Motorsport Games Inc.

Greetings and welcome to Motorsports Games Incorporated, first quarter 2022 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have questions, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, today's conference is being recorded. I would like to turn the conference over to Jake Pisano. from ICR. Please go ahead.

Thank you and welcome to Motorsport Games first quarter 2022 earnings conference call and webcast. I am Jake Pisano, vice president at ICR. 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 first quarter 2022 earnings press release filed today after market closed. This is available on the investor relations 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 law. 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 to update or alter its forward-looking statements, 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 quarterly report on Form 10-Q for the quarter ending March 31, 2022. for a detailed discussion of a 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 first quarter 2022 financial results. You will find a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures, as well as other related disclosures. in the press release issued earlier today. And now, I'd like to turn the call over to Dimitri Costo, Chief Executive Officer of Motorsport Games. Dimitri?

Thank you, and hello, everyone. I'd like to start today with an update on our product roadmap as we continue to be a steward of great long-term licenses that allow us to make exciting games and facilitate esports for some of the world's most captive fan bases using the Motorsport Games Engine and Studio. With regards to our NASCAR franchise, a few weeks ago, we published a community update that included a revised NASCAR product roadmap. This update included information about our continued improvements to the NASCAR 21 ignition that we're planning, as well as the road ahead for the remainder of 2022 and beyond. In a community update, we're now targeting the release of patch 1.5.0.0, which will introduce NASCAR 21 Ignition on Xbox Series X and S and PlayStation 5 next month. We're working closely with Microsoft and Sony, who are in full support of our timeline for this release. We continue to listen to our fans and value their constructive feedback about our products. We understand that there are still improvements that need to be made to our NASCAR franchise title in order for us to deliver on the excitement of the sport. We're working with our partners at NASCAR, and will bring the NASCAR 2022 Season Expansion DLC for Xbox, PlayStation, and PC due out in September 2022. The Season Expansion will include a full 2022 Cup Series team roster, the 2022 Cup Series regular season schedule, updated UI, an in-race HUD, Fanatec wheel support, and more. The reason we're delivering a NASCAR Season Expansion as opposed to a new game title is because delivering great gamer-first experience is paramount to us. And if we're going to reset the expectation of what the NASCAR title should be, we will need more time to work on that title. There will not be enough time to accomplish that in 2022, and we already have the main team working on a 2023 title. Nonetheless, fans will still want to enjoy the 2022 next-gen cars, and we will bring that content to users as DLC with some additional features around September of this year. Because we do not plan to charge full game price for the 2022 season expansion, we expect NASCAR console revenues to suffer in 2022 as a result. However, we strongly believe that our investment in further developing a great gaming experience is critical for the long run. And as you'll hear John talk about our Q1 financial results later on this call, our strategy to diversify our revenue sources is starting to show in our results. Additionally, in the fall, we plan to introduce a brand new NASCAR 22 title for the Nintendo Switch platform. The new and improved NASCAR Switch title will include updated visuals and new features. We'll be releasing additional details as we approach the game launch in the fall 2022. We saw great product reviews for our 2021 NASCAR Switch title and look forward to continuing to expand our fan demographics in the widely popular Nintendo Switch platform for the years to come. As we look beyond 2022 and into 2023, we're committed to improving the quality of all our games and experiences for all of our current and future fans. We've valued our continued relationship with NASCAR, IndyCar, BTCC, and Le Mans and appreciate their support. We currently expect 2023 will bring fully revamped NASCAR title. The 2023 NASCAR game will utilize the work done by the amazing teams that developed the Car Craft and the R-Factor 2 while still utilizing the Unreal Engine. By moving to a season expansion update for 2022, more time is allocated to the development team to work on the NASCAR 2023 to include the improvements and new features with the goal of releasing earlier in the year than previous titles. We're currently targeting the release date of mid-2023 for the updated console title. Additionally, in 2023, we're expecting to bring an official IndyCar game to the market. And besides the new official NASCAR and IndyCar games in 2023, we also anticipate the launch of our Le Mans video game, helping fans celebrate the 100-year anniversary of the iconic 24-hour Le Mans with the virtual interactive experience that the games provide. Later this month, we plan to provide additional news when our BTCC game will be expected to launch. During Q1 of this year, we launched a full release of our Car Craft game for PC, which continues to receive positive user feedback. And we're currently working on bringing this exciting and realistic carding experience to one of the main consoles this year. So stay tuned for our update on which console we will choose. R-Factor 2 is finally starting to get the spotlight it deserves. During Q1, we released a highly requested UI UX update and switched to a predictable content release schedule, which users seem to enjoy based on the feedback we're monitoring on socials. We look forward to bringing more quality of life improvements to the R Factor 2 with the help of real world drivers and our fans. I'd like to provide a quick update on our studio development resource as we continue to work on these scheduled games. We're currently firing on all cylinders and continue to hire more talent into the studios worldwide as we grow our internal development capabilities and expand our external development partner relationships. Our mobile game pipeline continues to be an opportunity zone for us, but our current focus is on applying our resources to our main console products as they are the core games that generate most revenue for us now. We currently plan on building on top of these console releases in the future by potentially leveraging the console content in the future mobile game titles. As we continue to invest in the growth of our development teams, with time, we expect to allocate more resources to mobile to increase our mobile game production. But for now, our focus remains on console and PC for these exclusive licenses. Let's touch on our esports. As we mentioned in our previous earnings call, we're truly proud of our 2021 into 2022 24-hour Le Mans virtual series that finished off in Q1 of this year. And as YouGov Sport helped us track, over 81 million fans were exposed to this past season's five races. It was a great feeling last week. Our team accepted the 2021 Sport Technology Award for Best Use of Esports by Sports Brand. And we're looking forward to announcing the details of our 2022 into 2023 Le Mans Virtual Series soon and continuing to build on this momentum with our other franchises. Lastly, I want to provide an update on our liquidity. As we continue to explore multiple funding options to resolve our going concern qualification, we have been looking at various ways to continue core product development while pausing certain endeavors to extend our runway. As indicated in our recent 10-K and reiterated in our first quarter 10-Q, there's doubt about ability to continue as a going concern. As of today, we have approximately $9 million of available cash on hand. This amount reflects the recent payment of one million that we made to Luminous as part of our agreed deferred payment schedule of the remaining 3.2 that we have an obligation to pay in connection to our acquisition of Studio 397. We're still debt free and are actively exploring options to assure that we have the capital we need to execute on the product roadmap I just laid out. Our main priority is to continue producing revenue generating products and reach profitability, effectively resolving our liquidity issue. We have three solutions, and we'll likely end up with some combination of these three. Our options include raising debt or equity. However, given the current market conditions and recent massive sell-offs in the tech sector, this could possibly be a feasible option only once we begin to see some stability in the market. We're also pursuing additional opportunities to reduce near-term spend. Currently, our revised roadmap reflects current cost structure initiatives. Additionally, bearing any unforeseeable events, there are additional levers we could pull, including potentially delaying some product releases to follow our cash-generating catalyst events, like launching major franchise console games. Sequencing releases based on our cash generating opportunities could be an additional option towards self-sustained profitability. This is the least favored option as it means launching some of the franchises later, leaving us less time under our still long-term licenses to monetize and be good steward of such licenses in our partner relations. Additionally, we're also exploring various new business development opportunities Since we are the only studio that holds these type of world-class IP racing game licenses, it's possible to leverage these licenses and bring in additional studio partners that would build alternative games and profit share with us. As you can see, we're exploring all options and laying them out on a table. I'm fortunate to have industry veterans surrounding me as we leverage each other's experience and knowledge to make the best decision for current circumstances. And we're hoping to solidify this plan in the coming months. With that, let me hand it over to John to review our financials.