Motorsport Games secures $2.5 million in private placement

MIAMI - Motorsport Games Inc. (MSGM), a developer and publisher of racing simulation games, has closed a private placement offering, raising approximately $2.5 million in funding. The funding comes at a crucial time for the company, which according to InvestingPro data, has been rapidly burning through cash with short-term obligations exceeding liquid assets. The agreement, completed with institutional and accredited investors including an affiliate of Pimax Innovation Inc., was finalized on April 11, 2025.

The private placement involved the issuance of 1,894,892 shares of the company’s Class A common stock and a pre-funded warrant to purchase up to 377,836 shares at an exercise price of $0.0001 per share. The initial closing of $2.4 million occurred on the same day, with the remaining $100,000 expected to be finalized today. Despite recent market challenges that have seen the stock decline by over 66% in the past year, InvestingPro analysis indicates the company has maintained positive revenue growth of approximately 26% over the last twelve months.

Shares were priced at $1.10 each, and the pre-funded warrants at $1.0999, reflecting a premium of roughly 33% over the stock’s closing price on April 10, 2025. This strategic move aims to bolster the company’s cash position, support working capital, cover general corporate expenses, and fuel product development acceleration. Additionally, it is intended to help Motorsport Games meet the Nasdaq Capital Market’s minimum stockholders’ equity requirement.

As part of the placement terms, Motorsport Games will appoint a Class II director to its board, chosen by the investors who acquired a majority interest in the newly issued securities. These investors will also have the right to nominate an individual to the company’s management team, pending board approval.

Stephen Hood, CEO and President of Motorsport Games, expressed satisfaction with the investment, particularly from Pimax, a leader in high-end VR headsets. He anticipates that the partnership will bring about synergies between the two companies, enhancing the virtual reality gaming experience in sim racing titles like Le Mans Ultimate.

Pimax Founder and Chairman, Robin Weng, also highlighted the partnership’s potential to cater to the sim racing community’s needs and push the boundaries of immersive VR experiences.

The securities sold in this private placement have not been registered under the Securities Act of 1933 and are therefore subject to restrictions on their sale in the United States. This press release does not constitute an offer to sell these securities.

Motorsport Games is renowned for its authentic racing games and esports competitions, holding official licenses for prestigious racing series such as the 24 Hours of Le Mans. The company’s portfolio includes rFactor 2 and KartKraft simulation platforms, and it also collaborates with Formula E and F1 Arcade. While the company maintains a healthy gross profit margin of about 63%, InvestingPro research reveals additional insights about the company’s financial health and market position. Subscribers can access over 15 exclusive ProTips and a comprehensive analysis through the Pro Research Report, helping investors make more informed decisions about this volatile gaming stock.

The information reported here is based on a press release statement.

In other recent news, Motorsport Games reported its Q4 2024 earnings, highlighting a 13% year-over-year revenue increase, reaching $2 million for the quarter. Despite this growth, the company faced a net loss of $2.9 million in Q4, contrasting with a net income of $2.7 million in the same quarter the previous year. For the full year, revenue rose to $8.7 million, up from $6.9 million in 2023, while the net loss improved to $3 million from $14.3 million in 2023. In addition to financial updates, Motorsport Games settled a legal dispute with Innovate 2 Corp., securing a $500,000 settlement to resolve the litigation. The settlement agreement, finalized in March 2025, involves initial and subsequent payments to be completed by the end of October 2025. This resolution is expected to have a positive impact on Motorsport Games’ financial position. Furthermore, the company is exploring various funding options to sustain operations, including potential equity or debt financing. Investors are likely to monitor these developments closely as Motorsport Games navigates its financial challenges and strategic initiatives.

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