0001493152-22-021890 | 10-Q | XBRL Viewer

BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2022

BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION

NOTE 1 - BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION

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. (“Motorsport Games” or the “Company”). 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.

Risks and Uncertainties

COVID-19 Pandemic

The lingering impact of COVID-19 has continued to create significant volatility throughout the global economy, such as supply chain disruptions, limited labor supplies, higher inflation, and recession, which in turn has caused constraints on consumer spending. More recently, new variants of COVID-19, such as the Omicron variant and its subvariants, 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 initially caused many government authorities and businesses to reimplement prior restrictions in an effort to lessen the spread of COVID-19 and its variants. However, while many of these restrictions have been lifted, uncertainty remains as to whether additional restrictions may be initiated or again reimplemented in response to surges in COVID-19 cases.

Although the Company does not currently expect the COVID-19 pandemic to have a material impact on its future business and operations, 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; the effect on discretionary spending by consumers; and how quickly and to what extent normal economic and operating conditions can resume.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In management’s opinion, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022. The Company’s results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related disclosures as of December 31, 2021 and 2020 and for the years then ended which are included in the 2021 Form 10-K.

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.

For the six months ended June 30, 2022, the Company had a net loss of approximately $23.5 million, negative cash flows from operations of approximately $12.0 million and an accumulated deficit of $60.5 million. It is expected that the Company will continue to incur operating expenses and, as a result, the Company will need to continue to grow revenues to reach profitability and positive cash flows. We expect to continue to incur losses for the foreseeable future as we continue to develop our product portfolio and invest in developing new video game titles.

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 these condensed consolidated financial statements are issued.

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 continue to explore additional funding in the form of potential equity and/or debt financing arrangements and consider these to be viable options to support future liquidity needs, provided that such opportunities can be obtained on terms that are commercially competitive and on terms acceptable to the Company. We are also seeking to improve our liquidity by achieving cost reductions by maintaining and enhancing cost control initiatives.

As we continue to evaluate incremental funding solutions, we have reevaluated our product roadmap in the first quarter of 2022 and modified the expected timing and scope of certain new product releases. These changes have been made not only to maintain the development of high-quality video game titles, but also to improve the timing of certain working capital requirements and reduce expenditures, thereby decreasing our expected future cash-burn and improve our short-term liquidity needs. If needed, further adjustments could be made that would decrease short-term working capital requirements, while pushing out the timing of expected revenues.

We expect to generate additional liquidity through consummating one or more potential equity and/or debt financings, achieving cost reductions by maintaining and enhancing cost control initiatives, and/or further adjusting our product roadmap to reduce near term need for working capital. If we are unable to generate adequate revenue and profit growth, 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 sales allowances.

There can be no assurance that we will be able to obtain funds on commercially acceptable terms, if at all, to satisfy our future needed liquidity and capital resources. 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:

	●	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.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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.

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 condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the condensed 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. However, substantial doubt about the Company’s ability to continue as a going concern exists.

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 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.

Adoption of Accounting Pronouncements

On January 1, 2022, the Company adopted Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) (“ASC 842”) using the modified retrospective approach and 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, the Company applied the guidance to all existing leases.

For leases with a term greater than 12 months, the new guidance requires the lease rights and obligations arising from the leasing arrangements, including operating leases, to be recognized as assets and liabilities on the balance sheet. Upon adoption of ASC 842, the Company recognized approximately $751,000 of operating lease assets and operating lease liabilities primarily related to real estate, which were presented in the condensed consolidated balance sheet as operating lease right-of-use assets, operating lease liabilities, current and operating lease liabilities, non-current. There was no cumulative effect of applying the new standard and accordingly there was no adjustment to retained earnings on adoption. The comparative information presented has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company opted to apply the optional package of practical expedients permitted under ASC 842, which eliminated the requirement to reassess prior conclusions regarding lease identification, classification and initial direct costs.

The adoption of ASC 842 did not have a material impact on the Company’s condensed consolidated statements of operations and comprehensive loss or condensed consolidated statements of cash flows.

On January 1, 2022, the Company adopted 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. The adoption of ASU 2020-01 did not have a material impact on the Company’s condensed consolidated financial statements.

On January 1, 2022, the Company adopted 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. The adoption of ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

SUBSEQUENT EVENTS (Details Narrative) - USD ($)					6 Months Ended
SUBSEQUENT EVENTS (Details Narrative) - USD ($)	Jul. 31, 2022	Jul. 21, 2022	Jul. 19, 2022	Jul. 18, 2022	Jun. 30, 2022	Jun. 30, 2021
Subsequent Event [Line Items]
Pay down of related party debt					$ 24,913	$ 12,663,168
Subsequent Event [Member]
Subsequent Event [Line Items]
Debt instrument obligation			$ 1,870,000	$ 2,200,000
Subsequent Event [Member] \| Letter Amendment [Member]
Subsequent Event [Line Items]
Pay down of related party debt	$ 330,000		1,870,000	$ 2,200,000
Outstanding balance			$ 1,870,000
Debt instrument, interest rate, stated percentage			15.00%
Subsequent Event [Member] \| Letter Amendment [Member] \| August 15, 2022 through December of 2022 [Member]
Subsequent Event [Line Items]
Debt instrument, periodic payment			$ 100,000
Subsequent Event [Member] \| Letter Agreement [Member]
Subsequent Event [Line Items]
Debt instrument, increase, accrued interest			$ 1,870,000
Subsequent Event [Member] \| Letter Agreement [Member] \| January 15, 2023 [Member]
Subsequent Event [Line Items]
Debt instrument, periodic payment		$ 150,000

STOCKHOLDERS’ EQUITY	6 Months Ended
Jun. 30, 2022
Equity [Abstract]
STOCKHOLDERS’ EQUITY	NOTE 9 – STOCKHOLDERS’ EQUITY 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 $63,073,783, after deducting underwriting discounts and commissions and offering expenses paid by the Company during 2020 and 2021. Stock Warrants As of June 30, 2022 and December 31, 2021, 704Games has outstanding 10-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 June 30, 2022, the warrants had no intrinsic value and a remaining life of 3.3 years.

STOCKHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 9 – STOCKHOLDERS’ EQUITY

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 $63,073,783, after deducting underwriting discounts and commissions and offering expenses paid by the Company during 2020 and 2021.

Stock Warrants

As of June 30, 2022 and December 31, 2021, 704Games has outstanding 10-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 June 30, 2022, the warrants had no intrinsic value and a remaining life of 3.3 years.

- 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.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: 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(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

DUE TO/FROM RELATED PARTIES (Details Narrative) - USD ($)		3 Months Ended	6 Months Ended
	Apr. 01, 2020	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2021	Nov. 23, 2020
Short-Term Debt [Line Items]
Line of credit		$ 0	$ 0
Related party interest expense		0	0
Due to related parties		37,049	37,049	$ 119,015
Promissory Note [Member]
Short-Term Debt [Line Items]
Line of credit	$ 12,000,000	12,000,000	12,000,000		$ 12,000,000
Line of credit interest rate	10.00%
Due to related parties		37,049	37,049
Due from related parties		$ 35,498	35,498
Payment to related parties			$ 132,288
Promissory Note [Member] \| Maximum [Member]
Short-Term Debt [Line Items]
Line of credit, maximum borrowing capacity	$ 10,000,000				12,000,000
Promissory Note [Member] \| Minimum [Member]
Short-Term Debt [Line Items]
Line of credit, maximum borrowing capacity					$ 10,000,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

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 Three and Six Months Ended
	June 30,
	2022		2021
Stock options		761,667		574,073
		761,667		574,073

SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

SCHEDULE OF STOCK-BASED COMPENSATION OPTIONS ACTIVITY

The following is a summary of stock-based compensation award activity for the periods ended June 30, 2022 and 2021:

For the Six Months Ended June 30, 2022

Number of Options

Vesting Term

Contractual Term

Grant Date Fair Value

Awards outstanding under the MSGM 2021 Stock Plan as of January 1, 2022 (net of forfeitures)

297,401

Stock options awarded to employees under the MSGM 2021 Stock Plan

569,348

3 Years

10 Years

1,171,370

Stock options awarded to Board of Directors under the MSGM 2021 Stock Plan

57,108

1 Year

10 Years

120,630

Forfeited, cancelled or expired

(162,190

)

Awards outstanding under the MSGM 2021 Stock Plan as of June 30, 2022 (net of forfeitures)

761,667

SCHEDULE OF STOCK BASED COMPENSATION EXPENSE

The following table summarizes stock-based compensation expense resulting from equity awards included in the Company’s consolidated statement of operations:

	2022		2021			2022		2021
	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2022		2021			2022		2021
G&A	$	188,201	$	136,155		$	458,323	$	9,051,518
Sales & Marketing		32,365		(34,350	)		78,839		83,372
Development		18,007		14,469			54,441		58,300
Stock-based compensation expense	$	238,573	$	116,274		$	591,603	$	9,193,190

SCHEDULE OF MATURITIES OF LEASE LIABILITIES (Details)	Jun. 30, 2022 USD ($)
Leases
2022 (remaining period)	$ 253,005
2023	509,676
2024	420,525
2025	286,897
2026	273,522
Thereafter	65,037
Total lease payments	1,808,662
Less effects of imputed interest	(238,234)
Present value of lease liabilities	$ 1,570,428

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net Loss	$ (23,454,716)	$ (20,046,367)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of intangible assets	4,640,102
Impairment of goodwill	4,788,268
Depreciation and amortization	1,071,172	659,309
Non-Cash lease expense	196,938
Stock-based compensation	591,603	9,193,190
Gain on equity method investment		(1,370,837)
Sales return and price protection reserves	1,098,397	199,940
(Increase) decrease in assets and increase (decrease) in liabilities, net of acquisitions and the effect of consolidation of equity affiliates:
Account receivables	2,877,935	2,149,685
Operating lease liabilities	(194,117)
Prepaid expenses and other assets	(572,926)	(751,480)
Other assets		25,000
Accounts payable	(1,455,211)	(579,061)
Other non-current liabilities	(475,927)	60,946
Accrued expenses	(1,160,816)	(804,871)
Net cash used in operating activities	(12,049,298)	(11,264,546)
Cash flows from investing activities:
Acquisition of Le Mans, net of cash acquired		153,250
Acquisition of Motorsport Games Australia		(1,000,000)
Acquisition of Studio 397		(12,785,463)
Purchase commitment liability		(27,928)
Purchase of property and equipment	(196,346)	(348,033)
Net cash used in investing activities	(196,346)	(14,008,174)
Cash flows from financing activities:
Advances from related parties	143,517	1,868,312
Repayments on advances from related parties	(24,913)	(12,663,168)
Repayments of purchase commitment liabilities	(1,000,000)
Purchase of non-controlling interest		(3,599,211)
Contributed capital from non-controlling shareholders		234,754
Payment of license liabilities	(100,000)
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting costs		63,661,128
Net cash (used in) provided by financing activities	(981,396)	49,501,815
Effect of exchange rate changes on cash	630,451	83,577
Net increase (decrease) in cash	(12,596,589)	24,312,672
Cash at beginning of period	17,819,640	3,990,532
Cash at end of period	5,223,051	28,303,204
Cash paid during the period for:
Interest		804,674
Non-cash investing and financing activities:
Shares issued to 704Games former minority shareholders		86
Purchase commitment liability	29,681	3,126,314
Reduction of additional paid-in capital for purchased 704Games minority shares		939,511
Reduction of additional paid-in capital for initial public offering issuance costs that were previously paid		587,000
Purchase of additional interest in Le Mans Esports Series Ltd.		$ 1,584,892

INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTANGIBLE ASSETS

The following is a summary of intangible assets as of June 30, 2022:

SCHEDULE OF INTANGIBLE ASSETS

	Licensing Agreements (Finite)		Licensing Agreements (Indefinite)			Software Licenses (Finite)			Distribution Contracts (Finite)		Trade Names (Indefinite)			Non-Compete Agreements (Finite)			Accumulated Amortization			Total
Balance as of December 31, 2021	$	7,198,363	$	2,810,000		$	10,364,541		$	560,000	$	2,672,581		$	257,530		$	(3,377,206	)	$	20,485,809
Amortization expense		-		-			-			-		-			-			(879,052	)		(879,052	)
Impairment of intangible assets		-		(1,118,209	)		(1,320,993	)		-		(2,200,900	)		-			-			(4,640,102	)
FX translation adjustments		27,507		(213,861	)		(528,818	)		-		(74,229	)		(18,813	)		102,734			(705,480	)
Balance as of June 30, 2022	$	7,225,870	$	1,477,930		$	8,514,730		$	560,000	$	397,452		$	238,717		$	(4,153,524	)	$	14,261,175

SCHEDULE OF ACCUMULATED AMORTIZATION OF INTANGIBLE ASSETS

Accumulated amortization of intangible assets consists of the following:

Licensing Agreements (Finite) Software Licenses (Finite) Distribution Contracts (Finite) Non-Compete Agreements (Finite) Accumulated Amortization

Balance as of December 31, 2021 $ 912,260 $ 1,843,716 $ 560,000 $ 61,230 $ 3,377,206

Amortization expense 113,749 723,628 - 41,675 879,052

Foreign currency translation adjustment - (96,403 ) - (6,331 ) (102,734 )

Balance as of June 30, 2022 $ 1,026,009 $ 2,470,941 $ 560,000 $ 96,574 $ 4,153,524

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 Ended December 31,	Total
2022 (remaining period)	$	1,045,777
2023		1,892,641
2024		1,687,137
2025		1,678,365
2026		1,400,729
Thereafter		2,172,544
	$	9,877,193

CONCENTRATIONS (Tables)

6 Months Ended

Jun. 30, 2022

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, with all the customers listed coming from the Gaming segment, for the following periods:

SCHEDULE OF CONCENTRATIONS

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Customer	2022			2021			2022			2021
Customer B		39.51	%		24.56	%		26.20	%		30.29	%
Customer C		29.72	%		30.60	%		21.61	%		19.24	%
Customer D		24.56	%		31.37	%		21.46	%		36.85	%
Total		93.79	%		86.53	%		69.27	%		86.38	%

*	Less than 10%.

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s trade accounts receivable (net), with all customers coming from the Gaming segment, as of:

	June 30,			December 31,
Customer	2022			2021
Customer A		65.08	%		51.9	%
Customer D		16.71	%		17.7	%
Total		81.79	%		69.6	%

*	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, with all suppliers relating to the Gaming segment, for the following periods:

SCHEDULE OF CONCENTRATIONS

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Supplier	2022			2021			2022			2021
Supplier A		54.66	%		27.40	%		27.42	%		36.41	%
Supplier C		16.90	%		50.86	%		-*	%		33.67	%
Total		71.56	%		78.26	%		27.42	%		70.08	%

*	Less than 10%.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Sales returns and price protection reserves	$ 864,157	$ 81,600	$ 1,098,397	$ 199,940

SCHEDULE OF ESTIMATED AGGREGATE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS (Details)	Jun. 30, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2022 (remaining period)	$ 1,045,777
2023	1,892,641
2024	1,687,137
2025	1,678,365
2026	1,400,729
Thereafter	2,172,544
Estimated aggregate amortization expense	$ 9,877,193

GOODWILL (Tables)

6 Months Ended

Jun. 30, 2022

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 six months ended June 30, 2022 were as follows:

SCHEDULE OF GOODWILL

	Games			Esports			Total
Balance as of January 1, 2022	$	4,802,882		$	64,583		$	4,867,465
Impairment of Goodwill		(4,723,685	)		(64,583	)		(4,788,268	)
Foreign exchange		(79,197	)		-			(79,197	)
Balance as of June 30, 2022	$	-		$	-		$	-

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1A
-URI https://asc.fasb.org/extlink&oid=121556970&loc=SL108378252-109267

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 2
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13854-109267

Reference 11: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 55
-Paragraph 24
-URI https://asc.fasb.org/extlink&oid=122137925&loc=d3e14258-109268

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

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 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 that 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.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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’s 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.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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 in the 2021 Form 10-K 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 recognized as a reduction of revenues for the three and six months ended June 30, 2022 were $864,157 and $1,098,397, respectively. The Company recognized approximately $81,600 and $199,940 of sales returns and price protection charges as a reduction of revenues for the three and six months ended June 30, 2021, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718 – Compensation – Stock Compensation. The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date, 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.

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 Three and Six Months Ended
	June 30,
	2022		2021
Stock options		761,667		574,073
		761,667		574,073

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Income Taxes

On January 8, 2021, Motorsport Gaming, a Florida limited liability company, converted into Motorsport Games, a Delaware corporation, pursuant to a statutory conversion.

The Company is subject to federal and state income taxes in the U.S. The Company files income tax returns in the jurisdictions in which nexus threshold requirements are met.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. ASC 740, Taxes requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized.

The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The Company’s policy is to classify assessments, if any, for tax-related interest as interest expense and penalties as general and administrative expenses in its condensed consolidated statements of operations.

- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

+ References + Details

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 17
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130561-203045

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 20
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130566-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130563-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 20
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130566-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130563-203045

Reference 7: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126899994&loc=d3e18823-107790

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 20
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130566-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 19
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130564-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 20
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130566-203045

+ Details

- Definition

Disclosure of accounting policy for award under share-based payment arrangement. Includes, but is not limited to, methodology and assumption used in measuring cost.

+ References + Details

SCHEDULE OF REMAINING LEASE TERMS (Details)	Jun. 30, 2022
Leases
Weighted-average remaining lease term - operating leases (years)	4 years 1 month 17 days
Weighted-average discount rate - operating leases	7.54%

INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
INTANGIBLE ASSETS (Details Narrative) - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Indefinite-Lived Intangible Assets [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	$ 2,201,000		$ 2,201,000
Impairment of Intangible Assets, Indefinite-Lived (Excluding Goodwill)			1,120.00
Impairment Loss			1,320,000
Amortization expense	396,500	$ 471,000	879,000	$ 581,500
Intangible assets	14,261,175		14,261,175		$ 20,485,809
Non-amortizing Intangible Assets [Member]
Indefinite-Lived Intangible Assets [Line Items]
Intangible assets	$ 3,460,000		3,460,000
Licensing Agreements [Member]
Indefinite-Lived Intangible Assets [Line Items]
Indefinite-Lived Intangible Assets Acquired			$ 774,680

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)		6 Months Ended
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	Jan. 15, 2021	Jun. 30, 2022	Dec. 31, 2021
Class of Stock [Line Items]
Proceeds from issuance initial public offering	$ 63,100,000
704 Games Company [Member]
Class of Stock [Line Items]
Warrants outstanding		4,000	4,000
Warrants exercise price		$ 93.03	$ 93.03
704 Games Company [Member] \| Warrant [Member]
Class of Stock [Line Items]
Remaining life of years		3 years 3 months 18 days
Common Class A [Member] \| IPO [Member]
Class of Stock [Line Items]
Stock issued during period, shares, new issues	3,450,000
Shares issued, price per share	$ 20.00
Proceeds from issuance initial public offering	$ 63,073,783
Common Class A [Member] \| IPO [Member] \| Additional Shares for Underwriters [Member]
Class of Stock [Line Items]
Stock issued during period, shares, new issues	450,000

SCHEDULE OF CALCULATION WEIGHTED AVERAGE DILUTIVE COMMON SHARES (Details) - shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded in computation of earnings per common share	761,667	574,073
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	761,667	574,073

SCHEDULE OF ACCRUED EXPENSES (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued royalties	$ 851,574	$ 1,694,011
Accrued professional fees	50,000	80,909
Accrued consulting fees	352,422	106,006
Accrued development costs	320,359	968,007
Esport prize money	11,126	168,959
Accrued taxes	74,402	31,491
Accrued payroll	116,293	235,224
Accrued other	180,583	239,664
Total	$ 1,956,759	$ 3,524,271

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Net loss	$ (7,487,671)	$ (5,960,943)	$ (23,454,716)	$ (20,046,367)
Other comprehensive income (loss):
Foreign currency translation adjustments	136,976	(70,809)	11,731	(103,723)
Comprehensive loss	(7,350,695)	(6,031,752)	(23,442,985)	(20,150,090)
Comprehensive loss attributable to non-controlling interests	(140,224)	(180,849)	(1,028,945)	(454,299)
Comprehensive loss attributable to Motorsport Games Inc.	$ (7,210,471)	$ (5,850,903)	$ (22,414,040)	$ (19,695,791)

- 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

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

+ References

Reference 1: 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(g)(1)(ii))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126968391&loc=SL7669619-108580

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (a)(1)
-URI https://asc.fasb.org/extlink&oid=109239629&loc=SL4573702-111684

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 9
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22663-107794

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(i))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(i))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL123482106-238011

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 50
-Paragraph 6
-URI https://asc.fasb.org/extlink&oid=124431353&loc=SL124452729-227067

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 2
-URI https://asc.fasb.org/extlink&oid=126954810&loc=d3e3000-108585

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 45
-Paragraph 19
-URI https://asc.fasb.org/extlink&oid=126929396&loc=SL4569616-111683

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(A))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI https://asc.fasb.org/extlink&oid=109222650&loc=SL51721683-107760

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=123596393&loc=d3e14064-108612

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 235
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-URI https://asc.fasb.org/extlink&oid=120399901&loc=d3e537907-122884

Reference 23: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126968391&loc=SL7669625-108580

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 26: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(A))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(B))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 29: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(ii))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (c)(1)
-URI https://asc.fasb.org/extlink&oid=109239629&loc=SL4573702-111684

Reference 31: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 55
-Paragraph 4J
-URI https://asc.fasb.org/extlink&oid=120409616&loc=SL4591551-111686

Reference 32: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 55
-Paragraph 4K
-URI https://asc.fasb.org/extlink&oid=120409616&loc=SL4591552-111686

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 8
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22658-107794

+ Details

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)				3 Months Ended	6 Months Ended
	Apr. 30, 2022	Apr. 22, 2022	Aug. 11, 2020	Jun. 30, 2022	Jun. 30, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Other commitment				$ 35,500,000	$ 35,500,000
Payment of royalty					3,550,000
License Agreement [Member] \| Epic Games International [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
License fee royalty percentage			5.00%
Proceeds from royalty				$ 70,641	$ 70,641
Letter Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Deferred purchase price installment		$ 3,200,000
Debt instrument, description		Pursuant to the Amendment, the deferred installment amount due to be paid under the SPA by the Company on the first anniversary of closing was reduced from $3,200,000 to $1,000,000, with the remaining $2,200,000 further deferred and to be paid within 90 days of the date that the Company made the $1,000,000 payment. Further, pursuant to the Amendment, secured obligations under the deed of pledge were correspondingly reduced from $3,200,000 to $2,200,000 following the finalization of an amendment to the deed of pledge on May 12, 2022.
Repayments of Debt	$ 1,000,000	$ 1,000,000

SEGMENT REPORTING

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 13 – SEGMENT REPORTING

The Company’s principal operating segments coincide with the types of products and services to be sold. The products and services from which revenues are derived are consistent with the reporting structure of the Company’s internal organization. The Company’s two reportable segments for the three and six months ended June 30, 2022 and 2021 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 June 30, 2022 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 U.S., 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.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

	For the Three Months Ended,						For the Six Months Ended,
	June 30,						June 30,
	2022			2021			2022			2021

Revenues:
Gaming	$	1,941,938		$	2,238,927		$	4,900,326		$	4,689,140
Esports		67,049			-			430,450			23,919
Total Segment and Consolidated Revenues	$	2,008,987		$	2,238,927		$	5,330,776		$	4,713,059

Cost of Revenues:
Gaming	$	820,740		$	902,751		$	2,224,744		$	1,617,867
Esports		35,417			3,552			645,219			70,244
Total Segment and Consolidated Cost of Revenues	$	856,157		$	906,303		$	2,869,963		$	1,688,111

Gross Profit (Loss):
Gaming	$	1,121,197		$	1,336,176		$	2,675,582		$	3,071,273
Esports		31,633			(3,552	)		(214,769	)		(46,325	)
Total Segment and Consolidated Gross Profit	$	1,152,830		$	1,332,624		$	2,460,813		$	3,024,948

Loss From Operations:
Gaming	$	(6,393,338	)	$	(5,716,887	)	$	(21,437,759	)	$	(20,910,146	)
Esports		(292,077	)		(256,517	)		(851,006	)		(440,327	)
Total Segment and Consolidated Loss From Operations	$	(6,685,415	)	$	(5,973,404	)	$	(22,288,765	)	$	(21,350,473	)

Depreciation and Amortization:
Gaming	$	109,656		$	58,496		$	217,139		$	85,305
Esports		8,069			7,952			16,657			11,918
Total Segment and Consolidated Depreciation and Amortization	$	117,725		$	66,448		$	233,796		$	97,223

Interest Expense, net:
Gaming	$	(191,662	)	$	(31,899	)	$	(393,258	)	$	(151,438	)
Esports		-			-			-			-
Total Segment and Consolidated Interest Expense, net	$	(191,662	)	$	(31,899	)	$	(393,258	)	$	(151,438	)

Gain attributable to equity method investment:
Gaming	$	-		$	-		$	-		$	1,370,837
Esports		-			-			-			-
Total Gain attributable to equity method investment	$	-		$	-		$	-		$	1,370,837
Other (Expense) Income, Net:
Gaming	$	(610,481	)	$	41,932		$	(767,605	)	$	82,279
Esports		(113	)		2,428			(5,088	)		2,428
Total Other (Expense) Income, Net:	$	(610,594	)	$	44,360		$	(772,693	)	$	84,707
Net Loss:
Gaming	$	(7,195,481	)	$	(5,706,855	)	$	(22,598,621	)	$	(19,608,468	)
Esports		(292,190	)		(254,088	)		(856,095	)		(437,899	)
Total Segment and Consolidated Net Loss	$	(7,487,671	)	$	(5,960,943	)	$	(23,454,716	)	$	(20,046,367	)

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

	June 30, 2022		December 31, 2021
Segment Total Assets:
Gaming	$	23,017,840	$	47,511,471
Esports		1,977,711		3,191,732
Consolidated Total Assets	$	24,995,551	$	50,703,203

- 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

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI https://asc.fasb.org/topic&trid=2134510

+ Details

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 11 – 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. Litigation or other legal proceedings, with or without merit, is unpredictable and generally expensive and time consuming and, even if resolved in our favor, is likely to divert significant resources from our core business, including distracting our management personnel from their normal responsibilities.

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 June 30, 2022 and December 31, 2021, the Company has not accrued any amounts for contingencies.

As previously disclosed, on February 11, 2021, HC2 Holdings 2 Inc. (now known as Innovate 2) and Continental General Insurance Company, former minority stockholders of 704Games, filed a complaint in the U.S. 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 manager of Motorsport Network. The complaint was later amended and added Leo Capital Holdings LLC as an additional plaintiff and the controller of Motorsport Network as an additional individual defendant. The complaint alleges, among other things, purported misrepresentations and omissions concerning 704Games’ financial condition made in connection with the Company’s purchase of these minority shareholders’ interest in 704Games in August and October 2021. The complaint asserts claims under Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 thereunder; Section 20(a) of the Exchange Act; Section 20A of the Exchange Act; breach of the Company’s obligations under the Stockholders’ Agreement dated August 14, 2018; fraudulent inducement; breach of fiduciary duties; and 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 the date of plaintiffs’ sale and the purchase price that was paid, 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’ complaint. On March 28, 2022, the court entered an order denying the motion to dismiss. The Company believes that this action is without merit and will continue to vigorously defend itself. However, litigation is inherently uncertain. Accordingly, the Company cannot predict the outcome of this matter and cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with this litigation.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Epic License Agreement

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 non-exclusive, 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. The Company will pay Epic a license fee royalty payment equal to 5% of product revenue, as defined in the licensing agreement. During the three and six months ended June 30, 2022, Epic earned royalties of approximately $70,641 under the agreement. During a 2-year support period, Epic will use commercially reasonable efforts to provide the Company with updates to the Unreal Engine 4 and technical support. Pursuant to the terms of the agreement, the Company has the right to actively develop new or existing authorized products during a 5-year period ending on August 11, 2025.

Minimum Royalty Guarantees

The Company is required to make certain minimum royalty guarantee payments to third-party licensors, arising primarily from its NASCAR, INDYCAR and BTCC licenses, Le Mans Video Gaming License and Le Mans Esports License. These minimum royalty guarantee payments apply throughout the duration of the licensing agreements, which expire between fiscal years ending December 31, 2026 and 2031, and give rise to a commitment of approximately $35.5 million, in the aggregate, for the duration of these arrangements. The Company expects to pay $3.55 million in cash payments in order to comply with the license agreements’ minimum royalty guarantees during the fiscal year ending December 31, 2022.

Purchase Commitment Liabilities

On April 22, 2022, Motorsport Games entered into a letter agreement (the “Amendment”) amending the terms of (i) the share purchase agreement dated March 31, 2021 (the “SPA”) with Luminis International BV, Technology In Business B.V. (“TIB”) and certain of TIB’s shareholders parties to such amendment, relating to the acquisition of Studio397 and (ii) the related deed of pledge that secured the Company’s payment of the $3,200,000 deferred purchase price installment due under the SPA.

Pursuant to the Amendment, the deferred installment amount due to be paid under the SPA by the Company on the first anniversary of closing was reduced from $3,200,000 to $1,000,000, with the remaining $2,200,000 further deferred and to be paid within 90 days of the date that the Company made the $1,000,000 payment. Further, pursuant to the Amendment, secured obligations under the deed of pledge were correspondingly reduced from $3,200,000 to $2,200,000 following the finalization of an amendment to the deed of pledge on May 12, 2022. The $1,000,000 payment was made on April 30, 2022. On July 21, 2022, the Company entered into a letter agreement, effective as of July 19, 2022 (the “Second Amendment”), further amending the terms of the SPA. See Note 14 - Subsequent Events.

SCHEDULE OF STOCK BASED COMPENSATION EXPENSE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 238,573	$ 116,274	$ 591,603	$ 9,193,190
General and Administrative Expense [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	188,201	136,155	458,323	9,051,518
Selling and Marketing Expense [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	32,365	(34,350)	78,839	83,372
Development [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 18,007	$ 14,469	$ 54,441	$ 58,300

SHARE-BASED COMPENSATION (Details Narrative) - USD ($)	6 Months Ended
SHARE-BASED COMPENSATION (Details Narrative) - USD ($)	Jun. 30, 2022	Dec. 31, 2021	Jan. 12, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Compensation expense period	3 years 6 months
Unrecognized stock based compensation expense	$ 2,000,000
MSGM 2021 Stock Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Compensation expense period	10 years
MSGM 2021 Stock Plan [Member] \| Board of Directors [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Compensation expense period	1 year
Number of options, granted	57,108
Grant date fair value	$ 120,630
MSGM 2021 Stock Plan [Member] \| Board of Directors [Member] \| Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options, granted	37,690
Common Class A [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock, shares authorized	100,000,000	100,000,000
Shares available for issuance	200,643
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			1,000,000

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

3 Months Ended

6 Months Ended

Jun. 30, 2022

Mar. 31, 2022

Jun. 30, 2021

Mar. 31, 2021

Jun. 30, 2022

Jun. 30, 2021

Dec. 31, 2021

Revenue from External Customer [Line Items]

Revenues

$ 2,008,987

$ 2,238,927

$ 5,330,776

$ 4,713,059

Cost of Revenues

^[1]

856,157

906,303

2,869,963

1,688,111

Gross Profit (Loss)

1,152,830

1,332,624

2,460,813

3,024,948

Loss From Operations

(6,685,415)

(5,973,404)

(22,288,765)

(21,350,473)

Depreciation and Amortization

117,725

66,448

233,796

97,223

Interest Expense, net

(191,662)

(31,899)

(393,258)

(151,438)

Total Gain attributable to equity method investment

1,370,837

Total Other (Expense) Income, Net

(610,594)

44,360

(772,693)

84,707

Net Loss

(7,487,671)

$ (15,967,045)

(5,960,943)

$ (14,085,424)

(23,454,716)

(20,046,367)

Segment Total Assets

24,995,551

$ 50,703,203

Gaming [Member]

Revenue from External Customer [Line Items]

Revenues

1,941,938

2,238,927

4,900,326

4,689,140

Cost of Revenues

820,740

902,751

2,224,744

1,617,867

Gross Profit (Loss)

1,121,197

1,336,176

2,675,582

3,071,273

Loss From Operations

(6,393,338)

(5,716,887)

(21,437,759)

(20,910,146)

Depreciation and Amortization

109,656

58,496

217,139

85,305

Interest Expense, net

(191,662)

(31,899)

(393,258)

(151,438)

Total Gain attributable to equity method investment

1,370,837

Total Other (Expense) Income, Net

(610,481)

41,932

(767,605)

82,279

Net Loss

(7,195,481)

(5,706,855)

(22,598,621)

(19,608,468)

Segment Total Assets

23,017,840

47,511,471

Esports [Member]

Revenue from External Customer [Line Items]

Revenues

67,049

430,450

23,919

Cost of Revenues

35,417

3,552

645,219

70,244

Gross Profit (Loss)

31,633

(3,552)

(214,769)

(46,325)

Loss From Operations

(292,077)

(256,517)

(851,006)

(440,327)

Depreciation and Amortization

8,069

7,952

16,657

11,918

Interest Expense, net

Total Gain attributable to equity method investment

Total Other (Expense) Income, Net

(113)

2,428

(5,088)

2,428

Net Loss

(292,190)

$ (254,088)

(856,095)

$ (437,899)

Segment Total Assets

$ 1,977,711

$ 3,191,732

[1]	Includes related party costs of $0 and $0 for the three months ended June 30, 2022 and 2021, respectively, and $6,228 and $0 for the six months ended June 30, 2022 and 2021, respectively.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Class A [Member] Common Stock [Member]	Common Class B [Member] Common Stock [Member]	Members Equity [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance - March 31, 2021 at Dec. 31, 2020			$ 3,791,674		$ (4,826,335)	$ 4,928	$ (1,029,733)	$ 2,645,559	$ 1,615,826
Beginning balance, shares at Dec. 31, 2020
Stock-based compensation	$ 33			9,076,883			9,076,916		9,076,916
Stock-based compensation, shares	330,633
Other comprehensive loss						(32,914)	(32,914)		(32,914)
Net loss					(13,811,974)		(13,811,974)	(273,450)	(14,085,424)
Conversion of membership interests into shares of common stock	700	700	(3,791,674)	3,790,274
Conversion of membership interests into shares of common stock, shares	7,000,000	7,000,000
Issuance of common stock in initial public offering, net [1]	$ 345			63,073,783			63,074,128		63,074,128
Issuance of common stock in initial public offering, net, shares	3,450,000
Purchase of additional interest in Le Mans Esports Series Ltd.								1,584,892	1,584,892
Ending balance, shares at Mar. 31, 2021	10,780,633
Balance - June 30, 2021 at Mar. 31, 2021	$ 1,078	700		75,940,940	(18,638,309)	(27,986)	57,276,423	3,957,001	61,233,424
Balance - March 31, 2021 at Dec. 31, 2020			3,791,674		(4,826,335)	4,928	(1,029,733)	2,645,559	1,615,826
Beginning balance, shares at Dec. 31, 2020
Net loss									(20,046,367)
Ending balance, shares at Jun. 30, 2021	11,635,897	7,000,000
Balance - June 30, 2021 at Jun. 30, 2021	$ 1,164	$ 700		75,117,703	(24,418,403)	(98,795)	50,602,369	1,351,120	51,953,489
Balance - March 31, 2021 at Mar. 31, 2021	$ 1,078	700		75,940,940	(18,638,309)	(27,986)	57,276,423	3,957,001	61,233,424
Beginning balance, shares at Mar. 31, 2021	10,780,633
Stock-based compensation				116,274			116,274		116,274
Other comprehensive loss						(70,809)	(70,809)		(70,809)
Net loss					(5,780,094)		(5,780,094)	(180,849)	(5,960,943)
Issuance of common stock to 704Games former minority shareholders	$ 86						86		86
Issuance of common stock to Gaming Nation and Playfast, shares	855,264
Purchase of 704Games minority interest				(939,511)			(939,511)	(2,659,786)	(3,599,297)
ACO Investment in Le Mans Esports Series Ltd.								234,754	234,754
Ending balance, shares at Jun. 30, 2021	11,635,897	7,000,000
Balance - June 30, 2021 at Jun. 30, 2021	$ 1,164	$ 700		75,117,703	(24,418,403)	(98,795)	50,602,369	1,351,120	51,953,489
Balance - March 31, 2021 at Dec. 31, 2021	$ 1,164	$ 700		75,651,175	(37,988,326)	(945,375)	36,719,338	1,262,665	37,982,003
Beginning balance, shares at Dec. 31, 2021	11,635,897	7,000,000
Stock-based compensation	$ 4			353,026			353,030		353,030
Stock-based compensation, shares	37,690
Other comprehensive loss						(125,245)	(125,245)	(59,293)	(184,538)
Net loss					(15,137,617)		(15,137,617)	(829,428)	(15,967,045)
Ending balance, shares at Mar. 31, 2022	11,673,587	7,000,000
Balance - June 30, 2021 at Mar. 31, 2022	$ 1,168	$ 700		76,004,201	(53,125,943)	(1,070,620)	21,809,506	373,944	22,183,450
Balance - March 31, 2021 at Dec. 31, 2021	$ 1,164	$ 700		75,651,175	(37,988,326)	(945,375)	36,719,338	1,262,665	37,982,003
Beginning balance, shares at Dec. 31, 2021	11,635,897	7,000,000
Net loss									(23,454,716)
Ending balance, shares at Jun. 30, 2022	11,673,587
Balance - June 30, 2021 at Jun. 30, 2022	$ 1,168	$ 700		76,242,774	(60,531,239)	(933,644)	14,779,759	233,720	15,013,479
Balance - March 31, 2021 at Mar. 31, 2022	$ 1,168	$ 700		76,004,201	(53,125,943)	(1,070,620)	21,809,506	373,944	22,183,450
Beginning balance, shares at Mar. 31, 2022	11,673,587	7,000,000
Stock-based compensation				238,573			238,573		238,573
Other comprehensive loss						136,976	136,976	(57,849)	79,127
Net loss					(7,405,296)		(7,405,296)	(82,375)	(7,487,671)
Ending balance, shares at Jun. 30, 2022	11,673,587
Balance - June 30, 2021 at Jun. 30, 2022	$ 1,168	$ 700		$ 76,242,774	$ (60,531,239)	$ (933,644)	$ 14,779,759	$ 233,720	$ 15,013,479

GOODWILL

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

NOTE 4 – GOODWILL

The carrying amount of goodwill attributable to our Gaming and Esports reporting units and the changes in such balances during the six months ended June 30, 2022 were as follows:

SCHEDULE OF GOODWILL

	Games			Esports			Total
Balance as of January 1, 2022	$	4,802,882		$	64,583		$	4,867,465
Impairment of Goodwill		(4,723,685	)		(64,583	)		(4,788,268	)
Foreign exchange		(79,197	)		-			(79,197	)
Balance as of June 30, 2022	$	-		$	-		$	-

During the six months ending June 30, 2022, the Company identified triggering events that indicated its goodwill associated with the acquisition of Studio397 B.V. (“Studio397”) was at risk of impairment and as such, performed a quantitative impairment assessment to determine whether the fair value of the associated reporting unit exceeded its fair value. The primary triggers for the impairment review were changes made to Motorsport Games’ product roadmap during the six months ended June 30, 2022, which resulted in changes to the scope and timing of certain product releases, as well as changes in the value of Motorsport Games’ market capitalization which had reduced significantly subsequent to December 31, 2021, the date of the last impairment assessment.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

As a result of the quantitative assessment, the Company determined the carrying value of its Gaming reporting unit exceeded its fair value and determined the associated goodwill was fully impaired. An impairment loss of $4,788,268 was recorded for the six months ended June 30, 2022. The Company determined the fair value of the Gaming reporting unit using a discounted cash flow valuation model. The impairment loss was primarily driven by a reduction in expected future revenues, following changes to the Company’s product roadmap, as well as a higher discount rate applied in the valuation model. The principal assumptions used in the discounted cash flow valuation model were forecasted revenues and weighted average cost of capital (i.e., the discount rate).

The impairment loss is presented as impairment of goodwill in the condensed consolidated statements of operations and comprehensive loss.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the significant accounting policies included in the audited consolidated financial statements included in the 2021 Form 10-K, except as disclosed in this note.

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.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Sales Returns and Price Protection Reserves

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 Three and Six Months Ended
	June 30,
	2022		2021
Stock options		761,667		574,073
		761,667		574,073

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Income Taxes

On January 8, 2021, Motorsport Gaming, a Florida limited liability company, converted into Motorsport Games, a Delaware corporation, pursuant to a statutory conversion.

The Company is subject to federal and state income taxes in the U.S. The Company files income tax returns in the jurisdictions in which nexus threshold requirements are met.

The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

SEGMENT REPORTING (Details Narrative) - Segment	3 Months Ended		6 Months Ended
SEGMENT REPORTING (Details Narrative) - Segment	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Segment Reporting [Abstract]
Number of reportable segments	2	2	2	2

SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

NOTE 10 – SHARE-BASED COMPENSATION

On January 12, 2021, in connection with initial public offering, 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 June 30, 2022, 200,643 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.

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 Motorsport Games’ Chief Executive Officer in conjunction with Motorsport Games’ initial public offering that vested immediately, as well as those made to Motorsport Games’ 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.

The following is a summary of stock-based compensation award activity for the periods ended June 30, 2022 and 2021:

For the Six Months Ended June 30, 2022

Number of Options

Vesting Term

Contractual Term

Grant Date Fair Value

Awards outstanding under the MSGM 2021 Stock Plan as of January 1, 2022 (net of forfeitures)

297,401

Stock options awarded to employees under the MSGM 2021 Stock Plan

569,348

3 Years

10 Years

1,171,370

Stock options awarded to Board of Directors under the MSGM 2021 Stock Plan

57,108

1 Year

10 Years

120,630

Forfeited, cancelled or expired

(162,190

)

Awards outstanding under the MSGM 2021 Stock Plan as of June 30, 2022 (net of forfeitures)

761,667

In addition to the equity awards granted and detailed above, the Company granted 37,690 restricted stock awards under the MSGM 2021 Stock Plan to its Board of Directors in January 2022 that vested on issuance, with a grant date fair value of $120,630.

Stock-Based Compensation

The following table summarizes stock-based compensation expense resulting from equity awards included in the Company’s consolidated statement of operations:

	2022		2021			2022		2021
	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2022		2021			2022		2021
G&A	$	188,201	$	136,155		$	458,323	$	9,051,518
Sales & Marketing		32,365		(34,350	)		78,839		83,372
Development		18,007		14,469			54,441		58,300
Stock-based compensation expense	$	238,573	$	116,274		$	591,603	$	9,193,190

As of June 30, 2022, there was approximately $2,000,000 of unrecognized stock-based compensation expense which will be recognized over approximately 3.5 years.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION (Details Narrative) - USD ($)		3 Months Ended				6 Months Ended
	Jan. 15, 2021	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Initial public offering	$ 63,100,000
Net loss		$ 7,487,671	$ 15,967,045	$ 5,960,943	$ 14,085,424	$ 23,454,716	$ 20,046,367
Net Cash Provided by (Used in) Operating Activities						12,049,298	$ 11,264,546
Retained Earnings (Accumulated Deficit)		60,531,239				60,531,239		$ 37,988,326
Right of use assets		1,567,838				1,567,838
Leasing Arrangements [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Right of use assets		$ 751,000				$ 751,000

- Definition

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

+ References

+ Details

RELATED PARTY TRANSACTIONS (Details Narrative)	6 Months Ended
RELATED PARTY TRANSACTIONS (Details Narrative)	Jun. 30, 2022 USD ($)
Promissory Note [Member]
Short-Term Debt [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	$ 143,517

SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

SCHEDULE OF SEGMENT REPORTING INFORMATION

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

	For the Three Months Ended,						For the Six Months Ended,
	June 30,						June 30,
	2022			2021			2022			2021

Revenues:
Gaming	$	1,941,938		$	2,238,927		$	4,900,326		$	4,689,140
Esports		67,049			-			430,450			23,919
Total Segment and Consolidated Revenues	$	2,008,987		$	2,238,927		$	5,330,776		$	4,713,059

Cost of Revenues:
Gaming	$	820,740		$	902,751		$	2,224,744		$	1,617,867
Esports		35,417			3,552			645,219			70,244
Total Segment and Consolidated Cost of Revenues	$	856,157		$	906,303		$	2,869,963		$	1,688,111

Gross Profit (Loss):
Gaming	$	1,121,197		$	1,336,176		$	2,675,582		$	3,071,273
Esports		31,633			(3,552	)		(214,769	)		(46,325	)
Total Segment and Consolidated Gross Profit	$	1,152,830		$	1,332,624		$	2,460,813		$	3,024,948

Loss From Operations:
Gaming	$	(6,393,338	)	$	(5,716,887	)	$	(21,437,759	)	$	(20,910,146	)
Esports		(292,077	)		(256,517	)		(851,006	)		(440,327	)
Total Segment and Consolidated Loss From Operations	$	(6,685,415	)	$	(5,973,404	)	$	(22,288,765	)	$	(21,350,473	)

Depreciation and Amortization:
Gaming	$	109,656		$	58,496		$	217,139		$	85,305
Esports		8,069			7,952			16,657			11,918
Total Segment and Consolidated Depreciation and Amortization	$	117,725		$	66,448		$	233,796		$	97,223

Interest Expense, net:
Gaming	$	(191,662	)	$	(31,899	)	$	(393,258	)	$	(151,438	)
Esports		-			-			-			-
Total Segment and Consolidated Interest Expense, net	$	(191,662	)	$	(31,899	)	$	(393,258	)	$	(151,438	)

Gain attributable to equity method investment:
Gaming	$	-		$	-		$	-		$	1,370,837
Esports		-			-			-			-
Total Gain attributable to equity method investment	$	-		$	-		$	-		$	1,370,837
Other (Expense) Income, Net:
Gaming	$	(610,481	)	$	41,932		$	(767,605	)	$	82,279
Esports		(113	)		2,428			(5,088	)		2,428
Total Other (Expense) Income, Net:	$	(610,594	)	$	44,360		$	(772,693	)	$	84,707
Net Loss:
Gaming	$	(7,195,481	)	$	(5,706,855	)	$	(22,598,621	)	$	(19,608,468	)
Esports		(292,190	)		(254,088	)		(856,095	)		(437,899	)
Total Segment and Consolidated Net Loss	$	(7,487,671	)	$	(5,960,943	)	$	(23,454,716	)	$	(20,046,367	)

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

	June 30, 2022		December 31, 2021
Segment Total Assets:
Gaming	$	23,017,840	$	47,511,471
Esports		1,977,711		3,191,732
Consolidated Total Assets	$	24,995,551	$	50,703,203

LEASES (Details Narrative) - USD ($)		6 Months Ended
LEASES (Details Narrative) - USD ($)	Feb. 08, 2022	Jun. 30, 2022
Leases
Lease description	The term of this new lease is 5 years, which commenced April 1, 2022 and expires on March 31, 2027, and is terminable upon 60-days’ written notice, by either party, with no penalty
Rent paid		$ 22,000

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)

3 Months Ended

6 Months Ended

Jun. 30, 2022

Jun. 30, 2021

Jun. 30, 2022

Jun. 30, 2021

Income Statement [Abstract]

Revenues

$ 2,008,987

$ 2,238,927

$ 5,330,776

$ 4,713,059

Cost of revenues [1]

^[1]

856,157

906,303

2,869,963

1,688,111

Gross profit

1,152,830

1,332,624

2,460,813

3,024,948

Operating expenses:

Sales and marketing

1,540,220

704,222

3,228,669

1,728,440

Development [2]

^[2]

2,681,643

1,818,178

5,085,980

3,068,540

General and administrative [3]

^[3]

3,349,609

4,717,180

6,772,763

19,481,218

Impairment of goodwill

4,788,268

Impairment of intangible assets

149,048

4,640,102

Depreciation and amortization

117,725

66,448

233,796

97,223

Total operating expenses

7,838,245

7,306,028

24,749,578

24,375,421

Loss from operations

(6,685,415)

(5,973,404)

(22,288,765)

(21,350,473)

Interest expense [4]

^[4]

(191,662)

(31,899)

(393,258)

(151,438)

Gain attributable to equity method investment

1,370,837

Other (expense) income, net

(610,594)

44,360

(772,693)

84,707

Net loss

(7,487,671)

(5,960,943)

(23,454,716)

(20,046,367)

Less: Net loss attributable to non-controlling interest

(82,375)

(180,849)

(911,803)

(454,299)

Net loss attributable to Motorsport Games Inc.

$ (7,405,296)

$ (5,780,094)

$ (22,542,913)

$ (19,592,068)

Net loss attributable to Class A common stock per share:

Basic and diluted

$ (0.63)

$ (0.50)

$ (1.93)

$ (1.88)

Weighted-average shares of Class A common stock outstanding:

Basic and diluted

11,673,587

11,494,919

11,670,888

10,421,910

[1]	Includes related party costs of $0 and $0 for the three months ended June 30, 2022 and 2021, respectively, and $6,228 and $0 for the six months ended June 30, 2022 and 2021, respectively.
[2]	Includes related party expenses of $824 and $10,882 for the three months ended June 30, 2022 and 2021, respectively, and $23,430 and $11,459 for the six months ended June 30, 2022 and 2021, respectively.
[3]	Includes related party expenses of $75,451 and $134,284 for the three months ended June 30, 2022 and 2021, respectively, and $98,337 and $1,570,518 for the six months ended June 30, 2022 and 2021, respectively.
[4]	Includes related party expenses of $0 and $0 for the three months ended June 30, 2022 and 2021, respectively, and $0 and $105,845 for the six months ended June 30, 2022 and 2021, respectively.

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

SCHEDULE OF ACCRUED EXPENSES

Accrued expenses and other liabilities consisted of the following:

SCHEDULE OF ACCRUED EXPENSES

	June 30		December 31,
	2022		2021
Accrued royalties	$	851,574	$	1,694,011
Accrued professional fees		50,000		80,909
Accrued consulting fees		352,422		106,006
Accrued development costs		320,359		968,007
Esport prize money		11,126		168,959
Accrued taxes		74,402		31,491
Accrued payroll		116,293		235,224
Accrued other		180,583		239,664
Total	$	1,956,759	$	3,524,271

LEASES (Tables)

6 Months Ended

Jun. 30, 2022

Leases

SCHEDULE OF LEASE COST

The components of lease expense were as follows:

SCHEDULE OF LEASE COST

	Condensed Consolidated Statement of	Three Months Ended		Six Months Ended
	Comprehensive Loss Classification	June 30, 2022		June 30, 2022
Short-term operating lease expense	G&A	$	23,951	$	52,916
Operating lease expense	G&A		126,237		196,938
Total lease costs		$	150,188	$	249,854

SCHEDULE OF REMAINING LEASE TERMS

Weighted average remaining lease terms and weighted average discount rates are as follows:

SCHEDULE OF REMAINING LEASE TERMS

Six Months

Ended

June 30, 2022

Weighted-average remaining lease term - operating leases (years)

4.13

Weighted-average discount rate - operating leases

7.54

SCHEDULE OF CASH FLOW SUPPLEMENTAL

Supplemental cash flow information related to leases is as follows:

SCHEDULE OF CASH FLOW SUPPLEMENTAL

Six Months

Ended

June 30, 2022

Cash paid for amounts included in the measurement of operating lease liabilities

249,854

Right of use assets obtained in exchange for new lease obligations

1,086,668

SCHEDULE OF MATURITIES OF LEASE LIABILITIES

As of June 30, 2022, maturities related to lease liabilities were as follows:

	Operating Leases
2022 (remaining period)	$	253,005
2023		509,676
2024		420,525
2025		286,897
2026		273,522
Thereafter		65,037
Total lease payments	$	1,808,662
Less effects of imputed interest		(238,234)
Present value of lease liabilities	$	1,570,428

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14 - SUBSEQUENT EVENTS

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements were issued.

On July 21, 2022, the Company entered into a letter agreement effective as of July 19, 2022 (the “Second Amendment”), further amending the terms of the share purchase agreement, dated March 31, 2021 (the “SPA”), with Luminis International BV and Technology In Business B.V. (“TIB”) and certain of TIB’s shareholders.

Pursuant to the Second Amendment, the deferred purchase price installment that was otherwise due to be paid by the Company on July 19, 2022 was reduced from $2,200,000 to $1,870,000 as a result of the Company’s pay down of $330,000 in July 2022. Under the Second Amendment, the remaining balance of $1,870,000, plus interest thereon at 15% per annum, is to be paid as follows: (i) $100,000 monthly payments from August 15, 2022 through December of 2022; and (ii) $150,000 monthly payments from January 15, 2023 until the entire unpaid $1,870,000 and accrued and unpaid interest thereon are paid in full. Further, pursuant to the Second Amendment, secured obligations under the deed of pledge have been correspondingly reduced from $2,200,000 to $1,870,000.

On August 9, 2022, the Company terminated the Lemon City Lease in accordance with its terms, without penalty, effective as of October 8, 2022.

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Allowances for doubtful accounts receivable	$ 3,596,634	$ 4,563,884
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common Class A [Member]
Common Stock, Par or Stated Value Per Share	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	11,673,587	11,635,897
Common stock, shares outstanding	11,673,587	11,635,897
Common Class B [Member]
Common Stock, Par or Stated Value Per Share	$ 0.0001	$ 0.0001
Common stock, shares authorized	7,000,000	7,000,000
Common stock, shares issued	7,000,000	7,000,000
Common stock, shares outstanding	7,000,000	7,000,000

SCHEDULE OF LEASE COST (Details) - USD ($)	3 Months Ended	6 Months Ended
SCHEDULE OF LEASE COST (Details) - USD ($)	Jun. 30, 2022	Jun. 30, 2022
Leases
Short-term operating lease expense	$ 23,951	$ 52,916
Operating lease expense	126,237	196,938
Total lease costs	$ 150,188	$ 249,854

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2022

RELATED PARTY TRANSACTIONS

NOTE 8 – RELATED PARTY TRANSACTIONS

From time to time, Motorsport Network, and other related entities pay for Company expenses on the Company’s behalf. During the six months ended June 30, 2022, the Company incurred expenses of $143,517 that were paid by Motorsport Network on its behalf and are reimbursable by the Company to Motorsport Network. In addition, the Company has a promissory note with Motorsport Network, which is discussed in Note 7 – Due To/From Related Parties.

Leasing agreements

On February 8, 2022, the Company entered into the Lemon City Lease with Lemon City Group, LLC, an entity affiliated with our majority shareholder, Motorsport Network, for office space located in Miami, Florida. See Note 5 – Leases for further information.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

LEASES

6 Months Ended

Jun. 30, 2022

Leases

LEASES

NOTE 5 - LEASES

The Company’s operating leases primarily relate to real estate, which include office space in the U.S., the U.K., and Russia. The Company’s leases have established fixed payment terms that are typically subject to annual rent increases throughout the term of each lease agreement. The Company’s lease agreements have varying noncancelable rental periods and do not typically include options for the Company to extend the lease terms.

The Company’s operating leases have been presented in operating lease right-of-use assets, operating lease liabilities (short-term) and operating lease liabilities (long-term), on the Company’s condensed consolidated balance sheet as of June 30, 2022. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Refer to Note 1, Business Organization, Nature of Operations, Risks and Uncertainties and Basis of Presentation, for further information on the adoption of ASC 842.

Incremental borrowing rate

The Company’s lease agreements do not provide an implicit rate to determine the present value of lease payments. As such, the Company uses its incremental borrowing rate to determine the present value of lease payments. The Company derives its incremental borrowing rate from information available at the lease commencement date, which represents a collateralized rate of interest the Company would have to pay to borrow over a similar term an amount equal to the lease payments in a similar economic environment. As the Company did not have external borrowings at the adoption date with comparable terms to its lease agreements, the Company estimated its borrowing rate based on prime lending rate (“Prime Rate”), adjusted for the US Treasury note rates for the same term as the associated lease and the Company’s credit risk spread.

The components of lease expense were as follows:

SCHEDULE OF LEASE COST

	Condensed Consolidated Statement of	Three Months Ended		Six Months Ended
	Comprehensive Loss Classification	June 30, 2022		June 30, 2022
Short-term operating lease expense	G&A	$	23,951	$	52,916
Operating lease expense	G&A		126,237		196,938
Total lease costs		$	150,188	$	249,854

Weighted average remaining lease terms and weighted average discount rates are as follows:

SCHEDULE OF REMAINING LEASE TERMS

Six Months

Ended

June 30, 2022

Weighted-average remaining lease term - operating leases (years)

4.13

Weighted-average discount rate - operating leases

7.54

Supplemental cash flow information related to leases is as follows:

SCHEDULE OF CASH FLOW SUPPLEMENTAL

Six Months

Ended

June 30, 2022

Cash paid for amounts included in the measurement of operating lease liabilities

249,854

Right of use assets obtained in exchange for new lease obligations

1,086,668

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

As of June 30, 2022, maturities related to lease liabilities were as follows:

	Operating Leases
2022 (remaining period)	$	253,005
2023		509,676
2024		420,525
2025		286,897
2026		273,522
Thereafter		65,037
Total lease payments	$	1,808,662
Less effects of imputed interest		(238,234)
Present value of lease liabilities	$	1,570,428

New lease agreements

On February 8, 2022, the Company entered into a new lease agreement with Lemon City Group, LLC, an entity affiliated with our majority shareholder, Motorsport Network, for office space located in Miami, Florida (the “Lemon City Lease”). The term of this new lease is 5 years, which commenced April 1, 2022 and expires on March 31, 2027, and is terminable upon 60-days’ written notice, by either party, with no penalty. The base rent from this new lease is fixed at approximately $22,000 per month. On April 1, 2022, the previous lease agreement for office space in Miami, Florida between 704Games LLC and Lemon City Group, LLC was terminated without penalty. See Note 14 – Subsequent Events for further information regarding this lease.

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2022	Aug. 09, 2022
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	001-39868
Entity Registrant Name	Motorsport Games Inc.
Entity Central Index Key	0001821175
Entity Tax Identification Number	86-1791356
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	5972 NE 4th Avenue
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33137
City Area Code	(305)
Local Phone Number	507-8799
Title of 12(b) Security	Class A common stock, $0.0001 par value per share
Trading Symbol	MSGM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Common Class A [Member]
Entity Common Stock, Shares Outstanding		11,673,587
Common Class B [Member]
Entity Common Stock, Shares Outstanding		7,000,000

SCHEDULE OF STOCK-BASED COMPENSATION OPTIONS ACTIVITY (Details)	6 Months Ended
	Jun. 30, 2022 USD ($) shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Vesting term, granted	3 years 6 months
MSGM 2021 Stock Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options, outstanding, beginning	297,401
Number of options, forfeited, cancelled or expired	(162,190)
Number of options, outstanding, ending	761,667
MSGM 2021 Stock Plan [Member] \| Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options, granted	569,348
Vesting term, granted	3 years
Contractual term, granted	10 years
Grant date fair value \| $	$ 1,171,370
MSGM 2021 Stock Plan [Member] \| Board of Directors [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options, granted	57,108
Vesting term, granted	1 year
Contractual term, granted	10 years
Grant date fair value \| $	$ 120,630

SCHEDULE OF CONCENTRATIONS (Details)

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2022

Jun. 30, 2021

Jun. 30, 2022

Jun. 30, 2021

Dec. 31, 2021

Revenue Benchmark [Member] | Supplier Concentration Risk [Member] | Supplier A [Member]

Concentration Risk [Line Items]

Concentration risk percentage

54.66%

27.40%

27.42%

36.41%

Revenue Benchmark [Member] | Supplier Concentration Risk [Member] | Supplier C [Member]

Concentration Risk [Line Items]

Concentration risk percentage

16.90%

50.86%

^[1]

33.67%

Revenue Benchmark [Member] | Supplier Concentration Risk [Member] | Supplier [Member]

Concentration Risk [Line Items]

Concentration risk percentage

71.56%

78.26%

27.42%

70.08%

Customer B [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration risk percentage

39.51%

24.56%

26.20%

30.29%

Customer C [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration risk percentage

29.72%

30.60%

21.61%

19.24%

Customer D [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration risk percentage

24.56%

31.37%

21.46%

36.85%

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

Concentration Risk [Line Items]

Concentration risk percentage

16.71%

17.70%

Customer [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration risk percentage

93.79%

86.53%

69.27%

86.38%

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

Concentration Risk [Line Items]

Concentration risk percentage

81.79%

69.60%

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

Concentration Risk [Line Items]

Concentration risk percentage

65.08%

51.90%

[1]	Less than 10%.

SCHEDULE OF CASH FLOW SUPPLEMENTAL (Details)	6 Months Ended
SCHEDULE OF CASH FLOW SUPPLEMENTAL (Details)	Jun. 30, 2022 USD ($)
Leases
Cash paid for amounts included in the measurement of operating lease liabilities	$ 249,854
Right of use assets obtained in exchange for new lease obligations	$ 1,086,668

SCHEDULE OF INTANGIBLE ASSETS (Details)	6 Months Ended
SCHEDULE OF INTANGIBLE ASSETS (Details)	Jun. 30, 2022 USD ($)
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	$ (3,377,206)
Intangible assets, Beginning	20,485,809
Amortization of intangible asset	(879,052)
Impairment of intangible assets finite lived	(4,640,102)
FX translation adjustments	(705,480)
Intangible assets, amortization ending	(4,153,524)
Intangible assets, ending	14,261,175
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net beginning	7,198,363
Intangible assets, amortization beginning	(912,260)
Amortization of intangible asset
Impairment of intangible assets finite lived
FX translation adjustments	27,507
Intangible assets, gross ending	7,225,870
Intangible assets, amortization ending	(1,026,009)
Licensing Agreements (Indefinite) [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net beginning	2,810,000
Amortization of intangible asset
Impairment of intangible assets finite lived	(1,118,209)
FX translation adjustments	(213,861)
Intangible assets, gross ending	1,477,930
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net beginning	10,364,541
Intangible assets, amortization beginning	(1,843,716)
Amortization of intangible asset
Impairment of intangible assets finite lived	(1,320,993)
FX translation adjustments	(528,818)
Intangible assets, gross ending	8,514,730
Intangible assets, amortization ending	(2,470,941)
Distribution Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net beginning	560,000
Intangible assets, amortization beginning	(560,000)
Amortization of intangible asset
Impairment of intangible assets finite lived
FX translation adjustments
Intangible assets, gross ending	560,000
Intangible assets, amortization ending	(560,000)
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net beginning	2,672,581
Amortization of intangible asset
Impairment of intangible assets finite lived	(2,200,900)
FX translation adjustments	(74,229)
Intangible assets, gross ending	397,452
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, net beginning	257,530
Intangible assets, amortization beginning	(61,230)
Amortization of intangible asset
Impairment of intangible assets finite lived
FX translation adjustments	(18,813)
Intangible assets, gross ending	238,717
Intangible assets, amortization ending	(96,574)
Accumulated Amortization [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization beginning	(3,377,206)
Amortization of intangible asset	(879,052)
Impairment of intangible assets finite lived
FX translation adjustments	102,734
Intangible assets, amortization ending	$ (4,153,524)

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Related party costs	$ 0	$ 0	$ 6,228	$ 0
Development [Member]
Related party expenses	824	10,882	23,430	11,459
General and Administrative Expense [Member]
Related party expenses	75,451	134,284	98,337	1,570,518
Interest Expense [Member]
Related party expenses	$ 0	$ 0	$ 0	$ 105,845

- Definition

Direct costs arising from transactions with related parties who are not affiliates or joint Ventures. These costs are categorized as cost of goods sold.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.2)
-URI https://asc.fasb.org/extlink&oid=126953954&loc=SL114868664-224227

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(C))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(k)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(B))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

+ Details

INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

NOTE 3 – INTANGIBLE ASSETS

Licensing Agreements

The Company has license agreements with various entities related to the development of video games and the organization and facilitation of esports events, including BARC (TOCA) Limited (“BARC”) with respect to the British Touring Car Championship (the “BTCC”) and INDYCAR LLC (“INDYCAR”) with respect to the INDYCAR SERIES. As of June 30, 2022, the Company had a remaining liability in connection with these licensing agreements of $774,680, which is included in other non-current liabilities on the condensed consolidated balance sheets.

Impairment

During the six months ended June 30, 2022, the Company identified triggering events during the six months ended June 30, 2022, that indicated its allocated intangible and finite-lived intangible assets were at risk of impairment and as such, performed quantitative impairment assessments of all its intangible and finite-lived intangible assets.

The primary triggers for the impairment review for the period ended March 31, 2022 were changes made to the Company’s product roadmap during the six months ended June 30, 2022, which resulted in changes to the scope and timing of certain product releases, as well as changes in the value of the Company’s market capitalization which had reduced significantly since December 31, 2021, the date of the last impairment assessment. These changes were made by the Company to better align the product roadmap with the Company’s ability to produce and release high quality games. The primary triggers for the impairment review for the three-month period ended June 30, 2022 were the ongoing reduction in the Company’s share price, the receipt of a deficiency letter notice from NASDAQ and the Company’s ongoing uncertain liquidity position.

As a result of the quantitative assessments, the Company determined that the fair value of its rFactor 2 trade name and Le Mans video gaming license (the “Le Mans Gaming License”) indefinite-lived intangible assets, as well as certain finite-lived technology intangible assets, were lower than their carrying values and recorded an impairment loss for the indefinite-lived intangible assets for the six months ended June 30, 2022 of approximately $2,201,000 for its rFactor 2 trade name and $1,120,00 for the Le Mans Gaming License. Additionally, the Company recorded an impairment loss of approximately $1,320,000 for its finite-lived rFactor 2 technology during the six months ended June 30, 2022.

The Company determined the fair value of the indefinite-lived intangible assets using a relief-from-royalty method for the trade name and a discounted cash flow valuation model for the Le Mans Gaming License and used a cost to recreate valuation model for the finite-lived technology intangible asset. The impairment loss for indefinite- and finite-lived intangible assets was primarily driven by a reduction in expected future revenues, following changes to the Company’s product roadmap, as well as changes to the discount rates applied, royalty rates and technological obsolescence assumptions used in the valuation models. The principal assumptions used in the relief-from-royalty method analysis used to determine the fair value of the rFactor 2 trade name consisted of forecasted revenues, royalty rate and weighted average cost of capital (i.e., discount rate), while the principal assumptions used in the discounted cash flow valuation model for the Le Mans Gaming License were forecasted revenues and weighted average cost of capital. The principal assumptions used in determining the fair value of the finite-lived technology intangible asset were number of production hours, cost per hour and technological obsolescence. The Company considers these assumptions to be judgmental and subject to risk and uncertainty, which could result in further changes in subsequent periods.

The impairment loss is presented as impairment of intangible assets in the condensed consolidated statements of operations and comprehensive loss.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

The following is a summary of intangible assets as of June 30, 2022:

SCHEDULE OF INTANGIBLE ASSETS

	Licensing Agreements (Finite)		Licensing Agreements (Indefinite)			Software Licenses (Finite)			Distribution Contracts (Finite)		Trade Names (Indefinite)			Non-Compete Agreements (Finite)			Accumulated Amortization			Total
Balance as of December 31, 2021	$	7,198,363	$	2,810,000		$	10,364,541		$	560,000	$	2,672,581		$	257,530		$	(3,377,206	)	$	20,485,809
Amortization expense		-		-			-			-		-			-			(879,052	)		(879,052	)
Impairment of intangible assets		-		(1,118,209	)		(1,320,993	)		-		(2,200,900	)		-			-			(4,640,102	)
FX translation adjustments		27,507		(213,861	)		(528,818	)		-		(74,229	)		(18,813	)		102,734			(705,480	)
Balance as of June 30, 2022	$	7,225,870	$	1,477,930		$	8,514,730		$	560,000	$	397,452		$	238,717		$	(4,153,524	)	$	14,261,175

Accumulated amortization of intangible assets consists of the following:

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

For the Years Ended December 31,	Total
2022 (remaining period)	$	1,045,777
2023		1,892,641
2024		1,687,137
2025		1,678,365
2026		1,400,729
Thereafter		2,172,544
	$	9,877,193

Amortization expense related to intangible assets was approximately $396,500 and $471,000 for the three months ended June 30, 2022 and 2021, respectively, and amortization expense related to intangible assets was approximately $879,000 and $581,500 for the six months ended June 30, 2022 and 2021, respectively. Within intangible assets is approximately $3,460,000 of licensing agreements that are not presently subject to amortization. These non-amortizing licensing agreements will commence amortizing upon release of the first title under the respective license agreement.

ACCRUED EXPENSES AND OTHER LIABILITIES

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER LIABILITIES

NOTE 6 – ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consisted of the following:

SCHEDULE OF ACCRUED EXPENSES

	June 30		December 31,
	2022		2021
Accrued royalties	$	851,574	$	1,694,011
Accrued professional fees		50,000		80,909
Accrued consulting fees		352,422		106,006
Accrued development costs		320,359		968,007
Esport prize money		11,126		168,959
Accrued taxes		74,402		31,491
Accrued payroll		116,293		235,224
Accrued other		180,583		239,664
Total	$	1,956,759	$	3,524,271

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

DUE TO/FROM RELATED PARTIES

6 Months Ended

Jun. 30, 2022

Due Tofrom Related Parties

DUE TO/FROM RELATED PARTIES

NOTE 7 – DUE TO/FROM RELATED PARTIES

On April 1, 2020, the Company entered into a promissory note (the “$12 million Line of Credit”) with the Company’s majority stockholder, Motorsport Network, LLC (“Motorsport Network”), that provides the Company with a line of credit of up to $10 million at an interest rate of 10% per annum, the availability of which is dependent on Motorsport Network’s available liquidity. On November 23, 2020, the Company and Motorsport Network entered into an amendment to the $12 million Line of Credit, effective in 2020, pursuant to which the availability under the $12 million Line of Credit was increased from $10 million to $12 million, with no changes to the other terms.

The $12 million Line of Credit does not have a stated maturity date and is payable upon demand at any time at the sole and absolute discretion of Motorsport Network, which has agreed, pursuant to a Side Letter Agreement related to the $12 million Line of Credit, dated September 4, 2020, not to demand or otherwise accelerate any amount due under the $12 million Line of Credit 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 $12 million Line of Credit in whole or in part at any time or from time to time without penalty or charge. In the event the Company or any of its subsidiaries consummates certain corporate events, including any capital reorganization, consolidation, joint venture, spin off, merger or any other business combination or restructuring of any nature, or if certain events of default occur, the entire principal amount and all accrued and unpaid interest will be accelerated and become payable.

Given the state of the financial markets, the Company has recently assessed its exposure to any potential non-performance by Motorsport Network and believes that there is a substantial likelihood that Motorsport Network will not fulfill any of the Company’s borrowing requests for the foreseeable future.

During the six months ended June 30, 2022, the Company did not draw or repay amounts under the $12 million Line of Credit and the balance due to Motorsport Network under the $12 million Line of Credit was $0 as of June 30, 2022. The Company recorded related party interest expense for this agreement of $0 during the respective three and six months ended June 30, 2022.

In addition to the $12 million Line of Credit, the Company had regular related party receivables and payables outstanding as of June 30, 2022. Specifically, the Company owed $37,049 to its related parties as a related party payable and was due $35,498 from its related parties as a related party receivable. During the six months ended June 30, 2022, $132,288 has been paid to related parties in settlement of related party payables.

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 5,223,051	$ 17,819,640
Accounts receivable, net of allowances of $3,596,634 and $4,563,884, at June 30, 2022 and December 31, 2021, respectively	1,472,430	5,490,272
Due from related parties	35,498	137,574
Prepaid expenses and other current assets	1,711,783	1,175,354
Total Current Assets	8,442,762	24,622,840
Property and equipment, net	723,776	727,089
Operating lease right of use assets	1,567,838
Goodwill		4,867,465
Intangible assets, net	14,261,175	20,485,809
Total Assets	24,995,551	50,703,203
Current liabilities:
Accounts payable	314,324	1,784,645
Accrued expenses and other liabilities	1,956,759	3,524,271
Due to related parties	37,049	119,015
Purchase commitments	2,582,122	3,170,319
Operating lease liabilities (current)	391,113
Total Current Liabilities	5,281,367	8,598,250
Operating lease liabilities (non-current)	1,179,315
Other non-current liabilities	3,521,390	4,122,950
Total Liabilities	9,982,072	12,721,200
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Preferred stock, $0.0001 par value; authorized 1,000,000 shares; none issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
Additional paid-in capital	76,242,774	75,651,175
Accumulated deficit	(60,531,239)	(37,988,326)
Accumulated other comprehensive loss	(933,644)	(945,375)
Total Stockholders’ Equity Attributable to Motorsport Games Inc.	14,779,759	36,719,338
Non-controlling interest	233,720	1,262,665
Total Stockholders’ Equity	15,013,479	37,982,003
Total Liabilities and Stockholders’ Equity	24,995,551	50,703,203
Common Class A [Member]
Stockholders’ Equity:
Class B common stock - $0.0001 par value; authorized 7,000,000 shares;7,000,000 shares issued and outstanding as of June 30, 2022, and December 31, 2021	1,168	1,164
Common Class B [Member]
Stockholders’ Equity:
Class B common stock - $0.0001 par value; authorized 7,000,000 shares;7,000,000 shares issued and outstanding as of June 30, 2022, and December 31, 2021	$ 700	$ 700

SCHEDULE OF GOODWILL (Details) - USD ($)	3 Months Ended		6 Months Ended
SCHEDULE OF GOODWILL (Details) - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Goodwill, beginning balance			$ 4,867,465
Goodwill impairment loss			(4,788,268)
Foreign exchange			(79,197)
Goodwill, ending balance
Le Mans Gaming [Member]
Goodwill, beginning balance			4,802,882
Goodwill impairment loss			(4,723,685)
Foreign exchange			(79,197)
Goodwill, ending balance
Esports Licenses [Member]
Goodwill, beginning balance			64,583
Goodwill impairment loss			(64,583)
Foreign exchange
Goodwill, ending balance

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

CONCENTRATIONS

6 Months Ended

Jun. 30, 2022

Risks and Uncertainties [Abstract]

CONCENTRATIONS

NOTE 12 – CONCENTRATIONS

Customer Concentrations

SCHEDULE OF CONCENTRATIONS

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Customer	2022			2021			2022			2021
Customer B		39.51	%		24.56	%		26.20	%		30.29	%
Customer C		29.72	%		30.60	%		21.61	%		19.24	%
Customer D		24.56	%		31.37	%		21.46	%		36.85	%
Total		93.79	%		86.53	%		69.27	%		86.38	%

*	Less than 10%.

	June 30,			December 31,
Customer	2022			2021
Customer A		65.08	%		51.9	%
Customer D		16.71	%		17.7	%
Total		81.79	%		69.6	%

*	Less than 10%.

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Supplier Concentrations

SCHEDULE OF CONCENTRATIONS

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Supplier	2022			2021			2022			2021
Supplier A		54.66	%		27.40	%		27.42	%		36.41	%
Supplier C		16.90	%		50.86	%		-*	%		33.67	%
Total		71.56	%		78.26	%		27.42	%		70.08	%

*	Less than 10%.

SCHEDULE OF ACCUMULATED AMORTIZATION OF INTANGIBLE ASSETS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization, beginning			$ 3,377,206
Amortization of Intangible Assets	$ 396,500	$ 471,000	879,000	$ 581,500
Accumulated amortization, ending	4,153,524		4,153,524
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization, beginning			912,260
Amortization of Intangible Assets			113,749
Amortization of intangible assets foreign currency translation adjusments
Accumulated amortization, ending	1,026,009		1,026,009
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization, beginning			1,843,716
Amortization of Intangible Assets			723,628
Amortization of intangible assets foreign currency translation adjusments			(96,403)
Accumulated amortization, ending	2,470,941		2,470,941
Distribution Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization, beginning			560,000
Amortization of Intangible Assets
Amortization of intangible assets foreign currency translation adjusments
Accumulated amortization, ending	560,000		560,000
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization, beginning			61,230
Amortization of Intangible Assets			41,675
Amortization of intangible assets foreign currency translation adjusments			(6,331)
Accumulated amortization, ending	96,574		96,574
Accumulated Amortization [Member]
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization, beginning			3,377,206
Amortization of Intangible Assets			879,052
Amortization of intangible assets foreign currency translation adjusments			(102,734)
Accumulated amortization, ending	$ 4,153,524		$ 4,153,524