0001493152-22-008160 | 10-K | XBRL Viewer

Intangible Asset			Useful Life
License agreements			6.5 - 16 years
Software			6 - 10 years
Distribution contracts			1 year
Employment and non-compete agreements			3 years

SUMMARY OF REVENUE RECOGNIZED

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

SUMMARY OF REVENUE RECOGNIZED

	2021		2020
	For the Year Ended December 31,
	2021		2020
Revenues:
Gaming	$	14,267,735	$	18,745,166
Esports		807,795		300,363
Total Revenues	$	15,075,530	$	19,045,529

SCHEDULE OF CALCULATION WEIGHTED AVERAGE DILUTIVE COMMON SHARES

The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

	For the Year Ended December 31,
	2021		2020
Stock options		573,571		n/a
		573,571		n/a

SCHEDULE OF ESTIMATED AGGREGATE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS (Details)	Dec. 31, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2022	$ 2,147,445
2023	2,147,445
2024	1,921,927
2025	1,932,455
2026	1,654,820
Thereafter	2,364,206
Estimated aggregate amortization expense	$ 12,168,298

SEGMENT REPORTING (Details Narrative)	12 Months Ended
SEGMENT REPORTING (Details Narrative)	Dec. 31, 2021 Segment
Segment Reporting [Abstract]
Number of segments	2

INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTANGIBLE ASSETS ACQUISITION

In connection with the acquisition of Le Mans Esports Series Ltd, the Company acquired the following intangible assets (See Note 3 – Acquisitions for additional details):

Intangible Asset	Useful Life	Cost
Gaming license	Indefinite	$	1,150,000
Esports licenses	Indefinite		1,660,000
Total		$	2,810,000

In connection with the acquisition of KartKraft, the Company acquired the following intangible assets (See Note 3 – Acquisitions for additional details):

Intangible Asset	Useful Life	Cost
KartKraft Trade Name	Indefinite	$	108,000
Software	6 Years		833,000
Employment & Non-Compete	3 Years		59,000
Total		$	1,000,000

In connection with the acquisition of Studio397, the Company acquired the following intangible assets (See Note 3 – Acquisitions for additional details):

Intangible Asset	Useful Life	Cost
Software	6-10 years	$	7,688,000
rFactor 2 Trade Name	Indefinite		3,040,000
Employment & Non-Compete Agreements	3 years		214,000
Total		$	10,942,000

SCHEDULE OF INTANGIBLE ASSETS

The following is a summary of intangible assets as of December 31, 2021 and 2020:

SCHEDULE OF INTANGIBLE ASSETS

	Licensing Agreements (Finite)			Licensing Agreements (Indefinite)		Software (Finite)			Distribution Contracts (Finite)		Trade Names (Infinite)			Non-Compete Agreement (Finite)			Accumulated Amortization			Total
Balance as of January 1, 2020	$	-			3,620,000		2,340,000			560,000		-			-			(1,192,844	)	$	5,327,156
Additions		891,999			-		-			-		-			-			-			891,999
Disposals		-			-		-			-		-			-			-			-
Impairment		-			-		-			-		-			-			-			-
Amortization		-			-		-			-		-			-			(650,703	)		(650,703	)
Foreign currency translation adjustment		-			-		-			-		-			-			-			-
Balance as of December 31, 2020	$	891,999			3,620,000		2,340,000			560,000		-			-			(1,843,547	)	$	5,568,452
Additions		5,553,818					8,521,000			-		3,175,928			273,000			-			17,523,746
Disposals		-					-			-		-			-			-			-
Impairment		-					-			-		(317,113	)		-			-			(317,113	)
Amortization		-					-			-		-			-			(1,568,652	)		(1,568,652	)
Foreign currency translation adjustment		(57,454	)		-		(496,459	)		-		(186,234	)		(15,470	)		34,993			(720,624	)
Balance as of December 31, 2021	$	6,388,363			3,620,000		10,364,541			560,000		2,672,581			257,530			(3,377,206	)	$	20,485,809

SCHEDULE OF ACCUMULATED AMORTIZATION OF INTANGIBLE ASSETS

Accumulated amortization of intangible assets consists of the following:

	Licensing Agreements			Software			Distribution Contracts		Trade Names		Non-Compete Agreement			Accumulated Amortization
Balance as of January 1, 2020	$	311,094			321,750			560,000		-		-			1,192,844
Amortization expense		374,918			275,785			-		-		-			650,703
Balance as of December 31, 2020		686,012			597,535			560,000		-		-			1,843,547
Amortization expense		226,873			1,278,633			-		-		63,146			1,568,652
Foreign currency translation adjustment		(625	)		(32,452	)		-		-		(1,916	)		(34,993	)
Balance as of December 31, 2021	$	912,260			1,843,716			560,000		-	$	61,230			3,377,206

SCHEDULE OF ESTIMATED AGGREGATE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS

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

For the Years Ending December 31,	Total
2022	$	2,147,445
2023		2,147,445
2024		1,921,927
2025		1,932,455
2026		1,654,820
Thereafter		2,364,206
	$	12,168,298

SCHEDULE OF CALCULATION WEIGHTED AVERAGE DILUTIVE COMMON SHARES (Details) - shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded in computation of earnings per common share	573,571
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded in computation of earnings per common share	573,571

INCOME TAXES (Details Narrative) $ in Millions	12 Months Ended
INCOME TAXES (Details Narrative) $ in Millions	Dec. 31, 2021 USD ($)
Operating Loss Carryforwards [Line Items]
Increase in valuation allowance	$ 5.9
Domestic Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	20.0
Operating loss carryforwards not subject to expiration	15.6
Operating losses subject to expiration	$ 4.4

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 16 - 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.

On February 8, 2022, the Company entered into a lease agreement with Lemon City Group, LLC for office space located at 350 NE 60^thStreet, Miami, Florida, 33137. The term of the lease is 5 years commencing April 1, 2022 and expiring on March 31, 2027, terminable with a 60-day written notice with no penalty. The base rent from the lease commencement date through March 31, 2027 is fixed at approximately $22,000 per month. Upon commencement of the lease term on April 1, 2022, the current 5-year lease agreement for office space in Miami, Florida, between 704Games LLC, a subsidiary of the Company, and Lemon City Group, LLC will be terminated without penalty.

On January 6, 2022, the Company granted an aggregate of 12,690 shares of restricted Class A common stock and on January 18, 2022 a further 25,000 shares of restricted Class A common stock, to certain members of the Company’s Board of Directors in connection with certain financial support services to the Board of Directors and in support of certain acquisition activity completed by the Company during the year ended December 31, 2021. Additionally, the Company granted on January 6, 2022 (i) stock options to purchase an aggregate of 57,108 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 543,066 shares of Class A common stock to various employees of the Company. On March 3, 2022 the Company granted additional stock options to purchase an aggregate of 16,281 shares of Class A common stock to various employees of the Company.

SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES (Details)	12 Months Ended
	Dec. 31, 2021
Licensing Agreements [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	6 years 6 months
Licensing Agreements [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	16 years
Computer Software, Intangible Asset [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	6 years
Computer Software, Intangible Asset [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	10 years
Distribution Rights [Member]
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	1 year
Employment Contracts [Member]
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	3 years

CONCENTRATIONS (Tables)

12 Months Ended

Dec. 31, 2021

Customer Concentration Risk [Member]

Concentration Risk [Line Items]

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:

SCHEDULE OF CONCENTRATIONS

	For the Year Ended
	December 31,
Customer	2021			2020
Customer A		28.11	%		29.64	%
Customer B		21.50	%		25.28	%
Customer C		22.36	%		23.27	%
Customer D		10.79	%		-*
Total		82.77	%		78.19	%

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	2021			2020
Customer A		51.92	%		81.84	%
Customer B		17.68	%		-*	%
Total		69.60	%		81.84	%

*	Less than 10%.

Supplier Concentration Risk [Member]

Concentration Risk [Line Items]

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:

SCHEDULE OF CONCENTRATIONS

	For the Year Ended
	December 31,
Supplier	2021			2020
Supplier A		30.89	%		34.59	%
Supplier B		13.13	%		19.45	%
Supplier C		*	%		11.46	%
Total		44.02	%		65.50	%

*	Less than 10%.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements have been 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.

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, goodwill and intangible assets impairment testing, and stock-based compensation valuation. 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. 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 in the distribution channel. 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, 2021 and 2020, the Company determined that all of its accounts receivable were fully collectible and, accordingly, no allowance for doubtful accounts was recorded. Sales allowances represent the difference between the retail distributor purchase order price and the estimated average sell through price. As of December 31, 2021 and 2020, sales allowances were $4,563,884 and $2,150,684, 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 accounts for goodwill and indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”), which requires goodwill and indefinite-lived intangible assets to be tested for impairment annually or more frequently, if events or circumstances indicate that the fair value of the asset or the reporting unit associated with the goodwill has decreased below its carrying value.

The Company performs its annual or interim goodwill and indefinite-lived intangible asset impairment tests by comparing the fair value of its reporting units and indefinite-lived intangible assets to their respective carrying values. An entity recognizes an impairment charge for the amount by which the carrying amount of the asset or reporting unit exceeds its fair value. The Company has determined that its reporting units align with its operating segments as defined below.

In evaluating goodwill and indefinite-lived intangible assets 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 or the indefinite-lived intangible asset 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 or indefinite-lived intangible asset 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 or indefinite-lived intangible asset 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 for its reporting units and the relief from royalty method for its indefinite-lived intangible assets. The Company performs its impairment testing as of December 31 of each year or as required if triggering events occur indicating a potential for impairment.

Intangible assets that have finite lives are amortized over their estimated useful lives and are subject to the provisions of ASC 360, Property, Plant and Equipment when determining the extent of impairment losses, if any. The Company’s finite lived intangible assets consist of the following:

Intangible Asset			Useful Life
License agreements			6.5 - 16 years
Software			6 - 10 years
Distribution contracts			1 year
Employment and non-compete agreements			3 years

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 include 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, PC and mobile games contain a software license that is delivered digitally or via physical disk at the time of sale;

	2)	Sales of Extra Content – Includes (a) extra content that is downloaded by console and PC 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 generate sponsorship revenue.

Sales of Games. Sales of games are generally determined to have a singular distinct performance obligation, as the Company does not have an obligation to provide future update rights or online hosting. As a result, the Company recognizes revenue equal to the full transaction price, less any applicable reserves, 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 recognized from sales of extra content is derived primarily from the sale of digital in-game content that is downloaded by the Company’s console, PC and mobile customers that enhance their gameplay experience, typically by providing car upgrades, additional drivers and/or allows them to customize their gameplay. In-game credit, and other downloadable content, may only be used for in-game purchases and/or customizing the gameplay. 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 purchasing the in-game credits. For console and PC customers, extra content is either purchased in a pack or on a standalone basis.

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 concurrent with the time the event is held. If the Company enters into a contract with a customer to sponsor 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 obligations.

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 Company’s performance obligations are satisfied.

During the years ended December 31, 2021 and 2020, 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:

SUMMARY OF REVENUE RECOGNIZED

	2021		2020
	For the Year Ended December 31,
	2021		2020
Revenues:
Gaming	$	14,267,735	$	18,745,166
Esports		807,795		300,363
Total Revenues	$	15,075,530	$	19,045,529

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 its 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 reviewing 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 the Company’s sales returns and price protection reserves.

Allocating the Transaction Price

Allocating the transaction price requires the Company to 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, Nintendo’s eShop, Apple’s App Store, and Google’s Play Store, to determine whether 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’s App Store or Google Play Store, the third party is considered the principal with the end customer and, as a result, the Company reports revenue net of the fees retained by the storefront. For contracts with customers where revenues are generated via the Apple’s App Store or Google’s Play Store, the Company has determined that it is the principal and, as a result, reports revenues 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 the Company’s 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 higher-than-expected returns or higher price protection in subsequent periods. The Company’s sales returns and price protection reserves as of December 31, 2021 and 2020 were approximately $4.6 million and $2.2 million, respectively. The Company recognized approximately $3.9 million and $2.2 million of sales returns and price protection charges as reductions of revenues for the years ended December 31, 2021 and 2020, respectively.

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 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 accounts for stock-based compensation in accordance with ASC Subtopic 718-10. 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, using the Black-Scholes option pricing model. 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. Stock-based compensation is adjusted for any forfeitures, which are accounted for on an as occurred basis.

We account for share-based payments in accordance with ASC Subtopic 718-10. Share-based compensation expense for a given grant is recognized over the requisite service period (that is, the period for which the employee is being compensated) and is based on the value of share-based payment awards after a reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

We generally estimate the value of stock options using a binomial-lattice model. This estimate is affected by our stock price, as well as assumptions regarding a number of highly complex and subjective variables, including our expected stock price volatility over the term of the awards and projected employee stock option exercise behaviors.

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares of options, if not anti-dilutive.

The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

	For the Year Ended December 31,
	2021		2020
Stock options		573,571		n/a
		573,571		n/a

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, Euro, Australian Dollar 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 $222,500 of transaction gains and $1,000 of transaction losses for years ended December 31, 2021 and 2020, respectively. Such amounts have been classified within other income (expense) in the accompanying consolidated statements of operations.

Recently Issued Accounting Standards

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time as the Company is no longer considered to be an EGC. The adoption dates discussed below reflect this election.

In February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 revises an entity’s accounting for operating leases and requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. This update also requires that lessees recognize assets and liabilities on the balance sheet for the rights and obligations created by all such leases and requires disclosures designed to give financial statement users information on the amount and timing of lease expenses arising from such leases. These disclosures include certain qualitative and specific quantitative disclosures.

The Company adopted ASU 2016-02 on January 1, 2022, using the modified retrospective transition approach and has elected the optional transition method, which allows entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

Upon adoption, ASU 2016-02 did not have a material effect on the Company’s consolidated balance sheets due to the recognition of approximately $765,000 of operating lease assets and approximately $765,000 of operating lease liabilities primarily related to real estate and automobiles. The Company does not expect a cumulative-effect adjustment of initially applying the guidance to the opening balance of its retained earnings or for ASU 2016-02 to have a material impact on its consolidated statements of operations and comprehensive loss or its consolidated statements of cash flows.

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 ASC 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 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 does not expect this amended guidance to have a material impact on its consolidated financial statements and disclosures.

In January 2020, the FASB issued ASU 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 will become effective for the Company on January 1, 2022. The Company does not expect this amended guidance to have a material impact on its consolidated financial statements and disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if the acquiring entity had originated the related revenue contracts. Early adoption is permitted, including interim periods within those fiscal years. An entity that early adopts this guidance in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company early adopted the guidance during the fourth quarter of 2021. As of December 31, 2021, this guidance did not have a material impact on the consolidated financial statements.

SCHEDULE OF INTANGIBLE ASSETS ACQUISITION (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Apr. 20, 2021	Mar. 19, 2021
Le Mans Esports Series Limited [Member]
Finite-Lived Intangible Assets [Line Items]
Total, cost	$ 2,810,000
Le Mans Esports Series Limited [Member] \| Gaming License [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	Indefinite
Total, cost	$ 1,150,000
Le Mans Esports Series Limited [Member] \| Esport License [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	Indefinite
Total, cost	$ 1,660,000
Kart Kraft [Member]
Finite-Lived Intangible Assets [Line Items]
Total, cost	$ 1,000,000		$ 1,000,000
Kart Kraft [Member] \| Kart Kraft Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	Indefinite
Total, cost	$ 108,000		108,000
Kart Kraft [Member] \| Computer Software, Intangible Asset [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	6 Years
Total, cost	$ 833,000
Kart Kraft [Member] \| Employment Non Compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	3 Years
Total, cost	$ 59,000		$ 59,000
Studio 397 [Member]
Finite-Lived Intangible Assets [Line Items]
Total, cost	$ 10,942,000	$ 15,911,781
Studio 397 [Member] \| Computer Software, Intangible Asset [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	6-10 years
Total, cost	$ 7,688,000
Studio 397 [Member] \| Employment Non Compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	3 years
Total, cost	$ 214,000	$ 214,000
Studio 397 [Member] \| rFactor 2 Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Useful life	Indefinite
Total, cost	$ 3,040,000

Consolidated Statements of Comprehensive Income (Loss) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Net loss	$ (33,704,745)	$ (679,854)
Other comprehensive loss:
Foreign currency translation adjustments	(950,303)
Comprehensive loss	(34,655,048)	(679,854)
Comprehensive income loss attributable to non-controlling interests	(542,754)	1,076,793
Comprehensive income loss attributable to Motorsport Games Inc.	$ (34,112,294)	$ (1,756,647)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

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

+ References

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+ Details

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

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, 2021 and 2020:

	2021			2020
Assets:
Net operating loss carryforwards	$	5,756,658		$	1,937,626
Bad debts		1,312,332			-
Stock options		684,238			-
Charitable contribution carryforward		17,032			797
Goodwill		11,268			287,878
Other assets		44,667			45,453
Total Assets		7,826,195			2,271,754
Liabilities:
Depreciable assets		21,135			45,177
Other intangible assets		590,692			923,224
Total Liabilities		611,827			968,401

Net asset before valuation allowance		7,214,368			1,303,353
Valuation allowance		(7,214,368	)		(1,303,353	)
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, 2021 and 2020 is as follows:

	2021			2020
Federal statutory income tax benefit		21.00	%		21.0	%
State income taxes, net of federal income tax benefit		5.50	%		-13.2	%
IPO & Acquisition Costs		-6.99	%		-
Permanent differences and other		-1.75	%		0.9	%
Change in valuation allowance		-17.54	%		46.9	%
Effect of flow through entity		0.00	%		-55.6	%
Other adjustments		-0.21	%		-
Effective income tax rate		0.0	%		0.0	%

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		12 Months Ended
	Jan. 02, 2020	Dec. 31, 2021	Dec. 31, 2020	Aug. 03, 2020
Related Party Transaction [Line Items]
Due to Related Parties		$ 24,348	$ 10,853,536
Promissory Note [Member]
Related Party Transaction [Line Items]
Related party expenses		1,400,000	1,099,846
Proceeds from Related Party Debt		2,157,707	361,145
Seven Hundred And Four Games Company [Member]
Related Party Transaction [Line Items]
Related party expenses		$ 0	$ 149,898
Services Agreement [Member] \| Principal Owner [Member]
Related Party Transaction [Line Items]
Legal Fees	$ 5,000
Accounting service fee	2,500
Services Agreement [Member] \| Principal Owner [Member] \| Minimum [Member]
Related Party Transaction [Line Items]
Development services hourly fee	15
Services Agreement [Member] \| Principal Owner [Member] \| Maximum [Member]
Related Party Transaction [Line Items]
Development services hourly fee	$ 30
Services Agreement [Member] \| Principal Owner [Member] \| Motorsport Network [Member]
Related Party Transaction [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired				20.00%

ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

SUMMARY OF AGGREGATE PURCHASE PRICE

The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows:

SUMMARY OF AGGREGATE PURCHASE PRICE

	Valuation Method	Discount Rate			GBP			USD
Cash					£	257,232		$	350,626
Other assets						858			1,169
Gaming license	Excess earning Method		30.00	%		843,682			1,150,000
Esports licenses	Excess earning Method		30.00	%		1,217,836			1,660,000
Goodwill			30.00	%		47,084			65,221
Accounts payable			-			(5,147	)		(7,016	)
Non-controlling interest	Business Enterprise Income		30.00	%		(1,157,531	)		(1,573,624	)

Total Fair value of Member’s equity					£	1,204,014		$	1,646,376
Fair value of the previously held interest					£	1,062,999		$	1,449,000

Fain value of the consideration					£	141,015		$	197,376

The purchase price allocation for the KartKraft acquisition was completed subsequent to the acquisition date. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows:

Intangible Asset	Valuation Method	Discount Rate			Amount
KartKraft Trade Name	Relief-from-Royalty		27.50	%	$	108,000
Software	Replacement cost		25.00	%		833,000
Employment & Non-Compete	With & Without Method		25.00	%		59,000
Total Consideration					$	1,000,000

The purchase price allocation for total invested capital of $

	Valuation Method	Discount Rate			Amount
Debt-free net working capital	-		-		$	(12,450	)
Fixed assets	-		-			21,504
rFactor 2 Trade Name	Relief-from-Royalty		9.30	%		3,040,000
Software	Replacement Cost		9.30	%		7,010,000
Employment & Non-Compete Agreements	With & Without Method		9.30	%		214,000
Internally developed franchise	Excess earning Method		9.30	%		678,000
Goodwill						4,960,727
Total Consideration					$	15,911,781

SUMMARY OF DEBT FREE NET WORKING CAPI TAL DEFICIT

The components of Studio397’s debt free net working capital deficit are as follows:

Current assets:
Projects to be invoiced	$	192,658
Trade debtors		26,121
Paid in advance		47,168
Total current assets	$	265,947

Less current liabilities:
Trade creditors		140,049
Advance invoices/payments		41,063
Audit costs		7,148
Holiday allowances		49,242
Bonuses		42,035
Taxes and social securities		(1,140	)
Total current liabilities	$	278,397

Debt free net working capital deficit	$	(12,450	)

SEGMENT REPORTING

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 15 – 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, 2021 and 2020 were (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”). The Company’s chief operating decision-maker has been identified as the Company’s Chief Executive Officer, 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, 2021 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.

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,
	2021			2020
Revenues:
Gaming	$	14,267,735		$	18,745,166
Esports		807,795			300,363
Total Revenues	$	15,075,530		$	19,045,529

Gross Profit:
Gaming	$	7,226,156		$	12,438,584
Esports		320,219			11,073
Total Segment and Consolidated Gross Profit	$	7,546,375		$	12,449,657

Income (Loss) From Operations:
Gaming	$	(33,802,804	)	$	508,461
Esports		(723,854	)		(507,314	)
Total Segment and Consolidated Income (Loss) From Operations	$	(34,526,658	)	$	1,147

Depreciation and Amortization:
Gaming	$	1,774,072		$	718,873
Esports		11,002			1,306
Total Segment Depreciation and Amortization	$	1,785,074		$	720,179

Interest Expense:
Gaming	$	(504,156	)	$	(717,498	)
Esports		-			-
Total Segment Interest Expense	$	(504,156	)	$	(717,498	)

Equity gain (loss) in Income:
Gaming	$	1,370,837		$	-
Esports		-			(70,792	)
Total Segment Equity gain (loss) in Income	$	1,370,837		$	(70,792	)

Expenditures for Additions to Long-Lived Assets:
Gaming	$	489,167		$	126,432
Esports		265,135			10,323
Total Expenditures for Additions to Long-Lived Assets:	$	754,302		$	136,755

	December 31, 2021		December 31, 2020
Segment Total Assets:
Gaming	$	47,511,471	$	17,377,993
Esports		3,191,732		9,017
Consolidated Total Assets	$	50,703,203	$	17,387,010

- 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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-Name Accounting Standards Codification
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+ Details

ACQUISITIONS (Details Narrative)				1 Months Ended		8 Months Ended	9 Months Ended		12 Months Ended		23 Months Ended
ACQUISITIONS (Details Narrative)	Jan. 25, 2031 GBP (£)	Apr. 02, 2021 USD ($)	Mar. 19, 2021 USD ($)	Apr. 30, 2022 USD ($)	Apr. 30, 2021 USD ($) shares	Dec. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Sep. 30, 2021	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2022 USD ($)	Jan. 25, 2021	Jan. 08, 2021
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage													100.00%
Development expenses									$ 9,060,000
Income (Loss) from Equity Method Investments									1,370,837	$ 70,792
Accounts Payable, Underwriters, Promoters, and Employees, Current										234,667
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures										271,200
Revenues											$ 741,000
Net loss									(33,161,991)	(1,756,647)	$ 288,000
Operating Expenses							$ 482,000		42,073,033	$ 12,448,510
KartKraft Acquisition [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross			$ 1,000,000
KartKraft Acquisition [Member] \| At Closing [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross			750,000
KartKraft Acquisition [Member] \| Six Month Anniversary Closing [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross			$ 250,000
Studio Three Nine Seven [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Value, Acquisitions		$ 16,000,000
[custom:PurchaseCommitmentLiabilites]									3,170,319
Pledged percentage								20.00%
Business Combination, Consideration Transferred									15,911,781
Business acquisition, revenue						845,000			15,143,000
Business acquisition, cost of sales						$ 1,857,000
Business acquisition, net income loss									$ 34,151,000
Studio Three Nine Seven [Member] \| Subsequent Event [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross				$ 3,111,781
Business combination discount percentage				2.80%
Studio Three Nine Seven [Member] \| At Closing [Member] \| Subsequent Event [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross				$ 12,800,000
Studio Three Nine Seven [Member] \| First Anniversary Of Closing [Member] \| Subsequent Event [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross				$ 3,200,000
Seven Zero Four Games Company [Member] \| Ascend Exchange Agreement [Member]
Business Acquisition [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired		17.80%
Seven Zero Four Games Company [Member] \| Ascend Exchange Agreement [Member] \| Common Class A [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Value, Acquisitions					$ 10,116,545
Business Combination, Consideration Transferred					$ 2,056,692
Stock Issued During Period, Shares, Acquisitions \| shares					488,722
Seven Zero Four Games Company [Member] \| Play Fast Exchange Agreement [Member] \| Common Class A [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Value, Acquisitions					$ 7,587,419
Business Combination, Consideration Transferred					$ 1,542,519
Stock Issued During Period, Shares, Acquisitions \| shares					366,542
Minimum [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage												45.00%
Maximum [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage												51.00%
Development expenses \| £	£ 8,000,000

BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES (Details Narrative) - USD ($)		12 Months Ended
	Jan. 15, 2021	Dec. 31, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Initial public offering	$ 63,100,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest		$ 33,704,745	$ 679,854
Net Cash Provided by (Used in) Operating Activities		20,941,664	(4,053,345)
Accumulated deficit		$ 37,988,326	$ 4,826,335

- Definition

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

+ References

+ Details

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

NOTE 11 – SHARE-BASED COMPENSATION

Summary of Plans and Plan Activity

On January 12, 2021, Motorsport Games established the Motorsport Games Inc. 2021 Equity Incentive Plan (the “MSGM 2021 Stock Plan”). The MSGM 2021 Stock Plan provides for the grant of options, stock appreciation rights, restricted stock awards, performance share awards and restricted stock unit awards, and initially authorized 1,000,000 shares of Class A common stock to be available for issuance. As of December 31, 2021, 429,873 shares of Class A common stock were available for issuance under the MSGM 2021 Stock Plan. Shares issued in connection with awards made under the MSGM 2021 Stock Plan are generally issued as new issuances of Class A common stock.

In conjunction with the Company’s initial public offering, the Company granted an aggregate of 330,633 shares of Class A common, with an aggregate grant date fair value of $6,612,660. These shares were primarily awarded to a third-party consultant, with a portion allocated to the Company’s Chief Executive Officer and three of its directors. The grant date fair value of these shares was recognized as stock-based compensation expense on the date of grant as the awards were fully vested on such date.

The Company issued stock options under its MSGM 2021 Stock Plan during the fiscal year ended December 31, 2021. The majority of the options issued under the MSGM 2021 Stock Plan have time-based vesting schedules, typically vesting ratably over a three-year period. Certain stock option awards differed from this vesting schedule, notably awards made to the Company’s Chief Executive Officer in conjunction with the Company’s initial public offering that vested immediately, as well as those made to Company’s directors that vested on the one-year anniversary of award issuance. All stock options issued under the MSGM 2021 Stock Plan expire 10 years from the grant date.

Fair Value Valuation Assumptions

The fair value of the stock options and stock appreciation rights are estimated using the Black-Scholes option pricing model. The estimation of fair value for these awards is affected by subjective and complex variables, which are typically based on historical information. Judgment is required to determine if historical trends are indicators of future outcomes.

Key assumptions of the Black-Scholes valuation model are the risk-free interest rate, expected volatility, expected term and expected dividends. The Company determined the risk-free interest rate using U.S. Treasury yields in effect at the time of the grant that matched the expected term of the options. Expected volatility is based on a combination of historical stock price volatility, as well as implied volatilities, of comparable publicly traded companies with operations similar to Motorsport Games over a 10-year period, consistent with the contractual term of the options. The Company calculated the expected term using the simplified method as prescribed by the SEC’s Staff Accounting Bulletin, topic 14 (“SAB Topic 14”). This decision was based on the lack of relevant historical data due to the Company’s limited historical experience. The dividend yield was zero, as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

Share-based compensation expense recognized is based on awards ultimately expected to vest and therefore has been reduced for actual forfeitures occurring within the period.

The following table presents the weighted-average assumptions, weighted average grant date fair value, and the range of expected price volatility:

	For the Year Ended December 31,
	2021		2020
Risk-free interest rate		0.48 - 1.09%		-
Expected volatility		50 - 65%		-
Weighted-average volatility		60%		-
Expected term		5 - 6 years		-
Expected dividends		None		-
Weighted-average grant date fair value		9.37		-

Stock Options

The following table summarizes the Company’s stock option activity for the fiscal year ended December 31, 2021:

SCHEDULE OF STOCK OPTIONS ACTIVITY

	Options			Weighted- Average Exercise Prices		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of January 1, 2021		-		$	-
Granted		573,571			20.35
Exercised		-			-
Forfeited, cancelled or expired		(22,972	)		20.00
Outstanding as of December 31, 2021		550,599		$	20.36		9.14	$	-
Vested and expected to vest		550,599		$	20.36		9.14	$	-
Exercisable as of December 31, 2021		205,425		$	20.04		9.04	$	-

The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price as of December 31, 2021, which would have been received by the option holders had all the option holders exercised their options as of that date. The Company issues new Class A common stock from its authorized shares upon the exercise of stock options.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense resulting from stock option awards included in our Consolidated Statement of Operations:


	For the Year Ended December 31,
	2021		2020
General and administrative	$	9,500,265		-
Sales and marketing		126,272		-
Development		100,125		-
Stock-based compensation expense	$	9,726,662		-

As of December 31, 2021, there was $2,225,415 of unrecognized stock-based compensation expense which will be recognized over approximately 2.0 years.

Stock Appreciation Rights

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 were required 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, 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. During the year ended December 31, 2021, the outstanding shares were settled in cash for $1,051,995 in connection with the acquisition of the remaining equity interest in 704Games during the second quarter of 2021.

SCHEDULE OF STOCK BASED COMPENSATION EXPENSE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 9,726,662
General and Administration [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	9,500,265
Sales And Marketing [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	126,272
Development [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 100,125

BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES

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

Organization and Operations

Motorsport Gaming US LLC (“Motorsport Gaming”) was established as a limited liability company on August 2, 2018 under the laws of the State of Florida. On January 8, 2021, Motorsport Gaming converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Motorsport Games Inc. (the “Company,” “Motorsport Games,” “we,” “us” or “our”). Upon effecting the corporate conversion on January 8, 2021, Motorsport Games now holds all the property and assets of Motorsport Gaming, and all of the debts and obligations of Motorsport Gaming were assumed by Motorsport Games by operation of law upon such corporate conversion. See “Note 10 – Stockholder’s/Member’s Equity – Corporate Conversion” for additional details.

Risks and Uncertainties

The global spread of the ongoing and prolonged COVID-19 pandemic and its variants has created significant business uncertainty for us and others, which has negatively impacted the global economy, disrupted global supply chains and workforce participation, and initially created significant volatility and disruption of financial markets. 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. In late fiscal 2020 and throughout fiscal 2021, vaccines for combating COVID-19 were approved by health agencies in certain countries and regions where we operate and began to be administered, and we saw some loosening of government-mandated COVID-19 restrictions in certain locations, such as the United States, in response to improved COVID-19 infection levels. More recently, new variants of COVID-19, such as the Omicron variant, that are significantly more contagious than previous strains, have emerged. Further, the effectiveness of approved vaccines on these new strains remains uncertain. The spread of these new strains have caused some government authorities to reimpose some or all of the earlier restrictions or impose other restrictions, all in an effort to lessen the spread of COVID-19 and its variants. While these lockdowns have begun to be lifted, the lingering impact of COVID-19 has continued to create significant volatility throughout the global economy, such as supply chain disruptions, limited labor supplies and higher inflation, which in turn has caused constraints on consumer spending.

As a result of the ongoing and prolonged COVID-19 pandemic, including the related responses from government authorities, the Company’s business and operations have been impacted, including the temporary closures of its offices in Miami, Florida, Silverstone, England, and Moscow, Russia, which has resulted in many of the Company’s employees working remotely. During the initial COVID-19 outbreak in 2020, demand for the Company’s games generally increased, which the Company believes was primarily attributable to a higher number of consumers staying at home due to COVID-19 related restrictions. Similarly, there was 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. Conversely, several retailers have experienced, and continue to experience, closures, reduced operating hours and/or other restrictions as a result of the ongoing and prolonged COVID-19 pandemic and its variants, which has negatively impacted the sales of the Company’s products from such retailers. Additionally, in the Company’s esports business, the ongoing and prolonged COVID-19 pandemic has resulted in the cancellation or postponement of certain events to later dates or shifting events from an in-person format to online only. The emergence of the significantly more contagious Omicron variant of COVID-19 and the prevalence of breakthrough cases of infection among fully vaccinated people adds additional uncertainty and could result in further impacts to the Company’s business and operations, such as those discussed above.

The Company continues to monitor the evolving situation caused by the COVID-19 pandemic, and the Company may take further actions required by governmental authorities or that the Company determines are prudent to support the well-being of the Company’s employees, suppliers, business partners and others. The degree to which the ongoing and prolonged 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; the emergence and severity of its variants; the actions to contain the virus or treat its impact, such as the availability and efficacy of vaccines (particularly with respect to emerging strains of the virus) and potential hesitancy to utilize them; and how quickly and to what extent normal economic and operating conditions can resume.

Liquidity and Going Concern

On January 15, 2021, the Company completed its initial public offering which resulted in net proceeds to the Company of approximately $63.1 million, after deducting underwriting discounts and commissions and offering expenses paid by the Company.

The Company had a net loss of approximately $33.7 million and negative cash flows from operations of approximately $20.9 million for the year ended December 31, 2021. As of December 31, 2021, we had an accumulated deficit of $38.0 million. 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. We expect to continue to incur losses for the foreseeable future as we continue to incur significant expenses. Accordingly, we do not believe that our existing cash on hand will be sufficient to fund our operations for at least the next 12 months.

Our future liquidity and capital requirements include funds to support the planned costs to operate our business, including amounts required to fund working capital, support the development and introduction of new products, maintain existing titles, and certain capital expenditures. The adequacy of our available funds generally depends on many factors, including our ability to successfully develop consumer-preferred new products or enhancements to our existing products, continued development and expansion of our esports platform and our ability to enter into collaborations with other companies and/or acquire other companies or technologies to enhance or complement our product and service offerings.

We may choose to raise additional funds during 2022 through a variety of equity and/or debt financing arrangements, as well as by focusing on cost reduction actions. While we expect to generate additional liquidity through consummating equity and/or debt financings, as well as by continued cost control initiatives, if our sales continue to decline, there can be no assurances that such actions will provide us with sufficient liquidity to meet our cash requirements as, among other things, our liquidity can be impacted by a number of factors, including our level of sales, costs and expenditures, as well as accounts receivable and inventory.

There are currently no commitments in place to satisfy our future needed liquidity and capital resources and there can be no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. If we are unable to obtain adequate funds on acceptable terms, we may be required to, among other things, significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms.

If we are unable to satisfy our cash requirements from the sources identified above, we could be required to adopt one or more of the following alternatives:

	●	delaying the implementation of or revising certain aspects of our business strategy;
	●	reducing or delaying the development and launch of new products and events;
	●	reducing or delaying capital spending, product development spending and marketing and promotional spending;
	●	selling assets or operations;
	●	seeking additional capital contributions and/or loans from Motorsport Network, the Company’s other affiliates and/or third parties; and/or
	●	reducing other discretionary spending.

There can be no assurance that we would be able to take any of the actions referred to above because of a variety of commercial or market factors, including, without limitation, market conditions being unfavorable for an equity or debt issuance, additional capital contributions and/or loans not being available from Motorsport Network or affiliates and/or third parties, or that the transactions may not be permitted under the terms of our various debt instruments then in effect, such as due to restrictions on the incurrence of debt, incurrence of liens, asset dispositions and related party transactions. In addition, such actions, if taken, may not enable us to satisfy our cash requirements if the actions that we are able to consummate do not generate a sufficient amount of additional capital.

Even if we do secure additional financing, if our anticipated level of revenues are not achieved because of, for example, less than anticipated consumer acceptance of our offering of products and events; less than effective marketing and promotion campaigns, decreased consumer spending in response to weak economic conditions or weakness in the overall electronic games category; adverse changes in currency; decreased sales of our products and events as a result of increased competitive activities by our competitors; changes in consumer purchasing habits; retailer inventory management or reductions in retailer display space; less than anticipated results from the Company’s existing or new products or from its advertising and/or marketing plans; or if the Company’s expenses, including, without limitation, for advertising and promotions, product returns or price protection expenditures, exceed the anticipated level of expenses, our liquidity may continue to be insufficient to satisfy our future capital requirements.

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The factors described above, in particular the available cash on hand to fund operations over the next year, have raised substantial doubt about the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates

Cash and Cash Equivalents

Accounts Receivable

Property and Equipment

Goodwill and Intangible Assets

Intangible Asset			Useful Life
License agreements			6.5 - 16 years
Software			6 - 10 years
Distribution contracts			1 year
Employment and non-compete agreements			3 years

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, PC and mobile games contain a software license that is delivered digitally or via physical disk at the time of sale;

	2)	Sales of Extra Content – Includes (a) extra content that is downloaded by console and PC 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 generate sponsorship revenue.

During the years ended December 31, 2021 and 2020, 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:

SUMMARY OF REVENUE RECOGNIZED

	2021		2020
	For the Year Ended December 31,
	2021		2020
Revenues:
Gaming	$	14,267,735	$	18,745,166
Esports		807,795		300,363
Total Revenues	$	15,075,530	$	19,045,529

Identifying Performance Obligations

Determining the Transaction Price

Allocating the Transaction Price

Allocating the transaction price requires the Company to 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

Net Loss Per Common Share

The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

	For the Year Ended December 31,
	2021		2020
Stock options		573,571		n/a
		573,571		n/a

Foreign Currency Translation

Recently Issued Accounting Standards

SCHEDULE OF ACCRUED EXPENSES (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Accrued royalties	$ 1,694,011	$ 1,485,261
Accrued professional fees	80,909	129,291
Accrued consulting fees	106,006	398,526
Payable to Le Mans joint venture		234,667
Accrued development costs	968,007	196,845
Esports prize money	168,959
Accrued taxes	31,491	54,880
Accrued payroll	235,224	778,918
Accrued other	239,664	76,615
Total	$ 3,524,271	$ 3,355,003

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

SCHEDULE OF ACCRUED EXPENSES

Accrued expenses and other liabilities consisted of the following:

SCHEDULE OF ACCRUED EXPENSES


	December 31,
	2021		2020
Accrued royalties	$	1,694,011	$	1,485,261
Accrued professional fees		80,909		129,291
Accrued consulting fees		106,006		398,526
Payable to Le Mans joint venture		-		234,667
Accrued development costs		968,007		196,845
Esports prize money		168,959		-
Accrued taxes		31,491		54,880
Accrued payroll		235,224		778,918
Accrued other		239,664		76,615
Total	$	3,524,271	$	3,355,003

SCHEDULE OF ACCUMULATED AMORTIZATION OF INTANGIBLE ASSETS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	$ 1,843,547	$ 1,192,844
Accumulated amortization, ending	3,377,206	1,843,547
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	686,012	311,094
Amortization expense	226,873	374,918
FX translation adjustments	(625)
Accumulated amortization, ending	912,260	686,012
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	597,535	321,750
Amortization expense	1,278,633	275,785
FX translation adjustments	(32,452)
Accumulated amortization, ending	1,843,716	597,535
Distribution Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	560,000	560,000
Amortization expense
FX translation adjustments
Accumulated amortization, ending	560,000	560,000
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning
Amortization expense
FX translation adjustments
Accumulated amortization, ending
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning
Amortization expense	63,146
FX translation adjustments	(1,916)
Accumulated amortization, ending	61,230
Accumulated Amortization [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	(1,843,547)	(1,192,844)
Amortization expense	1,568,652	650,703
FX translation adjustments	(34,993)
Accumulated amortization, ending	$ 3,377,206	$ (1,843,547)

GOODWILL

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

NOTE 6 - GOODWILL

The carrying amount of goodwill attributable to our Gaming and esports reporting units and the changes in such balances during the years ended December 31, 2021 and 2020 were as follows:

SCHEDULE OF GOODWILL

	Games			Esports			Total
Balance as of January 1, 2020	$	137,717			-		$	137,717
Foreign currency translation adjustment		-			-			-
Balance as of December 31, 2020		137,717			-			137,717
Goodwill attributable to Le Mans Esports Series Ltd		-			65,221			65,221
Goodwill attributable to Studio397		4,960,727			-			4,960,727
Foreign currency translation adjustment		(295,562	)		(638	)		(296,200	)
Balance as of December 31, 2021	$	4,802,882			64,583		$	4,867,465

As of December 31, 2021, we performed our annual goodwill impairment review and determined no impairment losses existed at the date of the annual assessment. We determined the fair value of the Gaming reporting unit exceeded its carrying value at the date of this annual assessment. The fair value of the Gaming reporting unit was determined using a discounted cash flow model, which required the use of assumptions that are subject to risk and uncertainties. The principal assumptions used in the discounted cash flow model to support the fair value of the Gaming reporting unit were forecasted net revenues and weighted average cost of capital (i.e., discount rate). The assumptions used are uncertain in nature and could be subject to change in future periods, which may result in impairments to goodwill in future periods.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2021

RELATED PARTY TRANSACTIONS

NOTE 9 – RELATED PARTY TRANSACTIONS

In August 2018, the Company entered into an agreement with its majority stockholder, 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 Company’s voting interest, at which time the promotion agreement will terminate automatically, unless otherwise extended by the parties. The Company agreed to give Motorsport Network an exclusive first look on any media-related activity in consideration of the promotion services.

In January 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 to the Company under the Promissory Note. During the years ended December 31, 2021 and 2020, the Company incurred expenses of $1,400,000 and $1,099,846 respectively, that were paid by Motorsport Network on its behalf and are reimbursable by the Company to Motorsport Network under the Promissory Note. During the years ended December 31, 2021 and 2020, the Company received from Motorsport Network cash proceeds of $2,157,707 and $361,145, respectively, in connection with advances under the Promissory Note.

During the years ended December 31, 2021 and 2020, an entity wholly owned by Motorsport Network provided services associated with In-Kind Consideration of $0 and $149,898, 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, 2021 and 2020, there was $24,348 and $10,853,536, respectively, related to these services included within due to related parties on the consolidated balance sheets. See Note 12 – Commitments and Contingencies – Operating Leases and Note 16 – Subsequent Events for additional details of the related party lease with an entity owned by the manager of Motorsport Network.

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

SCHEDULE OF PROPERTY AND EQUIPMENT

Property and equipment consist of the following balances as of December 31, 2021 and 2020:

SCHEDULE OF PROPERTY AND EQUIPMENT

	2021			2020
	December 31,
	2021			2020
Furniture and fixtures	$	16,580		$	-
Computer software and equipment		863,931			246,101
Leasehold improvements		127,524			-
Property and equipment, gross		1,008,035			246,101
Less: accumulated depreciation		(280,946	)		(83,953	)
Property and equipment, net	$	727,089		$	162,148	)

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following balances as of December 31, 2021 and 2020:

SCHEDULE OF PROPERTY AND EQUIPMENT

	2021			2020
	December 31,
	2021			2020
Furniture and fixtures	$	16,580		$	-
Computer software and equipment		863,931			246,101
Leasehold improvements		127,524			-
Property and equipment, gross		1,008,035			246,101
Less: accumulated depreciation		(280,946	)		(83,953	)
Property and equipment, net	$	727,089		$	162,148	)

Depreciation expense was $196,993 and $69,476 for the years ended December 31, 2021 and 2020, respectively.

INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

NOTE 5 – INTANGIBLE ASSETS

Licensing Agreements

BTCC

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, PC and mobile applications, esports series and esports events (including the Company’s esports platform). In exchange for this 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 this 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. The Company capitalized the initial license fee and present value of committed future minimum royalty payments as a license intangible asset in the amount of approximately $892,000. During the year ended December 31, 2020, the Company paid $100,000 in connection with the purchase of the license. The Company considers this to be a non-amortizing intangible asset until such point the Company begins to generate revenues under the BTCC license, at which amortization will be recorded, and as such the asset has been monitored for impairment triggers throughout the year. As such, no amortization expense has been recognized in respect of this asset during the year ended December 31, 2021. As of December 31, 2021 and 2020, the Company had a remaining liability in connection with the licensing agreement of $853,535 and $791,999, respectively, which is included in other non-current liabilities on the consolidated balance sheets.

INDYCAR

On July 13, 2021, the Company entered into a license agreement (the “INDYCAR Gaming License”) with INDYCAR LLC (“INDYCAR”). Pursuant to the INDYCAR Gaming License, INDYCAR granted the Company with a license to use certain licensed intellectual property (described in the INDYCAR Gaming License) for motorsports and/or racing video gaming products related to, themed as, or containing the INDYCAR SERIES. The INDYCAR Gaming License is a long-term agreement, in connection with which the parties intend to form an exclusive relationship for the development of video games to be the official video games of the INDYCAR SERIES. The Company expects the debut INDYCAR SERIES title to launch in 2023 on Xbox and PlayStation consoles, as well as on PC.

In exchange for the INDYCAR Gaming License, the Company will pay to INDYCAR an annual development fee through the date of launch, after which INDYCAR will receive a royalty equal to a certain percentage of sales of physical and digital video gaming products, subject to certain minimum guarantees. The Company has agreed under the INDYCAR Gaming License to provide advertising and publicity to bring the INDYCAR SERIES racing video gaming products to the attention of as many purchasers and potential purchasers as possible.

Additionally, the Company and INDYCAR entered into a license agreement pursuant to which, the Company was granted a license to use certain licensed intellectual property described in such license (“Licensed IP”) for motorsports and/or racing esports events related to, themed as, or containing the INDYCAR SERIES (including the rFactor 2 platform) (the “INDYCAR Esports License”). The INDYCAR Esports License is a long-term agreement, in connection with which the parties intend to form an exclusive relationship for the development of events to be the official esports events of the INDYCAR SERIES, which include the esports events related to and/or themed as or containing the Licensed IP and related features which, prior to launch, are hosted on the Company’s rFactor 2 and, after launch of the products, are hosted using the products. In exchange for the INDYCAR Esports License, INDYCAR will receive, on an annual basis, a royalty equal to a certain percentage of the net revenue (as defined in the INDYCAR Esports License) derived from or in connection with the events during the previous calendar year. The Company capitalized the initial license fee and present value of committed future minimum royalty payments as a license intangible asset in the amount of $2,713,871, which is considered to be an indefinite lived intangible asset and, as such, not subject to amortization. The committed liability outstanding in connection with the licensing agreement as of December 31, 2021 was approximately $2,787,129, of which approximately $79,739 and $2,707,390 is recorded as current and other non-current liabilities respectively on the consolidated balance sheets.

Acquisitions

In connection with the acquisition of Le Mans Esports Series Ltd, the Company acquired the following intangible assets (See Note 3 – Acquisitions for additional details):

Intangible Asset	Useful Life	Cost
Gaming license	Indefinite	$	1,150,000
Esports licenses	Indefinite		1,660,000
Total		$	2,810,000

In connection with the acquisition of KartKraft, the Company acquired the following intangible assets (See Note 3 – Acquisitions for additional details):

Intangible Asset	Useful Life	Cost
KartKraft Trade Name	Indefinite	$	108,000
Software	6 Years		833,000
Employment & Non-Compete	3 Years		59,000
Total		$	1,000,000

In connection with the acquisition of Studio397, the Company acquired the following intangible assets (See Note 3 – Acquisitions for additional details):

Intangible Asset	Useful Life	Cost
Software	6-10 years	$	7,688,000
rFactor 2 Trade Name	Indefinite		3,040,000
Employment & Non-Compete Agreements	3 years		214,000
Total		$	10,942,000

As of December 31, 2021, we performed our annual indefinite-lived intangible asset impairment review and determined the carrying value of the rFactor 2 trade name, which is part of the Gaming Segment, exceeded its fair value. Accordingly, we recognized an impairment charge of $317,113 for the year ended December 31, 2021 and is presented as impairment of intangible assets in the income statement. The assessment for impairment was triggered by brand specific results for the year ended December 31, 2021 being less than expected. The change in the weighted cost of capital applied when determining the fair value of the trade name is the primary contributor to the calculated impairment loss. Our Le Mans Video Gaming License and Le Mans Esports License were also subject to review and their fair values were found to exceed their carrying amounts by 266% and 32%, respectively.

The determination of our trade name fair value was determined using a relief-from-royalty method, which requires the use of assumptions that are subject to risk and uncertainties. The principal assumptions used in the relief-from-royalty method analysis used to determine the rFactor 2 trade name fair value consisted forecasted revenues, royalty rate and weighted average cost of capital (i.e., discount rate).

The following is a summary of intangible assets as of December 31, 2021 and 2020:

SCHEDULE OF INTANGIBLE ASSETS

	Licensing Agreements (Finite)			Licensing Agreements (Indefinite)		Software (Finite)			Distribution Contracts (Finite)		Trade Names (Infinite)			Non-Compete Agreement (Finite)			Accumulated Amortization			Total
Balance as of January 1, 2020	$	-			3,620,000		2,340,000			560,000		-			-			(1,192,844	)	$	5,327,156
Additions		891,999			-		-			-		-			-			-			891,999
Disposals		-			-		-			-		-			-			-			-
Impairment		-			-		-			-		-			-			-			-
Amortization		-			-		-			-		-			-			(650,703	)		(650,703	)
Foreign currency translation adjustment		-			-		-			-		-			-			-			-
Balance as of December 31, 2020	$	891,999			3,620,000		2,340,000			560,000		-			-			(1,843,547	)	$	5,568,452
Additions		5,553,818					8,521,000			-		3,175,928			273,000			-			17,523,746
Disposals		-					-			-		-			-			-			-
Impairment		-					-			-		(317,113	)		-			-			(317,113	)
Amortization		-					-			-		-			-			(1,568,652	)		(1,568,652	)
Foreign currency translation adjustment		(57,454	)		-		(496,459	)		-		(186,234	)		(15,470	)		34,993			(720,624	)
Balance as of December 31, 2021	$	6,388,363			3,620,000		10,364,541			560,000		2,672,581			257,530			(3,377,206	)	$	20,485,809

Accumulated amortization of intangible assets consists of the following:

	Licensing Agreements			Software			Distribution Contracts		Trade Names		Non-Compete Agreement			Accumulated Amortization
Balance as of January 1, 2020	$	311,094			321,750			560,000		-		-			1,192,844
Amortization expense		374,918			275,785			-		-		-			650,703
Balance as of December 31, 2020		686,012			597,535			560,000		-		-			1,843,547
Amortization expense		226,873			1,278,633			-		-		63,146			1,568,652
Foreign currency translation adjustment		(625	)		(32,452	)		-		-		(1,916	)		(34,993	)
Balance as of December 31, 2021	$	912,260			1,843,716			560,000		-	$	61,230			3,377,206

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

For the Years Ending December 31,	Total
2022	$	2,147,445
2023		2,147,445
2024		1,921,927
2025		1,932,455
2026		1,654,820
Thereafter		2,364,206
	$	12,168,298

Consolidated Balance Sheets - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Current Assets:
Cash and cash equivalents	$ 17,819,640	$ 3,990,532
Accounts receivable, net of allowances of $4,563,884 and $2,150,684 as of December 31, 2021 and 2020, respectively	5,490,272	5,975,414
Due from related parties	137,574
Prepaid expenses and other current assets	1,175,354	507,177
Total Current Assets	265,947	10,473,123
Property and equipment, net	727,089	162,148
Goodwill	64,583	137,717
Intangible assets, net	20,485,809	5,568,452
Deferred offering costs		749,370
Other assets		296,200
Total Assets	50,703,203	17,387,010
Current Liabilities:
Accounts payable	1,784,645	705,951
Accrued expenses and other liabilities	3,524,271	3,355,003
Due to related parties	119,015	10,853,536
Deferred acquisition payments	3,170,319
Total Current Liabilities	278,397	14,914,490
Other non-current liabilities	4,122,950	856,694
Total Liabilities	12,721,200	15,771,184
Commitments and contingencies (Note 12)
Stockholders’ Equity/Member’s Equity
Preferred stock, $0.0001 par value authorized 1,000,000 shares; 0 shares issued and outstanding as of December 31, 2021 and December 31, 2020
Common stock
Additional paid-in capital	75,651,175
Member’s equity		3,791,674
Accumulated deficit	(37,988,326)	(4,826,335)
Accumulated other comprehensive income (loss)	(945,375)	4,928
Total Stockholders’ Equity/Member’s Deficit Attributable to Motorsport Games Inc.	36,719,338	(1,029,733)
Noncontrolling interest	1,262,665	2,645,559
Total Stockholders’ Equity/Member’s Equity	37,982,003	1,615,826
Total Liabilities and Stockholders’ Equity/Member’s Equity	50,703,203	17,387,010
Common Class A [Member]
Stockholders’ Equity/Member’s Equity
Common stock	1,164
Common Class B [Member]
Stockholders’ Equity/Member’s Equity
Common stock	$ 700

INTANGIBLE ASSETS (Details Narrative) - USD ($)	12 Months Ended
INTANGIBLE ASSETS (Details Narrative) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payments to Acquire Intangible Assets	$ 227,928	$ 100,000
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)	317,113
License Agreements [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-Lived License Agreements, Gross	892,000
Licensing Agreements [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payments to Acquire Intangible Assets		100,000
BTCC License [Member] \| Other Current Liabilities [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-Lived License Agreements, Gross	853,535	$ 791,999
INDYCAR Gaming License [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-Lived License Agreements, Gross	2,787,129
Finite-Lived Intangible Assets, Gross	2,713,871
INDYCAR Gaming License [Member] \| Current Liabilities [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-Lived License Agreements, Gross	79,739
INDYCAR Gaming License [Member] \| Other Noncurrent Liabilities [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-Lived License Agreements, Gross	$ 2,707,390
LeMans Video Gaming License [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
[custom:IndefiniteLivedIntangibleAssetsTerm]	266.00%
LeMans Esports License [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
[custom:IndefiniteLivedIntangibleAssetsTerm]	32.00%

DUE TO/FROM RELATED PARTIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Apr. 01, 2020
Short-term Debt [Line Items]
Interest Expense, Debt	$ 105,845	$ 698,830
Repayments of Related Party Debt	12,967,143
Promissory Note [Member]
Short-term Debt [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 10,000,000
Debt Instrument, Interest Rate, Stated Percentage			10.00%
Repayments of lines of credit	12,665,000
Line of credit, outstanding	0
Interest Expense, Related Party		11,705,000
Accounts Payable, Related Parties	119,014
Accounts Receivable, Related Parties	137,574
Repayments of Related Party Debt	$ 302,000	$ 0
Promissory Note [Member] \| Minimum [Member]
Short-term Debt [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 10,000,000
Promissory Note [Member] \| Maximum [Member]
Short-term Debt [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 12,000,000

SHARE-BASED COMPENSATION (Details Narrative) - USD ($)

12 Months Ended

Jan. 15, 2021

Apr. 03, 2017

Dec. 31, 2021

Dec. 31, 2020

Jan. 12, 2021

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock issued

25,734

4,211

Compensation expense period

2 years

Unrecognized stock based compensation

$ 2,225,415

Shares Issued, Shares, Share-based Payment Arrangement, Forfeited

9,701

Share price

$ 55.67

Stock Issued During Period, Value, New Issues

$ 63,074,128

^[1]

$ 1,051,995

MSGM 2021 Stock Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Compensation expense period

10 years

Common Class A [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Common Stock, Shares Authorized

100,000,000

Common Class A [Member] | IPO [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock issued

3,450,000

Common Class A [Member] | Chief Executive Officer Consultant And Three Director [Member] | IPO [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock issued

330,633

Fair value

$ 6,612,660

Common Class A [Member] | Motorsport Games [Member] | MSGM 2021 Stock Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Common Stock, Shares Authorized

429,873

1,000,000

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

SCHEDULE OF EFFECTIVE INCOME TAX RATE AND THE FEDERAL STATUTORY INCOME TAX RATE (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Federal statutory income tax benefit	21.00%	21.00%
State income taxes, net of federal income tax benefit	5.50%	(13.20%)
IPO & Acquisition Costs	(6.99%)
Permanent differences and other	(1.75%)	0.90%
Change in valuation allowance	(17.54%)	46.90%
Effect of flow through entity	0.00%	(55.60%)
Other adjustments	(0.21%)
Effective income tax rate	0.00%	0.00%

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Accounts receivable, net of allowances	$ 4,563,884	$ 2,150,684
Preferred Stock, Par or Stated Value Per Share	$ 0.0001
Preferred Stock, Shares Authorized	1,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Class A [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	11,635,897	0
Common stock, shares outstanding	11,635,897	0
Common Class B [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	7,000,000	7,000,000
Common stock, shares issued	7,000,000	0
Common stock, shares outstanding	7,000,000	0

Consolidated Statements of Operations - USD ($)

12 Months Ended

Dec. 31, 2021

Dec. 31, 2020

Income Statement [Abstract]

Net revenues

$ 15,075,530

$ 19,045,529

Cost of Revenue

^[1]

7,529,155

6,595,872

Gross Profit

7,546,375

12,449,657

Operating Expenses:

Selling and Marketing Expense

^[2]

6,475,867

3,402,310

Research and Development Expense

^[3]

9,621,712

4,649,187

General and Administrative Expense

^[4]

25,378,149

4,335,434

Depreciation and amortization

280,192

61,579

Impairment of intangible assets

317,113

Total Operating Expenses

42,073,033

12,448,510

Income (Loss) From Operations

(34,526,658)

1,147

Interest Expense

^[5]

(504,156)

(717,498)

Gain (loss) attributable to equity method investment

1,370,837

70,792

Other income (expense), net

(44,768)

107,289

Net Loss

(33,704,745)

(679,854)

Less: Net income (loss) attributable to noncontrolling interest

(542,754)

1,076,793

Net Loss Attributable to Motorsport Games Inc.

$ (33,161,991)

$ (1,756,647)

Net loss per Class A common share attributable to Motorsport Games, Inc. [6]:

Basic and Diluted

$ (2.91)

Earnings Per Share, Basic and Diluted, Other Disclosures [Abstract]

Basic and Diluted

11,376,754

[1]	Includes related party costs of $0 and $135,431 for the years ended December 31, 2021 and 2020, respectively.
[2]	Includes related party expenses of $75,378 and $67,686 for the years ended December 31, 2021 and 2020, respectively.
[3]	Includes related party expenses of $44,423 and $93,472 for the years ended December 31, 2021 and 2020, respectively.
[4]	Includes related party expenses of $1,803,709 and $1,236,591 for the years ended December 31, 2021 and 2020, respectively.
[5]	Includes related party expenses of $105,845 and $698,830 for the years ended December 31, 2021 and 2020, respectively.

STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 10 – STOCKHOLDERS’ EQUITY/MEMBER’S EQUITY

Corporate Conversion

On January 8, 2021, Motorsport Gaming 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, Motorsport Network, converted into an aggregate of (i) 7,000,000 shares of Class A common stock of Motorsport Games, with 1 vote per share, and (ii) 7,000,000 shares of Class B common stock, with 10 votes per share, of Motorsport Games, 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 the Company’s 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 now holds all the property and assets of Motorsport Gaming, and all of the debts and obligations of Motorsport Gaming were assumed by Motorsport Games by operation of law upon such corporate conversion.

Effective as of January 8, 2021, the members of the board of directors of Motorsport Gaming became the members of Motorsport Games’ board of directors, at such time, and the officers of Motorsport Gaming became the officers of Motorsport Games, at such time.

Common Stock

See Note 3 – Acquisitions for details of the Company’s issuance of Class A common stock in connection with certain acquisitions.

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 $63,074,128, after deducting underwriting discounts and commissions and offering expenses paid by the Company during 2020 and 2021.

Stock Warrants

As of December 31, 2021 and 2020, 704Games has outstanding ten-year warrants to purchase 4,000 shares of common stock at an exercise price of $93.03 per share that were issued on October 2, 2015. As of December 31, 2021, the warrants had no intrinsic value and a remaining life of 3.8 years.

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, 2021, the Company recognized an adjustment to non-controlling interest and additional paid-in capital of $939,511 in connection with the purchase of the 106,307 shares of common stock.

On April 16, 2021, the Company closed the transactions contemplated by each of (i) the share exchange agreement with PlayFast, dated as of March 11, 2021, as amended by that certain amendment dated as of April 1, 2021 (as amended, the “PlayFast Exchange Agreement”) and (ii) the share exchange agreement with Ascend, dated as of March 14, 2021, as amended by that certain amendment dated as of April 1, 2021 (as amended, the “Ascend Exchange Agreement”). As a result, the Company acquired all of the remaining equity interests in 704Games Company.

The transactions contemplated by the PlayFast Exchange Agreement and the Ascend Exchange Agreement were structured as a merger of 704Games Company with and into 704Games LLC, a newly-formed Delaware limited liability company and wholly-owned subsidiary of the Company, with 704Games LLC being the surviving entity in such merger. The merger consideration issued to (i) PlayFast with respect to the shares of common stock of 704Games Company it surrendered in such merger consisted of 366,542 newly-issued shares of the Company’s Class A common stock with a fair market value of $7,587,419 and $1,542,519 in cash and (ii) Ascend with respect to the shares of common stock of 704Games Company it surrendered in such merger consisted of 488,722 newly-issued shares of the Company’s Class A common stock with a fair market value of $10,116,545 and $2,056,692 in cash.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

SUMMARY OF AGGREGATE PURCHASE PRICE (Details)				1 Months Ended
SUMMARY OF AGGREGATE PURCHASE PRICE (Details)	Mar. 19, 2021 USD ($)	Jan. 25, 2021 USD ($)	Jan. 25, 2021 GBP (£)	Apr. 20, 2021 USD ($)	Dec. 31, 2021 USD ($)	Jan. 25, 2021 GBP (£)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Business Acquisition [Line Items]
Goodwill					$ 64,583		$ 137,717	$ 137,717
Le Mans Esports Series Limited [Member]
Business Acquisition [Line Items]
Cash		$ 350,626				£ 257,232
Other assets		1,169				858
Gaming license		1,150,000				843,682
Esport licenses		1,660,000				1,217,836
Goodwill		65,221				47,084
Accounts payable		(7,016)				(5,147)
Non- controlling interest		(1,573,624)				£ (1,157,531)
Total Fair value of Member's equity		1,646,376	£ 1,204,014
Fair value of the previously held interest		1,449,000	1,062,999
Fair value of the consideration		$ 197,376	£ 141,015
Total Consideration					2,810,000
Le Mans Esports Series Limited [Member] \| Gaming License [Member]
Business Acquisition [Line Items]
Valuation Method		Excess earning Method	Excess earning Method
Discount Rate		30.00%	30.00%
Le Mans Esports Series Limited [Member] \| Esport License [Member]
Business Acquisition [Line Items]
Valuation Method		Excess earning Method	Excess earning Method
Discount Rate		30.00%	30.00%
Le Mans Esports Series Limited [Member] \| Goodwill [Member]
Business Acquisition [Line Items]
Discount Rate		30.00%	30.00%
Le Mans Esports Series Limited [Member] \| Noncontrolling Interest [Member]
Business Acquisition [Line Items]
Valuation Method		Business Enterprise Income	Business Enterprise Income
Discount Rate		30.00%	30.00%
Kart Kraft [Member]
Business Acquisition [Line Items]
Total Consideration	$ 1,000,000				1,000,000
Kart Kraft [Member] \| Kart Kraft Trade Name [Member]
Business Acquisition [Line Items]
Valuation Method	Relief-from-Royalty
Discount Rate	27.50%
Total Consideration	$ 108,000				108,000
Kart Kraft [Member] \| Software [Member]
Business Acquisition [Line Items]
Valuation Method	Replacement cost
Discount Rate	25.00%
Total Consideration	$ 833,000
Kart Kraft [Member] \| Employment Non Compete Agreements [Member]
Business Acquisition [Line Items]
Valuation Method	With & Without Method
Discount Rate	25.00%
Total Consideration	$ 59,000				59,000
Studio 397 [Member]
Business Acquisition [Line Items]
Total Consideration				$ 15,911,781	10,942,000
Studio 397 [Member] \| Software [Member]
Business Acquisition [Line Items]
Valuation Method				Replacement Cost
Discount Rate				9.30%
Studio 397 [Member] \| Employment Non Compete Agreements [Member]
Business Acquisition [Line Items]
Valuation Method				With & Without Method
Discount Rate				9.30%
Total Consideration				$ 214,000	$ 214,000
Studio 397 [Member] \| Debt-free net working capital [Member]
Business Acquisition [Line Items]
Total Consideration				(12,450)
Studio 397 [Member] \| Fixed Assets [Member]
Business Acquisition [Line Items]
Total Consideration				$ 21,504
Studio 397 [Member] \| R Factor Two R Factor Two Trade Name [Member]
Business Acquisition [Line Items]
Valuation Method				Relief-from-Royalty
Discount Rate				9.30%
Total Consideration				$ 3,040,000
Studio 397 [Member] \| Technology [Member]
Business Acquisition [Line Items]
Total Consideration				$ 7,010,000
Studio 397 [Member] \| Internally Developed Franchise [Member]
Business Acquisition [Line Items]
Valuation Method				Excess earning Method
Discount Rate				9.30%
Total Consideration				$ 678,000
Studio 397 [Member] \| Goodwill [Member]
Business Acquisition [Line Items]
Total Consideration				$ 4,960,727

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Litigation

The Company is involved in various routine legal proceedings incidental to the ordinary course of its business. The Company believes that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows. However, in light of the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company’s operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company’s income for that particular period.

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, 2021 and 2020, the Company has not accrued any amounts for contingencies.

On January 11, 2021, 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 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 closing of the transactions contemplated by the Ascend Exchange Agreement and the PlayFast Exchange Agreement, the Company and its affiliates, without admitting any liability by any party, were released from all claims that Ascend or PlayFast could allege or assert against the Company as minority stockholders of 704Games. Pursuant to the Ascend Exchange Agreement, the derivative legal action previously commenced by Ascend against the Company and certain of its affiliates was dismissed with prejudice on April 25, 2021.

On February 11, 2021, HC2 Holdings 2 Inc. and Continental General Insurance Company, former minority stockholders of 704Games, filed a complaint (the “HC2 and Continental Complaint”) in the United States District Court for the District of Delaware against the Company, the Company’s Chief Executive Officer and Executive Chairman, the Company’s Chief Financial Officer, and the sole manager of Motorsport Network (collectively, the “Individual Defendants”). 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 the Individual Defendants 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’ August 18, 2020 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 (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. In May 2021, the Company, along with the other defendants, filed a motion to dismiss the plaintiffs’ amended complaint. On March 28, 2022, the Court entered an order denying the motion to dismiss.

At this time, it is premature to determine the outcome of this litigation. 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 the Company intends to continue to vigorously defend its position to the fullest extent permitted by law.

On March 22, 2021, the Company entered into a binding term sheet (as amended, the “Digital Tales Term Sheet”) with EleDa s.r.l. (“EleDa”) in connection with a contemplated acquisition by the Company of the shares of Digital Tales USA, LLC, a Florida limited liability company. The Digital Tales Term Sheet expired on September 30, 2021, and the Company and EleDa did not consummate any transaction by such date, nor does the Company expect to complete any such transaction. On September 29, 2021, EleDa filed a complaint in the Eleventh Judicial Circuit Court of Florida against the Company and its Chief Executive Officer relating to the expiration of the Digital Tales Term Sheet, without having consummated any transaction. In November 2021, the Company filed a motion to dismiss the plaintiffs’ complaint and EleDa filed an amended complaint on February 2, 2022. The Company filed a motion to extend case management deadlines on March 2, 2022. 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, however, that the plaintiff’s allegations are without merit and intends to vigorously defend its position to the fullest extent permitted by law.

Operating Leases

The Company leases its facilities under operating leases. The Company’s rent expense under its operating leases was $387,865 and $291,892 for the years ended December 31, 2021 and 2020, respectively.

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, 2021, the Company recorded approximately $183,200 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 was $3,000 per month. The Company had 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 was $6,000. On March 31, 2022, this lease will be terminated without penalty in connection with the commencement on April 1, 2022 of a new five-year lease agreement for office space in Miami, Florida in a new location. See Note 16 – Subsequent Events for additional details.

On September 3, 2021, 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 $6,700 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, 2021 are as follows:

For the Years Ending December 31,	Total
2022	$	299,442
2023		289,218
2024		189,786
2025		48,104
2026		24,069
Total	$	850,619

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 employment agreement, Mr. Hood was entitled to a base salary of $198,000 per year, was eligible to receive a discretionary bonus and had 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 was required to provide Mr. Hood notice in writing three months in advance of any termination of employment. However, the Company could 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 (which was to be paid in pound sterling at the then applicable exchange rate). Subject to consummation of the initial public offering, Mr. Hood was 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 Company’s initial public offering. Mr. Hood was also entitled to receive an annual stock option award for such number of shares of the Company’s Class A common stock that will equal his then applicable annual base salary divided by the closing trading price of the Company’s Class A common stock on the date of each such grant, which would vest in three equal annual installments from the date of grant. On January 21, 2022, the Company notified Stephen Hood that his position will be eliminated effective January 21, 2022. Mr. Hood will receive the following separation payments: £43,750 in lieu of his entitlement to 3 months’ termination notice, £37,019 in lieu of accrued but untaken holiday pay and an £60,000 ex gratia settlement payment which includes statutory redundancy as required under the law of England & Wales.

Joint Venture Agreement

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

	i.	ACO 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 Esports Series Ltd 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.

On January 25, 2021, the Company entered into the Le Mans Amendment that increased the Company’s 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 Le Mans Amendment, the Company secured the rights to be the exclusive video game developer and publisher for the 24 Hours of Le Mans race and the WEC, as well as the rights to create and organize esports leagues and events for the 24 Hours of 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 $9,060,000 USD as of December 31, 2021) as needed for development of the video game products, to be contributed on an as-needed basis during the term of the applicable license. See Note 3 – Acquisitions for additional information.

Epic

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, non-transferable 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 required the Company to pay Epic an initial license fee of $40,000, which was paid during the year ended December 31, 2020. An additional $100,000 was paid during the year ended December 31, 2021 to add the Xbox and PlayStation platforms to the license. 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, 2021, Epic earned royalties of approximately $340,000 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. Effective September 3, 2021, this licensing agreement was assigned from MS Gaming Development LLC to Motorsport Games, Inc.

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

SCHEDULE OF FUTURE MINIMUM PAYMENT UNDER NON-OPERATING LEASES

Future minimum payments under our non-cancellable operating leases as of December 31, 2021 are as follows:

For the Years Ending December 31,	Total
2022	$	299,442
2023		289,218
2024		189,786
2025		48,104
2026		24,069
Total	$	850,619

SUMMARY OF REVENUE RECOGNIZED (Details) - USD ($)	12 Months Ended
SUMMARY OF REVENUE RECOGNIZED (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Product Information [Line Items]
Total Revenues	$ 15,075,530	$ 19,045,529
Gaming [Member]
Product Information [Line Items]
Total Revenues	14,267,735	18,745,166
Esports [Member]
Product Information [Line Items]
Total Revenues	$ 807,795	$ 300,363

- 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.

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-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=123359005&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=123359005&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 32
-Subparagraph (b)
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 32
-Subparagraph (a)
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Paragraph 22
-Subparagraph (a)
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=123359005&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=123351226&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

SUMMARY OF DEBT FREE NET WORKING CAPI TAL DEFICIT (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Business Combination, Separately Recognized Transactions [Line Items]
Total current assets	$ 265,947	$ 10,473,123
Total current liabilities	278,397	14,914,490
Total current liabilities	(278,397)	$ (14,914,490)
Debt free net working capital deficit	(12,450)
Projects to be Invoiced [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current assets	192,658
Trade Debtors [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current assets	26,121
Paid-In Advance [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current assets	47,168
Trade Creditors [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current liabilities	140,049
Total current liabilities	(140,049)
Advance Invoices Payments [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current liabilities	41,063
Total current liabilities	(41,063)
Audit Costs [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current liabilities	7,148
Total current liabilities	(7,148)
Holiday Allowances [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current liabilities	49,242
Total current liabilities	(49,242)
Bonuses [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current liabilities	42,035
Total current liabilities	(42,035)
Taxes and Social Securities [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Total current liabilities	1,140
Total current liabilities	$ (1,140)

SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	12 Months Ended
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	$ 1,843,547	$ 1,192,844
Intangible assets, net beginning	5,568,452	5,327,156
Additions	17,523,746	891,999
Disposals
Impairment	(317,113)
Amortization	(1,568,652)	(650,703)
Foreign currency translation adjustment	(720,624)
Intangible assets,net ending	20,485,809	5,568,452
Intangible assets, amortizated ending	(3,377,206)	(1,843,547)
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross beginning	3,620,000	3,620,000
Additions
Disposals
Impairment
Amortization
Foreign currency translation adjustment
Intangible assets, finite gross Ending	3,620,000	3,620,000
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross beginning	891,999
Intangible assets, amortization beginning	686,012	311,094
Additions	5,553,818	891,999
Disposals
Impairment
Amortization
Foreign currency translation adjustment	(57,454)
Intangible assets,net ending	6,388,363
Intangible assets, finite gross Ending		891,999
Intangible assets, amortizated ending	(912,260)	(686,012)
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross beginning	2,340,000	2,340,000
Intangible assets, amortization beginning	597,535	321,750
Additions	8,521,000
Disposals
Impairment
Amortization
Foreign currency translation adjustment	(496,459)
Intangible assets,net ending	10,364,541
Intangible assets, finite gross Ending		2,340,000
Intangible assets, amortizated ending	(1,843,716)	(597,535)
Distribution Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross beginning	560,000	560,000
Intangible assets, amortization beginning	560,000	560,000
Additions
Disposals
Impairment
Amortization
Foreign currency translation adjustment
Intangible assets,net ending	560,000
Intangible assets, finite gross Ending		560,000
Intangible assets, amortizated ending	(560,000)	(560,000)
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross beginning
Intangible assets, amortization beginning
Additions	3,175,928
Disposals
Impairment	(317,113)
Amortization
Foreign currency translation adjustment	(186,234)
Intangible assets,net ending	2,672,581
Intangible assets, finite gross Ending
Intangible assets, amortizated ending
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross beginning
Intangible assets, amortization beginning
Additions	273,000
Disposals
Impairment
Amortization
Foreign currency translation adjustment	(15,470)
Intangible assets,net ending	257,530
Intangible assets, finite gross Ending
Intangible assets, amortizated ending	(61,230)
Accumulated Amortization [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	(1,843,547)	(1,192,844)
Additions
Disposals
Impairment
Amortization	(1,568,652)	(650,703)
Foreign currency translation adjustment	34,993
Intangible assets, amortizated ending	$ (3,377,206)	$ 1,843,547

INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 13 - 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, 2021 and 2020:

	2021			2020
Assets:
Net operating loss carryforwards	$	5,756,658		$	1,937,626
Bad debts		1,312,332			-
Stock options		684,238			-
Charitable contribution carryforward		17,032			797
Goodwill		11,268			287,878
Other assets		44,667			45,453
Total Assets		7,826,195			2,271,754
Liabilities:
Depreciable assets		21,135			45,177
Other intangible assets		590,692			923,224
Total Liabilities		611,827			968,401

Net asset before valuation allowance		7,214,368			1,303,353
Valuation allowance		(7,214,368	)		(1,303,353	)
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, 2021 and 2020 is as follows:

	2021			2020
Federal statutory income tax benefit		21.00	%		21.0	%
State income taxes, net of federal income tax benefit		5.50	%		-13.2	%
IPO & Acquisition Costs		-6.99	%		-
Permanent differences and other		-1.75	%		0.9	%
Change in valuation allowance		-17.54	%		46.9	%
Effect of flow through entity		0.00	%		-55.6	%
Other adjustments		-0.21	%		-
Effective income tax rate		0.0	%		0.0	%

At December 31, 2021, the Company has United States federal net operating loss carryforwards available to reduce future taxable income in the amount of $20.0 million. $15.6 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 $4.4 million begin to expire in 2036 and the state net operating losses expire between 2030 and 2039. As a result of the 704 Games, LLC 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 the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, we considered all available positive and negative evidence, including our past operating results, forecasted earnings, frequency and severity of current and cumulative losses, duration of statutory carryforward periods, future taxable income and prudent and feasible tax planning strategies. On the basis of this evaluation, we continue to maintain a valuation allowance against the Company’s deferred tax assets. As of December 31, 2021, we have recorded a valuation allowance against our deferred tax asset that did not meet the more-likely-than-not realization criteria. We increased the valuation allowance on our net deferred taxes by approximately $5.9 million during 2021. The changes in the valuation allowance are primarily due to management concluding 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.

We do not have any unrecorded unrecognized tax positions (“UTPs”) as of December 31, 2021. While we currently do not have any UTPs, it is foreseeable that the calculation of our tax liabilities may involve dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. Upon identification of a UTP, we would (1) record the UTP as a liability in accordance with ASC 740 and (2) adjust these liabilities if/when management’s judgment changes as a result of the evaluation of new information not previously available. Ultimate resolution of UTPs may produce a result that is materially different from an entity’s estimate of the potential liability. In accordance with ASC 740, we would reflect these differences as increases or decreases to income tax expense in the period in which new information is available. We recognize and include interest and penalties accrued on uncertain tax positions as a component of income tax expense.

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 2018-2021 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

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)

12 Months Ended

Jan. 15, 2021

Jan. 08, 2021

Aug. 18, 2020

Apr. 03, 2017

Dec. 31, 2021

Dec. 31, 2020

Class of Stock [Line Items]

Equity Method Investment, Ownership Percentage

100.00%

Newly issued

25,734

4,211

Proceeds from issuance initial public offering

$ 63,100,000

Remaining life of years

9 years 14 days

Share price

$ 55.67

Fair market value

$ 63,074,128

^[1]

$ 1,051,995

Additional paid in capital

$ 75,651,175

Seven Zero Four Games Company [Member]

Class of Stock [Line Items]

Shares of common stock

4,000

Stock option exercise price increase

$ 93.03

Seven Zero Four Games Company [Member] | Warrant [Member]

Class of Stock [Line Items]

Remaining life of years

3 years 9 months 18 days

Stock Purchase Agreement [Member]

Class of Stock [Line Items]

Newly issued

106,307

Share price

$ 11.29

Fair market value

$ 1,200,000

Additional paid in capital

$ 939,511

Stockholders equity description

The merger consideration issued to (i) PlayFast with respect to the shares of common stock of 704Games Company it surrendered in such merger consisted of 366,542 newly-issued shares of the Company’s Class A common stock with a fair market value of $7,587,419 and $1,542,519 in cash and (ii) Ascend with respect to the shares of common stock of 704Games Company it surrendered in such merger consisted of 488,722 newly-issued shares of the Company’s Class A common stock with a fair market value of $10,116,545 and $2,056,692 in cash

Common Class A [Member]

Class of Stock [Line Items]

Conversion of Stock, Shares Converted

7,000,000

Common Stock, Voting Rights

1 vote per share

Proceeds from issuance initial public offering

$ 63,074,128

Common Class A [Member] | Play Fast Agreement [Member]

Class of Stock [Line Items]

Newly issued

366,542

Fair market value

$ 7,587,419

Cash

$ 1,542,519

Common Class A [Member] | Ascend Exchange Agreement [Member]

Class of Stock [Line Items]

Newly issued

488,722

Fair market value

$ 10,116,545

Cash

$ 2,056,692

Common Class A [Member] | IPO [Member]

Class of Stock [Line Items]

Newly issued

3,450,000

Shares issued price per share

$ 20.00

Common Class A [Member] | IPO [Member] | Additional Shares For Underwriters [Member]

Class of Stock [Line Items]

Newly issued

450,000

Common Class B [Member]

Class of Stock [Line Items]

Conversion of Stock, Shares Converted

7,000,000

Common Stock, Voting Rights

Class B common stock, with 10 votes per share

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

CONCENTRATIONS

12 Months Ended

Dec. 31, 2021

Risks and Uncertainties [Abstract]

CONCENTRATIONS

NOTE 14 – 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:

SCHEDULE OF CONCENTRATIONS

	For the Year Ended
	December 31,
Customer	2021			2020
Customer A		28.11	%		29.64	%
Customer B		21.50	%		25.28	%
Customer C		22.36	%		23.27	%
Customer D		10.79	%		-*
Total		82.77	%		78.19	%

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	2021			2020
Customer A		51.92	%		81.84	%
Customer B		17.68	%		-*	%
Total		69.60	%		81.84	%

*	Less than 10%.

A reduction in sales from or loss of these customers, in a significant amount, 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:

SCHEDULE OF CONCENTRATIONS

	For the Year Ended
	December 31,
Supplier	2021			2020
Supplier A		30.89	%		34.59	%
Supplier B		13.13	%		19.45	%
Supplier C		*	%		11.46	%
Total		44.02	%		65.50	%

*	Less than 10%.

SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Abstract]
Furniture and fixtures	$ 16,580
Computer software and equipment	863,931	246,101
Leasehold improvements	127,524
Property and equipment, gross	1,008,035	246,101
Less: accumulated depreciation	(280,946)	(83,953)
Property and equipment, net	$ 727,089	$ 162,148

ACCRUED EXPENSES AND OTHER LIABILITIES

12 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER LIABILITIES

NOTE 7 – ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consisted of the following:

SCHEDULE OF ACCRUED EXPENSES


	December 31,
	2021		2020
Accrued royalties	$	1,694,011	$	1,485,261
Accrued professional fees		80,909		129,291
Accrued consulting fees		106,006		398,526
Payable to Le Mans joint venture		-		234,667
Accrued development costs		968,007		196,845
Esports prize money		168,959		-
Accrued taxes		31,491		54,880
Accrued payroll		235,224		778,918
Accrued other		239,664		76,615
Total	$	3,524,271	$	3,355,003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Jan. 01, 2022
Property, Plant and Equipment [Line Items]
Sales allowances	$ 4,563,884	$ 2,150,684
Sales allowances and price protection reserves	4,600,000	2,200,000
Sales return and price protection reserves	3,900,000	2,200,000
Gain loss on foreign currency translation	$ 222,500	$ 1,000
Operating lease assets			$ 765,000
Operating lease liabilities			$ 765,000
Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful lifes	3 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment useful lifes	5 years

GOODWILL (Tables)

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF GOODWILL

The carrying amount of goodwill attributable to our Gaming and esports reporting units and the changes in such balances during the years ended December 31, 2021 and 2020 were as follows:

SCHEDULE OF GOODWILL

	Games			Esports			Total
Balance as of January 1, 2020	$	137,717			-		$	137,717
Foreign currency translation adjustment		-			-			-
Balance as of December 31, 2020		137,717			-			137,717
Goodwill attributable to Le Mans Esports Series Ltd		-			65,221			65,221
Goodwill attributable to Studio397		4,960,727			-			4,960,727
Foreign currency translation adjustment		(295,562	)		(638	)		(296,200	)
Balance as of December 31, 2021	$	4,802,882			64,583		$	4,867,465

SCHEDULE OF FUTURE MINIMUM PAYMENT UNDER NON-OPERATING LEASES (Details)	Dec. 31, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2022	$ 299,442
2023	289,218
2024	189,786
2025	48,104
2026	24,069
Total	$ 850,619

SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 2021

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,
	2021			2020
Revenues:
Gaming	$	14,267,735		$	18,745,166
Esports		807,795			300,363
Total Revenues	$	15,075,530		$	19,045,529

Gross Profit:
Gaming	$	7,226,156		$	12,438,584
Esports		320,219			11,073
Total Segment and Consolidated Gross Profit	$	7,546,375		$	12,449,657

Income (Loss) From Operations:
Gaming	$	(33,802,804	)	$	508,461
Esports		(723,854	)		(507,314	)
Total Segment and Consolidated Income (Loss) From Operations	$	(34,526,658	)	$	1,147

Depreciation and Amortization:
Gaming	$	1,774,072		$	718,873
Esports		11,002			1,306
Total Segment Depreciation and Amortization	$	1,785,074		$	720,179

Interest Expense:
Gaming	$	(504,156	)	$	(717,498	)
Esports		-			-
Total Segment Interest Expense	$	(504,156	)	$	(717,498	)

Equity gain (loss) in Income:
Gaming	$	1,370,837		$	-
Esports		-			(70,792	)
Total Segment Equity gain (loss) in Income	$	1,370,837		$	(70,792	)

Expenditures for Additions to Long-Lived Assets:
Gaming	$	489,167		$	126,432
Esports		265,135			10,323
Total Expenditures for Additions to Long-Lived Assets:	$	754,302		$	136,755

	December 31, 2021		December 31, 2020
Segment Total Assets:
Gaming	$	47,511,471	$	17,377,993
Esports		3,191,732		9,017
Consolidated Total Assets	$	50,703,203	$	17,387,010

SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Net operating loss carryforwards	$ 5,756,658	$ 1,937,626
Bad debts	1,312,332
Stock options	684,238
Charitable contribution carryforward	17,032	797
Goodwill	11,268	287,878
Other assets	44,667	45,453
Total Assets	7,826,195	2,271,754
Depreciable assets	21,135	45,177
Other intangible assets	590,692	923,224
Total Liabilities	611,827	968,401
Net asset before valuation allowance	7,214,368	1,303,353
Valuation allowance	(7,214,368)	(1,303,353)
Net deferred tax (liability) asset

ACQUISITIONS

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS

NOTE 3 – ACQUISITIONS

Le Mans

On January 25, 2021, the Company entered into an Amendment (the “Le Mans Amendment”) to the Le Mans Esports Series Ltd Joint Venture Agreement with Automobile Club de l’Ouest, a company registered in France (“ACO”). Pursuant to the Le Mans Amendment, the Company increased its ownership share in Le Mans Esports Series Ltd, from 45% to 51%, with the Company now holding a controlling financial interest and ACO holding a 49% minority ownership share in Le Mans Esports Series Ltd.

Pursuant to the Le Mans Amendment, the parties expanded the primary objective and purpose of Le Mans Esports Series Ltd to include the creation, development, and publishing of video games based on the FIA World Endurance Championship and the 24 Hours of Le Mans, in addition to operating, promoting, and running an electronic sports events business replicating races of the FIA World Endurance Championship and the 24 Hours of Le Mans on an electronic video gaming platform.

Pursuant to the Le Mans Amendment, if the board of directors of Le Mans Esports Series Ltd determines that its working capital requirements for the development of future games exceeds its resources, the Company will be obligated to contribute such additional funding to Le Mans Esports Series Ltd as a loan (which loan would not be interest bearing). Any such loan would be repayable when additional funding was no longer required by Le Mans Esports Series Ltd, as determined by its board of directors, provided that any such repayment would occur prior to Le Mans Esports Series Ltd’s distribution of any of its profits to the shareholders of Le Mans Esports Series Ltd.

Further, pursuant to the Le Mans Amendment, the Company has a right to priority distribution of profits to recoup the additional funding and royalty payments that serve as the consideration for the Le Mans Video Gaming License (as defined below).

On January 25, 2021, simultaneously with the execution of the Le Mans Amendment, Le Mans Esports Series Ltd and ACO entered into a license agreement pursuant to which Le Mans Esports Series Ltd was granted an exclusive license to use certain licensed intellectual property described in such license agreement for motorsports and/or racing video gaming products related to, themed as, or containing the FIA World Endurance Championship and the 24 Hours of Le Mans (including Le Mans Esports Series Ltd’s esports web platform) (the “Le Mans Video Gaming License”).

The Le Mans Video Gaming License’s term is 10 years starting on the date of the first release of a product and automatically renews for an additional 10-year term, unless ACO elects not to renew. In exchange for the Le Mans Video Gaming License, the Company agreed to fund up to €8,000,000 (approximately $9,060,000 USD as of December 31, 2021) as needed by Le Mans Esports Series Ltd to develop video game products, which will be contributed on an as-needed basis during the term of the Le Mans Video Gaming License. Additionally, the Company is obligated to pay ACO an annual royalty payment beginning from the time of the launch of the first video game product, which is planned for 2023, and continuing through each anniversary thereof for the term of the license.

On January 25, 2021, Le Mans Esports Series Ltd and ACO entered into an esports license agreement pursuant to which Le Mans Esports Series Ltd was granted an exclusive license to use certain licensed intellectual property described in such license agreement for motorsports and/or racing esports events related to, themed as, or containing the FIA World Endurance Championship and the 24 Hours of Le Mans (including the Le Mans Esports Series Ltd’s esports web platform) (the “Le Mans Esports License”).

The Le Mans Esports License’s term is through January 25, 2031, which automatically renews for an additional 10-year term, unless ACO elects not to renew. The Le Mans Esports License was granted to Le Mans Esports Series Ltd on a royalty-free basis in consideration of the investments already made into Le Mans Esports Series Ltd by the Company and ACO.

On January 25, 2021, Le Mans Esports Series Ltd and ACO entered into another esports license agreement pursuant to which Le Mans Esports Series Ltd was granted an exclusive license to use certain licensed intellectual property described in such license agreement to run, promote, and exploit the 24 Hours of Le Mans Virtual event (the “24 Hours of Le Mans Virtual License”).

The 24 Hours of Le Mans Virtual License’s term is through January 25, 2031, which will automatically renew for an additional 10-year term, unless ACO elects not to renew. The 24 Hours of Le Mans Virtual License was granted to Le Mans Esports Series Ltd on a royalty-free basis in consideration of the investments already made into Le Mans Esports Series Ltd by the Company and ACO.

The following key assumptions were utilized by the Company to determine the fair value of the acquired intangible assets: (i) revenue projections; (ii) risk-free rate, which was estimated based on the rate of treasury securities with the same term as the mid-period of the projection periods; and (iii) revenue volatility, which was estimated based on an analysis of historical asset volatilities for similar companies and adjusted for operating leverage to estimate revenue volatility.

The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows:

SUMMARY OF AGGREGATE PURCHASE PRICE

	Valuation Method	Discount Rate			GBP			USD
Cash					£	257,232		$	350,626
Other assets						858			1,169
Gaming license	Excess earning Method		30.00	%		843,682			1,150,000
Esports licenses	Excess earning Method		30.00	%		1,217,836			1,660,000
Goodwill			30.00	%		47,084			65,221
Accounts payable			-			(5,147	)		(7,016	)
Non-controlling interest	Business Enterprise Income		30.00	%		(1,157,531	)		(1,573,624	)

Total Fair value of Member’s equity					£	1,204,014		$	1,646,376
Fair value of the previously held interest					£	1,062,999		$	1,449,000

Fain value of the consideration					£	141,015		$	197,376

During the year ended December 31, 2020, the Company’s investment in Le Mans Esports Series Ltd generated a net loss of $70,792, which was included in gain (loss) from equity investment in the consolidated statements of operations and comprehensive loss. As of December 31, 2020, the Company had $234,667 payable to Le Mans Esports Series Ltd, which represents the balance due to Le Mans Esports Series Ltd attributable to the Company’s proportionate share of the loss generated by Le Mans Esports Series Ltd during 2020. As of December 31, 2020, there was $271,200 of investment recorded in other assets on the Company’s consolidated balance sheets. Following the Company’s acquisition of additional interest in Le Mans Esports Series Ltd on January 25, 2021, the Company ceased equity method accounting for its interest in Le Mans Esports Series Ltd and commenced consolidation accounting.

Results of operations of Le Mans Esports Series Ltd for the period from January 25, 2021 to December 31, 2021 included approximately $741,000 in revenues and approximately $288,000 in net losses. Revenues and net income (loss) on an unaudited pro forma basis for the years ended December 31, 2021 and 2020 are immaterial.

The acquisition of Le Mans Esports Series Ltd has been recorded in accordance with ASC 805, Business Combinations. The transactions were taxable for income tax purposes and all assets and liabilities have been recorded at fair value for both book and income tax purposes.

KartKraft

On March 19, 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 was transferred to an escrow account, which was released in September 2021 on the 6-month anniversary of closing. Through this acquisition, the Company entered the simulated kart-racing space and formed Motorsport Games Australia to support the Black Delta development team.

Intangible Asset	Valuation Method	Discount Rate			Amount
KartKraft Trade Name	Relief-from-Royalty		27.50	%	$	108,000
Software	Replacement cost		25.00	%		833,000
Employment & Non-Compete	With & Without Method		25.00	%		59,000
Total Consideration					$	1,000,000

Results of operations of KartKraft for the period from March 18, 2021 to December 31, 2021 included revenue of approximately $168,000 and approximately $482,000 in net losses. Revenues and net income (loss) on an unaudited pro forma basis for the years ended December 31, 2021 and 2020 are immaterial.

The KartKraft acquisition has been recorded in accordance with ASC 805, Business Combinations. The transactions were taxable for income tax purposes and all assets and liabilities have been recorded at fair value for both book and income tax purposes.

Studio397

On April 20, 2021, the Company closed the transactions contemplated by the share purchase agreement, dated April 1, 2021 (the “SPA”), with Luminis International BV (“Luminis”) and Technology In Business B.V. (“TIB”) pursuant to which the Company purchased from TIB 100% of the share capital (the “Studio397 Shares”) of Studio397 B.V. (“Studio397”). Studio397 is a racing simulation and technology company that provides the industry-leading racing simulation platform, rFactor 2. Since early 2020, Studio397 has been providing its vehicle physics, tire modeling and artificial intelligence software to the Company’s video games.

The purchase price for the Studio397 Shares was $16,000,000, payable in the following two installments: $12,800,000 was paid at closing (the “Completion Payment”) and $3,200,000 in April 2022 on the first anniversary of closing (the “Deferred Payment”). The Deferred Payment was discounted to $3,111,781 using a 2.8% discount rate as of the acquisition date and a payment date of April 20, 2022. The balance of the deferred payment as of December 31, 2021 was $3,170,319.

To secure the Company’s payment of the Deferred Payment, the Company granted a right of pledge on 20% of the Studio397 Shares (“Pledged Shares”) by means of execution of a deed of pledge at the closing of the transactions contemplated by the SPA. The voting rights attached to the Pledged Shares will be transferred to TIB if and to the extent that the Company fails to pay the Deferred Payment within 30 business days following receipt of TIB’s notice of any such failure.

The Studio397 acquisition has been recorded in accordance with ASC 805. The purchase price allocation for total invested capital of $16,000,000 was based on preliminary estimates of fair value of the assets acquired and liabilities assumed at the acquisition date, with excess allocated to goodwill. Goodwill represents synergies from combining the operations of the acquiree with the Company, as well as other intangible assets that do not qualify for separate recognition. Goodwill will be deductible for tax purposes and the transaction itself was deemed taxable for income tax purposes. All assets and liabilities have been recorded at fair value for both book and income tax purposes.

The purchase price allocation for total invested capital of $15,911,781 was completed as of the Studio397 acquisition date. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows:

	Valuation Method	Discount Rate			Amount
Debt-free net working capital	-		-		$	(12,450	)
Fixed assets	-		-			21,504
rFactor 2 Trade Name	Relief-from-Royalty		9.30	%		3,040,000
Software	Replacement Cost		9.30	%		7,010,000
Employment & Non-Compete Agreements	With & Without Method		9.30	%		214,000
Internally developed franchise	Excess earning Method		9.30	%		678,000
Goodwill						4,960,727
Total Consideration					$	15,911,781

Total acquisition-related costs and expenses incurred in connection with the acquisition of Studio397 were immaterial.

Studio397’s results of operations for the period from April 20, 2021 to December 31, 2021 included approximately $845,000 in revenues and $1,857,000 in net losses. On an unaudited pro forma basis, if the acquisition had occurred on January 1, 2021, the Company’s consolidated revenues and net loss for the year ended December 31, 2021 would have been approximately $15,143,000 and $34,151,000, respectively. It is impracticable to disclose revenues and net income (loss) on an unaudited pro forma basis for the year ended December 31, 2020, as the Company does not have access to the requisite financial information of Studio397 prior to the acquisition date.

The components of Studio397’s debt free net working capital deficit are as follows:

Current assets:
Projects to be invoiced	$	192,658
Trade debtors		26,121
Paid in advance		47,168
Total current assets	$	265,947

Less current liabilities:
Trade creditors		140,049
Advance invoices/payments		41,063
Audit costs		7,148
Holiday allowances		49,242
Bonuses		42,035
Taxes and social securities		(1,140	)
Total current liabilities	$	278,397

Debt free net working capital deficit	$	(12,450	)

The Studio397 acquisition has been recorded in accordance with ASC 805, Business Combinations. The transaction was taxable for income tax purposes and all assets and liabilities have been recorded at fair value for both book and income tax purposes.

704Games Company

On April 16, 2021, the Company closed the transactions contemplated by each of (i) the share exchange agreement with PlayFast Games, LLC, a North Carolina limited liability (“PlayFast”), dated as of March 11, 2021, as amended by that certain amendment dated as of April 1, 2021 (as amended, the “PlayFast Exchange Agreement”) and (ii) the share exchange agreement with Ascend FS, Inc., a British Columbia corporation (“Ascend”), dated as of March 14, 2021, as amended by that certain amendment dated as of April 1, 2021 (as amended, the “Ascend Exchange Agreement”). As a result, the Company acquired all of the remaining issued and outstanding equity interests in 704Games, which represented 17.8% of 704Games.

The transactions contemplated by the PlayFast Exchange Agreement and the Ascend Exchange Agreement were structured as a merger of 704Games Company with and into 704Games LLC, a newly-formed Delaware limited liability company and wholly-owned subsidiary of the Company, with 704Games LLC being the surviving entity in such merger. The merger consideration issued to (i) PlayFast with respect to the shares of common stock of 704Games Company it surrendered in such merger consisted of 366,542 newly-issued shares of the Company’s Class A common stock with a fair market value at such date of $7,587,419 and $1,542,519 in cash and (ii) Ascend with respect to the shares of common stock of 704Games Company it surrendered in such merger consisted of 488,722 newly-issued shares of the Company’s Class A common stock with a fair market value of $10,116,545 and $2,056,692 in cash.

SUBSEQUENT EVENTS (Details Narrative) - USD ($)					12 Months Ended
SUBSEQUENT EVENTS (Details Narrative) - USD ($)	Mar. 31, 2027	Mar. 03, 2022	Jan. 18, 2022	Jan. 06, 2022	Dec. 31, 2021	Dec. 31, 2020	Apr. 02, 2022	Feb. 08, 2022
Subsequent Event [Line Items]
Payments for rent					$ 387,865	$ 291,892
Stock options granted					573,571
Forecast [Member]
Subsequent Event [Line Items]
Payments for rent	$ 22,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Lessee, Operating Lease, Term of Contract							5 years	5 years
Subsequent Event [Member] \| Common Class A [Member]
Subsequent Event [Line Items]
Number of restricted shares granted			25,000	12,690
Subsequent Event [Member] \| Common Class A [Member] \| Employee Stock [Member]
Subsequent Event [Line Items]
Stock options granted		16,281		543,066
Subsequent Event [Member] \| Common Class A [Member] \| Board of Directors Chairman [Member]
Subsequent Event [Line Items]
Stock options granted				57,108

SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

SCHEDULE OF FAIR VALUE STOCK OPTION WEIGHTED AVERAGE ASSUMPTIONS

The following table presents the weighted-average assumptions, weighted average grant date fair value, and the range of expected price volatility:

	For the Year Ended December 31,
	2021		2020
Risk-free interest rate		0.48 - 1.09%		-
Expected volatility		50 - 65%		-
Weighted-average volatility		60%		-
Expected term		5 - 6 years		-
Expected dividends		None		-
Weighted-average grant date fair value		9.37		-

SCHEDULE OF STOCK OPTIONS ACTIVITY

The following table summarizes the Company’s stock option activity for the fiscal year ended December 31, 2021:

SCHEDULE OF STOCK OPTIONS ACTIVITY

	Options			Weighted- Average Exercise Prices		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of January 1, 2021		-		$	-
Granted		573,571			20.35
Exercised		-			-
Forfeited, cancelled or expired		(22,972	)		20.00
Outstanding as of December 31, 2021		550,599		$	20.36		9.14	$	-
Vested and expected to vest		550,599		$	20.36		9.14	$	-
Exercisable as of December 31, 2021		205,425		$	20.04		9.04	$	-

SCHEDULE OF STOCK BASED COMPENSATION EXPENSE

The following table summarizes stock-based compensation expense resulting from stock option awards included in our Consolidated Statement of Operations:


	For the Year Ended December 31,
	2021		2020
General and administrative	$	9,500,265		-
Sales and marketing		126,272		-
Development		100,125		-
Stock-based compensation expense	$	9,726,662		-

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 196,993	$ 69,476

SCHEDULE OF GOODWILL (Details) - USD ($)	12 Months Ended
SCHEDULE OF GOODWILL (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Goodwill, beginning balance	$ 137,717	$ 137,717
Foreign currency translation adjustment	296,200
Goodwill attributable	65,221
Goodwill attributable	4,960,727
Foreign currency translation adjustment	(296,200)
Goodwill, ending balance	$ 64,583	$ 137,717

SCHEDULE OF FAIR VALUE STOCK OPTION WEIGHTED AVERAGE ASSUMPTIONS (Details) - $ / shares		12 Months Ended
	Jan. 12, 2020	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate
Risk-free interest rate
Risk-free interest rate		60.00%
Expected term
Risk-free interest rate		0.00%
Risk-free interest rate		$ 9.37
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate		0.48%
Risk-free interest rate		50.00%
Expected term		5 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate		1.09%
Risk-free interest rate		65.00%
Expected term		6 years

COMMITMENTS AND CONTINGENCIES (Details Narrative)											1 Months Ended	12 Months Ended
COMMITMENTS AND CONTINGENCIES (Details Narrative)	Jan. 21, 2022	Sep. 03, 2021 USD ($) ft²	Mar. 02, 2021 USD ($)	Feb. 11, 2021 shares	Jan. 25, 2021	Jan. 11, 2021 shares	Oct. 01, 2020 USD ($)	Feb. 21, 2020 USD ($)	Jan. 02, 2020 USD ($)	Mar. 15, 2019	Jan. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2021 GBP (£)	May 15, 2020 USD ($)
Product Liability Contingency [Line Items]
Shares purchased \| shares				106,307		116,608
[custom:PercentageOfOutstandingShares-0]				26.20%		28.70%
Rental payment												$ 387,865	$ 291,892
Security deposit															$ 6,000
Base rent															$ 3,000
Employment Agreements [Member] \| Chief Executive Officer [Member]
Product Liability Contingency [Line Items]
Base salary									$ 500,000
Annual increase percentage of base salary									103.00%
Employment Agreements [Member] \| Mr. Hood [Member]
Product Liability Contingency [Line Items]
Base salary							$ 198,000				$ 230,000
Cash bonus to be paid											$ 100,000
Employment Agreements [Member] \| Mr. Hood [Member] \| Subsequent Event [Member]
Product Liability Contingency [Line Items]
Payment of lieu description	On January 21, 2022, the Company notified Stephen Hood that his position will be eliminated effective January 21, 2022. Mr. Hood will receive the following separation payments: £43,750 in lieu of his entitlement to 3 months’ termination notice, £37,019 in lieu of accrued but untaken holiday pay and an £60,000 ex gratia settlement payment which includes statutory redundancy as required under the law of England & Wales
Joint Venture Agreement [Member]
Product Liability Contingency [Line Items]
Joint venture equity ownership percentage										45.00%
[custom:AgreedToExchangeForLicenseRight-0]												9,060,000		£ 8,000,000
Joint Venture Agreement [Member] \| Minimum [Member]
Product Liability Contingency [Line Items]
Joint venture equity ownership percentage					45.00%
Joint Venture Agreement [Member] \| Maximum [Member]
Product Liability Contingency [Line Items]
Joint venture equity ownership percentage					51.00%
Joint Venture Agreement [Member] \| Automobile Club de l'Oues [Member]
Product Liability Contingency [Line Items]
Joint venture equity ownership percentage										55.00%
License Agreement [Member]
Product Liability Contingency [Line Items]
Payment for license fee												$ 100,000	$ 40,000
Licens fee royalty												5.00%
Royalties earned												$ 340,000
Charlotte, North Carolina [Member]
Product Liability Contingency [Line Items]
Rental payment								$ 14,896
Lease description								ends on August 31, 2024
Periodical increase percentage of rent			3.00%
Security deposit			$ 30,000
Sublease income												$ 183,200
Silverstone, England [Member]
Product Liability Contingency [Line Items]
Rental payment		$ 75,000
Security deposit		$ 15,000
Area of land \| ft²		1,600
Rental payment, per month		$ 6,700

SCHEDULE OF STOCK OPTIONS ACTIVITY (Details)	12 Months Ended
SCHEDULE OF STOCK OPTIONS ACTIVITY (Details)	Dec. 31, 2021 USD ($) $ / shares shares
Share-based Payment Arrangement [Abstract]
Number of Options, beginning \| shares
Weighted-Average Exercise Prices, beginning
Number of Options, granted \| shares	573,571
Weighted-Average Exercise Prices, Granted	$ 20.35
Number of Options, Exercised \| shares
Weighted-Average Exercise Prices, Exercised
Number of Options, Forfeited, Cancelled or expired \| shares	(22,972)
Weighted-Average Exercise Prices, Forfeited, Cancelled or expired	$ 20.00
Number of Options, ending	550,599
Weighted-Average Exercise Prices, ending	$ 20.36
Weighted-Average Remaining Contractual Term (in years) outstanding	9 years 1 month 20 days
Aggregate Intrinsic Value outstanding \| $
Number of Options, Vested and expected to vest \| shares	550,599
Weighted-Average Exercise Prices, Vested and expected to vest	$ 20.36
Weighted-Average Remaining Contractual Term (in years), Vested and expected to vest	9 years 1 month 20 days
Aggregate Intrinsic Value, Vested and expected to vest \| $
Number of Options, Exercisable ending \| shares	205,425
Weighted-Average Exercise Prices, Exercisable, ending	$ 20.04
Weighted-Average Remaining Contractual Term (in years), Exercisable	9 years 14 days
Aggregate Intrinsic Value, Exercisable \| $

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Cash Flows from Operating Activities:
Net loss	$ (33,704,745)	$ (679,854)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	1,785,074	720,179
Sales return and price protection reserves	3,934,697	314,086
Loss on disposal of property and equipment		32,537
Loss on impairment of goodwill and intangible assets	317,113
(Gain) loss on equity method investee	(1,370,837)	(70,792)
Stock-based compensation	9,726,662
Changes in operating assets and liabilities:
Accounts receivable	(3,252,041)	642,732
Prepaid expenses and other current assets	(768,801)	(427,980)
Other assets	25,000	(40,428)
Accounts payable	944,527	(1,737,999)
Accrued expenses	670,107	5,094,585
Other non-current liabilities	751,580	64,695
Net Cash Provided By (Used In) Operating Activities	(20,941,664)	4,053,345
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		(1,316,280)
Acquisition of equity method investee		(244,202)
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	(754,302)	(136,755)
Net Cash Used In Investing Activities	(14,614,443)	(1,797,237)
Cash Flows From Financing Activities:
Proceeds from advances from related parties	2,157,707	361,145
Repayments on advances from related parties	(12,967,143)
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting costs	63,661,128
Purchase of additional ownership from non-controlling interest	(3,599,211)
Contributed capital from non-controlling interests	234,754
Payments of deferred offering costs		(587,000)
Net Cash Provided By (Used In) Financing Activities	49,487,235	(225,855)
Effect of exchange rate changes on cash	(102,020)
Net Increase In Cash	13,829,108	2,030,253
Cash and Cash Equivalents - Beginning of the Year	3,990,532	1,960,279
Cash and Cash Equivalents - End of the Year	17,819,640	3,990,532
Cash paid during the year for:
Interest	804,675
Non-cash investing and financing activities:
Increase of additional paid-in capital for initial public offering costs paid in the prior year	587,000
Accrual of intangible asset	2,513,871	791,999
Deferred acquisition consideration	3,170,319
Reduction of additional paid-in capital for purchased 704Games minority shares	939,511
Acquisition of controlling interest in Le Mans	1,584,892
Accrual of deferred offering costs		162,370
Accrued loss on equity method investee		$ 26,999

SCHEDULE OF SEGMENT REPORTING INFORMATION (Details) - USD ($)

12 Months Ended

Dec. 31, 2021

Dec. 31, 2020

Revenue from External Customer [Line Items]

Total Revenues

$ 15,075,530

$ 19,045,529

Total Segment and Consolidated Gross Profit

7,546,375

12,449,657

Total Segment and Consolidated Income (Loss) From Operations

(34,526,658)

1,147

Total Segment Depreciation and Amortization

1,785,074

720,179

Total Segment Interest Expense

^[1]

(504,156)

(717,498)

Esports

^[1]

504,156

717,498

Total Segment Equity gain (loss) in Income

1,370,837

70,792

Total Expenditures for Additions to Long-Lived Assets:

754,302

136,755

Consolidated Total Assets

50,703,203

17,387,010

Gaming [Member]

Revenue from External Customer [Line Items]

Total Revenues

14,267,735

18,745,166

Total Segment and Consolidated Gross Profit

7,226,156

12,438,584

Total Segment and Consolidated Income (Loss) From Operations

(33,802,804)

508,461

Total Segment Depreciation and Amortization

1,774,072

718,873

Total Segment Interest Expense

(504,156)

(717,498)

Esports

504,156

717,498

Total Segment Equity gain (loss) in Income

1,370,837

Total Expenditures for Additions to Long-Lived Assets:

489,167

126,432

Consolidated Total Assets

47,511,471

17,377,993

Esports [Member]

Revenue from External Customer [Line Items]

Total Revenues

807,795

300,363

Total Segment and Consolidated Gross Profit

320,219

11,073

Total Segment and Consolidated Income (Loss) From Operations

723,854

(507,314)

Total Segment Depreciation and Amortization

11,002

1,306

Total Segment Interest Expense

Esports

Total Segment Equity gain (loss) in Income

(70,792)

Total Expenditures for Additions to Long-Lived Assets:

265,135

10,323

Consolidated Total Assets

$ 3,191,732

$ 9,017

[1]	Includes related party expenses of $105,845 and $698,830 for the years ended December 31, 2021 and 2020, respectively.

DUE TO/FROM RELATED PARTIES

12 Months Ended

Dec. 31, 2021

Due Tofrom Related Parties

DUE TO/FROM RELATED PARTIES

NOTE 8 – DUE TO/FROM RELATED PARTIES

On April 1, 2020, the Company entered into a promissory note (the “Promissory Note”) with the Company’s majority stockholder, 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. 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 in 2020, pursuant to which 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, 2021 and 2020, the Company recorded related party interest expense of $105,845 and $698,830, respectively.

During the year ended December 31, 2021, the Company repaid approximately $12,665,000 to Motorsport Network, which represented the total principal owed under the Promissory Note and accumulated interest incurred. As of December 31, 2021, the Company owed approximately $0 of principal and accrued interest on the promissory note, compared with approximately $11,705,000 as of December 31, 2020.

In addition to the Promissory Note, the Company had regular related party receivables and payables outstanding as of the year ended December 31, 2021. Specifically, the Company owed $119,014 to its related parties as a related party payable and was due $137,574 from its related parties as a related party receivable. Approximately $302,000 had been paid to related parties during the year ended December 31, 2021, in settlement of related party payables. No related party payables or receivables were outstanding as of December 31, 2020, beyond the Promissory Note disclosed above.