12 Mar Motorsport Games to Increase its Ownership Interest in 704 Games

ON PER SHARE BASIS, NOT MEANINGFUL THIS YEAR, THEN ACCRETIVE

MIAMI, March 12, 2021 (GLOBE NEWSWIRE) — Motorsport Games Inc. (NASDAQ: MSGM) (“Motorsport Games”), a leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the world, announced today that it has entered into an agreement with PlayFast Games, LLC, a minority stockholder in 704Games Company, to acquire PlayFast Games LLC’s entire ownership in 704Games Company.

While expected to be accretive in future years to the net (loss) income per share of Motorsport Games on a per share basis, the transaction is not expected to have any meaningful per share impact to Motorsport Games this year. However, beginning in 2022, the transaction is expected to be accretive to the net (loss) income per share of Motorsport Games.

The transaction will also completely settle and release, without admitting fault or liability by any party, all claims that PlayFast, as a minority stockholder of 704Games, could allege or assert against Motorsport Games.

Details of the transaction include:

• Motorsport Games intends to acquire the 30,903 shares of common stock of 704Games owned by PlayFast, which represents approximately 7.6% of the outstanding common stock of 704Games, in exchange for
  • 366,541 newly issued shares of Class A common stock of Motorsport Games (representing approximately 3.4% of the currently outstanding shares); and
  • cash in an amount to be determined based on the share price of Motorsport Games over the last ten trading days of this month.
• The total transaction with PlayFast for cash and shares is valued at approximately $10.75 million, based on the closing price on Thursday, March 11, 2021.
• The transaction is subject to customary conditions to closing and is expected to be completed on April 1, 2021.
• Upon closing of the transaction, Motorsport Games would increase its ownership interest in 704Games from approximately 82.2% to 89.9%.

Brian France, the former CEO and Chairman of NASCAR and one of the principal investors in PlayFast commented as following: “As an investor in 704Games prior to Motorsport Games acquiring over 50% of 704Games in 2018, it is evident to me that Motorsport Games’ involvement has substantially improved all aspects of 704Games. Without a doubt, they have added substantial strategic and financial value to help our NASCAR gaming and esport franchise flourish. My decision today to become a long-term strategic investor in Motorsport Games has purpose not only in helping them scale NASCAR gaming and esport business, but also in expanding all of Motorsport Games’ official franchises and licenses. As a motorsport industry insider, I know well what it takes to generate shareholder value in this ever-changing industry, particularly in the high growth esport segment. I am delighted to become an investor in Motorsport Games.”

Motorsport Games Offers Per Share Consideration to Ascend FS, Inc.
As part of its agreement with PlayFast, Motorsport Games is offering the same per share consideration to Ascend FS, Inc., the other minority stockholder in 704 Games owning approximately 10.1% of 704Games, with a March 17, 2021 deadline for acceptance by Ascend. If Ascend accepts such terms and executes an agreement similar to the agreement with PlayFast, Motorsport Games would acquire all of the common stock of 704Games owned by all of the current minority stockholders of 704Games and 704Games would become a 100% owned subsidiary of Motorsport Games. Acquiring 100% of 704Games would also be expected to be accretive to the net (loss) income per share of Motorsport Games for 2022 and following years. For this year, acquiring 100% of 704Games would not be expected to have any meaningful impact on such per share amount. Additionally, acquiring 100% of 704Games would simplify the financial reporting of Motorsport Games going forward and would completely settle and release all claims that the current minority stockholders of 704Games could allege or assert against Motorsport Games.

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