Motorsport Games Inc.

Greetings and welcome to Motorsport Games Inc. Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ashley DeSimone from ICR. Please go ahead.

Thank you, and welcome to Motorsport Games' fourth quarter and full year 2021 earnings conference call and webcast. On today's call are Dimitri Kosko, Motorsport Games Executive Chairman and CEO, and John New, Chief Financial Officer. By now, everyone should have access to the company's fourth quarter and full year 2021 earnings press release, filed today after the market closed. This is available on the Investor Relations website section of Motorsport Games' website at www.motorsportgames.com. During the course of this call, management may make forward-looking statements within the meaning of the U.S. federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Except as required by law, the company undertakes no obligation to update any forward-looking statement made on this call or to update or alter its forward-looking statement, whether as a result of new information, future events, or otherwise. Please refer to today's press release and the company's filings with the SEC, including its most recent annual report on Form 10-K for the year ended December 31, 2021, for a detailed discussion of certain of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. In today's conference call, we will refer to certain non-GAAP financial measures, such as adjusted EBITDA, as we discuss the fourth quarter and full year 2021 financial results. You will find a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, as well as other related disclosures in the press release issued today. And now I'd like to turn the call over to Dimitri Kosko, Chief Executive Officer of Motorsport Games. Dimitri.

Thank you. And hello, everyone. I'd like to start today by recognizing our development team, some of whom are in Moscow in the midst of this unexcusable and challenging situation. Our hearts are with the people in Ukraine and all those impacted by the war. This is a deeply personal issue for me as I'm half Ukrainian myself. I have been in constant communication with our Moscow team, and they share a concern and profound desire for peace and security. While it is challenging working through the complexity of the war, here's what we have done over the past month to assure that we continue to build out our product roadmap with minimal disruption. First, we have always been able to switch to remote work if need be. During the pandemic, especially during the peak COVID outbreaks where we saw lockdowns and other hurdles, We manage to scale our development capabilities and temporary transition to remote work. We do not foresee any issues if we need to transition some of our team members to remote work again because we have the infrastructure and process in place to be able to remain flexible. Second, we have great partnership with various outsourced developers and studios. Especially over the last year, we have built great relationship with several outsourced studios who are assisting us with the new product development. These development studios consist of professional and highly experienced teams that work with many different leading gaming companies. We're currently having conversations with additional development studios and we'll be ready to engage them if necessary to assure our development pipeline does not experience significant delay. Third, we have offered our Moscow staff a possibility to relocate if they choose and able to do so. As I mentioned earlier, we have the advantage of being flexible Earlier this month, when I had the conversation with that team, given the opportunity to relocate to one of our other global offices, while we acknowledge and appreciate the complexity of such relocation and corresponding immigration implications, our offices in Netherlands, UK, Australia, and the U.S. would welcome those folks with open arms. Now let's move on to our product roadmap and development. Our goal remains to build a portfolio of top racing games across world-class IP and across all platforms. We have a strong list of IP, being the official video game license folder of NASCAR, IndyCar, ATCC, WEC, and 24-Hour Le Mans. This list of IP gives us an opportunity to build official racing games and enables us to provide these captivating experiences to our audiences all over the world. Here's an update on where we are today. On Ignition, since the launch of NASCAR 21 Ignition in October 2021, we have been working diligently to provide patches and updates for continuous improvements. So far, we have released eight updates and continue to provide quality of life improvements to the game. We continue striving to make sure that the next NASCAR release and all future products be bringing excitement and satisfying gaming experiences to our customers. We also launched our NASCAR gaming franchise on Nintendo Switch platform for the first time on November 19th, and we named it NASCAR Heat Ultimate Edition Plus. We're happy to report that this game has met our expectations and delivered smiles to our fans, while currently being rated at about 4.6 out of 5 stars on Amazon. On CarCraft, we're happy to report that in January of this year, we released a full version of CarCraft, our realistic karting simulation game. On Steam, we're currently holds a rating of a very positive with over 1,700 reviews. CardCraft is a game that has the potential to generate meaningful revenue for us in the future. Let's touch on our R-Factor 2 game and eSport platform. We have been working to implement one of the most requested features by fans, which is the new user interface update. We were able to release this ahead of our internal release schedule in January of this year. as monitored through user feedback on various social networks, has been welcomed and very much appreciated by the community. And we were also able to reorganize our content release schedule on R Factor 2 and plan to offer our fans more content on a predictable quarterly release schedule. Our gaming and simulation platforms, such as R Factor 2, continue to be recognized by the motorsport industry as one of the leading go-to products of choice for drivers, leagues, and partners. One new partner of ours is Kindred Concepts. Formula One partnered with Kindred to create an immersive, state-of-the-art F1 racing simulation experience made accessible to the mass audience. And Kindred has chosen our R-Factor 2 as a simulation platform to help empower their F1 racing simulation experience. With this partnership, we'll be virtually recreating some of the world-famous Formula One tracks, cars, and most recent liveries. powering the authentic F1 experience to the visitors. Another example that earlier this week, we announced that R-Factor 2 is now an official sim racing platform of Formula E. As we switch gears in 2022, our focus remains on improving and expanding our NASCAR gaming franchise as we work to expand our portfolio of overall games. In 2022, we plan to update our NASCAR game for major consoles and PC, bringing the excitement of the next generation cars from the 2022 NASCAR season to the masses, as well as launching our new 2022 version of a NASCAR game for Nintendo Switch platform. Additionally, we're currently still intent to soft launch our first hyper-casual mobile category game with our NASCAR Match 3 title sometime in 2022. The NASCAR gaming franchise continues to be an important foundation to our gaming franchises that we have under license, which include BTC, IndyCar, and Le Mans. And our learnings from NASCAR 21 Ignition launch are already being integrated into a motorsport games engine that we continue to evolve internally to assure that our next gaming franchises, together with NASCAR, continue to improve as we build on top of our previous releases. Just as we set out on our mission from the beginning, we continue to move towards the goal where we have multiple franchises in market with multiple games on multiple platforms. And we believe we are on target for 2023 to be that year for us. On to development. With the help of our experienced leadership team, I've taken full responsibility for overseeing our production studios and development teams. Additionally standardized global process and tools we have implemented will allow greater clarity for my decision-making role. We have also promoted technical experts to leadership positions. We believe that this new development management structure will greatly benefit our future game and product releases, as together with management, we will continue to monitor the progress of all our studios while we scale our capabilities. We also reorganize our QA processes and departments to assure further checkpoints and efficiency in locating future issues within our products, which we believe will improve our QA process for future game releases. We continue to strive towards improving our processes and technology, building off the NASCAR 21 ignition launch as we scale our company further to offer our customer multiple racing franchises across a variety of platforms. I would like to touch on our esports segment. We believe our investments related to this area are really starting to pay off. Continuing to leverage our R-Factor 2 platform and building on the momentum we achieved with esports in 2020, where we replaced certain motorsport events with their virtual counterparts due to the COVID-19 pandemic. In 2021, we turned our 24-hour Le Mans virtual hit into an annual series, together with great partners such as Rolex, Goodyear, Total Energy, Lego Technics, Algorand, and others that came along for the ride. And our 2021 into 2022 24-hour Le Mans virtual series has been enjoyed by more than 81 million fans across digital and linear channels. These are the type of official esports series we look to replicate with all of our partners, such as BPCC, IndyCar, NASCAR, and others. And as we release our dedicated games for each one of these raid series, We believe our eSport program will serve as a great marketing tool, showcasing exciting competitions our games bring at the highest level. We have already started to scale our eSport program with inaugural IndyCar eSport Pro Challenge, featuring almost the entire official IndyCar grid. Allow me to quickly add a reminder that our business is organized in three important pillars, games, eSports, and community. and we're constantly making progress on each of these pillars and look forward to showcasing this progress in our upcoming quarterly material. Lastly, I'd like to address our liquidity. Currently, we're debt-free, and our 2021 year-end balance sheet illustrates that we had approximately $17.8 million in available cash on hand. As of today, we have nearly $12 million of available cash on hand. While our 2021 Form 10-K indicates a doubt about our ability to continue as a going concern, we're currently evaluating new sources of funding with different options on the table so that we have the resources to reach our goals. A year ago, we made a conscious decision to acquire assets to help us launch more products quicker. We have successfully utilized these acquisitions to get us closer to a portfolio that is diversified and that we believe is capable of achieving profitable revenues. And I remain committed to seeing this through and getting to 2023 when we plan to have multiple franchises with multiple games on multiple platforms in market, each at different stages in their life cycle, and many with long tail based on high quality IP rights. We also believe that we have a flexibility to hit the pause on some of those development initiatives in order to materially cut our cash burn if we decide that is in our best long-term interest. We expect that decisions will be made in the coming months after we finalize our financing decisions, and I intend to keep you all updated as we move through this process. Before I pass it on to John, I'd like to reinforce the fact that we have long-term licenses and partnerships to create great official racing games and esports over a long period of time, for captive audiences, and beyond, while we cultivate a community and become synonymous with virtual racing. With that, let me hand it over to John for a review of our financials.