SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

NOTE 10 – SHARE-BASED COMPENSATION

On January 12, 2021, in connection with 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 September 30, 2022, 42,595 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.

The majority of the options issued under the MSGM 2021 Stock Plan have time-based vesting schedules, typically vesting ratably over a 3-year period. Certain stock option awards differed from this vesting schedule, notably awards made to Motorsport Games’ Chief Executive Officer in conjunction with Motorsport Games’ initial public offering that vested immediately, as well as those made to Motorsport Games’ directors that vested 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 nine months ended September 30, 2022:

	For the Nine Months Ended September 30, 2022
	Number of Options			Vesting Term	Contractual Term	Grant Date Fair Value
Awards outstanding under the MSGM 2021 Stock Plan as of January 1, 2022 (net of forfeitures)		29,740
Stock options awarded to employees under the MSGM 2021 Stock Plan		56,935		3 Years	10 Years	$	1,143,500
Stock options awarded to Board of Directors under the MSGM 2021 Stock Plan		5,711		1 Year	10 Years	$	120,630
Forfeited, cancelled or expired		(34,981	)
Awards outstanding under the MSGM 2021 Stock Plan as of September 30, 2022 (net of forfeitures)		57,405

Motorsport Games Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

In addition to the equity awards granted and detailed above, the Company granted 3,769 restricted stock awards under the MSGM 2021 Stock Plan to its Board of Directors in January 2022 that vested on issuance, with a grant date fair value of approximately $0.1 million.

Stock-Based Compensation

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
G&A	$	223,953	$	285,318	$	682,276	$	9,264,583
Sales & Marketing		1,371		3,793		80,210		123,139
Development		3,388		3,062		57,829		97,641
Stock-based compensation expense	$	228,712	$	292,173	$	820,315	$	9,485,363

As of September 30, 2022, there was approximately $1.1 million of unrecognized stock-based compensation expense which will be recognized over approximately 2.5 years.