avenue
Miami, Florida 33137
2025
Annual MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, APRIL 25, 2025
PROXY
STATEMENT
General
Information
We
are providing these proxy materials to holders of shares of Class A common stock, $0.0001 par value per share (the “Class
A common stock”) and Class B common stock $0.0001 par value per share (the “Class B common stock”),
of Motorsport Games Inc., a Delaware corporation (referred to as “Motorsport Games,” the “Company,”
“we,” or “us”), in connection with the solicitation by the Board of Directors (the
“Board” or “Board of Directors”) of Motorsport Games of proxies to be voted at our
Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Friday, April 25, 2025, beginning at 11:00
a.m., local time at 5972 NE 4th Avenue, Miami, Florida 33137, and at any adjournment or postponement of the Annual Meeting.
The
purpose of the Annual Meeting and the matters to be acted on are stated in the accompanying Notice of Annual Meeting. No other business
will come before the Annual Meeting.
Our
Board of Directors is soliciting votes FOR the election of Andrew P. Jacobson and Navtej Singh Sunner as Class I directors of
the Company to serve for a two-year term expiring in 2027 (Proposal No. 1 also referred to as the “Election of Directors”);
FOR the approval of an amendment to the Amended and Restated Motorsport Games Inc. 2021 Equity Incentive Plan (the “Incentive
Plan”) to increase the number of shares of the Company’s Class A common stock available for awards under the Incentive
Plan by 200,000 shares (Proposal No. 2 also referred to as the “ Incentive Plan Increase Proposal”);
FOR the ratification of the selection of Grassi & Co., CPAs, P.C. as the Company’s independent registered public accounting
firm for the year ending December 31, 2025 (Proposal No. 3 also referred to as the “Auditor Ratification Proposal”);
FOR the approval to exercise warrants issued by the Company on July 29, 2024 to purchase up to an aggregate of 949,310 shares
of the Company’s Class A common stock under applicable rules and regulations of the Nasdaq Stock Market LLC (“Nasdaq”)
(Proposal No. 4 also referred to as the “Warrant Exercise Proposal”); and FOR the approval of
a proposal to adjourn the Annual Meeting to a later date, if necessary or appropriate, to permit further solicitation and vote of proxies
in the event that there are insufficient votes for, or otherwise in connection with, the approval of Proposal No. 4 (Proposal
No. 5 also referred to as the “Adjournment Proposal”).
On
or about March 21, 2025, we will begin mailing this proxy statement and the annual report for the year ended December 31, 2024.
The annual report and proxy statement are also available at www.proxyvote.com.
Annual
Meeting Admission
All
stockholders are welcome to attend the Annual Meeting. If you attend, please note that you will be asked to present government-issued
identification (such as a driver’s license or passport) and evidence of your share ownership of our Class A common stock on March
11, 2025, the record date for the Annual Meeting (the “Record Date”). This can be your proxy card if you are
a stockholder of record. If your shares are held beneficially in the name of a bank, broker or other holder of record and you plan to
attend the Annual Meeting, you will be required to present proof of your ownership of our Class A common stock on the Record Date, such
as a bank or brokerage account statement and voting instruction card, to be admitted to the Annual Meeting.
How
To Vote
Stockholders
of Record
If
your shares are registered directly in your name with Motorsport Games’s transfer agent, ClearTrust, LLC, you are considered the
“stockholder of record” of those shares and this proxy statement is being sent directly to you by Motorsport Games. If you
are a stockholder of record, you can vote your shares in one of two ways: either by proxy or in person at the Annual Meeting. If you
choose to have your shares voted by proxy, you may submit a proxy by using the internet (please visit www.proxyvote.com and follow
the instructions), or by completing and returning by mail the proxy card you have received. Whichever method you use, each valid proxy
received in time will be voted at the Annual Meeting in accordance with your instructions.
Submit
a Proxy by Mail
If
you choose to submit a proxy by mail, simply mark, date and sign your proxy card and return it in the postage-paid envelope provided.
Submit
a Proxy by Internet
If
you choose to submit a proxy by internet, go to www.proxyvote.com to complete an electronic proxy card. Have your proxy card or
voting instruction card in hand when you access the website and follow the instructions to obtain your records and to create an electronic
voting instruction form. Your internet vote must be received by 11:59 p.m. Eastern Daylight Time on April 24, 2025 to be counted.
Submit
a Proxy at the Annual Meeting
Submitting
a proxy by mail or internet will not limit your right to vote at the Annual Meeting if you decide to attend in person.
Beneficial
Owners of Shares Held in Street Name
If
your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner”
of shares held in street name, and this proxy statement is being forwarded to you by your broker, bank or nominee, who is considered
the stockholder of record of those shares. As a beneficial owner, you have the right to direct your broker, bank or nominee on how to
vote the shares held in your account. However, since you are not a stockholder of record, you may not vote these shares in person at
the Annual Meeting unless you bring with you a legal proxy from the stockholder of record. A legal proxy may be obtained from your broker,
bank or nominee. If you do not wish to vote in person or you will not be attending the Annual Meeting, you may instruct your broker,
bank or nominee to vote your shares pursuant to voting instructions you will receive from your broker, bank or nominee describing the
available processes for voting your stock.
Questions
And Answers About The Annual Meeting
Q:
What information is contained in this proxy statement?
A:
The information included in this proxy statement relates to the proposals to be voted on at the Annual Meeting, the voting process, and
other required information.
Q:
How do I get electronic access to the proxy materials?
A:
This proxy statement is available at www.proxyvote.com.
Q:
What items of business will be voted on at the Annual Meeting?
A:
The five (5) items of business scheduled to be voted on at the Annual Meeting are:
Proposal
No. 1—Election of Directors. To elect two Class I directors of the Company to serve for a two-year term expiring in 2027;
Proposal No. 2—Incentive Plan Increase
Proposal. To approve an amendment to the Incentive Plan to increase the number of shares of the Company’s Class A common stock
available for awards under the Incentive Plan by 200,000 shares;
Proposal
No. 3—Auditor Ratification Proposal. To ratify the selection of Grassi & Co., CPAs, P.C. as the Company’s
independent registered public accounting firm for the year ending December 31, 2025;
Proposal
No. 4—Warrant Exercise Proposal. To approve the exercise of the warrants issued by the Company on July 29, 2024 to purchase
up to an aggregate of 949,310 shares of Class A common stock under applicable rules and regulations of Nasdaq; and
Proposal
No. 5—Adjournment Proposal. To approve a proposal to adjourn the Annual Meeting to a later date, if necessary or appropriate,
to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with,
the approval of the Warrant Exercise Proposal.
Other
than these proposals, no other proposals will be presented for a vote at the Annual Meeting.
Q.
How does the Board of Directors recommend that I vote?
A:
The Board of Directors recommends that you vote your shares (1) FOR the election of Messrs. Jacobson and Sunner as Class I directors;
(2) FOR the Incentive Plan Increase Proposal; (3) FOR the Auditor Ratification Proposal; (4) FOR the
Warrant Exercise Proposal; and (5) FOR the Adjournment Proposal.
Q:
Who is entitled to vote at the Annual Meeting?
A:
Holders of record of our Class A common stock and Class B common stock as of the close of business on March 11, 2025, the Record Date
for the Annual Meeting, will be entitled to notice of and to vote at the Annual Meeting and at any adjournments or postponements thereof.
Holders of record of shares of common stock are entitled to vote on all matters brought before the Annual Meeting.
As
of the Record Date, there were 3,183,558 shares of Class A common stock and 700,000 shares of Class B common stock outstanding and entitled
to vote. Holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are entitled to ten votes
per share.
Q.
What shares can I vote?
A:
You may vote or cause to be voted all shares of Class A common stock and Class B common stock owned by you as of the close of business
on March 11, 2025, the Record Date. These shares include: (1) shares held directly in your name as a stockholder of record; and (2) shares
held for you, as the beneficial owner, through a broker or other nominee, such as a bank.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
Most of our stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned beneficially.
Record
Holder. If your shares are registered directly in your name on the books of Motorsport Games maintained with Motorsport Games’
transfer agent, ClearTrust, LLC, you are considered the “record holder” of those shares, and this proxy statement is sent
directly to you by Motorsport Games. As the stockholder of record, you have the right to grant your voting proxy directly or to directly
vote in person at the Annual Meeting.
Beneficial
Owner of Shares Held in Street Name. If your shares are held in a stock brokerage account or by a bank or other nominee, you are
considered the “beneficial owner” of shares held in street name (also called a “street name” holder), and this
proxy statement is forwarded to you by your broker, bank or other nominee. As a beneficial owner, you have the right to direct your broker,
bank or other nominee on how to vote the shares held in your account. However, since you are not a stockholder of record, you may not
vote these shares in person at the Annual Meeting unless you bring with you a legal proxy from the stockholder of record. A legal proxy
may be obtained from your broker, bank or nominee. If you do not wish to vote in person or you will not be attending the Annual Meeting,
instruct your broker, bank or nominee to vote your shares pursuant to voting instructions you will receive from your broker, bank or
nominee describing the available processes for voting your stock.
If
you are a beneficial owner and do not instruct your broker, bank, or nominee how to vote your shares, the question of whether your broker,
bank or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (the “NYSE”)
deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed”
shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters.
If the broker or nominee that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter,
the organization that holds your shares will not be able to vote your shares on such matter, often referred to as a broker non-vote.
Under
the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or
privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation
(including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation),
and certain corporate governance proposals, even if management-supported. We believe that Proposal No. 1, Proposal No. 2, Proposal
No. 4, and Proposal No. 5 are non-routine matters. Accordingly, your broker, bank or nominee may not vote your shares on
Proposal No. 1, Proposal No. 2, Proposal No. 4, or Proposal No. 5 without your instructions. We believe that Proposal
No. 3 is a routine matter. Accordingly, your broker, bank or nominee may not vote your shares on Proposal No. 3 without
your instructions.
Q:
Can I change my vote or revoke my proxy?
A:
You may change your vote or revoke your proxy at any time before the final vote at the Annual Meeting. To change your vote or revoke
your proxy if you are the record holder, you may (1) notify our Corporate Secretary in writing at Motorsport Games Inc., 5972 NE 4th
Avenue, Miami, Florida 33137; (2) submit a later-dated proxy (either by mail or internet), subject to the voting deadlines that
are described on the proxy card; (3) deliver to our Corporate Secretary another duly executed proxy bearing a later date; or (4) by appearing
at the Annual Meeting in person and voting your shares. Attendance at the meeting will not, by itself, change or revoke a proxy unless
you specifically so request.
For
shares you hold beneficially, you may change or revoke your vote by following instructions provided by your broker, bank or nominee.
Q:
What if I return a proxy card or otherwise submit a proxy but do not make specific choices?
A:
If you provide specific instructions, your shares will be voted as you instruct. If you are a record holder and submit your proxy card
with no further instructions, your shares will be voted in accordance with the recommendations of the Board of Directors, namely (1)
FOR the election of Messrs. Jacobson and Sunner as Class I directors; (2) FOR the Auditor Ratification Proposal; (3) FOR
the Warrant Exercise Proposal; and (4) FOR the Adjournment Proposal.
Q:
What is a quorum and why is it necessary?
A:
Conducting business at the Annual Meeting requires a quorum. The presence, either in person or by proxy, of holders of a majority of
the voting power of the issued and outstanding shares of stock entitled to vote on March 11, 2025 is necessary to constitute a quorum.
Because, as mentioned above, we believe that banks, brokers and nominee holders of record will have discretionary voting authority with
respect Proposal No. 3, if a beneficial owner of shares held in “street name” does not give voting instructions to
the broker, bank or nominee holder of record, such broker, bank or nominee holder of record may vote such shares with respect to Proposal
No. 3, which means such shares will be included in determining whether a quorum is present. Abstentions will be included in determining
whether a quorum is present. If you hold your shares in street name, we encourage you to provide voting instructions to the broker, bank
or nominee that holds your shares. If there is no quorum, the chairperson of the meeting or the holders of a majority of the shares represented
at the meeting may adjourn the meeting to another date.
Q:
What is the voting requirement to approve each of the proposals?
A:
Proposal No. 1—Election of Directors. Nominees for director shall be elected who receive the affirmative vote of the holders
of a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on Proposal
No. 1 (the Election of Directors). Abstentions and broker non-votes will have no effect on the outcome of the vote with respect to this
proposal.
Proposal No. 2— Incentive Plan Increase
Proposal. To be approved, Proposal No. 2 (the Auditor Ratification Proposal), must receive the affirmative vote of the holders of
a majority of the voting power of the shares present in person or represented by proxy and entitled to vote on that proposal at the Annual
Meeting. Abstentions will have the same effect as an AGAINST vote. Broker non-votes will have no effect on the outcome of the
vote with respect to this proposal.
Proposal
No. 3—Auditor Ratification Proposal. To be approved, Proposal No. 3 (the Auditor Ratification Proposal), must
receive the affirmative vote of the holders of a majority of the voting power of the shares present in person or represented by proxy
and entitled to vote on that proposal at the Annual Meeting. Abstentions will have the same effect as an AGAINST vote. Broker
non-votes are not expected on this proposal because we believe it is a routine matter.
Proposal
No. 4—Warrant Exercise Proposal. To be approved, Proposal No. 4 (the Warrant Exercise Proposal), must receive
the affirmative vote of the holders of a majority of the voting power of the shares present in person or represented by proxy and entitled
to vote on that proposal at the Annual Meeting. Abstentions will have the same effect as an AGAINST vote. Broker non-votes will
have no effect on the outcome of the vote with respect to this proposal.
Proposal
No. 5—Adjournment Proposal. To be approved, Proposal No. 5 (the Adjournment Proposal), must receive the
affirmative vote of the holders of a majority of the voting power of the shares present in person or represented by proxy and entitled
to vote on that proposal at the Annual Meeting. Abstentions will have the same effect as an AGAINST vote. Broker non-votes will
have no effect on the outcome of the vote with respect to this proposal.
We
recommend you vote FOR each of the director nominees and FOR the other four (4) proposals.
Q:
What should I do if I receive more than one proxy statement?
A:
You may receive more than one proxy statement. For example, if you are a stockholder of record and your shares are registered in more
than one name, you will receive more than one proxy statement. Please follow the voting instructions on all of the proxy statements to
ensure that all of your shares are voted.
Q:
Where can I find the voting results of the Annual Meeting?
A:
We intend to announce voting results at the Annual Meeting and publish final results in a Current Report on Form 8-K, which we expect
will be filed within four (4) business days of the Annual Meeting. If final voting results are not available to us in time to file a
Current Report on Form 8-K within four (4) business days after the Annual Meeting, we intend to file a Current Report on Form 8-K to
publish preliminary results and, within four (4) business days after the final results are known to us, file an additional Current Report
on Form 8-K to publish the final results.
Q:
Who will count the votes?
A:
One or more inspectors of election will tabulate the votes.
Q:
Is my vote confidential?
A:
Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your
voting privacy. Your vote will not be disclosed, either within Motorsport Games or to anyone else, except: (1) as necessary to meet applicable
legal requirements; (2) to allow for the tabulation of votes and certification of the vote; or (3) to facilitate a successful proxy solicitation.
Q:
Who will bear the cost of soliciting votes for the Annual Meeting?
A:
The Board of Directors is making this solicitation on behalf of Motorsport Games, which will pay the entire cost of preparing, assembling,
printing, mailing, and distributing these proxy materials. We are paying the cost of this solicitation. In addition to solicitation by
mail, proxies may be solicited in person or by telephone, e-mail, facsimile or other means by our officers or regular employees, without
paying them any additional compensation or remuneration. Arrangements have also been made with brokers, dealers, banks, voting trustees
and other custodians, nominees and fiduciaries to forward proxy materials and annual reports to the beneficial owners of the shares held
of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing.
Q:
When are stockholder proposals and director nominations due for next year’s annual meeting?
A:
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by November
21, 2025, to the attention of the Corporate Secretary of Motorsport Games Inc. at 5972 NE 4th Avenue, Miami, Florida
33137 and you must comply with all applicable requirements of Rule 14a-8 (“Rule 14a-8”) promulgated under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Stockholders of record may also
submit a proposal (including a director nomination) in accordance with Motorsport Games’s bylaws, as amended (the
“Bylaws”), which contain additional requirements about advance notice of stockholder proposals and
director nominations. Generally, timely notice of any director nomination or other proposal that any stockholder intends to present
at the 2026 Annual Meeting of Stockholders (the “2026 Annual Meeting”), but does not intend to have
included in the proxy materials prepared by the Company in connection with the 2026 Annual Meeting, must be delivered in writing to
the Corporate Secretary at the address above no less than 60 days nor more than 90 days before the first anniversary of the prior
year’s meeting. However, if we hold the 2026 Annual Meeting on a date that is advanced more than 30 days prior to such
anniversary date or delayed more than 60 days after such anniversary date then to be timely such notice must be received by us no
later than the later of 70 days prior to the date of the meeting or the 10th day following the day on which public announcement of
the date of the meeting was made. See “STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE
2026 ANNUAL MEETING OF STOCKHOLDERS” elsewhere in this proxy statement for additional information regarding stockholder
proposals and director nominations at our 2026 Annual Meeting. In addition to satisfying the foregoing requirements, to comply with
the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s
nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than February
24, 2026. If such meeting date is changed by more than 30 days, then notice pursuant to Rule 14a-19 must be provided by the later of
60 calendar days prior to the date of the annual meeting or the 10th calendar day following the day on which public
announcement of the date of the annual meeting is first made.
Q:
Who can help answer my questions?
A:
If you have any questions about the Annual Meeting or how to vote or revoke your proxy, or you need additional copies of this proxy statement
or voting materials, you should contact the Corporate Secretary, Motorsport Games Inc., at 5972 NE 4th Avenue, Miami, Florida
33137 or by phone at (305) 507-8799.
Proposal
No. 1
Election of Directors
Election
of Messrs. Jacobson and Sunner as Class I directors of the Company, who shall each be an independent director as defined by applicable
rules, to serve for a two-year term expiring in 2027
The
Board consists of three members. In accordance with the Company’s certificate of incorporation, our Board of Directors is divided
into two classes with staggered two-year terms as follows:
| |
● |
the
Class I directors are Messrs. Jacobson and Sunner, whose terms will expire at the Annual Meeting. Our Board of Directors has elected
the two Class 1 directors for re-election as directors. If elected at the Annual Meeting, each nominee would serve as a Class 1 director
for two years following the Annual Meeting until the 2027 Annual Meeting and until their respective successors are elected and qualified
or until such director’s earlier death, resignation or removal or as otherwise provided in the bylaws of the Company For more
information, see “Proposal No. 1—Election of Directors,” above. |
| |
|
|
| |
● |
the
Class II director is Mr. Delta, whose term will expire at the 2026 Annual Meeting and until his respective successor is elected and
qualified or as otherwise provided in the bylaws of the Company. |
Vacancies
on the Board may be filled only by a majority of the directors then in office (although less than a quorum) or by the sole remaining
director.
Each
director who is elected at a meeting of stockholders shall hold office for a term ending on the date of the second annual meeting of
stockholders following the annual meeting of stockholders at which such director was elected. Each director who is elected to fill a
vacancy shall hold office for a term that shall coincide with the term of the Class to which such director shall have been elected.
The
term of each director will continue until the election and qualification of his or her successor and be subject to his or her earlier
death, disqualification, resignation or removal.
Directors
are elected by a plurality of the voting power of the shares present in person or represented by proxy at the Annual Meeting and entitled
to vote on the election of directors. Accordingly, the two nominees receiving the highest number of affirmative votes will be elected.
Proxies may not be voted for a greater number of persons than the number of nominees named. Shares represented by executed proxies will
be voted, if authority to do so is not withheld, for the election of the two nominees named below. If any nominee becomes unavailable
for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the
election of a substitute nominee proposed by us. Each person nominated for election has agreed to serve if elected. The Company’s
management has no reason to believe that any nominee will be unable to serve.
The
following is a brief biography of each nominee and each director whose term will continue after the Annual Meeting.
Nominees
For Election to Serve as Class I Directors
Andrew
P. Jacobson, 53, has served as a member of the Board since December 23, 2022. Mr. Jacobson is currently Head of OEM and Agency Development
for Impel.AI, an automotive AI SaaS provider. From 2019 to 2024, Mr. Jacobson served as the Vice President of Automotive Client Development,
Digital Media Solutions of Epsilon, an outcome-based marketing company. Mr. Jacobson is also a founding partner of Lakeview Midwest,
L.L.C. (2016 to present), a consulting company focused on advising investors, media companies, ad tech firms, manufacturers and advertisers
on all aspects of digital media management, marketing, and sales. Additionally, Mr. Jacobson has held leadership roles in Sales and Marketing
at Cars.com, an online automotive shopping platform, VerticalScope Inc., a social media publisher, as well as various roles at Ford Motor
Company, Jaguar N.A. and Lincoln. Mr. Jacobson received a B.A. in Economics from Pomona College and an M.B.A., Marketing and Organization
Behavior from the Kellogg School of Management at Northwestern University. Our Nominating Committee believes that Mr. Jacobson’s
extensive expertise in the automotive industry qualify him to serve on our Board of Directors.
Navtej
Singh Sunner, 54, has served as a member of the Board since January 12, 2023. Mr. Sunner is a highly experienced lawyer and business
development expert immersed in the video games industry. After qualifying as a lawyer with Pinsent Masons, he spent several years as
Head of Legal at Codemasters as well as General Counsel at Mastertronic Group. Following a further period practicing law as Co-Head of
Interactive Entertainment for Osborne Clarke and, subsequently, as Head of Computer Games for Wiggin, Mr. Sunner worked with Japanese
games company GREE. Mr. Sunner then spent time as Commercial Director for a games studio at Microsoft as well as being on the Board of
esports company EGL. Currently, in addition to his video game consultancy “Navatron,” Mr. Sunner is on the advisory boards
of mobile games studio Reality Games and console games developer Radical Forge. Nav’s long career in the video games industry has
included extensively being involved with legal and business issues relating to racing games. Mr. Sunner received an LLM in Intellectual
Property Law from King’s College London in 1996, Professional Legal Qualifications from Inns of Court School of Law in 1994, and
an LLB from School of Legal Studies, University of Wolverhampton in 1993. Our Nominating Committee believes that Mr. Sunner’s extensive
expertise in the video game industry qualify him to serve on our Board of Directors.
Class
II Director
John
Delta, 62, has served as a member of the Board since November 9, 2022. Beginning on October 4, 2022 and through his resignation on
November 9, 2022, Mr. Delta served as our part-time Interim Chief Financial Officer. Mr. Delta was Managing Partner for the Mid-Atlantic
Region of TechCXO, LLC, a provider of outsourced C-Suite executives to high-tech companies from November 2016 through December 2024.
He is currently the Managing Partner and founder of IYP Advisory, a financial services firm focusing on mergers and acquisitions,
forensic accounting and other financial advisory services for publicly traded and private equity-backed firms. Prior to TechCXO,
he worked for several private equity-backed companies, including serving as Chief Operating Officer for Management CV Inc. from
February 2011 to June 2016; Co-Founder and Chief Financial Officer for JJAB Holdings, LLC from February 2010 to February 2011; Chief
Financial Officer for Edison Worldwide from December 2008 to January 2010; Chief Financial Officer for DoublePositive Marketing Group,
Inc. from March 2006 to October 2008; Executive Vice President and Global Head of Operations for Hemscott Group PLC from October 2003
to December 2005; and Vice President, General Manager for The Nasdaq Stock Market, including as Vice President of Interactive
Services. Earlier in his career, he was a consultant at McKinsey & Co. and Deloitte & Touche in the Financial Strategies practice.
Mr. Delta earned a bachelor’s degree and an MBA from the University of Virginia. Our Nominating Committee believes that Mr. Delta’s
extensive accounting and finance expertise qualify him to serve on our Board of Directors.
Required
Vote
Nominees
for director shall be elected who receive the affirmative vote of the holders of a plurality of the voting power of the shares present
in person or represented by proxy at the meeting and entitled to vote on Proposal No. 1 (the Election of Directors). Abstentions and
broker non-votes will have no effect on the outcome of the vote with respect to this proposal.
Recommendation
of our Board of Directors
The
Board unanimously recommends that you vote “FOR” the election of Messrs. Jacobson and Sunner as Class I directors.
Information
Regarding our Directors and Executive Officers and Corporate Governance
Directors
and Executive Officers
The
directors and executive officers of the Company and their respective ages, and positions with the Company as of March 11, 2025 are set
forth below. There are no family relationships among any of the directors or executive officers.
There
are no material legal proceedings to which any director or executive officer of the Company, or any associate of any director or executive
officer of the Company, is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company
or any of its subsidiaries.
| Name |
|
Age |
|
Position |
| Stephen
Hood |
|
47 |
|
Chief
Executive Officer and President |
| Stanley
Beckley |
|
42 |
|
Chief
Financial Officer |
| John
Delta |
|
62 |
|
Director |
| Andrew
P. Jacobson |
|
53 |
|
Director |
| Navtej
Singh Sunner |
|
54 |
|
Director |
Executive
officers serve at the discretion of the Board.
The
following is a brief biography of each executive officer. Biographies of our directors are set forth in “Proposal No. 1: Election
of Directors,” above.
Stephen
Hood, Chief Executive Officer and President. Mr. Hood has served as our Chief Executive Officer and President from April 19,
2023. Mr. Hood served as a business development consultant to Speed Capital Ltd. from October 2022 to April 2023. Mr. Hood served as
the Company’s President from April 2019 to January 2022. Mr. Hood has also served as President of Motorsport Games Limited, our
UK subsidiary, from February 2020 to January 2022 and as a director of 704Games from September 2018 to January 2022. Previously, Mr.
Hood served as Head of Esports for Autosport Media UK Limited, a subsidiary of Motorsport Network, from July 2018 to March 2019. Prior
to joining Motorsport Network, Mr. Hood served as Executive Producer at Dovetail Games, a UK-based producer of digital hobbies, from
September 2016 to May 2018 and as a Creative Director from December 2014 to September 2016. Mr. Hood was employed at Codemasters, a British
video game developer and publisher, as Creative Director from November 2011 to December 2013 and as Chief Game Designer from March 2009
to November 2011. Prior to that, Mr. Hood was Design Manager at Ideaworks Game Studio, a British video game developer, from August 2006
to October 2008 and a Senior Designer at renowned British developer Lionhead Studios Limited from 2004 to 2006. He also has held various
positions as Design Director and Design Manager with other video game producers. Mr. Hood is a BAFTA award winning developer (Best Simulation,
The Movies and Best Sports Game, Formula One 2010) with particular expertise in building creative teams and designing and managing the
development of complex video game projects and services.
Stanley
Beckley, Chief Financial Officer. Mr. Beckley has served as our Chief Financial Officer since May 16, 2024, after having served as
Interim Chief Financial Officer from November 8, 2023. Mr. Beckley initially joined Driven Lifestyle Group LLC (formerly Motorsport Network,
LLC) (“Driven Lifestyle”), the majority stockholder of the Company, in February 2021 as its Chief Accounting
Officer – a role he continues to serve in. Mr. Beckley has over nineteen years of experience in leading finance and accounting
teams and working on technical accounting matters. Prior to joining Driven Lifestyle, from 2017 through 2020, Mr. Beckly worked as a
Corporate Controller for H.I.G. Capital, a global private equity firm headquartered in Miami. Earlier in his career, Mr. Beckley spent
nine years with KPMG as a Senior Manager in its Audit Practice. More recently, between May 2022 and May 2023 Mr. Beckley was the Chief
Financial Officer for CDR Companies, a national firm that provides consulting, emergency management, and disaster health and medical
services. He graduated with Bachelor’s and Master’s degrees in Accounting with honors from Florida International University
and holds active Certified Public Accounting licenses in the states of Florida and Virginia. Mr. Beckley is also a certified Fraud Examiner
and a Chartered Certified Accountant.
Board
Leadership Structure
The
Board does not currently have a policy on whether or not the roles of Chairman of the Board and Chief Executive Officer should be separate.
The Board believes that it should be free to decide from time to time in any manner that is in the best interests of the Company and
its stockholders whether or not the roles of Chairman of the Board and Chief Executive Officer should be separate. Currently, the roles
of Chairman of the Board and Chief Executive Officer are separate with John Delta serving as the Chairman of the Board and Stephen Hood
serving as our Chief Executive Officer.
Risk
Oversight Functions
The
Board, in fulfilling its oversight role, focuses on the adequacy of our enterprise-wide risk management policies and procedures. The
Audit Committee of the Board (the “Audit Committee”) has been designated to take the lead in overseeing risk
management at the Board level. The Audit Committee is responsible for discussing guidelines and policies to govern the processes by which
risk assessment and management is undertaken and handled, and discussing with management the Company’s major financial risk exposures
and the steps management takes to monitor and control such exposures. Although the Board’s primary risk oversight has been assigned
to the Audit Committee, the full Board also receives information about the most significant risks that the Company faces.
Board
Meetings
The
Board of Directors held fifty-three (53) meetings and acted by unanimous written consent in lieu of a meeting four (4) times during the
fiscal year ended December 31, 2024. All directors attended 75% or more of the aggregate of the total number of the meetings of the Board
of Directors in 2024 and the total number of meetings held by all committees of the Board of Directors on which such directors served
in 2024. It is the Company’s policy to encourage, but not require, directors and nominees for director to attend the Annual Meeting.
None of the directors attended last year’s annual meeting of stockholders.
The
Board currently includes three nonemployee, independent members – John Delta, Andrew P. Jacobson and Navtej Singh Sunner. Each
of Messrs. Delta, Jacobson and Sunner is an “independent director” as defined under Nasdaq Listing Rule 5605(a)(2). A majority
of our Board members are independent directors, as all three of the three members of the Board qualify as independent under the Nasdaq
listing standards and the rules of the Commission. No director is considered independent unless the Board affirmatively determines that
the director has no material relationship with us (directly, or as a partner, stockholder or officer of an organization that has a relationship
with us) that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Also, all
members of the Board’s audit committee, compensation committee and nominating and governance committee are independent directors.
Committees
of the Board
On
January 5, 2021, the Board established its Audit Committee, Compensation Committee (the “Compensation Committee”)
and Nominating and Corporate Governance Committee (the “Nominating Committee”), the composition and responsibilities
of which are described below. Each committee operates pursuant to a written charter, which is reviewed each year. All committee charters
are available in the “Investors—Governance” section of our Internet website at http://www.motorsportgames.com.
Audit
Committee
The
Board has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act, which
committee is currently comprised of John Delta (Audit Committee chairman), Andrew P. Jacobson and Navtej Singh Sunner. The Audit Committee’s
responsibilities and other matters related to the Audit Committee are discussed below and in the section titled “Audit Committee
Report.”
The
primary purpose of the Audit Committee is to oversee our accounting and financial reporting processes, the integrity of the financial
reports and other financial information and the audits of our financial statements, as well as to review the qualifications, independence
and performance, and approve the terms of engagement of our independent auditor, review the performance of our internal audit function
and prepare any reports required of the Audit Committee under rules of the U.S. Securities and Exchange Commission (the “SEC”).
Specific responsibilities of the Audit Committee include:
| |
● |
overseeing
the work and compensation of the independent auditor in connection with the preparation by the independent auditor of the audit report; |
| |
|
|
| |
● |
reviewing
the qualifications, performance and independence of the independent auditor and approving the retention or replacement of the independent
auditors; |
| |
|
|
| |
● |
approving
the retention of the independent auditors to perform any proposed permissible non-audit services; |
| |
|
|
| |
● |
overseeing
the rotation of partners of the independent auditors on our audit engagement team as required by law; |
| |
|
|
| |
● |
reviewing
and approving transactions between us and any related persons; |
| |
|
|
| |
● |
conferring
with management and the independent auditors regarding the adequacy of internal controls over financial reporting; |
| |
|
|
| |
● |
establishing
procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by us regarding accounting,
internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding
questionable accounting or auditing matters; |
| |
|
|
| |
● |
discussing
guidelines and policies to govern the process by which risk assessment and management is undertaken and handled, and discussing with
management our major financial risk exposures and the steps management has taken to monitor and control such exposures; and |
| |
|
|
| |
● |
reviewing
and discussing our annual audited financial statements and quarterly financial statements with management and the independent auditor. |
The
Audit Committee held four (4) meetings during the fiscal year ended December 31, 2024.
Compensation
Committee
Messrs.
Delta, Jacobson and Sunner serve on the Compensation Committee. John Delta is the Compensation Committee chairman. The Board has adopted
a written Compensation Committee charter, which is reviewed each year. The Compensation Committee is responsible for determining, or
recommending to the Board for determination, the compensation of the executive officers and directors of the Company. Specific responsibilities
of the Compensation Committee include:
| |
● |
reviewing
and advising the Board concerning our overall compensation philosophy, policies and plans, including a review of both regional and
industry compensation practices and trends |
| |
|
|
| |
● |
reviewing
and approving corporate and personal performance goals and objectives relevant to the compensation of all executive officers, and
make recommendations to the Board regarding all executive compensation (including but not limited to salary, bonus, incentive compensation,
equity awards, benefits and perquisites). |
| |
|
|
| |
● |
making
recommendations to the Board regarding the establishment and terms of the Company’s incentive compensation plans and equity
compensation plans, and administering such plans, and making and approving grants of options and other equity awards to all executive
officers and directors under such plans; |
| |
|
|
| |
● |
reviewing
and discuss with management the risks associated with our compensation policies; and |
| |
|
|
| |
● |
making
recommendations to the Board regarding director compensation. |
The
Compensation Committee may not delegate any authority with respect to the above-described responsibilities to other persons other than
to one or more subcommittees of the Compensation Committee comprised of one or more members of the Compensation Committee. The Company’s
executive officers do not have any role in determining or recommending the amount or form of executive and director compensation.
The
Compensation Committee held two (2) meetings and did not act by unanimous written consent in lieu of a meeting during the fiscal year
ended December 31, 2024.
Nominating
and Corporate Governance Committee
Messrs.
Delta, Jacobson and Sunner serve on the Nominating Committee. Navtej Singh Sunner is the Nominating Committee chair. The Nominating Committee’s
responsibilities and other matters related to the Nominating Committee are discussed below and in the section titled “Director
Nominations.” Specific responsibilities of the Nominating Committee include:
| |
● |
identifying
individuals qualified to become Board members; |
| |
|
|
| |
● |
selecting
or recommending to the Board director nominees for each election of directors; |
| |
|
|
| |
● |
developing
and recommending to the Board criteria for selecting qualified director candidates; |
| |
|
|
| |
● |
considering
committee member qualifications, appointment and removal; |
| |
|
|
| |
● |
recommending
corporate governance principles and a code of business conduct and ethics applicable to the Company; and |
| |
|
|
| |
● |
providing
oversight in the evaluation of the Board and each committee. |
The
Nominating Committee held one (1) meeting and did not act by unanimous written consent in lieu of a meeting during the fiscal year ended
December 31, 2024.
Director
Nominations
The
Nominating Committee operates pursuant to a written charter, which is reviewed each year. The Nominating Committee is responsible for
the identification of individuals qualified to become members of the Board, the selection or recommendation of the director nominees
for annual meetings of stockholders, the selection of director candidates to fill any vacancies on the Board, recommendation of corporate
governance principles and related responsibilities. Criteria considered by the Nominating Committee in identifying and evaluating director
nominees include experience in corporate governance, experience in, or relationships within, the Company’s industries, academic
or professional expertise, reputation for high moral and ethical standards, business and professional standing that will add to the Board’s
stature, business experience, skills and time availability, and the diversity of the skills, background and experience of Board members
as a whole. In addition, it is a primary objective of the Nominating Committee to assure that the Board and its committees satisfy the
independence requirements of Nasdaq and any other applicable self-regulatory or regulatory requirements. The Nominating Committee’s
policy with regard to the consideration of diversity in identifying director nominees requires the committee to consider the diversity
of the skills, background and experience of Board members as a whole as one of many other criteria that may be considered in recommending
candidates for election or appointment to the Board; however, this policy does not require that the composition of the Board be diverse
in any manner or that persons identified as director nominees must promote or enhance the diversity of the Board.
The
Nominating Committee will consider director candidates recommended by stockholders and will evaluate such candidates on the same basis
as candidates recommended by other sources. Stockholder recommendations must meet the requirements set forth in the Company’s bylaws,
including providing all of the information specified in the bylaws. The notice must be submitted to the Secretary of the Company, at
the principal executive offices of the Company, 5972 NE 4th Avenue, Miami, Florida 33137. In order to ensure review and consideration
of any stockholder’s recommendation, the notice generally must be received not less than 60 days nor more than 90 days prior to
the first anniversary of this year’s annual meeting. However, if next year’s annual meeting is to be held more than 30 days
before or 60 days after the anniversary of this year’s annual meeting, notice must be received no later than the later of 70 days
prior to the date of the meeting or the 10th day following the Company’s public announcement of next year’s annual meeting
date. The Secretary will present such recommendations to the Nominating Committee. The Nominating Committee will identify potential candidates
through recommendations from the Company’s officers, directors, stockholders and other appropriate third parties.
In
2024, the Company did not pay a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees.
Although the Company is not currently paying a fee to any third party to identify or evaluate or assist in identifying or evaluating
potential nominees, the Company may engage a third-party search firm in the future.
Stockholder
Communications with the Board of Directors
The
Board has a process by which stockholders may communicate with the Board. Any stockholder desiring to communicate with the Board may
do so in writing by sending a letter addressed to the Board of Directors, c/o Secretary of the Company, at the principal executive offices
of the Company, 5972 NE 4th Avenue, Miami, Florida 33137. The Secretary will review all such communications but may disregard any communication
that he or she believes is not related to the duties and responsibilities of the Board. If deemed an appropriate communication, the Secretary
will share the communication with the applicable director or directors.
Code
of Ethics
We
have adopted a Code of Ethics and Business Conduct that applies to all of our directors, officers and employees, including our principal
executive officer and our principal financial and accounting officer. A copy of our Code of Ethics and Business Conduct has been posted
to the “Investors—Governance” section of our Internet website at http://www.motorsportgames.com. We intend to
satisfy the requirement under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of
Ethics and Business Conduct by posting such information on our Internet website at http://www.motorsportgames.com. We will provide
a copy of our Code of Ethics and Business Conduct to any person without charge, upon written request to our Secretary, 5972 NE 4th Avenue,
Miami, Florida 33137, telephone number (305) 507-8799, e-mail address: investors@motorsportgames.com.
Insider
Trading Policy
We
maintain an Insider Trading Policy that contains prohibitions on, among other items, officers, directors and employees purchasing or
selling our securities while in possession of material, non-public information, or otherwise using such information for their own personal
benefit. The Insider Trading Policy also requires the Company to comply with all insider trading laws, rules and regulations, and any
applicable listing standards when engaging in transactions in its own securities.
Hedging
Policy
Our Insider Trading Policy
prohibits our employees (including officers) or directors from selling our securities short or from entering into hedging or monetization
transactions or similar arrangements with respect to our securities.
*
The disclosure under the caption “Hedging Policy” is not to be incorporated by reference in any filing of the Company under
the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language
in any such filing.
Executive
and Director Compensation
We
have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such
term is defined under Item 10(f) of Regulation S-K promulgated under the Exchange Act (“Regulation S-K”). In
accordance with these rules, our “named executive officers” for fiscal year ended December 31, 2024 were:
| ● | Stephen
Hood, our Chief Executive Officer and President; and |
| | | |
| ● | Stanley
Beckley, our Chief Financial Officer. |
2024
Summary Compensation Table
The
following table sets forth information concerning the compensation of our named executive officers for the fiscal years indicated below.
| Name
and Principal Position | |
Fiscal
Year | | |
Salary | | |
Bonus | | |
Stock
Awards (1) | | |
Option
Awards (1) | | |
All
Other Compensation | | |
Total | |
| Stephen Hood
(2) | |
| 2024 | | |
$ | 260,463 | | |
$ | - | | |
$ | - | | |
$ | 81,391 | | |
$ | 1,566 | | |
$ | 343,420 | |
| Chief Executive Officer | |
| 2023 | | |
$ | 170,884 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 3,079 | | |
$ | 173,963 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stanley Beckley (3) | |
| 2024 | | |
$ | 230,000 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 7,213 | | |
$ | 237,213 | |
| Chief Financial Officer | |
| 2023 | | |
$ | 30,580 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 700 | | |
$ | 31,280 | |
(1)
The amounts represent the aggregate grant date fair value of stock awards or option awards, as applicable, computed in accordance with
ASC Topic 718. The assumptions used to calculate the grant date fair values of such awards are set forth in Note 10 – Share-Based
Compensation in the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31,
2024. These amounts reflect our calculation of the grant date fair value of these awards and do not necessarily correspond to the actual
value that may ultimately be realized by the executive officer.
(2)
Mr. Hood was appointed as our Chief Executive Officer
and President on April 19, 2023. Mr. Hood was paid in pound sterling for fiscal years 2023 and 2024. The amounts included in table
above for Mr. Hood for fiscal year 2023 were determined by converting his compensation in pound sterling to U.S. dollars using the average
exchange rate for fiscal year 2023 (approximately 1 pound sterling = 1.2544 U.S. dollars). The amounts included in table above for Mr.
Hood for fiscal year 2024 were determined by converting his compensation in pound sterling to U.S. dollars using the average exchange
rate for fiscal year 2024 (approximately 1 pound sterling = 1.2521 U.S. dollars).
On
January 26, 2024, the compensation committee of the board of directors of the Company approved and authorized the grant of an option
award to purchase 46,000 shares of the Company’s Class A common stock to Stephen Hood, the Chief Executive Officer and President
of the Company, pursuant to the MSGM 2021 Stock Plan. 11,500 shares underlying the option award vested immediately upon grant and the
remaining 34,500 shares underlying the option award vested in three equal quarterly instalments beginning on April 26, 2024.
(3)
Effective November 8, 2023, Stanley Beckley was
appointed as our Interim Chief Financial Officer. On May 16, 2024, Mr. Beckley was appointed to serve as the Chief Financial Officer
on a permanent basis.
Elements
of the Company’s Executive Compensation Program
For
fiscal years 2024 and 2023, the compensation for our named executive officers generally consisted of a base salary, a discretionary cash
bonus, standard employee benefits and, for our named executive officer in the United Kingdom, a Company contribution to a defined contribution
plan retirement plan. We may also grant other equity awards and cash bonuses as part of our executive compensation program for named
executive officers, as determined by the Board or our Compensation Committee.
Base
Salary
Our
named executive officers receive a base salary to compensate them for services rendered to our Company. The base salary payable to each
named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience,
role, and responsibilities. Base salaries may be increased based on the individual performance of the named executive officer, Company
performance, any change in the executive’s position within our business, the scope of his or her responsibilities and any changes
thereto. Base salaries may also be increased as required under the terms of a named executive officer’s employment agreement, as
applicable.
Cash
Bonus
From
time to time the Board or Compensation Committee may approve bonuses for our named executive officers based on individual performance,
company performance or as otherwise determined appropriate.
Equity
Compensation
We
adopted the Motorsport Games Inc. 2021 Equity Incentive Plan, or the Incentive Plan, which became effective on January 12, 2021, in order
to facilitate the grant of equity awards to our employees, consultants, and directors for the purposes of obtaining and retaining services
of these individuals, which we believe is essential to our long-term success. On November 10, 2022, as a result of the reverse stock
split of the Company’s outstanding shares of Class A and Class B common stock at a ratio of 1-for-10 (the “Reverse
Stock Split”), the Company amended and restated the Incentive Plan to reflect, pursuant to the provisions of Section 10.1
of the Incentive Plan, the proportionate adjustment to the number of shares of Company’s Class A Common Stock authorized for issuance
under the Incentive Plan from 1,000,000 shares of Class A common stock to 100,000 shares using the same 1-for-10 ratio used to consummate
the Reverse Stock Split. In connection with such amendment, pursuant to Section 10.2 of the Incentive Plan, the Board proportionally
adjusted the number of shares of Class A Common Stock subject to outstanding plan awards and the exercise price per share of Class A
common stock of each such award to reflect the impact of the Reverse Stock Split. No other modifications or amendments were made to the
Incentive Plan. Such Amended and Restated Motorsport Games Inc. 2021 Equity Incentive Plan is referred to herein as the “Incentive
Plan.” For additional information about the Incentive Plan, see “Equity Compensation Plan Table” below.
Other
Elements
We
provide various employee benefit programs to our named executive officers, including health and life insurance benefits, which are generally
available to all of our employees. We also currently maintain a 401(k) retirement savings plan for our U.S. employees, including our
U.S.-based named executive officers, who satisfy certain eligibility requirements, and a similar retirement savings plan for our employees
in the United Kingdom.
Executive
Employment Arrangements
Employment
Agreement with Stephen Hood
On
April 17, 2023 (but effective as of April 19, 2023), we entered into a Statement of Terms and Conditions of Employment between Motorsport
Games Limited (the Company’s UK subsidiary) and Stephen Hood (the “2023 Employment Agreement”) in connection
with his appointment as a new Chief Executive Officer (“CEO”) and President of the Company. Pursuant to the
2023 Employment Agreement, in connection with assuming the duties of CEO, Mr. Hood receives an annual base salary equal to gross $245,000
per annum as converted into British Pounds Sterling at the prevailing rate. Mr. Hood is eligible, subject to an approval by the Compensation
Committee, to receive the following pay increases when the Company’s Market Cap (as defined below) targets set forth below are
achieved from time to time (such targets shall be deemed achieved if any 60 consecutive calendar days average closing trading price of
the Class A common stock of the Company is reached to achieve the Market Cap applicable target set forth below):
| |
● |
Above
$50 million Market Cap, the CEO’s base salary will be eligible to be increased by the Committee to aggregate gross $300,000
per annum; |
| |
● |
Above
$100 million Market Cap, the CEO’s base salary will be eligible to increase to aggregate gross $375,000 per annum |
| |
|
|
| |
● |
Above
$200 million Market Cap, the CEO’s base salary will be eligible to increase to aggregate gross $440,000 per annum |
| |
|
|
| |
● |
Above
$300 million Market Cap, the CEO’s base salary will be eligible to increase to $500,000 per annum. |
“Market
Cap” means the dollar amount equal to the product of (i) the per share closing trading price of the Class A common stock of the
Company on Nasdaq Capital Market on the day of determination of the Market Value and (ii) the number of issued and outstanding shares
of the Company’s Class A common stock on the day of determination of the Market Value.
Mr.
Hood is eligible to participate in the Company’s applicable UK sub-plan to MSGM’s Incentive Compensation Plan (“ICP”).
Furthermore, subject to an approval by the Compensation Committee, the Company’s stockholders approving an amendment to the ICP
to increase the number of shares of the Company’s Class A common stock to become available for awards under the ICP and the ICP
having sufficient number of Class A shares of Common stock available for the awards summarized below (in addition to the annual awards
to other employees and independent contractors and awards to the independent directors of the Company), Mr. Hood may be eligible to receive
the following bonus payments when the Market Cap targets set forth below are achieved from time to time (such targets shall be deemed
achieved if any 60 consecutive calendar days average closing trading price of the Class A common stock of the Company is reached to achieve
the Market Cap applicable target set forth below):
| |
● |
$50
million Market Cap, the CEO will be eligible to receive a one-time cash bonus of $100,000. |
| |
|
|
| |
● |
$100
million Market Cap, the CEO will be eligible to receive such number of stock options that would equal 0.5% of the number of the total
issued shares of Class A common stock on the date of the applicable grant (with exercise price equal to the closing trading price
per share of such Class A common stock on the date of the applicable grant). |
| |
|
|
| |
● |
$250
million Market Cap, the CEO will be eligible to receive such number of additional stock options that would equal 0.5% of the number
of the total issued shares of Class A common stock on the date of the applicable grant (with exercise price equal to the closing
trading price per share of such Class A common stock on the date of the applicable grant). |
| |
|
|
| |
● |
$300
million Market Cap, the CEO will be eligible to receive (i) such number of additional stock options that would equal 0.5% of the
number of the total issued shares of Class A common stock on the date of the applicable grant (with exercise price equal to the closing
trading price per share of such Class A common stock on the date of the applicable grant) and (ii) a one-time $50,000 cash bonus. |
On
May 17, 2024, the Compensation Committee unanimously approved increasing Mr. Hood’s annual base salary to $275,000 (effective April
19, 2024) and to $300,000, effective January 1, 2025.
Mr.
Hood’s employment may be terminated upon three months’ written notice, or immediately in the event of gross misconduct. At
any point during such notice period, the Company, at its discretion, may choose to terminate Mr. Hood’s employment immediately
and pay a sum equivalent to his gross basic salary, including any bonus or commission payments that might otherwise have been due and
less appropriate PAYE deductions, in lieu of such notice period (or the remaining part of it).
Offer
Letter with Stanley Beckley
In
connection with Mr. Beckley’s appointment as the Company’s Interim Chief Financial Officer, on November 8, 2023, the Company
and Mr. Beckley entered into an offer letter (the “Beckley Offer Letter”). Pursuant to the Beckley Offer Letter,
Mr. Beckley receives an annual base salary equal to $230,000. Mr. Beckley will be eligible, subject to performance metrics, for an annual
bonus of $20,000 bonus payable on March 31 of the year following the calendar year for which the annual bonus was earned. Mr. Beckley
was first eligible for the annual bonus payment on March 31, 2024, subject to pro-ration for time served in calendar year ended December
31, 2023, and achieving performance metrics as set by the Company.
Mr.
Beckley is an at-will employee. If the Company terminates his employment without Cause (as defined in the Beckley Offer Letter) and Mr.
Beckley is not otherwise employed by any of the Company’s affiliates nor providing consulting services to the Company or any of
its affiliates, then he will be entitled to a continuation of payment of unpaid base salary from the effective date of such termination
to the expiration of three (3) months after the date of such termination.
On
May 16, 2024, the Nominating Committee appointed Mr. Beckley to serve as the Company’s Chief Financial Officer on a permanent basis.
Mr. Beckley’s employment in such position continues to be governed by the terms of the Beckley Offer Letter.
2024
Outstanding Equity Awards at Fiscal Year End
The
following table sets forth information with respect to outstanding equity awards at the end of the Company’s fiscal year 2024 for
the named executive officers:
| | |
Number of
securities
underlying
unexercised
options - exercisable | | |
Number of
securities
underlying
unexercised
options - unexercisable | | |
Option
exercise
price ($) | | |
Option
Grant Date | | |
Option
Expiration
Date | |
| | |
| | |
| | |
| | |
| | |
| |
| Stephen Hood | |
| 1,179 | | |
| - | | |
| 200.00 | | |
| 1/12/2021 | | |
| 1/13/2031 | |
| | |
| 46,000 | | |
| - | | |
| 2.565 | | |
| 1/26/2024 | | |
| 1/26/2034 | |
| Stanley Beckley | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent of
a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
To
the Company’s knowledge, based solely on a review of the copies of such reports filed on the SEC’s EDGAR system and written
representations that no other reports were required, during the fiscal years ended December 31, 2024 and 2023, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with except as follows:
(1) a Form 3 reporting his appointment as our Chief Executive Officer and President was filed late by Stephen Hood on December 8, 2023
and (2) a Form 3 reporting his appointment as our Interim Chief Financial Officer was filed late by Stanley Beckley on November 20, 2023.
Equity
Compensation Plan Table
The
following table summarizes our equity compensation plan information as of December 31, 2024. Information is included for equity compensation
plans approved by our stockholders and equity compensation plans not approved by our stockholders.
| Plan Category | |
(a)
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights | | |
(b)
Weighted-average
exercise price per
share of outstanding
options, warrants
and rights | | |
(c)
Number
of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a)) | |
| Equity compensation plans approved by stockholders (1) | |
| 97,366 | | |
$ | 61.83 | | |
| 2,634 | |
| Equity compensation plans not approved by stockholders | |
| - | | |
| - | | |
| - | |
| Total | |
| 97,366 | | |
$ | 61.83 | | |
| 2,634 | |
| (1) | Consists
of shares issuable pursuant to the Incentive Plan. For further information regarding the
Incentive Plan, see the section titled “Elements of the Company’s Executive Compensation
Program—Equity Compensation,” above. |
Director
Compensation
The
Board has adopted a non-employee director compensation policy, which became effective immediately prior to the consummation of the Company’s
IPO. Under the non-employee director compensation policy, our non-employee directors are eligible to receive compensation for service
on the Board and committees of the Board as follows:
| ● | Each
non-employee director shall be entitled to receive $25,000 annually as a cash retainer for
their board service, with additional annual cash retainers of (i) $2,000 for each member
of our Compensation Committee or Nominating Committee other than the chairman of each of
these committees; (ii) $5,000 for the chairman of our Compensation Committee or Nominating
Committee; (iii) $8,000 for each member of our Audit Committee other than the chairman of
this committee; and (iv) $16,000 for the chairman of our Audit Committee. All cash retainers
are paid quarterly in arrears. |
| ● | Additionally,
each non-employee director shall receive an annual stock option award under the Incentive
Plan to purchase such number of shares of our Class A common stock that will equal $75,000
divided by the closing trading price of our Class A common stock on the date of each such
grant, which will vest one year from the date of grant. Upon the occurrence of certain corporate
events, including a change of control of the Company, all such stock option awards will immediately
vest. |
Our
non-employee directors are entitled to reimbursement of ordinary, necessary and reasonable out-of-pocket travel expenses incurred in
connection with attending in-person meetings of the Board or committees thereof. In the event our non-employee directors are required
to attend greater than four in-person meetings or 12 telephonic meetings during any fiscal year, such non-employee directors shall be
entitled to additional compensation in the amount of $500 for each additional telephonic meeting beyond the 12 telephonic meeting threshold,
and $1,000 for each additional in-person meeting beyond the four in-person meeting threshold.
The
following table further summarizes the compensation paid to the Company’s non-employee directors for service as a director during
2024:
| Director Name | |
Fees earned or
paid in cash
($) | | |
Stock awards
($) | | |
Option awards
($) | | |
Total ($) | |
| John Delta, director (1) | |
| 48,000 | | |
| - | | |
| - | | |
| 48,000 | |
| Navtej Singh Sunner (2) | |
| 40,000 | | |
| - | | |
| - | | |
| 40,000 | |
| Andrew P. Jacobson, director (3) | |
| 37,000 | | |
| - | | |
| - | | |
| 37,000 | |
| (1) | At
the end of the fiscal year ended December 31, 2024, John Delta had (i) no stock awards and
(ii) 39,593 vested option awards outstanding. |
| (2) | At
the end of the fiscal year ended December 31, 2024, Navtej Singh Sunner had (i) no stock
awards and (ii) 13,158 vested option awards outstanding. |
| (3) | At
the end of the fiscal year ended December 31, 2024, Andrew P. Jacobson had (i) no stock awards
and (ii) 13,158 vested option awards outstanding. |
Company
Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
The
Company does not have a formal policy on the timing of awards of options in relation to the disclosure of material nonpublic information
by the Company. The Compensation Committee does not seek to time equity grants to take advantage of information, either positive or negative,
about our company that has not been publicly disclosed. Option grants are effective on the date the award determination is made by the
Compensation Committee, and the exercise price of options is the closing market price of our Common Stock on the date of the grant or,
if the grant is made on a weekend or holiday, on the prior business day.
During
the fiscal year ended December 31, 2024, we did not award any options to a named executive officer in the period beginning four business
days before the filing of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a current report on Form 8-K that
disclosed material nonpublic information, and ending one business day after the filing or furnishing of such report.
Certain
Relationships and Related Transactions
Policy
and Procedures
The
Audit Committee bears primary responsibility for the review, approval, or ratification of any related-party transaction pursuant to its
written charter. The charter provides that the Audit Committee shall review such transactions for potential conflicts of interests and
other improprieties and grants the Audit Committee the authority to approve such transactions.
Transactions
The
following are summaries of transactions since January 1, 2023 to which the Company has been a participant that involved amounts that
exceeded or will exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at December
31, 2024 and 2023, and in which any of the Company’s directors, executive officers or any other “related person” as
defined in Item 404(a) of Regulation S-K, had or will have a direct or indirect material interest.
Relationship
with Driven Lifestyle (formerly known as Motorsport Network)
On
April 1, 2020, the Company entered into a promissory note (the “$12 million Line of Credit”) with the Company’s
majority stockholder, Driven Lifestyle, that provided the Company with a line of credit of up to $10 million (which was subsequently
increased to $12 million pursuant to an amendment executed in November 2020) at an interest rate of 10% per annum, the availability of
which is dependent on Driven Lifestyle’s available liquidity. The $12 million Line of Credit does not have a stated maturity date
and is payable upon demand at any time at the sole and absolute discretion of Driven Lifestyle, and any principal and accrued interest
owed will be accelerated and become immediately payable in the event the Company consummates certain corporate events, such as a capital
reorganization. The Company may prepay the $12 million Line of Credit in whole or in part at any time or from time to time without penalty
or charge. In the event the Company or any of its subsidiaries consummates certain corporate events, including any capital reorganization,
consolidation, joint venture, spin off, merger or any other business combination or restructuring of any nature, or if certain events
of default occur, the entire principal amount and all accrued and unpaid interest will be accelerated and become payable.
On
September 8, 2022, the Company entered into a support agreement with Driven Lifestyle (the “Support Agreement”)
pursuant to which Driven Lifestyle issued approximately $3 million (the “September 2022 Cash Advance”) to the
Company in accordance with the $12 million Line of Credit. Additionally, the Support Agreement modified the $12 million Line of Credit
such that, among other things, until June 30, 2024, Driven Lifestyle would not demand repayment of the September 2022 Cash Advance or
other advances under the $12 million Line of Credit, unless certain events occurred, as prescribed in the Support Agreement, such as
the completion of a new financing arrangement or the Company generates positive cash flows from operations, among others. All principal
and accrued interest owed on the $12 million Line of Credit were exchanged for equity following the completion of two debt-for-equity
exchange agreements with Driven Lifestyle on January 30, 2023 and February 1, 2023, relieving the Company of approximately $3.9 million
in owed principal and unpaid interest in exchange for an aggregate of 780,385 shares of the Company’s Class A common stock. There
is currently no balance due to Driven Lifestyle under the $12 million Line of Credit. Although the $12 million Line of Credit remains
in place, we believe that there is a substantial likelihood that Driven Lifestyle will not fulfill any future borrowing requests, and
therefore we do not view the $12 million Line of Credit as a viable source for future liquidity needs.
Backoffice
Services Agreement
On
January 1, 2020, the Company entered into a three-year services agreement with Driven Lifestyle (the “Backoffice Services
Agreement”), pursuant to which Driven Lifestyle provides exclusive legal, development and accounting services on a full-time
basis to support the Company’s business functions. The Backoffice Services Agreement can be extended by mutual agreement and may
be terminated by either party at any time. Pursuant to the Backoffice Services Agreement, the Company is required to pay monthly fees
to Driven Lifestyle as follows: (i) $5,000 for legal services, (ii) $2,500 for accounting services and (iii) on an hourly, per use basis,
from $15 to $30 per hour for development services.
On
March 23, 2023 (but effective as of January 1, 2023), the Company entered into a new Backoffice Services Agreement with Driven Lifestyle
(the “New Backoffice Services Agreement”), following the expiration of the Services Agreement. Pursuant to
the New 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 New Services Agreement is 12 months
from the effective date of such agreement. 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 New Backoffice Services Agreement may be
terminated by either party at any time with a 60-day prior notice. Pursuant to the New Backoffice Services Agreement, the Company is
required to pay a monthly fee to Driven Lifestyle of $17,500.
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 provides 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.
For
the years ended December 31, 2024 and 2023, the Company incurred $180,000 and $210,000, respectively, in fees in connection with the
New Backoffice Services Agreement and the Amended Backoffice Services Agreement.
Debt-For-Equity
Exchanges
On
January 30, 2023, the Company entered into a debt-for-equity exchange agreement (the “January 30 Exchange Agreement”)
with Driven Lifestyle, whereby the Company issued 338,983 shares (the “Acquired Shares”) of Class A common
stock to Driven Lifestyle, which amount represented the aggregate number of shares of Class A common stock equal to $1,000,000 (the “Discharged
Debt”). The Acquired Shares were issued in consideration for the cancellation of the Discharged Debt under the $12 million
Line of Credit. Under the January 30 Exchange Agreement, subject to conditions set forth therein, the Company agreed to file a registration
statement with the SEC upon demand from Driven Lifestyle at any time within 60 days after date on which the transactions contemplated
under the January 30 Exchange Agreement have been completed in order to register the resale of the Acquired Shares. The Exchange Agreement
also granted certain piggyback registration rights to Driven Lifestyle. Prior to the closing of the transactions contemplated under the
January 30 Exchange Agreement, Driven Lifestyle beneficially owned 700,000 shares of Class A Common Stock, representing approximately
51.51% of the issued and outstanding shares of Class A Common Stock as of January 24, 2023. After the closing of the transactions contemplated
under the January 30 Exchange Agreement, Driven Lifestyle held approximately 61.19% of the issued and outstanding shares of Class A Common
Stock. Driven Lifestyle also beneficially owns 700,000 shares of Class B Common Stock of the Company, representing all of the issued
and outstanding shares of Class B Common Stock. Based upon the related party nature of the January 30 Exchange Agreement with Driven
Lifestyle, a special committee of Company’s Board comprised of independent and disinterested directors unanimously approved the
terms of the January 30 Exchange Agreement and the transactions contemplated by the January 30 Exchange Agreement and, based on the recommendation
of the special committee, the Board unanimously approved the terms of the January 30 Exchange Agreement and the transactions contemplated
by the January 30 Exchange Agreement.
On
February 1, 2023, the Company entered into another debt-for-equity exchange agreement (the “February 1 Exchange Agreement”)
with Driven Lifestyle, whereby the Company issued to Driven Lifestyle 441,402 shares of Class A common stock (the “Acquired
Shares”), which amount represents the aggregate number of shares of Class A common stock equal to $2,948,566 (the
“Discharged Debt”), representing the Company’s remaining debt outstanding (including the principal and
not yet paid interest thereon) under the $12 million Line of Credit held by Driven Lifestyle. The Acquired Shares were issued in consideration
for the cancellation of the Discharged Debt under the $12 million Line of Credit. Under the February 1 Exchange Agreement, subject to
conditions set forth therein, the Company agreed to file a registration statement with the SEC upon demand from Driven Lifestyle at any
time within 60 days after date on which the transactions contemplated under the February 1 Exchange Agreement have been completed in
order to register the resale of the Acquired Shares. The February 1 Exchange Agreement also granted certain piggyback registration rights
to Driven Lifestyle. Prior to the closing of the transactions contemplated under the February 1 Exchange Agreement, Driven Lifestyle
beneficially owned 1,038,983 shares of Class A Common Stock, representing approximately 61.19% of the issued and outstanding shares of
Class A Common Stock as of January 31, 2023. After the closing of the transactions contemplated under the February 1 Exchange Agreement
and the Offering described above, Driven Lifestyle holds approximately 63.74% of the issued and outstanding shares of Class A Common
Stock. Driven Lifestyle also beneficially owns 700,000 shares of Class B Common Stock of the Company, representing all of the issued
and outstanding shares of Class B Common Stock. Based upon the related party nature of the February 1 Exchange Agreement with Driven
Lifestyle, a special committee of Company’s Board comprised of independent and disinterested directors unanimously approved the
terms of the February 1 Exchange Agreement and the transactions contemplated by the February 1 Exchange Agreement and, based on the recommendation
of the special committee, the Board unanimously approved the terms of the February 1 Exchange Agreement and the transactions contemplated
by the February 1 Exchange Agreement.
Indemnification
Agreements
The
Company has entered, and intend to continue to enter, into separate indemnification agreements with its directors and executive officers
to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth
in its certificate of incorporation and bylaws and to provide additional procedural protections. At present, there is no pending litigation
or proceeding involving any of its directors or executive officers regarding which indemnification is sought.
Audit
Committee Report
The
Audit Committee consists of three non-employee directors, John Delta (Audit Committee chairman), Andrew P. Jacobson and Navtej Singh
Sunner. The Audit Committee operates under a written charter, which is reviewed each year and is available in the “Investors—Governance”
section of our Internet website at http://www.motorsportgames.com. The Board has determined that John Delta is financially sophisticated
as described in Nasdaq Listing Rule 5605(c)(2) and qualifies as an “audit committee financial expert” as defined in Item
407(d)(5) of Regulation S-K. We believe that the Audit Committee’s current member composition satisfies the rules of Nasdaq that
govern Audit Committee composition, including the requirement that Audit Committee members all be “independent directors”
as that term is defined by Nasdaq Listing Rule 5605(a)(2).
The
Audit Committee monitors and oversees the Company’s accounting and financial reporting process on behalf of the Board, reviews
the independence of its independent registered public accounting firm and is responsible for approving the engagement of its independent
registered public accounting firm for both audit services and permitted non-auditing services, the scope of audit and non-audit assignments
and fees related to all of the foregoing, and also is responsible for reviewing the accounting principles used in financial reporting,
internal financial auditing procedures, the adequacy of the internal control procedures and critical accounting policies.
The
Board of Directors, along with its Audit Committee, also oversee the management of cybersecurity risks and receives quarterly reports
from management on the detection and remediation of cybersecurity incidents, as well as on material security risks and vulnerabilities.
Through the Company’s outsourced managed service provider, the Company is informed about, and monitors the prevention, detection,
mitigation and remediation of cybersecurity incidents through the management of, and participation in monitoring systems and processes.
The information about such incidents is reported to the Company’s Chief Executive Officer and Chief Financial Officer, who then
would report such information to the Company’s Board of Directors, in some cases, earlier than the regular quarterly reports depending
on the nature and severity of the incident.
Management
is responsible for the Company’s financial statements, systems of internal control and the financial reporting process. The independent
registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements
in accordance with standards of the Public Company Accounting Oversight Board and issuing reports thereon. The Audit Committee’s
responsibility is to monitor and oversee these processes.
The
Audit Committee has implemented procedures to ensure that, during the course of each fiscal year, it devotes the attention it deems
necessary or appropriate to fulfill its oversight responsibilities under the Audit Committee’s charter. In this context, the
Audit Committee discussed with Grassi & Co., CPAs, P.C. the results of its audit of the Company’s financial statements for
the year ended December 31, 2024.
Specifically,
the Audit Committee has reviewed and discussed with the Company’s management the audited financial statements, management’s
assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial
reporting. In addition, the Audit Committee discussed with the independent registered public accounting firm the matters required
to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted
by the Public Company Accounting Oversight Board in Rule 3200T, and any other matters required to be discussed under generally accepted
auditing standards. These discussions included the scope of the independent registered public accounting firm’s responsibilities,
significant accounting adjustments, any disagreement with management and a discussion of the quality (not just the acceptability) of
accounting principles, reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The
independent registered public accounting firm provided
the Audit Committee with the written disclosures and the letter required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the
Audit Committee discussed with the independent registered public accounting firm that firm’s independence.
Based
on the reviews and discussions referred to above,
the Audit Committee recommended to the Board that the audited financial statements, together with Management’s Discussion and Analysis
of Financial Condition and Results of Operations, be included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2024 for filing with the Commission.
| Submitted by the Audit Committee. |
|
| |
|
| |
John
Delta, Chairman |
| |
Andrew P. Jacobson |
| |
Navtej
Singh Sunner |
Proposal
No. 2
The
Incentive Plan Increase Proposal
Approval
of an Amendment to the Incentive Plan to Increase the Number of Shares of Class A Common Stock Available for Awards Under the Incentive
Plan by 200,000 Shares
Our
Board is requesting stockholder approval of an amendment to the Incentive Plan to increase the total number of shares of Class A common
stock that may be awarded under the Incentive Plan by 200,000 shares, from 100,000 shares to 300,000 shares. The form of amendment is
attached to this proxy statement as Appendix A.
Background
and Reasons for the Proposal
We
adopted the Motorsport Games Inc. 2021 Equity Incentive Plan, or the Incentive Plan, which became effective on January 12, 2021, in order
to facilitate the grant of equity awards to our employees, consultants, and directors for the purposes of obtaining and retaining services
of these individuals, which we believe is essential to our long-term success. On November 10, 2022, as a result of the 1-for-10 Reverse
Stock Split, the Incentive Plan was amended and restated to reflect, pursuant to the provisions of Section 10.1 of the Incentive Plan,
the proportionate adjustment to the number of shares of Company’s Class A common stock authorized for issuance under the Incentive
Plan from 1,000,000 shares of Class A common stock to 100,000 shares using the same 1-for-10 ratio used to consummate the Reverse Stock
Split. As of December 31, 2024, there were 97,366 shares of Class A common stock issuable upon the exercise of outstanding option awards
and 2,634 shares available for future issuance under the Incentive Plan.
The
Board recommends that stockholders approve the amendment to the Incentive Plan to increase the total number of shares of Class A common
stock that may be awarded thereunder. In making such recommendation, the Board considered a number of factors, including the following:
| |
● |
Equity-based
compensation awards are a critical element of our overall compensation program. We believe that our long-term incentive compensation
program aligns the interests of management, employees and the stockholders to create long-term stockholder value. The Incentive Plan
Increase will allow us to continue to attract, motivate and retain our officers, key employees, non-employee directors and consultants. |
| |
|
|
| |
● |
We
believe the current number of shares remaining available for grant under the Incentive Plan are not sufficient in light of our compensation
structure and strategy, and that the additional shares being sought will ensure that we continue to have a sufficient number of shares
authorized and available for future awards issued under the Incentive Plan. |
As
of March 18, 2025, the closing price of a share of our Class A common stock on Nasdaq was $1.255.
Dilution
Analysis
As
of March 11, 2025, our capital structure consisted of 3,183,558 shares of Class A common stock and 700,000 shares of our Class B
common stock outstanding and no shares of preferred stock. The table below shows our potential dilution (referred to as “overhang”)
levels based on our Class A common stock outstanding, equity awards outstanding and our request for 200,000 additional shares to
be available for awards pursuant to the Incentive Plan. The 200,000 shares represent 6.28% of our outstanding shares of Class A
common stock as of March 11, 2025. The Board believes that the 200,000 shares requested represents a reasonable amount of potential equity
dilution, which will allow us to continue awarding equity awards, an important component of our compensation program.
| | |
# of Shares
as of
March
11, 2025 | | |
% of Shares of Class A Common Stock
Outstanding as of
March 11, 2025 | |
| New Share Reserve Proposal | |
| 200,000 | | |
| 6.28 | % |
| Shares Remaining Available for Future Issuance | |
| 2,634 | | |
| 0.08 | % |
| Stock Options Outstanding | |
| 97,366 | | |
| 3.06 | % |
| Full-Value Awards Outstanding | |
| - | | |
| 0.00 | % |
| Total Awards Granted + New Share Reserve | |
| 300,000 | | |
| 9.42 | % |
| Shares of Class A Common Stock Outstanding as of March 11, 2025 | |
| 3,183,558 | | |
| | |
Burn
Rate
The
following table sets forth information regarding the awards granted, the burn rate for each of the last three fiscal years and the average
burn rate over the last three years. The burn rate has been calculated as the quotient of (i) the sum of all stock options granted
in such year, divided by (ii) the weighted average number of shares of Class A common stock outstanding for each such year.
| Element | |
2022 | | |
2023 | | |
2024 | |
| Stock Options
Granted(1)(2) | |
| 69,988 | | |
| 57,566 | | |
| 46,000 | |
| Weighted average number of shares outstanding – basic | |
| 1,171,323 | | |
| 2,577,451 | | |
| 2,922,091 | |
| Annual Burn Rate | |
| 5.98 | % | |
| 2.23 | % | |
| 1.57 | % |
| Three-Year Average Burn Rate | |
| | | |
| 3.26 | % | |
| | |
| |
(1) |
Reflects
the gross number of shares underlying awards made to employees during the respective fiscal year. |
| |
(2) |
Not
adjusted for forfeitures, withholdings and expirations, which would reduce the burn rate if taken into account. |
Stockholders
are asked to approve the Incentive Plan Increase Proposal to satisfy Nasdaq requirements relating to stockholder approval of equity compensation
and to qualify certain stock options authorized under the Incentive Plan for treatment as incentive stock options under Section 422 of
the Internal Revenue Code.
Summary
of the 2021 Equity Incentive Plan
Administration
The
Incentive Plan is to be administered by the Board’s Compensation Committee or, with respect to individuals who are Non-Employee
Directors, the Board. Subject to the terms of the Incentive Plan, the Compensation Committee is authorized to (a) designate the participants
who are entitled to receive awards under the Incentive Plan; (b) determine the types of awards and the times when awards will be granted;
(c) determine the number of awards to be granted and the number of shares of Class A common stock to which an award will relate; (d)
determine the terms and conditions of any award granted pursuant to the Incentive Plan. All decisions by the Compensation Committee with
respect to the Incentive Plan shall be final, binding, and conclusive on all parties.
Eligibility
The
persons eligible to receive awards under the Incentive Plan are our employees, officers, non-employee directors and consultants. Currently,
the Company has 22 employees, including two officers, 17 contractors, and three non-employee directors, eligible to receive awards under
the Incentive Plan.
Types
of Awards
Our
Plan provides for the issuance of stock options, incentive stock options, restricted stock, restricted stock units, and performance share
awards.
Stock
Available for Awards
On
November 10, 2022, as a result of the 1-for-10 Reverse Stock Split, the Incentive Plan was amended and restated to reflect, pursuant
to the provisions of Section 10.1 of the Incentive Plan, the proportionate adjustment to the number of shares of Company’s Class
A common stock authorized for issuance under the Incentive Plan from 1,000,000 shares of Class A common stock to 100,000 shares. The
Company is now seeking an increase of the total authorized shares available for awards under the Incentive Plan to 300,000 shares. In
the event any award granted under the Incentive Plan is terminated, expired, forfeited, or cancelled for any reason, the number of shares
of Class A common stock subject to such award will again be available for grant under the Incentive Plan. Shares tendered to pay the
exercise price of an option or tendered, withheld or otherwise relinquished by a participant to satisfy a tax withholding obligation
arising in connection with any award will not again become available for grant under the Incentive Plan. Shares delivered pursuant to
any Award may consist, in whole or in part, of authorized but unissued Class A common stock, treasury stock not reserved for any other
purposes, or stock purchased on the open market. As of December 31, 2024 and 2023, the Company had 2,634 and 47,291, respectively,
shares available for future issuance under the Incentive Plan.
To
the maximum extent permitted by applicable law and the Nasdaq listing standards (or the rules of any exchange on which the Class A common
stock is then listed), shares of stock awarded in assumption of, or in substitution for, any outstanding awards of any entity acquired
in any form of combination by the Company or any subsidiary shall not be counted against shares of stock available for grant under the
Incentive Plan.
Stock
Options
The
Compensation Committee is authorized to grant options to purchase Class A common stock and determine the number of shares of Class A
common stock to be covered by each option, the exercise price of each option, and the conditions and limitations applicable to the exercise
of each option, including conditions relating to applicable federal or state securities laws, as the Compensation Committee considers
necessary or advisable. An option that is not intended to be an incentive stock option shall be designated a non-qualified stock option.
Incentive
stock options, as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), are
only available to our employees. All such incentive stock options shall be subject to and shall be construed consistently with the requirements
of Section 422 of the Code.
The
Compensation Committee is authorized to establish the exercise price of each option and specify the exercise price in an applicable option
agreement. The exercise price is not to be less than 100% of the fair market value on the date the option is granted, but in the case
of an incentive stock option granted to an employee who owns stock representing more than 10% of the voting power of all classes of our
stock, the per share exercise price is to be no less than 110% of the fair market value on the date the option is granted. The Compensation
Committee may specify the terms and duration under which options are exercisable in an applicable option agreement, but the maximum term
is 10 years for the exercise of options and 5 years in the case of an incentive stock option granted to an employee who owns stock representing
more than 10% of the voting power of all classes of our stock.
Stock
Appreciation Rights
The
Compensation Committee may grant stock appreciation rights with such terms and conditions as the Compensation Committee may determine
at the time of grant and as set forth in the award agreement. The base value of a stock appreciation right shall be determined by
the Compensation Committee and shall be specified in the award agreement; however, the base value must be at least equal to 100%
of the Fair Market Value of a share on the date of grant.
Restricted
Stock; Restricted Stock Units
The
Compensation Committee is authorized to grant restricted stock and restricted stock units and to determine the terms and conditions set
forth in the applicable award agreement, including the conditions for vesting, repurchase, forfeiture and issue price. Restricted stock
is a grant of shares of Class A common stock which are subject to such conditions and/or restrictions as the Compensation Committee may
impose (including, without limitation, limitations on transferability, the right to receive dividends, or the right to vote the stock),
which need not be the same for each grant or for each Participant. Alternatively, the Compensation Committee may grant restricted stock
units, which entitle the recipient to receive Class A common stock or cash at the time such award vests.
Performance
Share Awards
The
Compensation Committee is authorized to grant performance share awards, which represent a right granted to a participant to receive cash
or stock, the payment of which is contingent upon achieving certain performance goals established by the Compensation Committee. The
Compensation Committee has authority to determine the terms and conditions, restrictions of such awards, including whether payment thereunder
will be made in cash or stock, or in a combination thereof.
Adjustments
for Changes in Common Stock and Certain Other Events
In
the event of any change in the number of shares of Class A common stock outstanding by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares or similar corporate change, the maximum aggregate number of shares of Class
A common stock available for grant under the Incentive Plan, the number of shares of Class A common stock subject to any award, and any
numeric limitation expressed in the Incentive Plan shall be appropriately adjusted by the Compensation Committee. In connection with
such an event, the Committee shall proportionally adjust the number of shares of Class A common stock subject to each outstanding award
and the exercise price per share of Class A common stock of each such award. All adjustments shall be made in a manner consistent with
the requirements of the Code.
General
Provisions Applicable to Awards
Awards
are subject to restrictions not to be sold, assigned, transferred, pledged or otherwise encumbered, unless the Compensation Committee
determines otherwise. The Compensation Committee is authorized to determine the form in which each award shall be evidenced (written,
electronic or otherwise), the terms of each award, and the effect of an award in the event a recipient’s disability, death, retirement,
termination, cessation of employment, authorized leave of absence, other change in employment or other change in status. The Compensation
Committee may provide that any award shall become immediately exercisable in full or in part, free from some or all restrictions, or
otherwise realizable at any time, consistent with the requirements of the Code.
No
Rights as Stockholder
No
award gives a participant any of the rights of a stockholder of the Company unless and until shares of stock are in fact issued to such
person in connection with such award.
Effective
Date and Term of the Incentive Plan
The
Incentive Plan became effective on January 12, 2021 and expires in 10 years from such date.
Amendment
of the Incentive Plan
With
the approval of the Board, the Compensation Committee terminate, amend or modify the Incentive Plan at any time, subject to the approval
of stockholders or provisions of the Code, as applicable.
Compliance
with Code Section 409A
Unless
otherwise provided for in an award, awards granted under the Incentive Plan are intended to be exempt from Section 409A of the Code,
and, to the extent not so exempt, in compliance with Section 409A of the Code.
U.S.
Federal Income Tax Consequences
The
following is a brief summary of the general U.S. federal income tax consequences relating to the Incentive Plan. This summary is based
on U.S. federal tax laws and regulations in effect on the date of this Proxy Statement and does not purport to be a complete description
of the U.S. federal income tax laws.
Incentive
Stock Options. Incentive stock options are intended to qualify for special treatment available under Section 422 of the Internal
Revenue Code. A participant who is granted an incentive stock option will not recognize ordinary income at the time of grant. A participant
will not recognize ordinary income upon the exercise of an incentive stock option provided that the participant was, without a break
in service, an employee of the Company or a subsidiary during the period beginning on the grant date of the option and ending on the
date three months prior to the date of exercise (one year prior to the date of exercise if the participant’s employment is terminated
due to permanent and total disability).
If
the participant does not sell or otherwise dispose of the shares of Class A common stock acquired upon the exercise of an incentive stock
option within two years from the grant date of the incentive stock option or within one year after he or she receives the shares of Class
A common stock, then, upon disposition of such shares of Class A common stock, any amount recognized in excess of the exercise price
will be taxed to the participant as a capital gain. The participant will generally recognize a capital loss to the extent that the amount
recognized is less than the exercise price.
If
the foregoing holding period requirements are not met, the participant will generally recognize ordinary income at the time of the disposition
of the shares of Class A common stock in an amount equal to the lesser of (i) the excess of the fair market value of the shares of Class
A common stock on the date of exercise over the exercise price or (ii) the excess, if any, of the amount recognized upon disposition
of the shares of Class A common stock over the exercise price. Any amount recognized in excess of the value of the shares of Class A
common stock on the date of exercise will be capital gain. If the amount recognized is less than the exercise price, the participant
generally will recognize a capital loss equal to the excess of the exercise price over the amount recognized upon the disposition of
the shares of Class A common stock.
The
rules described above that generally apply to incentive stock options do not apply when calculating any alternative minimum tax liability.
The rules affecting the application of the alternative minimum tax are complex, and their effect depends on individual circumstances,
including whether a participant has items of adjustment other than those derived from incentive stock options.
Nonqualified
Stock Options. A participant will not recognize ordinary income when a nonqualified stock option is granted. When a nonqualified
stock option is exercised, a participant will recognize ordinary income in an amount equal to the excess, if any, of the fair market
value of the shares of Class A common stock that the participant purchased over the exercise price he or she paid.
Stock
Appreciation Rights. A participant will not recognize ordinary income when a stock appreciation right is granted. When a stock appreciation
right is exercised, the participant will recognize ordinary income equal to the cash and/or the fair market value of shares of Class
A common stock the participant receives.
Restricted
Shares. A participant who has been granted restricted shares will not recognize ordinary income at the time of grant, assuming
that the underlying shares of Class A common stock are not transferable and that the restrictions create a “substantial risk of
forfeiture” for federal income tax purposes and that the participant does not make an election under Section 83(b) of the Internal
Revenue Code. Generally, upon the vesting of restricted shares, the participant will recognize ordinary income in an amount equal to
the then fair market value of the shares of Class A common stock, less any consideration paid for such shares of Class A common stock.
Any gains or losses recognized by the participant upon disposition of the shares of Class A common stock will be treated as capital gains
or losses. However, a participant may elect, pursuant to Section 83(b) of the Internal Revenue Code, to have income recognized at the
date of grant of a restricted share award equal to the fair market value of the shares of Class A common stock on the grant date (less
any amount paid for the restricted shares) and to have the applicable capital gain holding period commence as of that date.
Restricted
Share Units. A participant generally will not recognize ordinary income when restricted share units are granted. Instead, a
participant will recognize ordinary income when the restricted share units are settled in an amount equal to the fair market value of
the shares of Common Stock or the cash he or she receives, less any consideration paid.
Sale
of Shares. When a participant sells shares of Class A common stock that he or she has received under an award, the participant
will generally recognize long-term capital gain or loss if, at the time of the sale, the participant has held the shares of Class A common
stock for more than one year (or, in the case of a restricted share award, more than one year from the date the restricted shares vested
unless the participant made an election pursuant to Section 83(b) of the Internal Revenue Code, described above). If the participant
has held the shares of Class A common stock for one year or less, the gain or loss will be a short-term capital gain or loss.
Tax
Deductibility of Compensation Provided Under the Incentive Plan. When a participant recognizes ordinary compensation income
as a result of an award granted under the Incentive Plan, the Company may be permitted to claim a federal income tax deduction for such
compensation, subject to various limitations that may apply under applicable law.
Further,
to the extent that compensation provided under the Incentive Plan may be deemed to be contingent upon a change in control of the Company,
a portion of such compensation may be non-deductible by the Company under Section 280G of the Internal Revenue Code and may be subject
to a 20% excise tax imposed on the recipient of the compensation.
Restrictions
on Shares; Claw-back Provisions
Shares
of Class A common stock acquired in respect of awards pursuant to the Incentive Plan are subject to such terms and conditions determined
by the Board, including restrictions on the transferability of shares, our right to repurchase shares, our right to require the transfer
of shares in the event of certain transactions, tag-along rights, bring-along rights, redemption and co-sale rights and voting requirements.
The issuance of shares of Class A common stock are subject to recipients’ consent to such terms and conditions and the recipient
entering into an award agreement. All awards are subject to the provisions of any claw-back policy implemented by us, including any claw-back
policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations
promulgated thereunder, to the extent set forth in such claw-back policy and/or in the applicable award agreement.
New
Plan Benefits
The
grant of options and other awards under the Incentive Plan is discretionary, and we cannot determine now the number or type of options
or other awards to be granted in the future to any particular person or group.
Since
it is not possible to determine the exact number of awards that will be granted under the Incentive Plan, the awards granted during the
year ended December 31, 2024 under the Incentive Plan are set forth in the following table.
| Name and Position | |
Number
of Stock
Options | |
| Stephen Hood | |
| 46,000 | |
| Stanley Beckley | |
| - | |
| Current Executive Officers as a Group | |
| 46,000 | |
| Current Non-Executive Director Group | |
| - | |
| Current Non-Executive Officer Employee Group | |
| - | |
Equity
Compensation Plan Information
The
section titled “Executive and Director Compensation—Equity Incentive Plan Information,” above, is incorporated by reference
herein.
Interests
of Directors and Executive Officers
Our
directors and executive officers have substantial interests in the matters set forth in this proposal since equity awards will be granted
to them under the Incentive Plan if this proposal is approved.
Required
Vote
To
be approved, Proposal No. 2 (the Incentive Plan Increase Proposal), must receive the affirmative vote of the holders of a majority of
the voting power of the shares present in person or represented by proxy and entitled to vote on that proposal at the Annual Meeting.
Abstentions will have the same effect as an AGAINST vote. Broker non-votes will have no effect on the outcome of the vote with
respect to this proposal.
Recommendation
of the Board of Directors
The
Board unanimously recommends that you vote “FOR” Proposal No. 2 to approve the Incentive Plan Increase Proposal.
Proposal
No. 3
The
Auditor Ratification Proposal
ratification
of the selection of Grassi & Co., CPAs, P.C. as the Company’s independent registered public accounting firm for the year ending
December 31, 2025
The
Audit Committee has appointed and the Board has affirmed Grassi & Co., CPAs, P.C. (“Grassi”) as our independent
registered public accounting firm for the year ending December 31, 2025. Grassi commenced serving as our independent registered public
accounting firm on December 4, 2024. Representatives of Grassi will not be present at the Annual Meeting and therefore will not make
a statement at the Annual Meeting or be available to respond to questions from stockholders.
Although
ratification of the Company’s independent accounting firm by stockholders is not required by law, the Board has determined that
it is desirable to request ratification of this selection by the stockholders. Notwithstanding its selection, the Audit Committee, in
its discretion, may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee believes
that such a change would be in the best interest of the Company and its stockholders. If the stockholders do not ratify the appointment
of Grassi, the Audit Committee may reconsider its selection.
Engagement
of Grassi
On
December 4, 2024, the Audit Committee approved the engagement of Grassi as the Company’s independent registered public accounting
firm for the Company’s fiscal year ended December 31, 2024, effective immediately, and dismissed Grant Thornton LLP (“Grant
Thornton”) as the Company’s independent registered public accounting firm. On December 4, 2024, the Company entered
into an engagement letter with Grassi and engaged Grassi as the Company’s independent registered public accounting firm effective
immediately.
Grant
Thornton’s audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended December
31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion, were not qualified or modified as to audit scope or
accounting principles, but included an explanatory paragraph describing conditions that raised substantial doubt about the Company’s
ability to continue as a going concern as of December 31, 2023.
During
the fiscal years ended December 31, 2023, and 2022, and the subsequent interim periods through December 4, 2024, there were (i) no disagreements
(as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Grant Thornton on any matter
of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Grant
Thornton’s satisfaction, would have caused Grant Thornton to make reference thereto in their reports on the financial statements
for such years, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
The
Company provided Grant Thornton with a copy of the disclosures above and requested that Grant Thornton furnish a letter addressed to
the SEC stating whether or not it agrees with the statements made therein. A copy of Grant Thornton’s letter was filed as Exhibit
16.1 to our Current Report on Form 8-K filed on December 6, 2024.
During
the fiscal years ended December 31, 2023 and 2022 and the subsequent interim periods through December 4, 2024, neither the Company nor
anyone on its behalf has consulted with Grassi regarding: (i) the application of accounting principles to a specific transaction, either
completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a
written report nor oral advice was provided to the Company that Grassi concluded was an important factor considered by the Company in
reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a “disagreement”
within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions; or (iii) any “reportable event”
within the meaning of Item 304(a)(1)(v) of Regulation S-K.
Principal
Accountant Fees and Services
Grassi
The
following table shows the fees paid or accrued by the Company for the audit and other services provided by Grassi for the year ended
December 31, 2024.
| | |
Year Ended
December 31, 2024 | |
| Audit Fees (1) | |
$ | 160,000 | |
| Audit Related Fees | |
| - | |
| Tax Fees | |
| - | |
| All Other Fees | |
| - | |
| Total | |
$ | 160,000 | |
| (1) | Audit
fees primarily represent fees for professional services provided in connection with the audit
of the Company’s financial statements. |
Grant
Thornton
The
following table shows the fees paid or accrued by the Company for the audit and other services provided by Grant Thornton for the years
ended December 31, 2024 and 2023.
| | |
Year Ended
December 31, 2024 | | |
Year Ended
December 31, 2023 | |
| Audit Fees (1) | |
$ | 132,924 | | |
$ | 504,210 | |
| Audit Related Fees (2) | |
| - | | |
| - | |
| Tax Fees | |
| - | | |
| - | |
| All Other Fees | |
| - | | |
| - | |
| Total | |
$ | 132,924 | | |
$ | 504,210 | |
| (1) | Audit
fees primarily represent fees for professional services provided in connection with the audit
of the Company’s financial statements, review of quarterly financial statements and
other services that are normally provided in connection with statutory and regulatory filings
or engagements. |
| (2) | Audit-related
fees represent fees reasonably related to the performance of the audit or review of the Company’s
financial statements not reported under “Audit Fees” above. |
Audit
Committee Pre-Approval Policy
The
Audit Committee pre-approves all audit and permissible non-audit services provided by our independent registered public accounting firm.
These services may include audit services, audit-related services, tax services and other services. Prior to engaging our independent
registered public accounting firm to render an audit or permissible non-audit services, the Audit Committee specifically approves the
engagement of our independent registered public accounting firm. As such, the respective engagements of Grassi and Grant Thornton to
render audit services, audit related services and other services were approved by the Audit Committee in advance of the rendering of
the services.
Audit
Committee Report
See
Audit Committee Report included in this proxy statement. Such report is incorporated herein by this reference.
Required
Vote
To
be approved, Proposal No. 3 (the Auditor Ratification Proposal), must receive the affirmative vote of the holders of a majority
of the voting power of the shares present in person or represented by proxy and entitled to vote on that proposal at the Annual Meeting.
Abstentions will have the same effect as an AGAINST vote. Broker non-votes are not expected on this proposal because we believe
it is a routine matter
Recommendation
of the Board of Directors
The
Board unanimously recommends that you vote “FOR” Proposal No. 3 to approve the Auditor Ratification Proposal.
Proposal
No. 4
The
Warrant Exercise Proposal
APPROVAL
OF THE EXERCISE OF WARRANTS ISSUED ON JULY 29, 2024 TO PURCHASE UP TO AN AGGREGATE OF 949,310 SHARES OF CLASS A COMMON STOCK UNDER APPLICABLE
RULES AND REGULATIONS OF NASDAQ
Motorsport
Games is seeking stockholder approval for the exercise of the warrants issued by Motorsport Games on July 29, 2024 (the “Warrants”)
to purchase up to an aggregate of 949,310 shares of the Company’s Class A common stock under applicable listing rules and regulations
of Nasdaq.
On
July 26, 2024, Motorsport Games entered into a securities purchase agreement (the “Purchase Agreement”) with
two institutional investors (the “Investors”) for the issuance and sale of
an aggregate of: (i) 351,928 shares of Class A common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”)
to purchase up to an aggregate of 108,902 shares of Class A common stock, and in the concurrent private placement (the “Private
Placement”), the Company issued: (a) Series A Warrants to purchase up to 460,830 shares of Class A common stock at an exercise
price of $2.17 per share (the “Series A Warrants”), and (b) Series B Warrants to purchase up to 460,830 shares
of Class A common stock at an exercise price of $2.17 per share (the “Series B Warrants” and collectively with
the Series A Warrants, the “Purchase Warrants”); and (c) placement agent warrants (the “Placement
Agent Warrants” and collectively with the Purchase Warrants, the “Warrants”) to purchase up to
27,650 shares of Class A common stock that were issued to designees of H.C. Wainwright & Co., LLC (“Wainwright”
or the “Placement Agent”) as compensation for Wainwright acting as placement agent in connection with the Private
Placement. The net proceeds to us from the Offering (as defined below) were approximately $0.9 million, after deducting placement agent
fees and expenses and estimated offering expenses payable by us.
The
shares of Class A common stock issuable upon the exercise of the Series A Warrants and the Series B Warrants are collectively referred
to as the “Warrant Shares.” The Series A Warrants and the Series B Warrants will become exercisable on the
effective date of the stockholder approval for the issuance of the Warrant Shares upon exercise of the Series A Warrants and the Series
B Warrants (the “Stockholder Approval Date”). The Series A Warrants have a term of exercise equal to five and
one-half years from the Stockholder Approval Date. The Series B Warrants have a term of exercise equal to eighteen months from the Stockholder
Approval Date
A
holder of the Series A Warrants and Series B Warrants may not exercise any portion of such
holder’s the Warrants to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% (or,
at the election of the holder, 9.99%) of the Company’s outstanding shares of Class A common stock immediately after exercise, except
that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation
to up to 9.99% of the number of shares of Class A common stock outstanding immediately after giving effect to the exercise.
In
connection with the Private Placement, we agreed with the Investors to prepare and file a registration statement with the SEC registering
the resale of the shares of Class A common stock underlying the Purchase Warrants no later than 30 days after the Closing Date (as defined
in the Purchase Agreement) and to use commercially reasonable efforts to cause such registration statement to become effective within
60 days following the Closing Date (or within 90 days following the Closing Date if the SEC informs the Company that it intends to review
such registration statement). We filed a registration statement on Form S-1 registering the Warrant Shares for resale on August 20, 2024,
which registration statement was declared effective on August 30, 2024.
The
Company entered into an engagement letter with Wainwright, dated November 6, 2023, the term of which was subsequently amended by the
Company and Wainwright, pursuant to which Wainwright agreed to act as the exclusive placement agent for the Company, on a reasonable
best-efforts basis, in connection with the registered direct offering and the concurrent Private Placement (collectively, the “Offering”).
The Company paid Wainwright an aggregate cash fee equal to 7.0% of the gross proceeds of the Offering. The Company also paid Wainwright
certain expenses of $30,000 for non-accountable expenses and $15,950 for clearing fees. Additionally, the Company issued to Wainwright
and its designees as compensation, the Placement Agent Warrants to purchase up to 27,650 shares of Class A common stock, which is equal
to 6.0% of the aggregate number of shares of Class A common stock and shares of Class A common stock issuable upon the exercise of the
Pre-Funded Warrants included in the Offering. The Placement Agent Warrants have substantially the same terms as the Series A Warrants
and Series B Warrants described above, except that the Placement Agent Warrants have an exercise price of $2.7125 per share (representing
125% of the combined purchase price per Share and accompanying Purchase Warrants) and expire five (5) years following the commencement
of the sales pursuant to the Private Placement.
The
Series A Warrants, the Series B Warrants, the Placement Agent Warrants and the shares of Class A common stock issuable upon exercise
thereof were offered pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Reasons
for the Private Placement
As
of June 30, 2024, the Company’s cash and cash equivalents were approximately $0.5 million. As a result, in July 2024, the Company’s
Board of Directors determined that it was necessary to raise additional funds for general corporate purposes.
We
believe that the Offering, which yielded gross proceeds of approximately $1.0 million, was necessary in light of the Company’s
cash and funding requirements at the time. In addition, at the time of the Offering, the Company’s Board of Directors considered
numerous other alternatives to the transaction, none of which proved to be feasible or, in the opinion of the Company’s Board of
Directors, would have resulted in aggregate terms equivalent to, or more favorable than, the terms obtained in the Offering.
Description
of the Warrants
Pursuant
to Nasdaq Stock Market Rule 5635(d), the Warrants will not be exercisable until the Company’s stockholders approve (the “Private
Placement Stockholder Approval”) the issuance of the shares of Class A common stock issuable upon exercise of the Warrants.
The Purchase Agreement provided that we would be required to hold an annual or special meeting of stockholders on or prior to the date
that is ninety (90) days following July 29, 2024, the closing date of the Offering, for the purpose of obtaining the Private Placement
Stockholder Approval, meaning we are required to hold a stockholder meeting no later than October 25, 2024. We further agreed with the
Investors that if we did not obtain the Private Placement Stockholder Approval at the first meeting that is called, we would call an
additional stockholder meeting every six (6) months thereafter until the earlier of the date we obtain such Private Placement Stockholder
Approval or the Warrants are no longer outstanding. On October 25, 2024, we held a special meeting of stockholders for the purpose of
seeking the Private Placement Stockholder Approval, which was not obtained.
Set
forth below is a summary of the terms of the Warrants. Except as described below, the Placement Agent Warrants have substantially the
same terms as the Series A Warrants.
Exercisability
The
Purchase Warrants each have an initial exercise price of $2.17 per share and are exercisable beginning on the Stockholder Approval Date,
if at all. The Series A Warrants expire five and half years after the Stockholder Approval Date and the Series B Warrants expire 18 months
after the Stockholder Approval Date. The Placement Agent Warrants have an initial exercise price of $2.7125 per share and are exercisable
beginning on the Stockholder Approval Date, if at all, and expire five years after the commencement of sales in the Offering.
No
Fractional Shares
No
fractional shares or scrip representing fractional shares will be issued upon the exercise of the Warrants. As to any fraction of a share
which the holder would otherwise be entitled to purchase upon such exercise, the number of shares of Class A common stock to be issued
will be rounded up to the nearest whole number.
Exercise
Limitation
In
general, a holder of the Warrants does not have the right to exercise any portion of a Warrant if the holder (together with its Attribution
Parties (as defined in the Warrant) would beneficially own in excess of 4.99% of the number of shares of Class A common stock outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrant.
However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided
that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase or
decrease will apply only to the holder providing such notice.
Cashless
Exercise
If
at the time of exercise of a Warrant there is no effective registration statement registering, or the prospectus contained therein is
not available for the resale of, the Warrant Shares, in lieu of making the cash payment otherwise contemplated to be made to us upon
the exercise of any Warrants in payment of the aggregate exercise price, the holder may, at its option, instead receive upon such exercise
(either in whole or in part) only the net number of shares of Class A common stock determined according to a formula set forth in the
Warrants.
Adjustment
for Stock Splits
The
exercise price of the Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock
splits, stock combinations, reclassifications or similar events affecting the Class A common stock.
Dividends
or Distributions
If
we declare or make any dividend or other distribution of the Company’s assets (or rights to acquire the Company’s assets)
to holders of shares of Class A common stock, by way of return of capital or otherwise (including, without limitation, any distribution
of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) at any time after the issuance of the Warrants, then, in
each such case, the holders of the Warrants shall be entitled to participate in such distribution to the same extent that the holders
would have participated therein if the holders had held the number of shares of common stock acquirable upon complete exercise of the
Warrants.
Purchase
Rights
If
we grant, issue or sell any shares of Class A common stock or securities exercisable for, exchangeable for or convertible into Class
A common stock, or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares
of Class A common stock, referred to as Purchase Rights, then each holder of the Warrants will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the holder could have acquired if the holder had held the number
of shares of common stock acquirable upon complete exercise of the Warrants immediately before the Record Date, or, if no such record
is taken, the date as of which the record holders of shares of Class A common stock are to be determined, for the grant, issue or sale
of such Purchase Rights.
Fundamental
Transaction
If
a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right
and power that we may exercise and will assume all of the Company’s obligations under the Warrants with the same effect as if such
successor entity had been named in the warrant itself. If holders of the Class A common stock are given a choice as to the securities,
cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as to the consideration
it receives upon any exercise of the Warrants following such fundamental transaction. Notwithstanding the foregoing, in the event of
a fundamental transaction, the holders of the Warrants have the right to require us or a successor entity to redeem the Warrants for
cash in the amount of the Black Scholes Value (as defined in each Warrant) of the unexercised portion of the Warrants concurrently with
or within 30 days following the consummation of a fundamental transaction.
However,
in the event of a fundamental transaction which is not in the Company’s control, including a fundamental transaction not approved
by the Company’s Board of Directors, the holders of the Warrants will only be entitled to receive from us or the Company’s
successor entity, as of the date of consummation of such fundamental transaction the same type or form of consideration (and in the same
proportion), at the Black Scholes Value of the unexercised portion of the Warrant that is being offered and paid to the holders of Class
A common stock in connection with the fundamental transaction, whether that consideration is in the form of cash, stock or any combination
of cash and stock, or whether the holders of Class A common stock are given the choice to receive alternative forms of consideration
in connection with the fundamental transaction.
Transferability
Subject
to applicable laws, the Warrants may be offered for sale, sold, transferred or assigned.
Rights
as a Stockholder
Except
as otherwise provided in the Warrants or by virtue of a holder’s ownership of shares of Class A common stock, the holders of the
Warrants do not have the rights or privileges of holders of our Class A common stock, including any voting rights, unless and until they
exercise their Warrants.
Amendments
Each
Warrant may be amended with the written consent of the holder of such Warrant and us.
Listing
There
is no established public trading market for the Warrants, and we do not expect a market to develop. In addition, we do not intend to
apply for listing of the Warrants on any national securities exchange.
Reasons
for the Warrant Exercise Proposal
Our
Class A common stock is listed on Nasdaq and trades under the ticker symbol “MSGM.” Nasdaq Listing Rule 5635(d) requires
stockholder approval of transactions other than public offerings of greater than 20% of the outstanding common stock or voting power
of the issuer prior to such issuance for less than the applicable Minimum Price. Under Rule 5635(d), the “Minimum Price”
means a price that is the lower of: (i) the closing price immediately preceding the signing of the binding agreement; or (ii) the average
closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement. The closing price
of our Class A common stock on Nasdaq on July 25, 2024, the trading date immediately preceding the signing of the Purchase Agreement,
was $2.17 per share. In order to comply with Nasdaq Listing Rule 5635(d), the Warrants are not exercisable until the Private Placement
Stockholder Approval is obtained.
We
are seeking stockholder approval for the issuance of up to an aggregate of 949,310 shares of Class A common stock upon the exercise of
the Warrants that were issued. Effectively, stockholder approval of this Warrant Exercise Proposal is one of the conditions for us to
receive up to an additional approximately $2.1 million (before deducting expenses and placement agent fees) upon the exercise of the
Warrants, if exercised for cash. Loss of these potential funds could adversely impact our ability to fund our operations. If we should
reduce the exercise price of the Warrants, the gross proceeds received by us from the exercise of the Warrants may be less than $2.1
million, and approval of this proposal is an approval of the issuance of up to an aggregate of 949,310 shares of our Common Stock pursuant
to the Warrants at the initial exercise price as well as an unknown lower exercise price.
The
Board is not seeking the approval of our stockholders to authorize our entry into or consummation of the transactions contemplated by
the Purchase Agreement, as the Private Placement has already been completed and the Warrants have already been issued. We are only asking
for approval to issue the Warrant Shares upon exercise of the Warrants.
Potential
Consequences if Proposal No. 4 is Not Approved
The
failure of our stockholders to approve this Proposal No. 4 will mean that: (i) we cannot permit the exercise of the Warrants and
(ii) we may incur substantial additional costs and expenses because we will need to hold another meeting to vote upon this proposal.
Each
Series A Warrants and Series B Warrant has an initial exercise price of $2.17 per share and each Placement Agent Warrant has an initial
exercise price of $2.7125 per share. Accordingly, we would realize an aggregate of up to approximately $2.1 million in gross proceeds
before deducting expenses and fees that we will owe to H.C. Wainwright & Co., LLC, the placement agent in connection with the Private
Placement, if all the Warrants were exercised for cash at their respective initial exercise prices. If the Warrants cannot be exercised,
we will not receive any such proceeds, which could adversely impact our ability to fund our operations.
In
addition, in connection with the Private Placement and the issuance of the Warrants, we have agreed to seek stockholder approval every
six (6) months until our stockholders approve the issuance of the Warrant Shares or until such time as none of the Warrants are outstanding.
The costs and expenses associated with seeking such approval could materially adversely impact our ability to fund our operations.
Potential
Adverse Effects of the Approval of Proposal No. 4
If
this Proposal No. 4 is approved, existing stockholders will suffer dilution in their ownership interests in the future upon the
issuance of the Warrant Shares upon exercise of the Warrants. Assuming the full exercise of the Warrants, an aggregate of 949,310 additional
shares of Class A common stock will be outstanding, and the ownership interest of our existing stockholders would be correspondingly
reduced. In addition, the sale into the public market of these shares also could materially and adversely affect the market price of
our Class A common stock.
No
Appraisal Rights
No
appraisal rights are available under the General Corporation Law of the State of Delaware or under our Certificate, or our Bylaws, as
amended, with respect to the Warrant Exercise Proposal.
Required
Vote
To
be approved, Proposal No. 4 (the Warrant Exercise Proposal), must receive the affirmative vote of the holders of a majority of
the voting power of the shares present in person or represented by proxy and entitled to vote on that proposal at the Annual Meeting.
Abstentions will have the same effect as an AGAINST vote. Broker non-votes will have no effect on the outcome of the vote with
respect to this proposal.
Recommendation
of the Board of Directors
The
Board unanimously recommends that you vote “FOR” Proposal No. 4 to approve the Warrant Exercise Proposal.
Proposal
No. 5
The
Adjournment Proposal
APPROVAL
TO ADJOURN THE 2025 Annual MEETING TO A LATER DATE, IF NECESSARY OR APPROPRIATE, TO PERMIT FURTHER SOLICITATION AND VOTE OF PROXIES IN
THE EVENT THAT THERE ARE INSUFFICIENT VOTES FOR, OR OTHERWISE IN CONNECTION WITH, THE APPROVAL OF PROPOSAL NO. 4
Background
of and Rationale for the Proposal
The
Board believes that if the number of shares of the Company’s common stock voted in favor of and entitled to vote at the Annual
Meeting is insufficient to approve Proposal No. 4 (the Warrant Exercise Proposal) it is in the best interests of the stockholders
to enable the Board to continue to seek to obtain a sufficient number of additional votes to approve any of the Warrant Exercise Proposal.
In
the Adjournment Proposal, we are asking stockholders to authorize the holder of any proxy solicited by the Board to vote in favor of
adjourning or postponing the Annual Meeting or any adjournment or postponement thereof. If our stockholders approve this proposal, we
could adjourn or postpone the Annual Meeting, and any adjourned session of the Annual Meeting, to use the additional time to solicit
additional proxies in favor of any of the Warrant Exercise Proposal.
Additionally,
approval of the Adjournment Proposal could mean that, in the event we receive proxies indicating that a majority of the number of outstanding
shares of Class A common stock will vote against any of the Warrant Exercise Proposal we could adjourn or postpone the Annual Meeting
without a vote on the proposal and use the additional time to solicit the holders of those shares to change their vote in favor of the
Warrant Exercise Proposal.
If
it is necessary or appropriate (as determined in good faith by the Board) to adjourn the Annual Meeting, no notice of the adjourned meeting
is required to be given to our stockholders, other than an announcement at the Annual Meeting of the time and place to which the Annual
Meeting is adjourned, so long as the meeting is adjourned for 30 days or less and no new Record Date is fixed for the adjourned meeting.
At the adjourned meeting, we may transact any business which might have been transacted at the original meeting.
Required
Vote
To
be approved, Proposal No. 5 (the Adjournment Proposal), must receive the affirmative vote of the holders of a majority of the
voting power of the shares present in person or represented by proxy and entitled to vote on that proposal at the Annual Meeting. Abstentions
will have the same effect as an AGAINST vote. Broker non-votes will have no effect on the outcome of the vote with respect to
this proposal.
Recommendation
of our Board of Directors
The
Board unanimously recommends that you vote “for” Proposal No. 5
to approve the Adjournment Proposal.
Security
Ownership Of Certain Beneficial Owners And Management
The
following table sets forth the beneficial ownership of our common stock as of March 11, 2025 for:
| ● | each
stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares
of Class A common stock and Class B common stock (by number or by voting power); |
| ● | each
of our named executive officers; and |
| ● | all
of our directors and current executive officers as a group. |
Applicable
percentage ownership before the offering is based on 3,183,558 shares of Class A common stock and 700,000 shares of our Class B common
stock outstanding as of March 11, 2025.
The
number of shares beneficially owned by each stockholder is determined under rules issued by the SEC and includes voting or investment
power with respect to securities. Under these rules, beneficial ownership includes any shares as to which the individual or entity has
sole or shared voting power or investment power. In computing the number of shares beneficially owned by an individual or entity and
the percentage ownership of that person, shares of common stock subject to options, or other rights, including the redemption right described
above, held by such person that are currently exercisable or will become exercisable within 60 days of the date of March 11, 2025, are
considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any
other person. Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the
stockholder unless noted otherwise, subject to community property laws where applicable.
Unless
otherwise indicated, the address of all listed stockholders is c/o Motorsport Games Inc., 5972 NE 4th Avenue, Miami, FL 33137.
| | |
Shares Beneficially Owned | |
| | |
Class A | | |
Class B | | |
| |
| Name of Beneficial Owner | |
Shares | | |
% | | |
Shares | | |
% | | |
% of Total Voting Power(1) | |
| 5% Stockholders: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Driven Lifestyle Group LLC(2) | |
| 1,480,385 | | |
| 46.50 | % | |
| 700,000 | | |
| 100 | % | |
| 83.28 | % |
| Directors and Named Executive Officers: | |
| | | |
| | | |
| | | |
| | | |
| | |
| John Delta | |
| 39,593 | | |
| 1.24 | | |
| — | | |
| — | | |
| * | |
| Andrew P. Jacobson | |
| 13,158 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Navtej Singh Sunner | |
| 13,158 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Stephen Hood | |
| 47,179 | | |
| 1.47 | % | |
| — | | |
| — | | |
| * | |
| Stanley Beckley | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Directors and current executive officers as a group (5 persons) | |
| 113,088 | | |
| 3.53 | % | |
| — | | |
| — | | |
| * | |
| (1) | Percentage
of total voting power represents voting power with respect to all shares of Class A common
stock and Class B common stock, as a single class. The holders of our Class B common stock
are entitled to ten votes per share, and holders of our Class A common stock are entitled
to one vote per share. See the section titled “Description of Capital Stock—Common
Stock” for additional information about the voting rights of our Class A common stock
and Class B common stock. |
| (2) | Consists
of shares held of record by Driven Lifestyle (formerly known as Motorsport Network LLC).
Mike Zoi is the manager of Driven Lifestyle and has sole voting and dispositive power with
respect to the shares held by Driven Lifestyle. |
Notice
Regarding Delivery Of Stockholder Documents (“Householding” Information)
The
SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy
statements, annual reports and notices of internet availability of proxy materials with respect to two or more stockholders sharing the
same address by delivering a single copy of the applicable document(s) addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
Brokers
with account holders who are stockholders of the Company may be “householding” our proxy materials. A single proxy statement
or notice may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker that it will be “householding” communications to your address,
“householding” will continue until you are notified otherwise or until you notify your broker or the Company that you no
longer wish to participate in “householding.”
If,
at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement,
annual report or notice you may (1) notify your broker, (2) direct your written request to: Motorsport Games Inc., 5972 NE 4th Avenue,
Miami, Florida 33137, Attention: Corporate Secretary, or (3) call (305) 507-8799. Stockholders who currently receive multiple copies
of our proxy statement and/or notice at their address and would like to request “householding” of their communications should
contact their broker. In addition, the Company will promptly deliver, upon written or oral request to the address or telephone number
above, a separate copy of the proxy statement, annual report and/or notice to a stockholder at a shared address to which a single copy
of the document(s) was delivered.
Stockholder
Proposals And Nominations For The 2026 Annual Meeting
Stockholder
proposals intended to be presented at the 2026 Annual Meeting must be submitted to the Secretary of the Company, at the principal executive
offices of the Company, 5972 NE 4th Avenue, Miami, Florida 33137, generally no later than November 21, 2025, which is
120 calendar days before the date of the Company’s proxy statement released to stockholders in connection with the previous year’s
annual meeting (i.e., March 21, 2025) in order to receive consideration for inclusion in the Company’s 2025 proxy materials.
However, if next year’s annual meeting is to be held more than 30 days before or 30 days after the anniversary of this year’s
annual meeting, stockholder proposals must be received a reasonable time before we begin to print and mail our 2026 proxy materials.
Any such stockholder proposal must comply with the requirements of Rule 14a-8 promulgated under the Exchange Act.
Notice
of proposals to be considered at next year’s meeting but not included in the proxy statement must meet the requirements set forth
in the Company’s bylaws, including providing all of the information specified in the bylaws. The notice must be submitted to the
Secretary of the Company, at the principal executive offices of the Company, 5972 NE 4th Avenue, Miami, Florida 33137. Each proposal
submitted must be a proper subject for stockholder action at the meeting. The notice generally must be received not less than 60 days
nor more than 90 days prior to the first anniversary of this year’s annual meeting. Therefore, to be timely, stockholder proposals
must be received no earlier than January 25, 2026 and no later than February 24, 2026. However, if next year’s
annual meeting is to be held more than 30 days before or 60 days after April 25, 2026 (the anniversary of this year’s annual meeting),
notice must be received no later than the later of 70 days prior to the date of the meeting or the 10th day following the Company’s
public announcement of next year’s annual meeting date.
In
addition to satisfying the advance notice provisions of the Company’s bylaws, stockholders who intend to solicit proxies in support
of director nominees other than the Company’s nominees must provide the Company notice that sets forth the information required
by Rule 14a-19 under the Exchange Act postmarked to the Company at its corporate headquarters located at 5972 NE 4th Avenue,
Miami, Florida 33137 no later than February 24, 2026, which is 60 calendar days prior to the anniversary of this year’s annual
meeting date (i.e., April 25, 2025) to comply with the SEC’s universal proxy rules. If the date of the 2026 Annual Meeting is changed
by more than 30 days before or after April 25, 2026, then notice must be provided by the later of 60 calendar days prior to the date
of the meeting or the 10th calendar day following the day on which public announcement of the date of the 2026 Annual Meeting
is first made.
| BY
ORDER OF THE BOARD OF DIRECTORS |
|
| |
|
| |
|
| Stephen
Hood |
|
| Chief
Executive Officer and President |
|
| |
|
| Date:
March 21, 2025 |
|
Annex
A
Form
of AMENDMENT TO THE Amended and Restated
Motorsport Games INC. 2021 Equity Incentive Plan
Whereas,
the Board of Directors (the “Board”) of Motorsport Games Inc. (the “Company”) heretofore established
the Motorsport Games Inc. 2021 Equity Incentive Plan (the “Plan”); and
Whereas,
the Board desires to amend the Plan to increase the maximum number of shares of the Company’s Class A common stock, par value
$0.0001 per share (the “Common Stock”) available for grants of Awards thereunder by an additional 200,000 shares of
Common Stock to 300,000 shares of Common Stock; and
Whereas,
pursuant to Section 13.1 of the Plan, the Board has the right to amend the Plan with respect to certain matters; and
Whereas,
the Board has approved and authorized this amendment to the Plan (this “Amendment”) and has recommended that the stockholders
of the Company approve this Amendment; and
Whereas,
the stockholders of the Company have approved this Amendment at a duly called meeting; now, therefore, be it
Resolved,
that the Plan is hereby amended, subject to and effective as of the date of stockholder approval hereof, such that Section 5.1 of
the Plan is hereby amended by increasing the share references in such section by an additional 200,000 shares of Common Stock to 300,000
shares of Common Stock, so that the first sentence of Section 5.1 reads in its entirety as follows:
Subject
to adjustment as provided in Section 10, the aggregate number of shares of Stock reserved and available for grant pursuant to the Plan
shall be 300,000 shares.
Except
as specifically set forth herein, the terms of the Plan shall be and remain unchanged, and the Plan as amended shall remain in full force
and effect.
[Signature
page follows.]
In
witness whereof, the Company has caused this
Amendment to be signed this ___ day of _____________, 2025.
| |
MOTORSPORT
GAMES INC. |
| |
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
Grafico Azioni Motorsport Games (NASDAQ:MSGM)
Storico
Da Mar 2025 a Apr 2025
Grafico Azioni Motorsport Games (NASDAQ:MSGM)
Storico
Da Apr 2024 a Apr 2025
