MIAMI, Aug. 09, 2024 (GLOBE NEWSWIRE) -- Motorsport Games Inc. (NASDAQ:MSGM) ("Motorsport Games" or "the Company") today reported financial results for its second quarter ended June 30, 2024. The Company has also posted the second quarter 2024 earnings slides highlighting key milestones that occurred during and subsequent to the period, which are accessible on the Company's investor relations website. "We are pleased to have built upon the foundation that our successful launch of Le Mans Ultimate achieved in February 2024 in this quarter," stated Stephen Hood, President and Chief Executive Officer of Motorsport Games. "For players, we've made significant improvements to the game through multiple updates and subsequently added a new revenue stream through our first paid-for downloadable content for the title, adding a second revenue stream." "There has also been traction this quarter and the following month of July in our constant efforts to improve the Company's balance sheet and short-term cash needs. A settlement with INDYCAR LLC resulted in a $2.9 million liability reduction and our recent Registered Direct Offering ("RDO") raised approximately $1 million in gross proceeds to fund business operations," continued Hood. "Our business now boasts a promising product and development team with a significantly reduced operating expense base and detachment from historical challenges that we now believe presents an attractive opportunity to investors and potential acquirers. Given the strong customer reception to our ongoing development of the Le Mans Ultimate game, we have decided to accelerate efforts to bring this to title to games consoles and reach a larger audience."  Second Quarter 2024 and Subsequent Business Update Net income attributable to Motorsport Games Inc. of $2.4 million in Q2 2024 compared to a net loss of $8.2 million in Q2 2023, an improvement of $10.6 million.   Net income attributable to Class A common stock was $0.87 per share in Q2 2024, compared to a net loss per share of $3.04 in Q2 2023.  Executed INDYCAR Settlement Agreement and entered into new License Agreement with INDYCAR LLC in Q2 2024, resulting in a $2.5 million gain from settlement of the INDYCAR License liability.   Released inaugural paid downloadable content ("DLC") pack for Le Mans Ultimate in July 2024, featuring Imola Circuit, Lamborghini SC63 LMDH and the 2024 Peugeot 9X8 LMH.  Raised $1.0 million in gross proceeds from an RDO transaction in July 2024.  Select Financial Highlights for the Three Months Ended June 30, 2024 Revenue for the second quarter of 2024 was $1.9 million compared to $1.7 million for the same period in the prior year, an increase of $0.2 million, or 8.2%. Gross profit was $1.1 million compared to $0.9 million for the same period in the prior year, an increase of $0.2 million, while gross profit margin increased to 59.0% from 50.2%. Net income for the second quarter of 2024 was $2.1 million, compared to a net loss of $8.2 million for the same period in the prior year, an improvement of $10.3 million. The increase in net income is driven by a $6.9 million reduction in operating expenses related to headcount reductions, lower general and administrative expenses and no impairment of intangible assets recorded during the three months ended June 30, 2024 compared to the same prior year period. The increase in net income is also due to the recognition of a $2.5 million gain stemming from a Settlement and License Agreement with INDYCAR LLC, executed on May 17, 2024, and a gain of $0.6 million related to the Settlement Agreement with BARC (TOCA) LIMITED, the exclusive promoter of the British Touring Car Championship, signed on April 12, 2024. Furthermore, the Company recorded a $0.3 million gain from the sale on April 26, 2024 to Traxion.GG Limited of non-core assets. Net income attributable to Class A common stock was $0.87 per share for the second quarter of 2024, compared to a net loss of $3.04 for the same period in the prior year. Adjusted EBITDA loss(1) for the second quarter of 2024 was $0.2 million, compared to an Adjusted EBITDA loss(1) of $2.7 million for the same period in the prior year. The decrease in Adjusted EBITDA loss(1) of $2.5 million was primarily due to the same factors driving the previously discussed change in net income for the second quarter of 2024 when compared to the same period in the prior year, as well as a decrease in stock-based compensation compared to the prior year period. The following table provides a reconciliation from net income (loss) to Adjusted EBITDA (loss)(1) for the second quarter of 2024 and 2023, respectively:            Three Months Ended June 30, 2024   Three Months Ended June 30, 2023 Net income (loss) $ 2,087,483     $ (8,200,882 ) Interest expense, net   29,746       244,750   Depreciation and amortization (1)   587,160       508,874   EBITDA   2,704,389       (7,447,258 ) Acquisition-related expenses   336,172       231,607   Gain from settlement of license liabilities   (3,248,000 )     -   Impairment of intangible assets   -       4,004,627   Stock-based compensation   10,658       521,303   Adjusted EBITDA $ (196,781 )   $ (2,689,721 ) (1) Includes $522,830 and $403,969 of amortization expenses included in cost of revenues for the three months ended June 30, 2024 and 2023, respectively.     Cash Flow and Liquidity As of June 30, 2024, the Company had cash and cash equivalents of approximately $0.5 million, which increased to $1.3 million as of July 31, 2024. The increase in cash and cash equivalents was primarily due to $0.9 million in net proceeds received from a registered direct offering transaction that closed on July 29, 2024. During the six months ended June 30, 2024, the Company had negative cash flows from operations of approximately $1.4 million, representing an average monthly net cash burn from operations of approximately $0.2 million. While it has taken measures to reduce its costs, the Company expects to continue to have a net cash outflow from operations for the foreseeable future as it continues to develop its product portfolio and invest in developing new video game titles. Based on its cash and cash equivalents position and the average monthly cash burn, the Company does not believe it has sufficient cash on hand to fund its operations over the next year and that additional funding will be required in order to continue operations. In order to address its liquidity short fall, the Company is actively exploring several options, including, but not limited to: i) additional funding in the form of potential equity and/or debt financing arrangements or similar transactions; ii) other strategic alternatives for its business, including, but not limited to, the sale or licensing of the Company's assets in addition to its recent sales of its NASCAR license and Traxion; and iii) further cost reduction and restructuring initiatives. There can be no assurances that the Company will be able to secure additional liquidity through the means referenced above, nor can there be any assurances that the Company can sufficiently reduce costs and restructure its business to sufficiently lower its cash burn to sustainable levels and therefore meet its ongoing cash requirements. Further, other factors can impact the Company's liquidity position, including, but not limited to, the Company's level of sales and expenditures, as well as accounts receivable, sales allowances, and accrued expenses. For additional information regarding the Company's liquidity, see the Company's Quarterly Report on Form 10-Q for the three months ended June 30, 2024 to be filed with the Securities and Exchange Commission (the "SEC"). (1)Use of Non-GAAP Financial Measures Adjusted EBITDA (the "Non-GAAP Measure") is not a financial measure defined by U.S. generally accepted accounting principles ("U.S. GAAP"). Reconciliations of the Non-GAAP Measure to net income (loss), its most directly comparable financial measure, calculated and presented in accordance with U.S. GAAP, are presented in the tables above. Adjusted EBITDA, a measure used by management to assess the Company's operating performance, is defined as EBITDA, which is net income (loss) plus interest expense, depreciation and amortization, less income tax benefit (if any), adjusted to exclude: (i) acquisition-related expenses; (ii) gain from settlement of license liabilities; (iii) impairment of intangible assets; and (iv) stock-based compensation expenses. The Company uses the Non-GAAP Measure to manage its business and evaluate its financial performance, as Adjusted EBITDA eliminates items that affect comparability between periods that the Company believes are not representative of its core ongoing operating business. Additionally, management believes that using the Non-GAAP Measure is useful to its investors because it enhances investors' understanding and assessment of the Company's normalized operating performance and facilitates comparisons to prior periods and its competitors' results (who may define Adjusted EBITDA differently). The Non-GAAP Measure is not a recognized term under U.S. GAAP and does not purport to be an alternative to revenue, income/loss from operations, net (loss) income, or cash flows from operations or as a measure of liquidity or any other performance measure derived in accordance with U.S. GAAP. Additionally, the Non-GAAP Measure is not intended to be a measure of free cash flows available for management's discretionary use, as it does not consider certain cash requirements, such as interest payments, tax payments, working capital requirements and debt service requirements. The Non-GAAP Measure has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for the Company's results as reported under U.S. GAAP. Management compensates for the limitations of using the Non-GAAP Measure by using it to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business than would be presented by using only measures in accordance with U.S. GAAP. Because not all companies use identical calculations, the Non-GAAP Measure may not be comparable to other similarly titled measures of other companies. Conference Call and Webcast Details The Company will host a conference call and webcast at 5:00 p.m. ET today, August 9, 2024, to discuss its financial results. The live conference call can be accessed by dialing 1-800-717-1738 or 1-646-307-1865. Alternatively, participants may access the live webcast on the Motorsport Games Investor Relations website at https://ir.motorsportgames.com under "Events." About Motorsport Games: Motorsport Games is a racing game developer, publisher and esports ecosystem provider of official motorsport racing series. Combining innovative and engaging video games with exciting esports competitions and content for racing fans and gamers, Motorsport Games strives to make racing games that are authentically close to reality. The Company is the officially licensed video game developer and publisher for iconic motorsport racing series including the 24 Hours of Le Mans and the FIA World Endurance Championship, recently releasing Le Mans Ultimate in Early Access. Motorsport Games also owns the industry leading rFactor 2 and KartKraft simulation platforms. rFactor 2 also serves as the official sim racing platform of Formula E, while also powering F1 Arcade through a partnership with Kindred Concepts. Motorsport Games is also an award-winning esports partner of choice for the 24 Hours of Le Mans, creating the renowned Le Mans Virtual Series. Motorsport Games is building a virtual racing ecosystem where each product drives excitement, every esports event is an adventure, and every race inspires. For more information about Motorsport Games visit: www.motorsportgames.com. Forward-Looking Statements Certain statements in this press release, the related conference call and webcast which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E ...