Motorsport Games Granted An Extension By Nasdaq

The publisher of Le Mans Ultimate and rFactor 2 will remain on the American stock exchange for at least a while longer, with Motorsport Games granted an extension by Nasdaq.

The second potential delisting in two years was noted in an SEC filing in November 2023, with a deadline of January 2nd for a plan to regain compliance, and a further 180 days to put it into action. Now a new filing dated February 5th, 2024 states that ‘Nasdaq’s staff has determined to grant the Company an extension to regain compliance with Nasdaq’s minimum $2,500,000 stockholders’ equity requirement set forth in Listing Rule 5550(b)(1) (the “NCM Equity Rule”), until May 15, 2024, subject to the Company’s regaining and evidencing compliance with the NCM Equity Rule by such date.’

And that means it will be still be listed to enable a potential rise is share prices following the release of Le Mans Ultimate as an Early Access title on the 20th February, 2024.

Being delisted doesn’t automatically end a company, but it does means shares are only able to be traded privately, which makes them more difficult to trade, and lowers their valuation further.

The filing goes on to say that to “regain compliance with Nasdaq’s minimum $2,500,000 stockholders’ equity requirement threshold, the Company plans to negotiate and implement equity financing transactions and negotiate reductions of its licensing liabilities.”

Which does raise some questions. We know that the BTCC license was revoked, and around $800,000 is owed to rightsholders BARC, and that the Indycar license has also been terminated. And the NASCAR license has already been sold to iRacing. So from the 11 titles listed in the Motorsport Games portfolio, support for eight of them ends this year with the loss of NASCAR.

And despite the fact that KartKraft is still prominently featured, development on that game stopped a while ago, with the team moved onto developing a now-suspended Indycar title before being made redundant. While there may be some value in the IP, many players and supporters of the game over the year have now drifted away after no major updates since 2021.

Which leaves Le Mans Ultimate and rFactor 2. And the launch of Le Mans Ultimate had to be postponed before moving to an Early Access release, with both titles handled by Studio 397. Meanwhile on the eSports side, the loss of Indycar and NASCAR reduces the series which Motorsport Games can host primarily to the Le Mans Virtual series.

Equity financing means raising cash through issuing new shares, and while I’m not a financial expert, Motorsport Games had to previously raise their share price by combining them into a smaller number to avoid delisting. With just rFactor 2 and Le Mans Ultimate to invest in, this feels like it’s more of a stay of execution than a repreive. About the only reason I could see for any significant investors to become involved would be as part of a takeover, as an alternative to buying Studio 397 and the Le Mans license.

But we’ll have to wait and see what happens as the Motorsport Games saga continues to roll on for a while longer.