SHARE-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
SHARE-BASED COMPENSATION

NOTE 8 – SHARE-BASED COMPENSATION

 

On January 12, 2021, in connection with its initial public offering, Motorsport Games established the Motorsport Games Inc. 2021 Equity Incentive Plan (the “MSGM 2021 Stock Plan”). The MSGM 2021 Stock Plan provides for the grant of options, stock appreciation rights, restricted stock awards, performance share awards and restricted stock unit awards, and initially authorized 100,000 shares of Class A common stock to be available for issuance. As of June 30, 2023, 21,815 shares of Class A common stock were available for issuance under the MSGM 2021 Stock Plan. Shares issued in connection with awards made under the MSGM 2021 Stock Plan are generally issued as new issuances of Class A common stock.

 

 

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

 

The majority of the options issued under the MSGM 2021 Stock Plan have time-based vesting schedules, typically vesting ratably over a three-year period. Certain stock option awards differed from this vesting schedule, notably awards made to the Company’s former Chief Executive Officer in conjunction with the Company’s initial public offering that vested immediately, as well as those made to the Company’s current and former directors that vest on the one-year anniversary of award issuance. All stock options issued under the MSGM 2021 Stock Plan expire 10 years from the grant date.

 

The following is a summary of stock-based compensation award activity for the six months ended June 30, 2023:

      

   Number of Options 
Awards outstanding under the MSGM 2021 Stock Plan as of January 1, 2023 (net of forfeitures)   74,285 
Stock options awarded to Board of Directors under the MSGM 2021 Stock Plan   26,316 
Forfeited, cancelled or expired   (30,609)
Awards outstanding under the MSGM 2021 Stock Plan as of June 30, 2023 (net of forfeitures)   69,992 

 

On April 4, 2023, the Company granted an aggregate of 26,316 stock option awards under the MSGM 2021 Stock Plan to its directors with a grant date fair value of approximately $0.1 million, which will fully vest on the one-year anniversary of the award issuance date. Additionally, on June 9, 2023, the Company granted 21,394 restricted shares of Class A Common Stock outside of the MSGM 2021 Stock Plan, with a grant fair value of approximately $30,000, to a consultant pursuant to a consultancy agreement entered into in February 2023. These restricted shares of Class A Common Stock will fully vest on the one-year anniversary of the date of the consultancy agreement.

 

Stock-Based Compensation

 

The following table summarizes stock-based compensation expense resulting from equity awards included in the Company’s condensed consolidated statements of operations:

      

   For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,		 
   2023   2022   2023   2022 
General and Administrative  $525,952   $188,201   $545,378   $458,323 
Sales and Marketing   (16,982)   32,365    222,735    78,839 
Development   12,333    18,007    2,423    54,441 
Stock-based compensation expense  $521,303   $238,573   $770,536   $591,603 

 

As of June 30, 2023, there was approximately $0.3 million of unrecognized stock-based compensation expense which will be recognized over approximately 1.8 years.

 

 

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements