Games such as rFactor 2, Kartkraft and the NASCAR titles have once again found their futures being called into question in the face of the latest turbulence suffered by Motorsport Games.
Image Credit: Studio 397 / Motorsport Games
A series of board resignations has resulted in confusion at the highest levels of the company. These resignations came narrowly before the company was due to reveal its Q3 results.
The revelation of these results, originally scheduled for the 10 November, has now been postponed. As of the time of writing, no new date has been proposed for the earnings release. What’s more, the company now finds itself no longer in compliance with the Nasdaq Listing Rules.
Disputes at the Top
Four directors of the Motorsport Games board resigned their posts on 9 November 2022. Neil Anderson, Peter Moore and Francesco Piovanetti’s resignations were all cited as being the result of “a disagreement with Motorsport Network LLC… regarding proposals by such directors to raise additional capital… that would be dilutive to MSN”.
Motorsport Network LLC (MSN) is the majority stockholder of Motorsport Games. In their capacity as such, they requested the resignations of Anderson, Moore and Piovanetti. A fourth board member, James Allen, also resigned. In his case, the stated reason was so that “a new board can be appointed.”
Earlier this year, OverTake.gg raised concerns regarding the future of Motorsport Games and their products. At that time, a standalone BTCC game which had been promised by the company was removed from their roadmap of future releases.
Instead, the company used its BTCC license to add content to the popular racing sim rFactor 2. This abrupt change of plans, in combination with the community response to NASCAR 21: Ignition and the sinking stock market price of Motorsport Games, caused many to worry about their future. Now, the company’s prospects seem to have grown yet bleaker.
What will Happen Now?
On 11 November, Motorsport Games notified the Nasdaq that it was no longer in compliance with the Nasdaq Listing Rules. Since the company became publicly listed on the stock market back in January 2021, it has been beholden to the Nasdaq Listing Rules.
Specifically, the resignation of the board members means that Motorsport Games’ board is no longer comprised in its majority of “Independent Directors”. Furthermore, following a 10-to-1 reverse stock split, Motorsport Games also now fails to comply with a rule stating that a minimum of 500,000 shares must be publicly held.
Now, the company has 45 calendar days to “submit a plan” to regain compliance on these issues. In order to do so, Motorsport Games is now “actively looking for independent director candidates.”
Currently, John Delta, who joined the company on 14 October as their Part-Time Interim Chief Financial Officer, is the sole independent director remaining on the company’s board.
What exactly this means for the future of games such as rFactor 2 and Kartkraft is uncertain, but the fact that these resignations took place narrowly before the release of the Q3 earnings report is a worrisome sign.
What do you think will happen to Motorsport Games? Tell us on Twitter at @OverTake_gg or in the comments down below!