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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the quarterly period ended September 30, 2021
     
    or
     
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
    For the transition period from ___________ to ___________

 

Commission file number: 001-39868

 

Motorsport Games Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   86-1791356

State or Other Jurisdiction of

Incorporation or Organization

  I.R.S. Employer Identification No.
     

5972 NE 4th Avenue

Miami, FL

  33137
Address of Principal Executive Offices   Zip Code

 

Registrant’s Telephone Number, Including Area Code: (305) 507-8799

 

Not Applicable

 

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Class A common stock, $0.0001 par value per share   MSGM  

The Nasdaq Stock Market LLC

(The Nasdaq Capital Market)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer Smaller reporting company
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of November 4, 2021, the registrant had 11,635,897 shares of Class A common stock and 7,000,000 shares of Class B common stock outstanding.

 

 

 

 

 

 

Motorsport Games Inc.

Form 10-Q

For the Quarter Ended September 30, 2021

 

TABLE OF CONTENTS

 

    Page
Part I. FINANCIAL INFORMATION 1
Item 1. Condensed Consolidated Financial Statements (Unaudited) 1
  Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020 1
  Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 2
  Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020 3
  Unaudited Condensed Consolidated Statements of Stockholders’ Equity / Member’s Equity (Deficiency) for the Three and Nine Months Ended September 30, 2021 and 2020 4
  Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 5
  Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28
Item 3. Quantitative and Qualitative Disclosures About Market Risk 41
Item 4. Controls and Procedures 42
     
Part II. OTHER INFORMATION 43
Item 1. Legal Proceedings 43
Item 1A. Risk Factors 43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43
Item 5. Other Information 43
Item 6. Exhibits 44
Signatures 45

 

i
 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements in this Quarterly Report on Form 10-Q (this “Report”) of Motorsport Games Inc. (the “Company,” “Motorsport Games,” “we,” “us” or “our”) are forward-looking statements within the meaning of federal securities laws, including statements that involve expectations, plans or intentions, such as, but not limited to, those relating to: our future business, results of operations, financial condition and/or liquidity, including with respect to the ongoing effects of the coronavirus (“COVID-19”) pandemic; new or planned products or offerings, including the anticipated timing of our product launches, such as for our NASCAR Heat Ultimate Edition+ on Nintendo Switch, British Touring Car Championship, iconic 24 Hours of Le Mans endurance race and the associated FIA World Endurance Championship, and INDYCAR video games, as well as the launch of our updated NASCAR Heat Mobile game and introduction of a slate of NASCAR branded casual gaming options for mobile devices; our intention to expand our license arrangements to other internationally recognized racing series and the platforms we operate on; our expectation that having a broader product portfolio will improve our operating results and provide a revenue stream that is less cyclical based on the release of a single game per year; our plans to drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles through in-game purchases and extra content; our expectation that we will continue to derive significant revenues from sales of our products to a very limited number of distribution partners; our belief that additions to our existing portfolio of games centered around popular licensed racing series will provide us the opportunity to further grow our esports business by having more titles to produce our esports events; our expectation that we will continue to invest in technology, hardware and software to support our games and services, including with respect to security protections; our intention to continue to look for opportunities to expand the recurring portion of our busines; our liquidity, including, without limitation, our belief that existing cash on hand will be sufficient to fund our operations for at least the next 12 months and our belief that we may choose to raise additional funds at any time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures or other strategic investments, as well as our cash flows and anticipated uses of cash; our plans and intentions with respect to our remediation efforts to address the material weaknesses in our internal control over financial reporting; our beliefs regarding the impact of any claims and litigation that we are subject to; industry trends, potential acquisitions; and management strategies. We use words such as “could,” “would,” “may,” “might,” “will,” “expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,” “plan,” “project” and other similar expressions to identify some forward-looking statements, but not all forward-looking statements include these words. The forward-looking statements contained in this Report are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements. Important factors that could cause our actual results to differ materially from those projected in any forward-looking statements are discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) and in “Risk Factors” in Part II, Item 1A of this Report, our prior 10-Q filings during 2021, in each case as updated in our subsequent filings with the Securities and Exchange Commission (the “SEC”), which include, but are not limited to, the following principal risks:

 

  If we do not consistently deliver popular products or if consumers prefer competing products, our business may be negatively impacted.
     
  Our business and products are highly concentrated in the racing game genre, and our operating results may suffer if consumer preferences shift away from this genre.
     
  If we do not provide high-quality products in a timely manner, our business operations, financial performance, financial condition, liquidity, cash flows and/or results of operations may be negatively impacted.
     
  The ongoing and prolonged COVID-19 pandemic has impacted our operations and could continue to adversely affect our business operations, financial performance, financial condition, liquidity, cash flows and/or results of operations, the extent of which is uncertain and difficult to predict.    
     
  Declines in consumer spending and other adverse changes in the economy could have a material adverse effect on our business, financial condition, liquidity, cash flows and/or operating results.
     
  We depend on a relatively small number of franchises for a significant portion of our revenues and profits.
     
  Our ability to acquire and maintain licenses to intellectual property, especially for sports titles, affects our revenues and profitability.
     
  The importance of retail sales to our business exposes us to the risks of that business model.
     
  We primarily depend on a single third-party distribution partner to distribute our games for the retail channel, and our ability to negotiate favorable terms with such partner and its continued willingness to purchase our games is critical for our business.

 

ii
 

 

  We plan to continue to generate a portion of our revenues from advertising and sponsorship during our esports events. If we are unable to attract more advertisers and sponsors to our gaming platform, tournaments or competitions, our revenues may be adversely affected.
     
  We are reliant on the retention of certain key personnel and the hiring of strategically valuable personnel, and we may lose or be unable to hire one or more of such personnel, which could adversely affect our ability to achieve our business plans and financial objectives.
     
  The success of our business relies heavily on our marketing and branding efforts, and these efforts may not be accepted by consumers to the extent we planned.
     
  If we do not adequately address the shift to mobile device technology by our customers, operating results could be harmed and our financial performance, financial condition, liquidity, cash flows and/or growth plans could be negatively affected.
     
  Failure to adequately protect our intellectual property, technology and confidential information could harm our business and operating results.
     
  Motorsport Network, LLC (“Motorsport Network”) controls more than a majority of our Class A common stock and Class B common stock and therefore it has the ability to exert significant control over the direction of our business, which could prevent other stockholders from influencing significant decisions regarding our business plans and other matters.
     
  If we are no longer controlled by or affiliated with Motorsport Network, we may be unable to continue to benefit from that relationship, which may adversely affect our operations and have a material adverse effect on us and our financial performance, financial condition, liquidity and/or cash flows.
     
  We have incurred significant losses since our inception, and we may continue to experience losses in the future, which could adversely impact our ability to invest in new product development, marketing, advertising and other activities that are important to achieving our business plans and financial objectives.
     
  Our limited operating history makes it difficult to evaluate our current business and future prospects, and we may not be able to effectively grow our business or implement our business strategies.
     
  We are an emerging growth company and a smaller reporting company, and we cannot be certain if the reduced disclosure requirements applicable to us will make our Class A common stock less attractive to investors.
     
  The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
     
  Higher than anticipated payments, costs, expenses and liabilities or other unanticipated consequences arising from pending or future litigation.
     
  Less than expected liquidity or the unavailability of additional sources of funds from equity or debt financing arrangements, from less than anticipated cash generated by the Company’s operations, from less than expected availability of funds under the Promissory Note from Motorsport Network, from higher than expected operating expenses (such as higher than expected capital expenditures, debt service payments and costs, cash tax payments, acquisitions, joint ventures and/or licensing arrangements, costs related to litigation, advertising, promotional and marketing activities or for product sales returns by the Company’s customers or otherwise), from the inability to efficiently manage cash and working capital and/or from macroeconomic trends, such as higher inflation and interest rates and taxes.

 

Additionally, there are other risks and uncertainties described from time to time in the reports that we file with the SEC. Should one or more of these risks or uncertainties materialize or should any of these assumptions prove to be incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this Report to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, except as otherwise required by law. New factors that could cause our business not to develop as we expect emerge from time to time, and it is not possible for us to predict all of them. Further, we cannot assess the impact of each currently known or new factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

iii
 

 

PART I: FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

MOTORSPORT GAMES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   September 30, 2021   December 31, 2020 
   (unaudited)     
Assets          
           
Current assets:          
Cash  $22,162,693   $3,990,532 
Accounts receivable, net of allowances of $886,247 and $2,150,684, at September 30, 2021 and December 31, 2020, respectively   3,008,986    5,975,414 
Prepaid expenses and other current assets   2,680,371    507,177 
Total Current Assets   27,852,050    10,473,123 
Property and equipment, net   694,835    162,148 
Goodwill   4,979,786    137,717 
Intangible assets, net   21,507,349    5,568,452 
Deferred offering costs   -    749,370 
Other assets   -    296,200 
Total Assets  $55,034,020   $17,387,010 
           
Liabilities and Stockholders’ Equity / Member’s Equity          
Current liabilities:          
Accounts payable  $501,375   $705,951 
Accrued expenses   2,401,715    3,355,003 
Due to related parties   55,551    10,853,536 
Purchase commitments   3,222,269    - 
Total Current Liabilities   6,180,910    14,914,490 
Other non-current liabilities   3,803,658    856,694 
Total Liabilities   9,984,568    15,771,184 
           
Commitments and contingencies (Note 8)   -     -  
           
Stockholders’ Equity / Member’s Equity:          
           
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; none issued and outstanding as of September 30, 2021 and December 31, 2020   -    - 
Class A common stock - $0.0001 par value; authorized 100,000,000 shares; 11,635,897 and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively   1,164    - 
Class B common stock - $0.0001 par value; authorized 7,000,000 shares; 7,000,000 and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively   700    - 
Additional paid-in capital   75,409,876    - 
Member’s equity   -    3,791,674 
Accumulated deficit   (30,977,918)   (4,826,335)
Accumulated other comprehensive loss   (636,376)   4,928 
Total Stockholders’ Equity / Member’s Deficit Attributable to Motorsport Games Inc.   43,797,446    (1,029,733)
Non-controlling interest   1,252,006    2,645,559 
Total Stockholders’ Equity / Member’s Equity   45,049,452    1,615,826 
Total Liabilities and Stockholders’ Equity / Member’s Equity  $55,034,020   $17,387,010 

  

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1

 

 

MOTORSPORT GAMES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

                     
   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2021   2020   2021   2020 
Revenues  $2,138,466   $8,988,197   $6,851,525   $16,111,581 
Cost of revenues [1]   949,139    2,920,747    2,637,250    5,261,483 
Gross profit   1,189,327    6,067,450    4,214,275    10,850,098 
                     
Operating expenses:                    
Sales and marketing [2]   1,348,773    961,450    3,077,213    2,321,635 
Development [3]   3,015,233    1,300,314    6,083,773    3,438,461 
General and administrative [4]   3,130,944    936,818    22,612,162    2,227,373 
Depreciation and amortization   81,874    38,016    179,097    50,083 
Total operating expenses   7,576,824    3,236,598    31,952,245    8,037,552 
(Loss) income from operations   (6,387,497)   2,830,852    (27,737,970)   2,812,546 
Interest expense [5]   (160,310)   (230,965)   (311,748)   (448,325)
Gain (loss) attributable to equity method investment   -    (40,530)   1,370,837    (69,764)
Other (loss) income, net   (110,822)   46,337    (26,115)   79,195 
Net (loss) income   (6,658,629)   2,605,694    (26,704,996)   2,373,652 
Less: Net (loss) income attributable to non-controlling interest   (99,114)   1,412,329    (553,413)   1,498,233 
Net (loss) income attributable to Motorsport Games Inc.  $(6,559,515)  $1,193,365   $(26,151,583)  $875,419 
                     
Net loss attributable to Class A common stock per share [6]:                    
Basic and diluted  $(0.56)       $(2.32)     
                     
Weighted-average shares of Class A common stock outstanding [6]:                    
Basic and diluted   11,635,897         11,285,757      

 

[1] Includes related party costs of $0 and $8,721 for the three months ended September 30, 2021 and 2020, respectively. Includes related party costs of $0 and $92,522 for the nine months ended September 30, 2021 and 2020, respectively.
 
[2] Includes related party expenses of $71,865 and $48,609 for the three months ended September 30, 2021 and 2020, respectively. Includes related party costs of $71,865 and $117,088 for the nine months ended September 30, 2021 and 2020, respectively.
 
[3] Includes related party expenses of $3,132 and $15,279 for the three months ended September 30, 2021 and 2020, respectively. Includes related party costs of $14,591 and $134,942 for the nine months ended September 30, 2021 and 2020, respectively.
 
[4] Includes related party expenses of $22,853 and $539,320 for the three months ended September 30, 2021 and 2020, respectively. Includes related party costs of $1,593,371 and $1,130,864 for the nine months ended September 30, 2021 and 2020, respectively.
 
[5] Includes related party expenses of $0 and $230,965 for the three months ended September 30, 2021 and 2020, respectively. Includes related party costs of $105,845 and $439,723 for the nine months ended September 30, 2021 and 2020, respectively.

 

[6] Basic and diluted net loss per share of Class A common stock is presented only for the period after the Company’s organizational transactions. See Note 1 for a description of the organizational transactions. See Note 3 for the calculation of net loss per share.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2

 

 

MOTORSPORT GAMES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

                     
   Three Months Ended
September 30,
   For the Nine Months Ended
September 30,
 
   2021   2020   2021   2020 
Net Income (loss)   $(6,658,629)  $2,605,694   $(26,704,996)  $2,373,652 
Other comprehensive income (loss):                    
Foreign currency translation adjustments   (537,581)   -    (466,772)   - 
Comprehensive income (loss)    (7,196,210)   2,605,694    (27,171,768)   2,373,652 
Comprehensive income (loss) attributable to non-controlling interests   (99,114)   1,412,329    (553,413)   1,498,233 
Comprehensive income (loss) attributable to Motorsport Games Inc.  $(7,097,096)  $1,193,365   $(26,618,355)  $875,419 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3

 

 

MOTORSPORT GAMES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

                                                        
   For the Nine Months Ended September 30, 2021 
     
                                  

Total

Stockholders’

        
                               Accumulated  

Equity /

Member’s

Equity

      

Total

Stockholders’

 
   Class A   Class B       Additional       Other   Attributable   Non-   Equity / 
   Common Stock   Common Stock   Member’s   Paid-In   Accumulated   Comprehensive   to Motorsport   controlling   Member’s 
   Shares   Amount   Shares   Amount   Equity   Capital   Deficit   Income (Loss)   Games Inc.   Interest   Equity 
Balance - January 1, 2021   -   $-    -   $-   $3,791,674   $-   $(4,826,335)  $4,928   $         (1,029,733)  $2,645,559   $1,615,826 
Conversion of membership interests into shares of common stock   7,000,000    700    7,000,000    700    (3,791,674)   3,790,274    -    -    -    -    - 
Issuance of common stock in initial public offering, net [1]   3,450,000    345    -    -    -    63,073,783    -    -    63,074,128    -    63,074,128 
Stock-based compensation   330,633    33    -    -    -    9,076,883    -    -    9,076,916    -    9,076,916 
Purchase of additional interest in Le Mans   -    -    -    -    -    -    -    -    -    1,584,892    1,584,892 
Comprehensive loss:                                                       
Other comprehensive loss   -    -    -    -    -    -    -    (32,914)   (32,914)   -    (32,914)
Net loss   -    -    -    -    -    -    (13,811,974)   -    (13,811,974)   (273,450)   (14,085,424)
Balance - March 31, 2021     10,780,633   $1,078      7,000,000   $700   $-   $  75,940,940   $  (18,638,309)  $(27,986)  $      57,276,423   $3,957,001   $       61,233,424 
Issuance of common stock to Ascend and PlayFast   855,264    86    -    -    -    -    -    -    86    -    86 
Purchase of 704Games minority interest   -    -    -    -    -    (939,511)   -    -    (939,511)   (2,659,786)   (3,599,297)
ACO Investment in Le Mans Joint Venture   -    -    -    -    -    -    -    -    -    234,754    234,754 
Stock-based compensation   -    -    -    -    -    116,274    -    -    116,274    -    116,274 
Comprehensive loss:                                                       
Other comprehensive loss   -    -    -    -    -    -    -    (70,809)   (70,809)   -    (70,809)
Net loss   -    -    -    -    -    -    (5,780,094)   -    (5,780,094)   (180,849)   (5,960,943)
Balance - June 30, 2021   11,635,897   $1,164    7,000,000   $700   $-   $75,117,703   $(24,418,403)  $(98,795)  $50,602,369   $1,351,120   $51,953,489 
Stock-based compensation   -    -    -    -    -    292,173    -     -    292,173    -    292,173 
Other comprehensive loss   -    -    -    -    -    -     -    (537,581)   (537,581)   -    (537,581)
Net loss                                 (6,559,515)        (6,559,515)   (99,114)   (6,658,629)
Balance - September 30, 2021   11,635,897   $1,164    7,000,000   $700   $-   $75,409,876   $(30,977,918)  $(636,376)  $43,797,446   $1,252,006   $45,049,452 

                                                                                         

[1] Gross proceeds of $69,000,000 less offering costs of $5,925,872.

 

    For the Nine Months Ended September 30, 2020 
                                            

Total

Stockholders’

          
                                       Accumulated     

Equity /

Member’s

Equity

         

Total

Stockholders’

 
    Class A    Class B         Additional          Other     Attributable    Non-     Equity /  
    Common Stock    Common Stock    Member’s    Paid-In     Accumulated     Comprehensive     to Motorsport     controlling    Member’s  
    Shares     Amount    Shares     Amount    Equity    Capital     Deficit    Income (Loss)    Games Inc.    Interest    Equity 
Balance - January 1, 2020   -   $-    -   $-   $-   $-   $(3,064,354)  $-   $            (3,064,354)  $           6,676,314   $3,611,960 
Net loss   -    -    -    -    -    -    (239,631)   -    (239,631)   39,123    (200,508)
Balance - March 31, 2020   -   $-    -   $-   $-   $-   $(3,303,985)  $-   $(3,303,985)  $6,715,437   $3,411,452 
Net loss   -    -    -    -    -    -    (78,315)   -    (78,315)   46,781    (31,534)
Balance - June 30, 2020   -   $-    -   $-   $-   $-   $(3,382,300)  $-   $(3,382,300)  $6,762,218   $3,379,918 
Change of control adjustments   -    -    -    -    -    -    927,102    -    927,102    (2,127,102)   (1,200,000)
Net loss   -    -    -    -    -    -    1,193,365    -    1,193,365    1,412,329   2,605,694 
Balance - September 30, 2020   -   $-    -   $-   $-   $-   $(1,261,833)  $-   $(1,261,833)  $6,047,445   $4,785,612 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

 

MOTORSPORT GAMES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

           
   For the Nine Months Ended
September 30,
 
   2021   2020 
         
Cash Flows from Operating Activities:          
Net loss  $(26,704,996)  $2,373,652 
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   1,217,234    457,729 
Sales return and price protection reserves   257,060    55,077 
Loss on disposal of property and equipment   -    32,537 
Stock-based compensation   9,485,363    - 
(Gain) loss on equity method investee   (1,370,837)   69,764 
Changes in operating assets and liabilities:          
Accounts receivable   2,914,584    (3,313,292)
Prepaid expenses and other current assets   (2,277,279)   (529,391)
Other assets   25,000    55,363 
Accounts payable   (338,895)   266,495 
Accrued expenses   (374,033)   1,035,703 
Other non-current liabilities   443,700    58,594 
Net Cash Used In Operating Activities   (16,723,099)   562,231 
           
Cash Flows From Investing Activities:          
Purchase of additional interest in Le Mans, net of cash acquired   153,250    - 
Purchase of shares of common stock of 704Games from noncontrolling shareholders   -    (1,200,000)
Acquisition of equity method investee   -    (65,156)
Acquisition of KartKraft   (1,000,000)   - 
Acquisition of Studio397   (12,785,463)   - 
Purchase of intangible assets   (227,928)   (100,000)
Purchase of property and equipment   (665,190)   (78,640)
Net Cash Used In Investing Activities   (14,525,331)   (1,443,796)
           
Cash Flows From Financing Activities:          
Advances from related parties   2,073,312    2,342,926 
Repayments on advances from related parties   (12,935,519)   - 
Issuance of common stock in initial public offering, net [1]   63,661,128