Motorsport Games Entire Board Of Directors Have Resigned

chrome_A1dIsboOVg.png
The Motorsport Games Odyssey keeps on continuing. And it keeps on getting weirder. In the latest stroke of madness, the entire board of directors resigned due to a "proposal to raise additional capital".

As if the story of Motorsport Games couldn't get any more complicated and convoluted, today's news seems to top everything off.

As the American company tries to find a way to raise more capital, its parent company Motorsport Network seems to have made such an outrageous proposal that the entire board of directors have resigned.

But first, a little lesson in company structure and stocks:

What is a Board of Directors?​

A board of directors (B of D) is the governing body of a company, elected by shareholders in the case of public companies to set strategy and oversee management. The board typically meets at regular intervals. Every public company must have a board of directors. - Investopedia
So a few key facts are:
  • The board of directors of a public company is elected by shareholders.
  • The board makes key decisions on issues such as mergers and dividends, hires senior managers, and sets their pay.
  • Board of directors candidates can be nominated by the company's nominations committee or by outsiders seeking change.
  • The New York Stock Exchange and the Nasdaq require listed companies to have a majority of outside, or independent, directors on their board.
Now the last of these points might prove troublesome for the company yet, as the current Board of Directors, which seems to be made up of 1 person appointed by Motorsport Network, is no longer NASDAQ compliant.

This means that, should no solution be found in the near future, Motorsport Games could be delisted from NASDAQ.

Why being delisted is bad.​

If a company has been delisted, it is no longer trading on a major exchange, but the stockholders are not stripped of their status as owners. The stock still exists, and they still own the shares; however, delisting often results in a significant or total devaluing of a company's share value.

Therefore, although a shareholder's ownership of a company does not decrease after a company is delisted, that ownership may become worth much less, or, in some cases, it may lose its entire value.

As a shareholder, you should seriously revisit your investment decision in a company that has become delisted. In many cases, it may be better to cut your losses. A firm unable to meet the listing requirements of the exchange upon which it is traded is quite obviously not in a great position. - Investopedia

So, basically, if a company is delisted from NASDAQ, the stock value tends to drop dramatically. Meaning some investors or shareholders might think sooner rather than later to "get off the sinking ship".

So to keep a TL;DR of everything: This is pretty bad.

After saving themselves from delisting with a 1-to-10 stock split, they are now at risk again.

At this point, what do you think of this odyssey that Motorsport Games is going through? Is the company saveable? And how do you think will rFactor 2 be affected? Let us know in the comments down below!
About author
Julian Strasser
Motorsports and Maker-stuff enthusiast. Part time jack-of-all-trades. Owner of tracc.eu, a sim racing-related service provider and its racing community.

Comments

Honestly I hope Motorsport Games finally goes under so we can get companies that actually have experience running racing games/sims... well, running games/sims. NASCAR, WEC, Indycar, BTCC, and Studio 397 have made the mistake of going all-in to a company that has literally no experience with any type of racing.

You'd think they would know to do proper research and go with a company that actually... has experience.

Yes, they have 704 Games, but even still, those games weren't entirely the best either.

Keeping the original comment but editing to add a bit of clarity.
If we're going to give a game publisher a license that lasts practically 10 years, maybe make sure the user base actually likes the company? And that said company hasn't been around for like, only a year or two?

TLDR - Just because they pulled off a couple standalone events doesn't mean they should be trusted with game development/publishing for multiple years with multiple series.
 
Last edited:
BertramRaven
Premium
The addition of rf2 to LFM has a chance to save rf2 for now, but the reality is although more content has been produced of late, the core engine is still stuck at 1311 and is unlikely to have any more updates.
A factory contact within one team has complained the customised version of rf2 which they run no longer has access to support development staff to help them map next year's tyre compound changes and their custom drive-train physics.
It seems rFactor2, as with AC, has gone as far as it can for now. rf3 is not looking likely, but you can never tell. Maybe it will be like Project Cars 3.
 
BertramRaven
Premium
Share value from the SEC filing...

View attachment 617084
That is the notional value for an employee who has been granted shares as part of their package, it does not reflect the public stock price. (Which may be less ;) )
Seriously, as an example the value of publicly trades shares in my company stands at $13.01 but I have shares granted to me at $0.002 in recognition of my position and personal opportunity-cost investment (the value of my time if I were to be paid at full commercial rates) I have made in the company. If I want the shares, I pay for them at the granted rate not the public value. If I want to sell them, I must give the company first choice at the publicly traded value or an agreed value. If they want to buy my granted options, we would agree a price and I would "buy" the shares at the granted price and then immediately sell them to the company at an agreed price. This cannot be a single transaction or the SEC and IRS get angry.
Anyway, it's complicated.
 
Last edited:
BertramRaven
Premium
Feel sorry for studio 397 tbh. They needed funding which is clearly why they basically sold themselves to motorsport games and now when the rf2 content quality level is the best it's ever been this happens.
I wonder if the monies from the sale went back into S397 or if one or more of the owners received payment for their stock and decided to hang onto it rather than reinvest in the company. When considering the age of the game engine and the relatively small number of custom licences, I know which I would have chosen.
 
The addition of rf2 to LFM has a chance to save rf2 for now, but the reality is although more content has been produced of late, the core engine is still stuck at 1311 and is unlikely to have any more updates.
You know v1131 got literally released last week, right?
 
Here’s hoping that Studio397 survives and is picked up by someone with legitimate financial resources and is committed to the racing sim community.

 

Article information

Author
Julian Strasser
Article read time
2 min read
Views
31,883
Comments
166
Last update

Share this article

Top