0001493152-21-006719 | 10-K | XBRL Viewer

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2020	Mar. 22, 2021	Jun. 30, 2020
Entity Registrant Name	Motorsport Games Inc.
Entity Central Index Key	0001821175
Document Type	10-K
Document Period End Date	Dec. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filer	No
Entity Current Reporting Status	No
Entity Interactive Data Current	No
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 0
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2020
Class A Common Stock [Member]
Entity Common Stock, Shares Outstanding		10,780,633
Class B Common Stock [Member]
Entity Common Stock, Shares Outstanding		7,000,000

Consolidated Balance Sheets - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Current Assets:
Cash	$ 3,990,532	$ 1,960,279
Accounts receivable, net of allowances of $2,150,684 and $1,891,681 as of December 31, 2020 and 2019, respectively	5,975,414	5,092,332
Prepaid expenses and other current assets	507,177	77,021
Total Current Assets	10,473,123	7,129,632
Property and equipment, net	162,148	127,406
Goodwill	137,717	137,717
Intangible assets, net	5,568,452	5,327,156
Deferred offering costs	749,370
Other assets	296,200	55,363
Total Assets	17,387,010	12,777,274
Current Liabilities:
Accounts payable	705,951	266,854
Accrued expenses	3,355,003	852,938
Due to related parties	10,853,536	8,045,522
Total Current Liabilities	14,914,490	9,165,314
Other non-current liabilities	856,694
Total Liabilities	15,771,184	9,165,314
Member's Equity:
Member's deficiency attributable to Motorsport Gaming US LLC	(1,029,733)	(3,064,354)
Noncontrolling interest	2,645,559	6,676,314
Total Member's Equity	1,615,826	3,611,960
Total Liabilities and Member's Equity	$ 17,387,010	$ 12,777,274

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Accounts receivable, net of allowances	$ 2,150,684	$ 1,891,681

Consolidated Statements of Operations - USD ($)

12 Months Ended

Dec. 31, 2020

Dec. 31, 2019

Income Statement [Abstract]

Revenues

$ 19,045,529

$ 11,850,787

Cost of revenues

^[1]

6,595,872

4,888,877

Gross Profit

12,449,657

6,961,910

Operating Expenses:

Sales and marketing

^[2]

3,402,310

3,771,570

Development

^[3]

4,649,187

4,784,034

General and administrative

^[4]

4,335,434

2,605,782

Depreciation and amortization

61,579

401,622

Loss on impairment of goodwill

575,015

Total Operating Expenses

12,448,510

12,138,023

Income (Loss) From Operations

1,147

(5,176,113)

Interest income

1,339

35,728

Interest expense

^[5]

(718,837)

Loss attributable to equity method investment

(70,792)

(608,656)

Other income (expense), net

107,289

(6,523)

Net Loss

(679,854)

(5,755,564)

Less: Net income (loss) attributable to noncontrolling interest

1,076,793

(2,191,418)

Net Loss Attributable to Motorsport Gaming US, LLC

$ (1,756,647)

$ (3,564,146)

Pro forma net loss per share - basic and diluted

^[6]

$ (0.25)

[1]	Includes related party costs of $135,431 and $0 for the years ended December 31, 2020 and 2019, respectively.
[2]	Includes related party expenses of $67,686 and $593,094 for the years ended December 31, 2020 and 2019, respectively.
[3]	Includes related party expenses of $93,472 and $15,229 for the years ended December 31, 2020 and 2019, respectively.
[4]	Includes related party expenses of $1,236,591 and $0 for the years ended December 31, 2020 and 2019, respectively.
[5]	Includes related party expenses of $698,830 and $0 for the years ended December 31, 2020 and 2019, respectively.
[6]	Pro forma basic and diluted net loss per share for the year ended December 31, 2020 consists of the net loss attributable to Motorsport Gaming US LLC, divided by the number of shares of the Company's Class A common stock outstanding at the Company's conversion into a Delaware corporation of 7,000,000.

Consolidated Statements of Operations (Parenthetical) - USD ($)	1 Months Ended	12 Months Ended
	Jan. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Related party costs		$ 135,431	$ 0
Interest expense, related party		698,830	0
IPO [Member] \| Class A Common Stock [Member]
Weighted average number of shares outstanding, basic and diluted	7,000,000
Sales and Marketing [Member]
Expenses from related party transactions		67,686	593,094
Development [Member]
Expenses from related party transactions		93,472	15,229
General and Administrative [Member]
Expenses from related party transactions		$ 1,236,591	$ 0

Consolidated Statements of Changes in Member's Equity - USD ($)	Member's Deficiency Attributable to Motorsport Gaming US LLC [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2018	$ 499,792	$ 8,867,732	$ 9,367,524
Net (loss) income	(3,564,146)	(2,191,418)	(5,755,564)
Balance at Dec. 31, 2019	(3,064,354)	6,676,314	3,611,960
Change of control adjustments	3,791,268	(5,107,548)	(1,316,280)
Net (loss) income	(1,756,647)	1,076,793	(679,854)
Balance at Dec. 31, 2020	$ (1,029,733)	$ 2,645,559	$ 1,615,826

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Cash Flows from Operating Activities:
Net loss	$ (679,854)	$ (5,755,564)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	720,179	861,872
Sales return and price protection reserves	314,086	55,083
Loss on disposal of property and equipment	32,537
Loss on impairment of goodwill		575,015
Loss on equity method investee	70,792	608,656
Changes in operating assets and liabilities:
Accounts receivable	642,732	56,339
Prepaid expenses and other current assets	(427,980)	5,402
Other assets	(40,428)	(5,582)
Accounts payable	(1,737,999)	(565,287)
Accrued expenses	5,094,585	(260,780)
Other non-current liabilities	64,695
Net Cash Provided By (Used In) Operating Activities	4,053,345	(4,424,846)
Cash Flows From Investing Activities:
Acquisition of equity method investee	(244,202)	(484,335)
Purchase of intangible assets	(100,000)
Purchase of property and equipment	(136,755)	(108,293)
Net Cash Used In Investing Activities	(480,957)	(592,628)
Cash Flows From Financing Activities:
Proceeds from advances from related parties	361,145	3,564,326
Purchase of additional ownership from non-controlling interest	(1,316,280)
Payments of deferred offering costs	(587,000)
Net Cash (Used In) Provided By Financing Activities	(1,542,135)	3,564,326
Net Increase (Decrease) In Cash	2,030,253	(1,453,148)
Cash - Beginning of the Year	1,960,279	3,413,427
Cash - End of the Year	3,990,532	1,960,279
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for: Interest
Non-cash investing and financing activities:
Accrual of intangible asset	(791,999)
Accrual of deferred offering costs	(162,370)
Accrued loss on equity method investee	$ (26,999)	$ (124,321)

Business Organization, Nature of Operations and Risks and Uncertainities

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Business Organization, Nature of Operations and Risks and Uncertainities

NOTE 1 – BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES

Organization and Operations

Motorsport Gaming US LLC (“Motorsport Games”) was established on August 2, 2018 under the laws of the State of Florida. Motorsport Gaming US LLC, through its subsidiaries, including 704Games Company (“704Games”), which Motorsport Games acquired a 53.5% equity interest in on August 14, 2018 and an additional 26.2% and 2.5% equity interest on August 18, 2020 and October 6, 2020, respectively (collectively, the “Company”), is a leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the world, including NASCAR, the iconic 24 Hours of Le Mans endurance race and the associated World Endurance Championship, the British Touring Car Championship (the “BTCC”) and others. The Company develops and publishes multi-platform racing video games including for game consoles, personal computer (PC) and mobile platforms. On January 8, 2021, Motorsport Games converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport Games Inc. See Note 14 – Subsequent Events for details. As of the date the financial statements were issued, Motorsport Games’ wholly owned and majority owned subsidiaries were as follows:

	●	704Games Company
	●	Racing Pro League, LLC
	●	MS Gaming Development LLC
	●	Motorsport Games Limited (formed on February 6, 2020)

In addition, the Company organizes and facilitates esports tournaments, competitions, and events for its licensed racing games as well as on behalf of third-party racing game developers and publishers.

Risks and Uncertainties

The global spread of the COVID-19 pandemic has created significant business uncertainty for the Company and others, resulting in volatility and economic disruption. Additionally, the outbreak has resulted in government authorities around the world implementing numerous measures to try to reduce the spread of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place, stay-at-home or total lock-down (or similar) orders and business limitations and shutdowns.

As a result of the COVID-19 pandemic, including the related responses from government authorities, the Company’s business and operations have been impacted, including the temporary closure of its offices in Orlando, Florida, Silverstone, England, and Moscow, Russia, which has resulted in the Company’s employees working remotely. During the COVID-19 outbreak, demand for the Company’s games has generally increased, which the Company believes is primarily attributable to a higher number of consumers staying at home due to COVID-19 related restrictions. Similarly, there has been a significant increase in viewership of the Company’s esports events since the initial impact of the virus, as these events began to air on both digital and linear platforms, particularly as the Company was able to attract many of the top “real world” motorsport stars to compete. However, several retailers have experienced, and continue to experience, closures, reduced operating hours and/or other restrictions as a result of the COVID-19 pandemic, which has negatively impacted the sales of the Company’s products from such retailers. Additionally, in the Company’s esports business, the COVID-19 pandemic has resulted in the postponing of certain events to later dates or shifting events from an in-person format to online only.

The Company continues to monitor the evolving situation caused by the COVID-19 pandemic, and it may take further actions required by governmental authorities or that it determines are prudent to support the well-being of its employees, suppliers, business partners and others. The degree to which the COVID-19 pandemic impacts the Company’s operations, business, financial results, liquidity, and financial condition will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted. This includes, but is not limited to, the duration and spread of the pandemic, its severity, actions to contain the virus or treat its impact, such as the efficacy of vaccines (particularly with respect to emerging strains of the virus), and how quickly and to what extent normal economic and operating conditions can resume. Adverse economic and market conditions as a result of COVID-19 could also adversely affect the demand for the Company’s products and may also impact the ability of its customers to satisfy their obligations to the Company.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Liquidity

On January 15, 2021, the Company completed its initial public offering which resulted in net proceeds to the Company of approximately $62.9 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company.

The Company had a net loss of $679,854 and positive cash flows from operations of $4,053,345 for the year ended December 31, 2020. It is expected that operating expenses will continue to increase and, as a result, the Company will eventually need to generate significant revenues to reach profitability.

The Company expects that its cash on hand will fund its operations for at least one year from the date the consolidated financial statements were issued. Although the Company’s management believes that it has access to capital resources, there are currently no commitments in place for new financing at this time and there is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. If the Company is unable to obtain adequate funds on reasonable terms, it may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the operations of the Company and its wholly owned and majority owned subsidiaries. The interests of non-controlling members are reflected as non-controlling interest in the accompanying consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations.

On February 18, 2019, the Company formed its subsidiary, Racing Pro League, LLC, under the laws of the State of Delaware.

On March 15, 2019, Motorsport Games entered into a joint venture agreement whereby the parties formed Le Mans Esports Series Limited (“Le Mans”), of which Motorsport Games acquired a 45% ownership interest. The Company accounts for its investment in its unconsolidated entity, Le Mans, using the equity method of accounting in accordance with Accounting Standards Codification (“ASC”) 323. The equity method is an appropriate means of recognizing increases or decreases measured by U.S. GAAP in the economic resources underlying the investments. Under the equity method, an investor recognizes its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend or distribution. An investor adjusts the carrying amount of an investment for its share of the earnings or losses recognized by the investee. See Note 10 – Commitments and Contingencies – Joint Venture Agreement for additional details. Additionally, see Note 14 – Subsequent Events – Le Mans Agreements for additional information regarding the increase in the Company’s ownership interest in Le Mans from 45% to 51% in January 2021.

On April 4, 2019, the Company formed its wholly owned subsidiary, MS Gaming Development LLC, under the laws of Russia.

On February 6, 2020, the Company formed its wholly owned subsidiary, Motorsport Games Limited.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

The Company’s significant estimates used in these consolidated financial statements include, but are not limited to, revenue recognition criteria, including reserves for sales returns and price protection, valuation allowance of deferred income taxes, valuation of acquired companies and equity method investments, the recognition and disclosure of contingent liabilities, and goodwill and intangible assets impairment testing. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and may cause actual results to differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly-liquid instruments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2020 and 2019, the Company did not have any cash equivalents. The Company maintains cash in bank accounts, which, at times, may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company has not experienced any losses in such accounts, periodically evaluates the creditworthiness of the financial institutions and has determined the credit exposure to be negligible. The Company’s foreign bank accounts are not subject to FDIC insurance.

Accounts Receivable

Accounts receivable are carried at their contractual amounts, less an estimate for sales allowances. Management estimates the allowance for sales based on previous experience, existing economic conditions, actual sales and inventories on hand. See Note 2 – Summary of Significant Accounting Policies – Revenue Recognition - Sales Allowance, Sales Returns and Price Protection Reserves for additional details.

Balances that are still outstanding after management has performed reasonable collection efforts are written off through a charge to the allowance and a credit to accounts receivable. As of December 31, 2020 and 2019, the Company determined that all of its accounts receivable were fully collectible and, accordingly, no allowance for doubtful accounts was recorded. Sales allowances as of December 31, 2020 and 2019 were $2,150,684 and $1,891,691, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization, which is provided on the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are expensed as incurred.

Equipment, furniture and fixtures are depreciated over a range of three to five years. Leasehold improvements are amortized over the lives of the leases or estimated useful lives of the assets, whichever is shorter. When assets are sold or otherwise retired, the costs and accumulated depreciation are removed from the books and the resulting gain or loss is included in operating results.

Goodwill and Intangible Assets

The Company has recorded goodwill in connection with its acquisition of 704Games. Under ASC 350, Intangibles—Goodwill and Other (“ASC 350”), goodwill is not amortized but is reviewed annually for impairment, or more frequently, if impairment indicators arise which may indicate that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that its reporting units align with its operating segments. See Note 13 – Segment Reporting. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a one-step quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizes a loss on impairment in the event the carrying value exceeds the fair value. In assessing the fair value of a reporting unit, the Company utilizes the Income Approach-Discounted Cash Flow Method as well as the Market Approach-Guideline Public Company Method.

Intangible assets that have finite lives are amortized over their estimated useful lives and are subject to the provisions of ASC 350. The Company’s intangible assets consist of the following which were acquired in connection with the acquisition of 704Games:

Intangible Asset			Useful Life
License agreements			16 years
Software			7 years
Distribution contracts			1 year

Segment Reporting

The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company classified its reportable operating segments into (i) the development and publishing of interactive racing video games, entertainment content and services (the “Gaming segment”) and (ii) the organization and facilitation of esports tournaments, competitions and events for the Company’s licensed racing games as well as on behalf of third-party video game racing series and other video game publishers (the “esports segment”).

Revenue Recognition

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:

	●	Identification of a contract with a customer;
	●	Identification of the performance obligations in the contract;
	●	Determination of the transaction price;
	●	Allocation of the transaction price to the performance obligations in the contract; and
	●	Recognition of revenue when or as the performance obligations are satisfied.

The Company currently derives revenue principally from sales of its games and related extra content that can be played by customers on a variety of platforms, which includes game consoles, PCs, mobile phones and tablets. The Company’s product and service offerings include, but are not limited to, the following:

	1)	Sales of Games - Full console and mobile games contain a software license that is delivered digitally or via physical disc at the time of sale;

	2)	Sales of Extra Content – Includes (a) extra content that is downloaded by console players that provides the ability to customize and/or enhance their gameplay and (b) virtual currencies that provide mobile players with the ability to purchase extra content that allows them to customize and/or enhance their gameplay; and

	3)	Esports Competition Events - Hosting of online esports competitions that generates sponsorship revenue.

Sales of Games. Sales of games are generally determined to have a singular distinct performance obligation, as the Company does not currently have an obligation to provide future update rights or online hosting. As a result, the Company recognizes revenue equal to the full transaction price at the point in time the customer obtains control of the software license and the Company satisfies its performance obligation.

Sales of Extra Content. Revenue received from sales of extra content are derived primarily from the sale of (a) digital in-game content that is downloaded by the Company’s console customers that enhance their gameplay experience, typically by providing car upgrades or additional drivers and (b) virtual currencies that can be used by mobile customers to purchase content that allows them to customize and/or enhance their gameplay. Virtual currencies may not be used for any purpose other than for these in-game purchases. Revenue related to extra content is recognized at the point in time the Company satisfies its performance obligation, which is generally at the time the customer obtains control of the extra content, either by downloading the digital in-game content or by using the virtual currencies to purchase extra content. For console customers, extra content is either purchased in a pack or on a standalone basis. Revenue associated with extra content from console customers is deferred until the content has been delivered digitally to the customer. Revenue associated with virtual currencies is deferred until the virtual currency has been used by the customer to purchase extra content, which is the point in time the customer obtains control.

Esports. The Company recognizes sponsorship revenue associated with hosting online esports competition events over the period of time the Company satisfies its performance obligation under the contract, which is generally the concurrent time the event is held and the customer obtains control. In the event the Company enters into a contract with a customer to sponsor for a series of esports events, the Company allocates the transaction price between the series of events and recognizes revenue over the period of time each event is held and the Company satisfies its performance obligation.

The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

During the years ended December 31, 2020 and 2019, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

The following table summarizes revenue recognized under ASC 606 in the consolidated statements of operations:

	For the Year Ended December 31,
	2020		2019
Revenues:
Gaming	$	18,745,166	$	11,775,787
Esports		300,363		75,000
Total Revenues	$	19,045,529	$	11,850,787

Identifying Performance Obligations

Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, (i.e., the customer can benefit from the goods or services either on its own or together with other resources that are readily available), and are distinct in the context of the contract (i.e., it is separately identifiable from other goods or services in the contract). To the extent a contract includes multiple promises, the Company must apply judgment to determine whether those promises are separate and distinct performance obligations. If these criteria are not met, the promises are accounted for as a combined performance obligation.

Determining the Transaction Price

The transaction price is determined based on the consideration that the Company will be entitled to receive in exchange for transferring our goods and services to the customer. Determining the transaction price often requires significant judgment based on an assessment of contractual terms and business practices. It further includes review of variable consideration such as discounts, sales returns, price protection, and rebates, which is estimated at the time of the transaction. See below for additional information regarding our sales returns and price protection reserves.

Allocating the Transaction Price

Allocating the transaction price requires that the Company determine an estimate of the relative stand-alone selling price for each distinct performance obligation.

Principal Versus Agent Considerations

The Company evaluates sales to end customers of its full games and related content via third-party storefronts, including digital storefronts such as Microsoft’s Xbox Store, Sony’s PlayStation Store, Apple’s App Store, and Google’s Play Store, in order to determine whether or not the Company is acting as the principal or agent in the sale to the end customer. Key indicators that the Company evaluates in determining gross versus net treatment include but are not limited to the following:

	●	the underlying contract terms and conditions between the various parties to the transaction;
	●	which party is primarily responsible for fulfilling the promise to provide the specified good or service to the end customer;
	●	which party has inventory risk before the specified good or service has been transferred to the end customer; and
	●	which party has discretion in establishing the price for the specified good or service.

Based on an evaluation of the above indicators, the Company determined that, apart from contracts with customers where revenue is generated via the Apple App Store or Google Play Store, the third party is considered the principal and, as a result, the Company reports revenue net of the fees retained by the storefront. For contracts with customers where revenue is generated via the Apple App Store or Google Play Store, the Company has determined that it is the principal and, as a result, reports revenue on a gross basis, with mobile platform fees included within cost of revenues.

Sales Allowance, Sales Returns and Price Protection Reserves

Sales returns and price protection are considered variable consideration under ASC 606. The Company reduces revenue for estimated future returns and price protection which may occur with distributors and retailers (“channel partners”). See Note 2 – Summary of Significant Accounting Policies – Accounts Receivable for additional details. Price protection represents our practice to provide channel partners with a credit allowance to lower their wholesale price on a particular game unit that they have not resold to customers. The amount of the price protection for permanent markdowns is the difference between the original wholesale price and the new reduced wholesale price. Credits are also given for short-term promotions that temporarily reduce the wholesale price. When evaluating the adequacy of sales returns and price protection reserves, the Company analyzes the following: historical credit allowances, current sell-through of channel partners’ inventory of the Company’s products, current trends in retail and the video game industry, changes in customer demand, acceptance of products, and other related factors. In addition, the Company monitors the volume of sales to its channel partners and their inventories, as substantial overstocking in the distribution channel could result in high returns or higher price protection in subsequent periods. The Company recognized sales allowances and price protection reserves for the years ended December 31, 2020 and 2019 in the amount of $2,150,681 and $2,483,147, respectively, which were included as reductions of revenues.

Income Taxes

On January 8, 2021, Motorsport Gaming US LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport Games Inc.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of transactions and events. Under this method, deferred tax assets and liabilities are determined based on the difference between financial statement book values and the tax bases of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. If necessary, deferred tax assets are reduced by a valuation allowance to an amount that is determined to be more likely than not recoverable in the foreseeable future. The Company must make significant estimates and assumptions about future taxable income and future tax consequences and tax strategies available to recognize deferred tax assets when determining the amount of the valuation allowance. The additional guidance provided by ASC No. 740, Income Taxes (ASC 740), clarifies the accounting for uncertainty in income taxes recognized in the financial statements. Expected outcomes of current or anticipated tax examinations, refund claims and tax-related litigation and estimates regarding additional tax liability (including interest and penalties thereon) or refunds resulting therefrom will be recorded based on the guidance provided by ASC 740 to the extent applicable. The Company is considered to be disregarded from its owner for U.S. tax purposes. In addition, for its 2019 fiscal year, the Company is the parent company to another disregarded entity, MS Gaming Development LLC, and a regarded entity taxed as a separate corporation, 704Games. 704Games was acquired on August 14, 2018 and the Company has no other material tax effective items other than those items attributed to it from 704Games.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Under ASC 740, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the quarter ended March 31, 2020. The provisions of the CARES Act do not have a material impact on the Company’s consolidated financial statements.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company issues new shares of common stock out of its authorized shares.

Advertising Expenses

The Company recognizes advertising expenses as incurred. Advertising expenses were $2,791,054 and $3,487,498 for the years ended December 31, 2020 and 2019, respectively.

Foreign Currency Translation

The Company’s functional and reporting currency is the United States Dollar. The functional currency of the Company’s operating subsidiaries are their local currencies (the United States Dollar, the Russian Ruble and Pound Sterling). Assets and liabilities are translated based on the exchange rates at the balance sheet date, while revenue and expense accounts are translated at the average exchange rate in effect during the year. Equity accounts are translated at historical exchange rates. The resulting translation gain and loss adjustments are accumulated as a component of other comprehensive income. Foreign currency gains and losses resulting from transactions denominated in foreign currencies, including intercompany transactions, are included in the results of operations.

The Company recorded approximately $1,000 and $8,000 of transaction losses for years ended December 31, 2020 and 2019, respectively. Such amounts have been classified within general and administrative expenses in the accompanying consolidated statements of operations.

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “(ASU”) 2016-02, Leases (Topic 842), which applies a right-of-use model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments. The ASU requires a lessor to classify leases as either sales-type, direct financing or operating, similar to existing U.S. GAAP requirements. Classification depends on the same five criteria used by lessees under U.S. GAAP plus certain additional factors. The new leases standard addresses other considerations including identification of a lease, separating lease and non-lease components of a contract, sale and leaseback transactions, modifications, combining contracts, reassessment of the lease term, and remeasurement of lease payments. Early adoption is permitted. As an emerging growth company, the JOBS Act permits the Company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. The Company is choosing to take advantage of this provision and, as a result, will not be required to comply with new or revised accounting standards until those standards would otherwise apply to private companies. This update is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses” (“ASU 2019-11”). ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments update guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in ASU 2019-11 are effective for annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years. All entities may adopt the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This update is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for periods for which financial statements have not yet been made available for issuance. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

In January 2020, the FASB issued Accounting Standards Update No. 2020-01—Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) (ASU 2020-01). The amendments in this ASU clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with Topic 825, Financial Instruments. These amendments improve current U.S. GAAP by reducing diversity in practice and increasing comparability of the accounting for these interactions. ASU 2020-01 is effective for the Company on January 1, 2022. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

Property and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following balances as of December 31, 2020 and 2019:

	December 31,
	2020			2019
Furniture and fixtures	$	-		$	52,309
Computer software and equipment		246,101			109,992
Office equipment		-			8,132
Leasehold improvements		-			6,460
		246,101			176,893
Less: accumulated depreciation		(83,953	)		(49,487	)
Property and equipment, net	$	162,148		$	127,406

Depreciation expense was $69,476 and $51,622 for the years ended December 31, 2020 and 2019, respectively.

Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

NOTE 4 - INTANGIBLE ASSETS

Licensing Agreement

On May 29, 2020, the Company secured a licensing agreement with the BARC (TOCA) Limited (“BARC”), the exclusive promoter of the BTCC. Pursuant to the agreement, the Company was granted an exclusive license to use certain licensed intellectual property for motorsports and/or racing video gaming products related to, themed as, or containing the BTCC, on consoles and mobile applications, esports series and esports events (including the Company’s esports platform). In exchange for the license, the agreement requires the Company to pay BARC an initial fee in two installments, the first of which was due on June 5, 2020 and the second installment on the earlier of 60 days after the release of the products contemplated by the license or May 29, 2022. Following the initial fee, the agreement also requires the Company to pay royalties, including certain minimum annual guarantees, on an ongoing basis to BARC and to meet certain product distribution, marketing and related milestones, subject to termination penalties. In connection with the licensing agreement, the Company acquired the BTCC license with a cost of $891,999. The Company began recognizing amortization expense during year ended December 31, 2020 over the six-and-a-half year useful life, as the license terminates on December 31, 2026. During the year ended December 31, 2020, the Company paid $100,000 in connection with the purchase of the license. As of December 31, 2020, the Company had a remaining liability in connection with the licensing agreement of $791,999, which is included in other non-current liabilities on the consolidated balance sheets.

On August 11, 2020, the Company entered into a licensing agreement with Epic Games International (“Epic”) for worldwide licensing rights to Epic’s proprietary computer program known as the Unreal Engine 4. Pursuant to the agreement, upon payment of the initial license fee described below, the Company was granted a nonexclusive, nontransferable and terminable license to develop, market and sublicense (under limited circumstances and subject to conditions of the agreement) certain products using the Unreal Engine 4 for its next generation of games. In exchange for the license, the agreement requires the Company to pay Epic an initial license fee that was paid during the year ended December 31, 2020. Additionally, the Company will pay Epic a license fee royalty payment equal to 5% of product revenue, as defined in the licensing agreement. During the year ended December 31, 2020, Epic did not earn any royalties under the agreement. During a two-year support period, Epic will use commercially reasonable efforts to provide the Company with updates to the Unreal Engine 4 and technical support via a licensee forum. After the expiration of the support period, Epic has no further obligation to provide or to offer to provide any support services. The agreement is effective until terminated under the provisions of the agreement; however, pursuant to the terms of the agreement, the Company can only actively develop new or existing authorized products during a five-year active development period, which terminates on August 11, 2025.

Intangible assets consist of the following:

	Licensing Agreements		Software		Distribution Contracts		Accumulated Amortization			Total
Balance as of January 1, 2019	$	3,620,000	$	2,340,000	$	560,000	$	(382,594	)	$	6,137,406
Amortization expense		-		-		-		(810,250	)		(810,250	)
Balance as of December 31, 2019		3,620,000		2,340,000		560,000		(1,192,844	)		5,327,156
Purchase of intangible assets		891,999		-		-		-			891,999
Amortization expense		-		-		-		(650,703	)		(650,703	)
Balance as of December 31, 2020	$	4,511,999	$	2,340,000	$	560,000	$	(1,843,547	)	$	5,568,452

Weighted average remaining amortization period at December 31, 2020 (in years)		11.8		5.2		-

Accumulated amortization of intangible assets consists of the following:

	Licensing Agreements		Software		Distribution Contracts		Accumulated Amortization
Balance as of January 1, 2019	$	84,844	$	87,750	$	210,000	$	382,594
Amortization expense		226,250		234,000		350,000		810,250
Balance as of December 31, 2019		311,094		321,750		560,000		1,192,844
Amortization expense		374,918		275,785		-		650,703
Balance as of December 31, 2020	$	617,396	$	666,151	$	560,000	$	1,843,547

Estimated aggregate amortization expense of intangible assets for the next five years is as follows:

For the Years Ended December 31,	Total
2021	$	631,086
2022		697,767
2023		697,767
2024		697,767
2025		697,767
Thereafter		2,146,298
	$	5,568,452

Goodwill

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

NOTE 5 - GOODWILL

The changes in the carrying amount of goodwill are as follow:

Balance - January 1, 2019	$	712,732
Loss on impairment of goodwill		(575,015	)
Balance - December 31, 2019		137,717
Loss on impairment of goodwill		-
Balance - December 31, 2020	$	137,717

During the year ended December 31, 2019, due to a decrease in actual and projected revenues and after considering all quantitative and qualitative factors, the Company determined that it was more likely than not that the reporting unit’s (704Games) carrying value exceeded its fair value and, as a result, the Company completed a quantitative impairment test and recorded a loss on impairment of goodwill of $575,015. As of December 31, 2019, the Company’s revenue projections were reduced in order to give effect to the fact that the development of the planned premium esports platform of 704Games was delayed and, therefore, the Company did not generate any revenue in 2019 associated with this premium esports platform. As a result, actual 2019 revenues were significantly less than what was originally projected for the 2019 period due to the premium esports platform never being implemented. This 2019 shortfall also resulted in lower expected revenues for 2020 and 2021. See Note 2 – Summary of Significant Accounting Policies – Goodwill and Intangible Assets for additional details.

Accrued Expenses

12 Months Ended

Dec. 31, 2020

Payables and Accruals [Abstract]

Accrued Expenses

NOTE 6 – ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,
	2020		2019
Accrued royalties	$	1,485,261	$	268,558
Accrued payroll and bonuses		778,918		-
Accrued professional fees		129,291		81,480
Accrued consulting fees		398,526		166,667
Payable to Le Mans joint venture		234,667		124,320
Accrued development costs		196,845		145,193
Accrued rent		40,787		43,017
Accrued taxes		54,880		18,860
Accrued other		35,828		4,845
Total	$	3,355,003	$	852,938

Due To Related Parties

12 Months Ended

Dec. 31, 2020

Due To Related Parties

NOTE 7 – DUE TO RELATED PARTIES

On April 1, 2020, the Company entered into a promissory note with the Company’s parent, Motorsport Network, LLC (“Motorsport Network”), for a line of credit of up to $10,000,000 at an interest rate of 10% per annum. The principal amount under the promissory note was primarily funded through one or more advances from Motorsport Network, including advances in August and October 2020 for purposes of acquiring an additional ownership interest in 704Games. Previous non-interest-bearing advances due to Motorsport Network as of December 31, 2019 also were included in the amount outstanding under the promissory note at the time it was executed. The promissory note does not have a stated maturity date and is payable upon demand at any time at the sole and absolute discretion of Motorsport Network, which has agreed, pursuant to a Side Letter Agreement related to the promissory note, dated September 4, 2020, not to demand or otherwise accelerate any amount due under the promissory note that would otherwise constrain the Company’s liquidity position, including the Company’s ability to continue as a going concern. The Company may prepay the promissory note 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 November 23, 2020, the Company and Motorsport Network entered into an amendment to the promissory note, effective as of September 15, 2020. Under the terms of the amendment, the line of credit under the promissory note was increased from $10,000,000 to $12,000,000. All other terms remained the same. During the year ended December 31, 2020, the Company recorded interest expense related party of $698,830.

On January 20, 2021 and January 29, 2021, the Company repaid $10,000,000 and $400,000, respectively, of the Promissory Note.

Member's Equity

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Member's Equity

NOTE 8 – MEMBER’S EQUITY

Stock Warrants – 704Games

As of December 31, 2020 and 2019, 704Games has outstanding ten-year warrants to purchase 4,000 shares of common stock at an exercise price of $93.03 per share. As of December 31, 2020, the warrants had no intrinsic value and a weighted average remaining life of 4.4 years.

Stock Appreciation Rights – 704Games

On April 3, 2017, as amended on August 8, 2018, 704Games effected the 2017 Appreciation Plan (“SAR Plan”) that provides a means whereby directors, officers, employees, consultants or advisors of 704Games can be granted Stock Appreciation Rights (“SARs”) as incentive compensation measured by reference to the value of common stock. A total of 25,734 SARs may be granted under the SAR Plan. The SARs granted under the SAR Plan that vest are to be settled in cash only upon the occurrence of a change of control event, as defined in the SAR Plan.

During the year ended December 31, 2019, an aggregate of 6,671 SARs were forfeited, such that as of December 31, 2019, there were 13,912 SARs outstanding with an exercise price of $55.67 per share. During the year ended December 31, 2020, an aggregate of 9,701 SARs were forfeited, such that as of December 31, 2020, there were 4,211 SARs outstanding with an exercise price of $55.67 per share. The Company determined that the SARs do not result in liability classification and no compensation expense should be recognized, as the contingent event (the liquidity event) is not probable as it is outside the control of the employee. The probability of the contingent event will be reassessed by the Company at each reporting period.

Stock Purchase Agreement

On August 18, 2020, the Company entered into a stock purchase agreement with HC2 Holdings 2, Inc. (“HC2”) and Continental General Insurance Company (“Continental”) pursuant to which the Company purchased an aggregate of 106,307 shares of common stock of 704Games at a price of $11.29 per share for an aggregate consideration of $1,200,000. During the year ended December 31, 2020, the Company recognized an adjustment to non-controlling interest and additional paid-in capital of $927,102 in connection with the purchase of the 106,307 shares of common stock. See Note 14 – Subsequent Events – Litigation and Subsequent Events - Share Exchange Agreements—704Games Common Stock for additional details.

Related Party Transactions

12 Months Ended

Dec. 31, 2020

Related Party Transactions

NOTE 9 – RELATED PARTY TRANSACTIONS

See Note 7 – Due to Related Parties for details regarding the Company’s promissory note with Motorsport Network.

On August 3, 2018, the Company entered into an agreement with its parent, Motorsport Network, to provide the Company exclusive promotion services for the Company’s business, organizations, products and services. The promotion agreement shall remain in effect until such date that Motorsport Network no longer holds at least twenty percent (20%) of the voting interest in the Company, at which time the promotion agreement will terminate automatically, unless otherwise extended by the parties. The Company shall give Motorsport Network an exclusive first look on any media-related activity in consideration of the promotion services.

On January 1, 2020, the Company entered into a three-year services agreement with Motorsport Network, pursuant to which Motorsport Network will provide exclusive legal, development and accounting services on a full-time basis to support the Company’s business functions. The services agreement can be extended by mutual agreement and may be terminated by either party at any time. Pursuant to the services agreement, the Company is required to pay monthly fees to Motorsport Network 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.

From time to time, Motorsport Network, and other related entities pay for Company expenses on the Company’s behalf. In addition, Motorsport Network occasionally advances funds through a line of credit to the Company. During the years ended December 31, 2020 and 2019, the Company incurred expenses of $1,099,846 and $647,513 respectively, that were paid by Motorsport Network on its behalf and are reimbursable by the Company under the promissory note. During the years ended December 31, 2020 and 2019, the Company received cash proceeds of $361,145 and $2,274,875, respectively, in connection with advances from Motorsport Network.

During the years ended December 31, 2020 and 2019, an entity wholly owned by Motorsport Network provided services associated with In-Kind Consideration of $149,898 and $641,938, respectively, to 704Games in connection with the terms of the acquisition. Such amounts are reflected as related party operating expenses on the consolidated statements of operations.

As of December 31, 2020 and 2019, there was $10,853,536 and $8,045,522, respectively, related to these services included within due to related parties on the consolidated balance sheets. See Note 10 – Commitments and Contingences – Operating Leases for additional details of the related party lease with an entity owned by the manager of Motorsport Network.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Litigation

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. As of December 31, 2020 and 2019, the Company has not accrued any amounts for contingencies.

See Note 14 – Subsequent Events – Litigation for additional details.

See Note 4 – Intangible Assets for details on the Company’s licensing agreement with Epic.

Operating Leases

The Company leases its facilities under operating leases. The Company’s rent expense under its operating leases was $291,892 and $161,695 for the years ended December 31, 2020 and 2019, respectively.

On March 7, 2019, the Company entered into a lease agreement for 2,190 square feet of office space in Orlando, Florida beginning April 1, 2019 and ending April 30, 2021. The base rent ranges from $3,833 to $3,947 per month over the term of the lease for a total base rent lease commitment of approximately $93,000. The security deposit is approximately $4,000.

On April 15, 2019, the Company entered into a three-year lease agreement for office space in Moscow, Russia beginning April 15, 2019 and ending April 15, 2022. The base rent is $9,000 per month over the term of the lease for a total base rent lease commitment of approximately $324,000. The security deposit is approximately $10,000.

On May 3, 2019, the Company entered into a lease agreement for 5,586 square feet of office space in Charlotte, North Carolina beginning May 3, 2019 and ending August 31, 2024. The base rent ranges from $13,965 to $16,189 per month over the term of the lease for a total base rent lease commitment of approximately $954,000. The security deposit is approximately $42,000.

On February 21, 2020, the Company entered into a sublease agreement for office space in Charlotte, North Carolina, that provides for rent payments to the Company in the amount of $14,896 per month and ends on August 31, 2024. On March 1, 2021 and each anniversary thereafter for the duration of the term of the sublease, the monthly payment to the Company shall increase by 3% per annum. The security deposit is approximately $30,000. During the year ended December 31, 2020, the Company recorded $137,335 of sublease income.

On May 15, 2020, the Company entered into a five-year lease agreement for office space in Miami, Florida with an entity owned by the manager of Motorsport Network. The base rent from the lease commencement date through April 15, 2025 is $3,000 per month. The Company has the option to renew the lease for two separate five-year terms, with monthly rent to be negotiated prior to such extension. The security deposit is $6,000.

On September 9, 2020, the Company entered into a one-year lease agreement for approximately 1,600 square feet of office space in Silverstone, England. The base rent is approximately $6,250 per month over the term of the lease for a total base rent lease commitment of approximately $75,000. The security deposit is approximately $15,000.

Future minimum payments under our non-cancellable operating leases as of December 31, 2020 are as follows:

For the Years Ending December 31,	Total
2021	$	387,641
2022		244,320
2023		222,782
2024		163,628
2025		12,000
	$	1,030,371

Employment Agreements

The Company entered into an employment agreement, effective as of January 1, 2020, with Dmitry Kozko, Chief Executive Officer of the Company, for a term expiring on December 31, 2024. After such term expires, Mr. Kozko will be employed as an employee “at will.” Mr. Kozko’s base salary will be $500,000 per annum, subject to annual increases to 103% of the base salary paid to Mr. Kozko in the prior calendar year. Mr. Kozko is entitled to participate (in addition to the additional incentive compensation described below) in all equity incentive plans generally available to the Company’s executive officers, subject to the compensation committee of the Company determining any awards and performance metrics for such awards under any such plans. Mr. Kozko is also entitled to certain additional incentive compensation outside of the Company’s equity incentive plans, subject to the satisfaction of certain conditions pursuant to Mr. Kozko’s employment agreement. Mr. Kozko’s employment agreement also provides for payments to him and/or vesting acceleration of certain equity awards upon the termination of his employment in certain circumstances and upon a “Change in Control” (as such term is defined in the employment agreement), as applicable.

The Company entered into an employment agreement, effective as of October 1, 2020, with Stephen Hood, President of Motorsport Games, which replaced Mr. Hood’s prior employment agreement. Pursuant to this new employment agreement, Mr. Hood is currently entitled to a base salary of $198,000 per year, is eligible to receive a discretionary bonus and has the right to participate in the Company’s group pension plan for UK employees. In addition, other than in connection with a termination for cause as specified in the agreement, the Company must provide Mr. Hood notice in writing three months in advance of any termination of employment. However, the Company may terminate Mr. Hood immediately by paying a sum equal to his gross basic salary (less any deductions) in lieu of this notice period or any remaining part of it. Following the consummation of the Company’s initial public offering in January 2021, Mr. Hood’s gross salary increased to $230,000 (to be paid in pound sterling at the then applicable exchange rate). Subject to consummation of the initial public offering, Mr. Hood will also be entitled to be paid a one-time cash bonus of $100,000 (subject to the applicable withholding and deductions) payable to Mr. Hood 90 days after the consummation of the offering. Mr. Hood will also be entitled to receive an annual stock option award for such number of shares of our Class A common stock that will equal his then applicable annual base salary divided by the closing trading price of our Class A common stock on the date of each such grant, which will vest in three equal annual installments from the date of grant.

Joint Venture Agreement

On March 15, 2019, Motorsport Games (Party B) entered into a joint venture agreement with Automobile Club de l’Ouest (Party A), whereby Motorsport Games acquired 45 B Shares, which represented 45% of the equity interests of Le Mans, and Automobile Club de l’Ouest acquired 55 A Shares of Le Mans, which represented the remaining 55% of the equity interests of Le Mans. Under the joint venture agreement, Motorsport Games and Automobile Club de l’Ouest are jointly and severally liable for the fulfillment of the obligations of the joint venture. The parties agreed to make the following in-kind contributions to Le Mans:

	i.	Automobile Club de l’Ouest has and will continue to provide a dedicated team to develop and implement the business and has and will continue to make the 24 Hours of Le Mans brand available to Le Mans under a separate license agreement; and
	ii.	Motorsport Games has provided and will continue to provide a dedicated team to develop and implement the business and has and will continue to make itself and its employees, who have experience in e-sports and e-gaming platforms, available to develop the business and create a dedicated gaming platform for use by and to facilitate the continued development of the business.

During the years ended December 31, 2020 and 2019, the Company’s investment in Le Mans generated a loss of $70,792 and $608,656, respectively, which is included in loss attributable to equity method investment in the consolidated statements of operations. As of December 31, 2020, the Company had a $234,667 payable to Le Mans, which represents the balance due to Le Mans attributable to the Company’s proportionate share of the loss generated by Le Mans during 2020. As of December 31, 2020 and 2019, there was $271,200 and $0 of investment recorded in other assets on the Company’s consolidated balance sheets.

See Note 14 – Subsequent Events – Le Mans Agreements for additional details.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 11 - INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company establishes valuation allowances against its net deferred tax assets when it is more likely than not that the benefits will not be realized in the foreseeable future.

The components of deferred tax assets and liabilities consist of the following at December 31, 2020 and 2019:

	2020			2019
Assets:
Net operating loss carryforwards	$	1,937,626		$	2,255,880
Charitable Contribution Carryforward		797			780
Goodwill		287,878			294,822
Other Assets		45,453			48,878
Total Assets		2,271,754			2,600,360
Liabilities:
Depreciable Assets		45,177			4,847
Other Intangible Assets		923,224			973,073
Total Liabilities		968,401			977,920

Net Asset before Valuation allowance		1,303,353			1,622,440
Valuation allowance		(1,303,353	)		(1,622,440	)
Net deferred tax (liability) asset	$	-		$	-

A reconciliation between the Company’s effective income tax rate and the federal statutory income tax rate for the years ended December 31, 2020 and 2019 is as follows:

	2020			2019
Federal statutory income tax benefit		21.0	%		21.0	%
State income taxes, net of federal income tax benefit		-13.2	%		0.0	%
Permanent differences and other		0.9	%		-0.1	%
Change in valuation allowance		46.9	%		-14.8	%
Effect of flow through entity		-55.6	%		-6.1	%
Effective income tax rate		0.0	%		0.0	%

At December 31, 2020, the Company has United States federal net operating loss carryforwards available to reduce future taxable income in the amount of $8 million. Such net operating loss carryforwards are attributable to 704Games. $2.7 million of the Federal net operating losses do not expire due to changes made by the Tax Cuts and Jobs Act (TCJA). The remaining federal net operating losses of $5.3 million begin to expire in 2035 and the state net operating losses expire between 2030 and 2039. As a result of the 704Games acquisition during the 2018 tax year, certain pre-change federal and state net operating losses were limited under Section 382 of the Internal Revenue Code and were subject to a valuation allowance to the extent they are not expected to be realized in the foreseeable future.

In assessing whether the Company’s deferred tax assets will be realized, management considered whether it was more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of the deferred tax assets is dependent upon the ability to generate future taxable income (including reversals of deferred tax liabilities) during periods in which temporary differences become deductible. A valuation allowance was recognized as of December 31, 2020, as management concluded that is not more likely than not that the Company will generate sufficient future income to utilize the NOL carryforward and realize the deferred tax assets.

The Company regularly assesses the likelihood of additional tax assessments by jurisdiction and, if necessary, adjusts its tax reserves based on new information or developments. The Company is not currently under any income tax audits or examinations, however, the tax years 2017-2020 remain open for examination.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Concentrations

12 Months Ended

Dec. 31, 2020

Risks and Uncertainties [Abstract]

Concentrations

NOTE 12 – CONCENTRATIONS

Customer Concentrations

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s revenues for the following periods:

	For the Year Ended
	December 31,
Customer	2020			2019
Customer A		29.64	%		39.99	%
Customer B		25.28	%		22.43	%
Customer C		23.27	%		15.86	%
Total		78.19	%		78.28	%

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s accounts receivable as of:

	December 31,
Customer	2020			2019
Customer A		81.84	%		82.99	%
Total		81.84	%		82.99	%

A reduction in sales from or loss of these customers would have a material adverse effect on the Company’s results of operations and financial condition.

Supplier Concentrations

The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s cost of revenues for the following periods:

	For the Year Ended
	December 31,
Supplier	2020			2019
Supplier A		34.59	%		28.39	%
Supplier B		19.45	%		22.41	%
Supplier C		11.46	%		15.16	%
Supplier D		*			10.63	%
Total		65.50	%		76.59	%

* Less than 10%.

Segment Reporting

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Reporting

NOTE 13 – SEGMENT REPORTING

The Company’s principal operating segments coincide with the types of products and services to be sold. The products and services from which revenues are derived are consistent with the reporting structure of the Company’s internal organization. The Company’s two reportable segments for the years ended December 31, 2020 and 2019 were (i) the Gaming segment and (ii) the esports segment. The Company’s chief operating decision-maker has been identified as the CEO, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon the Company’s management organization structure as of December 31, 2020 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed. There are no inter-segment revenue transactions and, therefore, revenues are only to external customers. As the Company primarily generates its revenues from customers in the United States, no geographical segments are presented. Given that the Company’s esports segment just began its operations in late 2018, it has no material separate assets. That being said, the Company expects that its esports segment will have separate assets in the future.

Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker. The Company derives the segment results from its internal management reporting system. The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including net revenues, gross profit and operating loss. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Company manages certain operating expenses separately at the corporate level and does not allocate such expenses to the segments. Segment income from operations excludes interest income/expense and other income or expenses and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, and unallocated costs in measuring the performance of the reportable segments.

Segment information available with respect to these reportable business segments was as follows:

	For the Year Ended December 31,
	2020			2019
Revenues:
Gaming	$	18,745,166		$	11,775,787
Esports		300,363			75,000
Total Revenues	$	19,045,529		$	11,850,787

Gross Profit:
Gaming	$	12,438,584		$	6,909,410
Esports		11,073			52,500
Total Segment and Consolidated Gross Profit	$	12,449,657		$	6,961,910

Income (Loss) From Operations:
Gaming	$	508,461		$	(4,900,945	)
Esports		(507,314	)		(275,168	)
Total Segment and Consolidated Income (Loss) From Operations	$	1,147		$	(5,176,113	)

Depreciation and Amortization:
Gaming	$	718,873		$	861,872
Esports		1,306			-
Total Segment Depreciation and Amortization	$	720,179		$	861,872

Interest Expense:
Gaming	$	718,837		$	-
Esports		-			-
Total Segment Interest Expense	$	718,837		$	-

Equity in (Loss) Income:
Gaming	$	-		$	-
Esports		(70,792	)		(608,656	)
Total Segment Equity in (Loss) Income	$	(70,792	)	$	(608,656	)

Expenditures for Additions to Long-Lived Assets:
Gaming	$	126,432		$	108,293
Esports		10,323			-
Total Expenditures for Additions to Long-Lived Assets:	$	136,755		$	108,293

	December 31, 2020		December 31, 2019
Segment Total Assets:
Gaming	$	17,377,994	$	12,777,274
Esports		9,017		-
Consolidated Total Assets	$	17,387,011	$	12,777,274

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

Subsequent Events

12 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

NOTE 14 - SUBSEQUENT EVENTS

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements were issued. Other than as described below, the Company did not identify any subsequent events that would have required adjustments or disclosure in the consolidated financial statements or notes.

Corporate Conversion

On January 8, 2021, Motorsport Gaming US LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport Games Inc.

Effective as of January 8, 2021, 100% of the membership interests held by the sole member of Motorsport Gaming US LLC, Motorsport Network, converted into an aggregate of (i) 7,000,000 shares of Class A common stock of Motorsport Games Inc. and (ii) 7,000,000 shares of Class B common stock of Motorsport Games Inc., representing all of the outstanding shares of Class A and Class B common stock immediately following the corporate conversion. Motorsport Network is the only holder of shares of our Class B common stock and does not have any transfer, conversion, registration or economic rights with respect to such shares of Class B common stock.

Upon effecting the corporate conversion on January 8, 2021, Motorsport Games Inc. now holds all the property and assets of Motorsport Gaming US LLC, and all of the debts and obligations of Motorsport Gaming US LLC were assumed by Motorsport Games Inc. by operation of law upon such corporate conversion.

Effective as of January 8, 2021, the members of the board of directors of Motorsport Gaming US LLC became the members of Motorsport Games Inc.’s board of directors, and the officers of Motorsport Gaming US LLC became the officers of Motorsport Games Inc.

Initial Public Offering

On January 15, 2021, the Company completed its initial public offering of 3,450,000 shares of its Class A common stock at a price to the public of $20.00 per share, which includes the exercise in full by the underwriters of their option to purchase from the Company an additional 450,000 shares of the Company’s Class A common stock. The net proceeds to the Company from the initial public offering were approximately $62.9 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company.

Equity Grants

On January 12, 2021, the Company awarded Dmitry Kozko, the Company’s Chief Executive Officer, (i) 20,333 shares of the Company’s Class A common stock (the “Restricted Shares”) and (ii) stock options to purchase 203,333 restricted shares of the Company’s Class A common stock (the “Restricted Options”) at an exercise price of $20.00 per share, in each case, subject to the satisfaction of certain conditions pursuant to Mr. Kozko’s employment agreement with the Company. On January 15, 2021, the Restricted Shares and the Restricted Options were issued to Mr. Kozko in connection with the Company’s initial public offering, which vested immediately upon issuance. The Restricted Options expire on January 12, 2031. Additionally, the Company granted (i) an aggregate of 10,000 shares of restricted Class A common stock and stock options to purchase an aggregate of 15,096 shares of Class A common stock to certain members of the Company’s board of directors and (ii) stock options to purchase an aggregate of 141,592 shares of Class A common stock to various employees of the Company, in conjunction with the Company’s initial public offering.

On January 15, 2021, the Company issued to Fernando Alonso 300,300 shares of the Company’s Class A common stock pursuant to a professional services agreement entered into with Mr. Alonso in July 2020, representing 3.0% of the issued and outstanding shares of the Company’s Class A common stock as of the closing date of the Company’s initial public offering.

Repayment of Promissory Note

The Company repaid $10.4 million of the balance relating to the Promissory Note due to Motorsport Network in January 2021.

Le Mans Agreements

On January 25, 2021, the Company entered into an amendment (the “Amendment”) to our joint venture agreement with Le Mans with respect to the Le Mans Esports Series Limited joint venture. Pursuant to the Amendment, the Company increased its ownership interest in the joint venture from 45% to 51%. Additionally, through certain multi-year licensing agreements that were entered into in connection with the Amendment, the Company secured the rights to be the exclusive video game developer and publisher for the Le Mans race and the WEC, as well as the rights to create and organize esports leagues and events for the Le Mans race, the WEC and the 24 Hours of Le Mans Virtual event. In exchange for certain of these license rights, the Company agreed to fund up to €8,000,000 (approximately $9.8 million USD as of December 31, 2020) as needed for development of the video game products, to be contributed on an as-needed basis during the term of the applicable license.

Litigation

On January 11, 2021, Ascend FS, Inc. (“Ascend”), a minority stockholder of 704Games, filed a derivative action on behalf of 704Games in the Eleventh Judicial Circuit Court of Florida against the Company and Dmitry Kozko, the Company’s Chief Executive Officer and Executive Chairman. The complaint alleged breach of fiduciary duty and breach of contract in connection with the Company’s August and October 2020 purchases of an aggregate of 116,608 shares of common stock of 704Games (representing approximately 28.7% of the outstanding shares of 704Games) from certain selling stockholders. In connection with the share exchange agreements entered into with Ascend and PlayFast Games, LLC (“PlayFast”) discussed below, the Company and its affiliates, without admitting any liability by any party, will be released from all claims that Ascend or PlayFast could allege or assert against the Company as minority stockholders of 704Games. Pursuant to the exchange agreement with Ascend, the derivative legal action previously commenced by Ascend against the Company and certain of its affiliates will be dismissed with prejudice upon the closing of the transaction with Ascend.

On February 11, 2021, HC2 Holdings 2 Inc. and Continental General Insurance Company, former minority stockholders of 704Games, filed a complaint in the United States District Court for the District of Delaware against the Company, Dmitry Kozko, the Company’s Chief Executive Officer and Executive Chairman, Jonathan New, the Company’s Chief Financial Officer, and Mike Zoi, the sole manager of Motorsport Network, which, at the time of the allegations set forth in the complaint, owned 100% of the Company and continues to own approximately 62.8% of the Company’s outstanding Class A common stock on a fully-diluted basis on the date hereof.

The complaint alleges misrepresentations and omissions by the Company concerning 704Games’ financial condition and future prospects in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 under the Exchange Act; joint and several liability of Mike Zoi, Dmitry Kozko and Jonathan New under Section 20(a) of the Exchange Act with respect to the alleged violation of Section 10(b) and Rule 10(b); alleged violation by the Company of Section 20A of the Exchange Act in connection with plaintiffs’ sale to the Company of an aggregate of 106,307 shares of common stock of 704Games, which is equal to 26.2% of the outstanding common stock of 704Games, in August 18, 2020 (the “Stock Sale”); alleged breach of the Company’s obligations under the Stockholders’ Agreement, dated August 14, 2018, by and among the Company and the other stockholders of 704Games, in connection with 704Games’ requirement to provide financial information about 704Games to the plaintiffs; the defendants’ alleged fraudulent inducement of the plaintiffs to enter into a stock purchase agreement for the Stock Sale; the defendants’ alleged breach of fiduciary duty by alleged failure to disclose key financial and other information about 704Games and allegedly diverting corporate opportunities for the benefit of defendants; and alleged unjust enrichment. The plaintiffs seek, among other things, damages from the defendants, jointly and severally, based on the alleged difference between the fair market value of the shares of common stock of 704Games on August 18, 2020, the date of the Stock Sale, and the purchase price that was paid in the Stock Sale, as well as punitive damages and other relief.

At this time, it is too soon to determine the outcome of any litigation that may result from this claim. As a result, the Company has not accrued for any loss contingencies related to this claim because the amount and range of loss, if any, cannot currently be reasonably estimated. The Company believes that the plaintiff’s allegations are without merit and intends to vigorously defend its position to the full extent permitted by law.

KartKraft Acquisition

On March 18, 2021, the Company acquired all assets comprising the KartKraft computer video game from Black Delta Holdings PTY, Black Delta Trading Pty Ltd and Black Delta IP Pty Ltd (collectively, “Black Delta”). The purchase price for the assets was $1,000,000, of which $750,000 was paid at closing and $250,000 will be paid on the six-month anniversary of closing. Through this acquisition, the Company plans to enter the simulated kart-racing space. Black Delta’s development team is expected to form a new division, Motorsport Games Australia.

Studio397 Binding Term Sheet

On February 25, 2021, we entered into a binding term sheet with Luminis International BV (“Luminis”). Pursuant to the binding term sheet, the Company and Luminis intend that the Company will acquire from Luminis 100% of the share capital of Studio397 B.V. (“Studio397”). The purchase price for the shares will be $16,000,000, payable in two installments as follows: $12,800,000 at closing and $3,200,000 on the first-year anniversary of closing. The parties are in the process of negotiating the definitive acquisition documents to complete the transaction, which is subject to customary closing conditions.

Share Exchange Agreements—704Games Common Stock

On March 11, 2021, the Company entered into a share exchange agreement with PlayFast pursuant to which the Company will acquire 30,903 shares of common stock of 704Games owned by PlayFast, which is equal to approximately 7.6% of the outstanding equity interests of 704Games, in exchange for (i) 366,541 newly issued shares of the Company’s Class A common stock and (ii) cash in an amount to be determined based on the share price of the Company’s Class A common stock over the last 10 trading days of March of 2021. Additionally, on March 14, 2021, the Company entered into a share exchange agreement with Ascend pursuant to which the Company will acquire 41,204 shares of common stock of 704Games owned by Ascend, which is equal to approximately 10.15% of the outstanding equity interests of 704Games, in exchange for (i) 488,722 newly issued shares of the Company’s Class A common stock and (ii) cash in an amount to be determined based on the share price of the Company’s Class A common stock over the last 10 trading days of March of 2021. The exchange transactions with each of PlayFast and Ascend are subject to customary conditions to closing, including the receipt of necessary third-party approvals, and are expected to be completed on April 1, 2021. Upon closing of such exchange transactions, the Company’s ownership interest in 704Games will increase to 100%.

Digital Tales Binding Term Sheet

On March 22, 2021 (but effective as of March 12, 2021), the Company entered into a binding term sheet (the “Binding Term Sheet”) with EleDa s.r.l. (“EleDa”). Pursuant to the Binding Term Sheet, the Company and EleDa intend that the Company will acquire from EleDa all of the shares of Digital Tales USA, LLC, a Florida limited liability company (the “Interests”). The purchase price for the Interests will be $2,200,000, payable as follows: (i) $1,540,000 at closing, (ii) $260,000 on the six-month anniversary of closing, (iii) $200,000 after the SBK video game license or substantially similar two-wheel racing brand license currently held by the Digital Tales USA, LLC is amended to be extended beyond current expiration date in 2024 for no less than 3 additional years, so long as such amendment is executed within 12 months of closing and (iv) $200,000 after the SBK video game license or substantially similar two-wheel racing brand license currently held by the Digital Tales USA, LLC is amended to be expanded to include console and PC video game development and publishing for the same period, so long as such amendment is executed within 12 months of closing. In addition, the Company agreed to reimburse EleDa for its legal fees and expenses up to $60,000. The parties are in the process of negotiating the definitive acquisition documents to complete the transaction, which is subject to customary closing conditions.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Liquidity

Basis of Presentation and Principles of Consolidation

On February 18, 2019, the Company formed its subsidiary, Racing Pro League, LLC, under the laws of the State of Delaware.

On April 4, 2019, the Company formed its wholly owned subsidiary, MS Gaming Development LLC, under the laws of Russia.

On February 6, 2020, the Company formed its wholly owned subsidiary, Motorsport Games Limited.

Use of Estimates

Cash and Cash Equivalents

Accounts Receivable

Property and Equipment

Goodwill and Intangible Assets

Intangible Asset			Useful Life
License agreements			16 years
Software			7 years
Distribution contracts			1 year

Segment Reporting

Revenue Recognition

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:

	●	Identification of a contract with a customer;
	●	Identification of the performance obligations in the contract;
	●	Determination of the transaction price;
	●	Allocation of the transaction price to the performance obligations in the contract; and
	●	Recognition of revenue when or as the performance obligations are satisfied.

	1)	Sales of Games - Full console and mobile games contain a software license that is delivered digitally or via physical disc at the time of sale;

	2)	Sales of Extra Content – Includes (a) extra content that is downloaded by console players that provides the ability to customize and/or enhance their gameplay and (b) virtual currencies that provide mobile players with the ability to purchase extra content that allows them to customize and/or enhance their gameplay; and

	3)	Esports Competition Events - Hosting of online esports competitions that generates sponsorship revenue.

During the years ended December 31, 2020 and 2019, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

The following table summarizes revenue recognized under ASC 606 in the consolidated statements of operations:

	For the Year Ended December 31,
	2020		2019
Revenues:
Gaming	$	18,745,166	$	11,775,787
Esports		300,363		75,000
Total Revenues	$	19,045,529	$	11,850,787

Identifying Performance Obligations

Determining the Transaction Price

Allocating the Transaction Price

Allocating the transaction price requires that the Company determine an estimate of the relative stand-alone selling price for each distinct performance obligation.

Principal Versus Agent Considerations

	●	the underlying contract terms and conditions between the various parties to the transaction;
	●	which party is primarily responsible for fulfilling the promise to provide the specified good or service to the end customer;
	●	which party has inventory risk before the specified good or service has been transferred to the end customer; and
	●	which party has discretion in establishing the price for the specified good or service.

Sales Allowance, Sales Returns and Price Protection Reserves

Income Taxes

On January 8, 2021, Motorsport Gaming US LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport Games Inc.

Stock-based Compensation

Stock-Based Compensation

Advertising Expenses

The Company recognizes advertising expenses as incurred. Advertising expenses were $2,791,054 and $3,487,498 for the years ended December 31, 2020 and 2019, respectively.

Foreign Currency Translation

Recently Issued Accounting Standards

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Schedule of Intangible Assets Estimated Useful Lives

The Company’s intangible assets consist of the following which were acquired in connection with the acquisition of 704Games:

Intangible Asset			Useful Life
License agreements			16 years
Software			7 years
Distribution contracts			1 year

Summary of Revenue Recognized

The following table summarizes revenue recognized under ASC 606 in the consolidated statements of operations:

	For the Year Ended December 31,
	2020		2019
Revenues:
Gaming	$	18,745,166	$	11,775,787
Esports		300,363		75,000
Total Revenues	$	19,045,529	$	11,850,787

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consist of the following balances as of December 31, 2020 and 2019:

	December 31,
	2020			2019
Furniture and fixtures	$	-		$	52,309
Computer software and equipment		246,101			109,992
Office equipment		-			8,132
Leasehold improvements		-			6,460
		246,101			176,893
Less: accumulated depreciation		(83,953	)		(49,487	)
Property and equipment, net	$	162,148		$	127,406

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following:

	Licensing Agreements		Software		Distribution Contracts		Accumulated Amortization			Total
Balance as of January 1, 2019	$	3,620,000	$	2,340,000	$	560,000	$	(382,594	)	$	6,137,406
Amortization expense		-		-		-		(810,250	)		(810,250	)
Balance as of December 31, 2019		3,620,000		2,340,000		560,000		(1,192,844	)		5,327,156
Purchase of intangible assets		891,999		-		-		-			891,999
Amortization expense		-		-		-		(650,703	)		(650,703	)
Balance as of December 31, 2020	$	4,511,999	$	2,340,000	$	560,000	$	(1,843,547	)	$	5,568,452

Weighted average remaining amortization period at December 31, 2020 (in years)		11.8		5.2		-

Schdeule of Accumulated Amortization of Intangible Assets

Accumulated amortization of intangible assets consists of the following:

	Licensing Agreements		Software		Distribution Contracts		Accumulated Amortization
Balance as of January 1, 2019	$	84,844	$	87,750	$	210,000	$	382,594
Amortization expense		226,250		234,000		350,000		810,250
Balance as of December 31, 2019		311,094		321,750		560,000		1,192,844
Amortization expense		374,918		275,785		-		650,703
Balance as of December 31, 2020	$	617,396	$	666,151	$	560,000	$	1,843,547

Schedule of Estimated Aggregate Amortization Expense of Intangible Assets

Estimated aggregate amortization expense of intangible assets for the next five years is as follows:

For the Years Ended December 31,	Total
2021	$	631,086
2022		697,767
2023		697,767
2024		697,767
2025		697,767
Thereafter		2,146,298
	$	5,568,452

Goodwill (Tables)

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying amount of goodwill are as follow:

Balance - January 1, 2019	$	712,732
Loss on impairment of goodwill		(575,015	)
Balance - December 31, 2019		137,717
Loss on impairment of goodwill		-
Balance - December 31, 2020	$	137,717

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2020

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consisted of the following:

	December 31,
	2020		2019
Accrued royalties	$	1,485,261	$	268,558
Accrued payroll and bonuses		778,918		-
Accrued professional fees		129,291		81,480
Accrued consulting fees		398,526		166,667
Payable to Le Mans joint venture		234,667		124,320
Accrued development costs		196,845		145,193
Accrued rent		40,787		43,017
Accrued taxes		54,880		18,860
Accrued other		35,828		4,845
Total	$	3,355,003	$	852,938

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Payments Under Non-cancellable Operating Leases

Future minimum payments under our non-cancellable operating leases as of December 31, 2020 are as follows:

For the Years Ending December 31,	Total
2021	$	387,641
2022		244,320
2023		222,782
2024		163,628
2025		12,000
	$	1,030,371

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of Components of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities consist of the following at December 31, 2020 and 2019:

	2020			2019
Assets:
Net operating loss carryforwards	$	1,937,626		$	2,255,880
Charitable Contribution Carryforward		797			780
Goodwill		287,878			294,822
Other Assets		45,453			48,878
Total Assets		2,271,754			2,600,360
Liabilities:
Depreciable Assets		45,177			4,847
Other Intangible Assets		923,224			973,073
Total Liabilities		968,401			977,920

Net Asset before Valuation allowance		1,303,353			1,622,440
Valuation allowance		(1,303,353	)		(1,622,440	)
Net deferred tax (liability) asset	$	-		$	-

Schedule of Effective Income Tax Rate and the Federal Statutory Income Tax Rate

A reconciliation between the Company’s effective income tax rate and the federal statutory income tax rate for the years ended December 31, 2020 and 2019 is as follows:

	2020			2019
Federal statutory income tax benefit		21.0	%		21.0	%
State income taxes, net of federal income tax benefit		-13.2	%		0.0	%
Permanent differences and other		0.9	%		-0.1	%
Change in valuation allowance		46.9	%		-14.8	%
Effect of flow through entity		-55.6	%		-6.1	%
Effective income tax rate		0.0	%		0.0	%

Concentrations (Tables)

12 Months Ended

Dec. 31, 2020

Customer Concentration Risk [Member]

Schedule of Concentrations

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s revenues for the following periods:

	For the Year Ended
	December 31,
Customer	2020			2019
Customer A		29.64	%		39.99	%
Customer B		25.28	%		22.43	%
Customer C		23.27	%		15.86	%
Total		78.19	%		78.28	%

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s accounts receivable as of:

	December 31,
Customer	2020			2019
Customer A		81.84	%		82.99	%
Total		81.84	%		82.99	%

Supplier Concentrations [Member]

Schedule of Concentrations

The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s cost of revenues for the following periods:

	For the Year Ended
	December 31,
Supplier	2020			2019
Supplier A		34.59	%		28.39	%
Supplier B		19.45	%		22.41	%
Supplier C		11.46	%		15.16	%
Supplier D		*			10.63	%
Total		65.50	%		76.59	%

* Less than 10%.

Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

Segment information available with respect to these reportable business segments was as follows:

	For the Year Ended December 31,
	2020			2019
Revenues:
Gaming	$	18,745,166		$	11,775,787
Esports		300,363			75,000
Total Revenues	$	19,045,529		$	11,850,787

Gross Profit:
Gaming	$	12,438,584		$	6,909,410
Esports		11,073			52,500
Total Segment and Consolidated Gross Profit	$	12,449,657		$	6,961,910

Income (Loss) From Operations:
Gaming	$	508,461		$	(4,900,945	)
Esports		(507,314	)		(275,168	)
Total Segment and Consolidated Income (Loss) From Operations	$	1,147		$	(5,176,113	)

Depreciation and Amortization:
Gaming	$	718,873		$	861,872
Esports		1,306			-
Total Segment Depreciation and Amortization	$	720,179		$	861,872

Interest Expense:
Gaming	$	718,837		$	-
Esports		-			-
Total Segment Interest Expense	$	718,837		$	-

Equity in (Loss) Income:
Gaming	$	-		$	-
Esports		(70,792	)		(608,656	)
Total Segment Equity in (Loss) Income	$	(70,792	)	$	(608,656	)

Expenditures for Additions to Long-Lived Assets:
Gaming	$	126,432		$	108,293
Esports		10,323			-
Total Expenditures for Additions to Long-Lived Assets:	$	136,755		$	108,293

	December 31, 2020		December 31, 2019
Segment Total Assets:
Gaming	$	17,377,994	$	12,777,274
Esports		9,017		-
Consolidated Total Assets	$	17,387,011	$	12,777,274

Business Organization, Nature of Operations and Risks and Uncertainities (Details Narrative)	Oct. 06, 2020	Aug. 18, 2018	Aug. 14, 2018
704Games [Member]
Ownership percentage acquired	2.50%	26.20%	53.50%

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Jan. 31, 2021	Jan. 08, 2021	Mar. 15, 2019
Proceeds from initial public offering	$ 62,900,000
Net loss	(679,854)	$ (5,755,564)
Cash flows from operations	4,053,345	(4,424,846)
Cash equivalents
Allowances for accounts receivable	2,150,684	1,891,681
Revenue recognized
Sales allowances and price protection reserves	2,150,681	2,483,147
Advertising expenses	2,791,054	3,487,498
General and Administrative [Member]
Foreign currency transaction loss	$ (1,000)	$ (8,000)
Subsequent Event [Member]
Ownership percentage acquired				100.00%
Le Mans [Member]
Ownership percentage acquired	45.00%				45.00%
Le Mans [Member] \| Subsequent Event [Member]
Ownership percentage acquired			51.00%

Summary of Significant Accounting Policies - Schedule of Intangible Assets Estimated Useful Lives (Details)	12 Months Ended
	Dec. 31, 2020
License Agreements [Member]
Intangible asset, useful life	16 years
Software [Member]
Intangible asset, useful life	7 years
Distribution Contracts [Member]
Intangible asset, useful life	1 year

Summary of Significant Accounting Policies - Summary of Revenue Recognized (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Total Revenues	$ 19,045,529	$ 11,850,787
Gaming [Member]
Total Revenues	18,745,166	11,775,787
Esports [Member]
Total Revenues	300,363	75,000
ASU 606 [Member]
Total Revenues	19,045,529	11,850,787
ASU 606 [Member] \| Gaming [Member]
Total Revenues	18,745,166	11,775,787
ASU 606 [Member] \| Esports [Member]
Total Revenues	$ 300,363	$ 75,000

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Property and Equipment (Details Narrative) - USD ($)	12 Months Ended
Property and Equipment (Details Narrative) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 69,476	$ 51,622

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Property and equipment, gross	$ 246,101	$ 176,893
Less : accumulated depreciation	(83,953)	(49,487)
Property and equipment, net	162,148	127,406
Furniture and Fixtures [Member]
Property and equipment, gross		52,309
Computer Software and Equipment [Member]
Property and equipment, gross	246,101	109,992
Office Equipment [Member]
Property and equipment, gross		8,132
Leasehold Improvements [Member]
Property and equipment, gross		$ 6,460

Intangible Assets (Details Narrative) - USD ($)	12 Months Ended
Intangible Assets (Details Narrative) - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Purchase of license	$ 100,000
Intangible assets	5,568,452	$ 5,327,156	$ 6,137,406
License Agreements [Member]
License cost	$ 891,999
Useful life of license	6 years 6 months
Purchase of license	$ 100,000
License fee royalty payments, percentage	5.00%
License Agreements [Member] \| Other Noncurrent Liabilities [Member]
Intangible assets	$ 791,999

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Beginning Balance	$ 5,327,156	$ 6,137,406
Purchase of intangible assets	891,999
Amortization expense	(650,703)	(810,250)
Ending Balance	5,568,452	5,327,156
Accumulated amortization, Beginning Balance	(1,192,844)	(382,594)
Amortization expense	(650,703)	(810,250)
Accumulated amortization, ending balance	(1,843,547)	(1,192,844)
License Agreements [Member]
Beginning Balance	3,620,000	3,620,000
Purchase of intangible assets	891,111
Amortization expense
Ending Balance	$ 4,511,999	$ 3,620,000
Weighted average remaining amortization period	12 years 1 month 6 days	12 years 1 month 6 days
Accumulated amortization, Beginning Balance	$ (311,094)	$ (84,844)
Amortization expense	(374,918)	(226,250)
Accumulated amortization, ending balance	(617,396)	(311,094)
Software [Member]
Beginning Balance	2,340,000	2,340,000
Purchase of intangible assets
Amortization expense
Ending Balance	$ 2,340,000	$ 2,340,000
Weighted average remaining amortization period	4 years 7 months 6 days	4 years 7 months 6 days
Accumulated amortization, Beginning Balance	$ (321,750)	$ (87,750)
Amortization expense	(275,785)	(234,000)
Accumulated amortization, ending balance	(666,150)	(321,750)
Distribution Contracts [Member]
Beginning Balance	560,000	560,000
Purchase of intangible assets
Amortization expense
Ending Balance	560,000	560,000
Accumulated amortization, Beginning Balance	(560,000)	(210,000)
Amortization expense		(350,000)
Accumulated amortization, ending balance	$ (560,000)	$ (560,000)

Intangible Assets - Schdeule of Accumulated Amortization of Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Beginning Balance	$ 1,192,844	$ 382,594
Amortization expense	650,703	810,250
Ending Balance	1,843,547	1,192,844
License Agreements [Member]
Beginning Balance	311,094	84,844
Amortization expense	374,918	226,250
Ending Balance	617,396	311,094
Software [Member]
Beginning Balance	321,750	87,750
Amortization expense	275,785	234,000
Ending Balance	666,150	321,750
Distribution Contracts [Member]
Beginning Balance	560,000	210,000
Amortization expense		350,000
Ending Balance	$ 560,000	$ 560,000

Intangible Assets - Schedule of Estimated Aggregate Amortization Expense of Intangible Assets (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
2021	$ 697,767
2022	697,767
2023	697,767
2024	697,767
2025	697,767
Thereafter	2,079,617
Estimated aggregate amortization expense	$ 5,568,452	$ 5,327,156	$ 6,137,406

Goodwill (Details Narrative) - USD ($)	12 Months Ended
Goodwill (Details Narrative) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Loss on impairment of goodwill		$ 575,015

Goodwill - Schedule of Goodwill (Details) - USD ($)	12 Months Ended
Goodwill - Schedule of Goodwill (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Beginning balance	$ 137,717	$ 712,732
Loss on impairment of goodwill		(575,015)
Ending balance	$ 137,717	$ 137,717

Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accrued royalties	$ 1,485,261	$ 268,558
Accrued payroll and bonuses	778,918
Accrued professional fees	129,291	81,480
Accrued consulting fees	398,526	166,667
Payable to Le Mans joint venture	234,667	124,320
Accrued development costs	196,845	145,193
Accrued rent	40,787	43,017
Accrued taxes	54,880	18,860
Accrued other	35,828	4,845
Total	$ 3,355,003	$ 852,938

Due to Related Parties (Details Narrative) - USD ($)			12 Months Ended
Due to Related Parties (Details Narrative) - USD ($)	Jan. 29, 2021	Jan. 20, 2021	Dec. 31, 2020	Dec. 31, 2019	Sep. 15, 2020	Apr. 01, 2020
Interest expense related party			$ 698,830	$ 0
Promissory Note [Member]
Line of credit maximum amount					$ 12,000,000	$ 10,000,000
Interest rate						10.00%
Repayment of debt	$ 400,000	$ 10,000,000

Member's Equity (Details Narrative) - 704Games Company [Member] - USD ($)		12 Months Ended
	Aug. 18, 2020	Dec. 31, 2020	Dec. 31, 2019	Apr. 03, 2017
Stock Purchase Agreement [Member] \| HC2 and Continental [Member]
Number of shares purchased	106,307
Purchase price per share	$ 11.29
Aggregate consideration	$ 1,200,000
Non-controlling interest and additional paid-in capital		$ 927,102
Stock Warrant [Member]
Number of warrants to purchase common stock		4,000	4,000
Warrants exercise price		$ 93.03	$ 93.03
Warrants, intrinsic value
Warrants, term		4 years 4 months 24 days
Stock Appreciation Rights [Member]
Exercise price		$ 55.67	$ 55.67
Number of shares available for grant				25,734
Number of shares forfeited		9,701	6,671
Number of shares outstanding		4,211	13,912

Related Party Transactions (Details Narrative) - USD ($)		12 Months Ended
	Jan. 02, 2020	Dec. 31, 2020	Dec. 31, 2019	Aug. 03, 2020
Related party expenses		$ 1,099,846	$ 647,513
Proceeds from advances from related parties		361,145	3,564,326
Due to related parties		10,853,536	8,045,522
704Games Company [Member]
Related party expenses		$ 149,898	$ 641,938
Services Agreement [Member] \| Motorsport Network [Member]
Legal services fee	$ 5,000
Accounting service fee	2,500
Services Agreement [Member] \| Motorsport Network [Member] \| Minimum [Member]
Voting interest				20.00%
Development services hourly fee	30
Services Agreement [Member] \| Motorsport Network [Member] \| Minimum [Member]
Development services hourly fee	$ 15

Commitments and Contingencies (Details Narrative)										1 Months Ended	12 Months Ended
Commitments and Contingencies (Details Narrative)	Oct. 02, 2020 USD ($)	Sep. 09, 2020 USD ($) ft²	May 15, 2020 USD ($)	Feb. 21, 2020 USD ($)	Jan. 02, 2020 USD ($)	May 03, 2019 USD ($) ft²	Apr. 15, 2019 USD ($)	Mar. 15, 2019	Mar. 07, 2019 USD ($) ft²	Jan. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Operating leases, rent expense											$ 291,892	$ 161,695
Due to related parties											10,853,536	8,045,522
Employment Agreements [Member] \| Dmitry Kozko [Member]
Base salary					$ 500,000
Annual increase percentage of base salary					103.00%
Employment Agreements [Member] \| Mr. Hood [Member]
Base salary	$ 198,000
Employment Agreements [Member] \| Mr. Hood [Member] \| Subsequent Event [Member]
Base salary										$ 230,000
Employment Agreements [Member] \| Mr. Hood [Member] \| Subsequent Event [Member] \| Deferred Bonus [Member]
Cash bonus to be paid										$ 100,000
Joint Venture Agreement [Member]
Joint venture equity ownership percentage								45.00%
Loss of joint venture											70,792	608,656
Due to related parties											234,667
Joint Venture Agreement [Member] \| Other Assets [Member]
Investment											271,200	$ 0
Joint Venture Agreement [Member] \| Automobile Club de I'Ouest [Member]
Joint venture equity ownership percentage								55.00%
Orlando, Florida [Member]
Operating leases, rent expense									$ 93,000
Area of land \| ft²									2,190
Lease description									Beginning April 1, 2019 and ending April 30, 2021.
Security deposit									$ 4,000
Orlando, Florida [Member] \| Minimum [Member]
Base rent									3,833
Orlando, Florida [Member] \| Minimum [Member]
Base rent									$ 3,947
Moscow, Russia [Member]
Operating leases, rent expense							$ 324,000
Lease description							Beginning April 15, 2019 and ending April 15, 2022.
Base rent							$ 9,000
Security deposit							$ 10,000
Term of lease contract							3 years
Charlotte, North Carolina [Member]
Operating leases, rent expense						$ 954,000
Area of land \| ft²						5,586
Lease description				Ends on August 31, 2024		Beginning May 3, 2019 and ending August 31, 2024
Security deposit				$ 30,000		$ 42,000
Sublease income				$ 14,896							$ 137,335
Periodical increase percentage of rent				3.00%
Charlotte, North Carolina [Member] \| Minimum [Member]
Base rent						13,965
Charlotte, North Carolina [Member] \| Minimum [Member]
Base rent						$ 16,189
Miami, Florida [Member]
Base rent			$ 3,000
Security deposit			$ 6,000
Term of lease contract			5 years
Renewal term			5 years
Silverstone, England [Member]
Operating leases, rent expense		$ 75,000
Area of land \| ft²		1,600
Base rent		$ 6,250
Security deposit		$ 15,000

Commitments and Contingencies - Schedule of Future Minimum Payments Under Non-cancellable Operating Leases (Details)	Dec. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2021	$ 387,641
2022	244,320
2023	222,782
2024	163,628
2025	12,000
Total	$ 1,030,371

Income Taxes (Details Narrative) - Federal [Member]	12 Months Ended
Income Taxes (Details Narrative) - Federal [Member]	Dec. 31, 2020 USD ($)
Operating loss carryforwards	$ 8,000,000
Operating loss carryforwards, limitations on use	The remaining federal net operating losses of $5.3 million begin to expire in 2035 and the state net operating losses expire between 2030 and 2039.
704 Games Company [Member]
Operating loss carryforwards	$ 2,700,000

Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Net operating loss carryforwards	$ 1,937,626	$ 2,255,880
Charitable Contribution Carryforward	797	780
Goodwill	287,878	294,822
Other Assets	45,453	48,878
Total Assets	2,271,754	2,600,360
Depreciable Assets	45,177	4,847
Other Intangible Assets	923,224	973,073
Total Liabilities	968,401	977,920
Net Asset before Valuation allowance	1,303,353	1,622,440
Valuation allowance	(1,303,353)	(1,622,440)
Net deferred tax (liability) asset

Income Taxes - Schedule of Effective Income Tax Rate and the Federal Statutory Income Tax Rate (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Federal statutory income tax benefit	21.00%	21.00%
State income taxes, net of federal income tax benefit	(13.20%)	0.00%
Permanent differences and other	0.90%	(0.10%)
Change in valuation allowance	46.90%	(14.80%)
Effect of flow through entity	(55.60%)	(6.10%)
Effective income tax rate	0.00%	0.00%

Concentrations - Schedule of Concentrations (Details)

12 Months Ended

Dec. 31, 2020

Dec. 31, 2019

Customer Concentration Risk [Member] | Revenues [Member]

Concentration risk percentage

78.19%

78.28%

Customer Concentration Risk [Member] | Accounts Receivable [Member]

Concentration risk percentage

81.84%

82.99%

Customer Concentration Risk [Member] | Customer A [Member] | Revenues [Member]

Concentration risk percentage

29.64%

39.99%

Customer Concentration Risk [Member] | Customer A [Member] | Accounts Receivable [Member]

Concentration risk percentage

81.84%

82.99%

Customer Concentration Risk [Member] | Customer B [Member] | Revenues [Member]

Concentration risk percentage

25.28%

22.43%

Customer Concentration Risk [Member] | Customer C [Member] | Revenues [Member]

Concentration risk percentage

23.27%

15.86%

Supplier Concentrations [Member] | Revenues [Member]

Concentration risk percentage

65.50%

76.59%

Supplier Concentrations [Member] | Supplier A [Member] | Revenues [Member]

Concentration risk percentage

34.59%

28.39%

Supplier Concentrations [Member] | Supplier B [Member] | Revenues [Member]

Concentration risk percentage

19.45%

22.41%

Supplier Concentrations [Member] | Supplier C [Member] | Revenues [Member]

Concentration risk percentage

11.46%

15.16%

Supplier Concentrations [Member] | Supplier D [Member] | Revenues [Member]

Concentration risk percentage

0.00%

^[1]

10.63%

[1]	Less than 10%.

Segment Reporting (Details Narrative) - Integer	12 Months Ended
Segment Reporting (Details Narrative) - Integer	Dec. 31, 2020	Dec. 31, 2019
Segment Reporting [Abstract]
Number of reportable segments	2	2

Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($)

12 Months Ended

Dec. 31, 2020

Dec. 31, 2019

Total Revenues

$ 19,045,529

$ 11,850,787

Total Segment and Consolidated Gross Profit

12,449,657

6,961,910

Total Segment and Consolidated Income (Loss) From Operations

1,147

(5,176,113)

Total Segment Depreciation and Amortization

720,179

861,872

Total Segment Interest Expense

^[1]

718,837

Total Segment Equity in (Loss) Income

(70,792)

(608,656)

Total Expenditures for Additions to Long-Lived Assets

136,755

108,293

Consolidated Total Assets

17,387,010

12,777,274

Gaming [Member]

Total Revenues

18,745,166

11,775,787

Total Segment and Consolidated Gross Profit

12,438,584

6,909,410

Total Segment and Consolidated Income (Loss) From Operations

508,461

(4,900,945)

Total Segment Depreciation and Amortization

718,873

861,872

Total Segment Interest Expense

718,837

Total Segment Equity in (Loss) Income

Total Expenditures for Additions to Long-Lived Assets

126,432

108,293

Consolidated Total Assets

17,377,994

12,777,274

Esports [Member]

Total Revenues

300,363

75,000

Total Segment and Consolidated Gross Profit

11,073

52,500

Total Segment and Consolidated Income (Loss) From Operations

(507,314)

(275,168)

Total Segment Depreciation and Amortization

1,306

Total Segment Interest Expense

Total Segment Equity in (Loss) Income

(70,792)

(608,656)

Total Expenditures for Additions to Long-Lived Assets

10,323

Consolidated Total Assets

$ 9,017

[1]	Includes related party expenses of $698,830 and $0 for the years ended December 31, 2020 and 2019, respectively.

Subsequent Events (Details Narrative)											1 Months Ended	12 Months Ended
Subsequent Events (Details Narrative)	Mar. 22, 2021 USD ($)	Mar. 14, 2021 USD ($) shares	Mar. 11, 2021 shares	Feb. 25, 2021 USD ($)	Feb. 11, 2021 $ / shares shares	Jan. 25, 2021 EUR (€)	Jan. 15, 2021 USD ($) $ / shares shares	Jan. 12, 2021 $ / shares shares	Jan. 08, 2021 shares	Dec. 31, 2020 USD ($)	Jan. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jan. 24, 2021	Jan. 11, 2021 $ / shares
Proceeds from initial public offering \| $												$ 62,900,000
Development expenses \| $										$ 9,800,000
Subsequent Event [Member]
Membership interests									100.00%
Repayment of promissory note \| $											$ 10,400,000
Subsequent Event [Member] \| Ascend FS, Inc [Member]
Percentage of outstanding shares \| $ / shares														$ 28.7
Subsequent Event [Member] \| Euro [Member] \| Minimum [Member]
Development expenses \| €						€ 8,000,000
Subsequent Event [Member] \| Le Mans [Member]
Membership interests						51.00%							45.00%
Subsequent Event [Member] \| HC2 Holdings 2 Inc [Member]
Purchases of an aggregate shares					106,307
Percentage of outstanding shares \| $ / shares					$ 26.2
Description of litigation					Former minority stockholders of 704Games, filed a complaint in the United States District Court for the District of Delaware against the Company, Dmitry Kozko, the Company's Chief Executive Officer and Executive Chairman, Jonathan New, the Company's Chief Financial Officer, and Mike Zoi, the sole manager of Motorsport Network, which, at the time of the allegations set forth in the complaint, owned 100% of the Company and continues to own approximately 62.8% of the Company's outstanding Class A common stock on a fully-diluted basis on the date hereof.
Subsequent Event [Member] \| Binding Term Sheet [Member] \| Studio397 [Member]
Purchase price for the shares \| $				$ 16,000,000
Business acquisition percentage				100.00%
Subsequent Event [Member] \| Binding Term Sheet [Member] \| Studio397 [Member] \| At Closing [Member]
Purchase price for the shares \| $				$ 12,800,000
Subsequent Event [Member] \| Binding Term Sheet [Member] \| Studio397 [Member] \| First Year Anniversary Closing [Member]
Purchase price for the shares \| $				$ 3,200,000
Subsequent Event [Member] \| Share Exchange Agreements [Member] \| Ascend FS, Inc [Member]
Shares acquired		41,204
Business acquisition percentage		10.15%
Payments to acquire businesses \| $		$ 14,600,000
Subsequent Event [Member] \| Share Exchange Agreements [Member] \| 704Games [Member]
Membership interests			100.00%
Business acquisition percentage			7.60%
Subsequent Event [Member] \| Share Exchange Agreements [Member] \| Digital Tales USA, LLC [Member]
Business acquisition description	Pursuant to the Binding Term Sheet, the Company and EleDa intend that the Company will acquire from EleDa all of the shares of Digital Tales USA, LLC, a Florida limited liability company (the "Interests"). The purchase price for the Interests will be $2,200,000, payable as follows: (i) $1,540,000 at closing, (ii) $260,000 on the six-month anniversary of closing, (iii) $200,000 after the SBK video game license or substantially similar two-wheel racing brand license currently held by the Digital Tales USA, LLC is amended to be extended beyond current expiration date in 2024 for no less than 3 additional years, so long as such amendment is executed within 12 months of closing and (iv) $200,000 after the SBK video game license or substantially similar two-wheel racing brand license currently held by the Digital Tales USA, LLC is amended to be expanded to include console and PC video game development and publishing for the same period, so long as such amendment is executed within 12 months of closing.
Purchase price for the interests \| $	$ 2,200,000
Subsequent Event [Member] \| Share Exchange Agreements [Member] \| Digital Tales USA, LLC [Member] \| At Closing [Member]
Purchase price for the interests \| $	1,540,000
Subsequent Event [Member] \| Share Exchange Agreements [Member] \| Digital Tales USA, LLC [Member] \| Six Month Anniversary Closing [Member]
Purchase price for the interests \| $	260,000
Subsequent Event [Member] \| Share Exchange Agreements [Member] \| Minimum [Member] \| Digital Tales USA, LLC [Member]
Legal fees and expenses \| $	$ 60,000
Subsequent Event [Member] \| Class A Common Stock [Member]
Conversion of shares									7,000,000
Proceeds from initial public offering \| $							$ 62,900,000
Restricted stock issued during the period								10,000
Subsequent Event [Member] \| Class A Common Stock [Member] \| Dmitry Kozko [Member]
Restricted stock issued during the period								20,333
Restricted options issued during the period								203,333
Exercise price \| $ / shares								$ 20.00
Options expire								Jan. 12, 2031
Subsequent Event [Member] \| Class A Common Stock [Member] \| Board of Directors [Member]
Stock options granted								15,096
Subsequent Event [Member] \| Class A Common Stock [Member] \| Fernando Alonso [Member]
Membership interests							3.00%
Subsequent Event [Member] \| Class A Common Stock [Member] \| Share Exchange Agreements [Member] \| Ascend FS, Inc [Member]
Stock issued during the period, shares		488,722
Subsequent Event [Member] \| Class A Common Stock [Member] \| Share Exchange Agreements [Member] \| 704Games [Member]
Stock issued during the period, shares			366,541
Shares acquired			30,903
Business acquisition description			The Company entered into a share exchange agreement with PlayFast pursuant to which the Company will acquire 30,903 shares of common stock of 704Games owned by PlayFast, which is equal to approximately 7.6% of the outstanding equity interests of 704Games, in exchange for (i) 366,541 newly issued shares of the Company's Class A common stock and (ii) cash in an amount to be determined based on the share price of the Company's Class A common stock over the last 10 trading days of March of 2021.
Subsequent Event [Member] \| Class A Common Stock [Member] \| IPO [Member]
Stock issued during the period, shares							3,450,000
Stock price per share \| $ / shares							$ 20.00
Subsequent Event [Member] \| Class A Common Stock [Member] \| IPO [Member] \| Additional Shares For Underwriters [Member]
Stock issued during the period, shares							450,000
Subsequent Event [Member] \| Class B Common Stock [Member]
Conversion of shares									7,000,000