SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2024

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 September 30, 2024, 2,098 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 Company issued stock options under its MSGM 2021 Stock Plan during the nine months ended September 30, 2024 and 2023. 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, 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.

On January 26, 2024, the compensation committee of the board of directors of the Company approved and authorized the grant of an option award to purchase 46,000 shares of the Company’s Class A common stock to Stephen Hood, the Chief Executive Officer and President of the Company, pursuant to the MSGM 2021 Stock Plan. 11,500 shares underlying the option award vested immediately upon grant and the remaining 34,500 shares underlying the option award will vest in three equal quarterly installments beginning on April 26, 2024. As of September 30, 2024, 34,500 shares of the Company’s Class A common stock granted to Stephen Hood on January 26, 2024, had vested.

The following is a summary of stock-based compensation award activity for the nine months ended September 30, 2024:

	Number of Options
Awards outstanding under the MSGM 2021 Stock Plan as of January 1, 2024 (net of forfeitures)		53,371
Granted		46,000
Forfeited, cancelled or expired		(1,469	)
Awards outstanding under the MSGM 2021 Stock Plan as of September 30, 2024 (net of forfeitures)		97,902

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 September 30,				For the Nine Months Ended September 30,
	2024		2023		2024		2023
General and Administrative	$	24,371	$	86,737	$	103,746	$	632,116
Sales and Marketing		331		6,720		1,803		229,454
Development		2,187		12,067		189		14,490
Stock-based compensation expense	$	26,889	$	105,524	$	105,738	$	876,060

As of September 30, 2024, there was approximately $11,000 of unrecognized stock-based compensation expense which will be recognized over approximately 1 year.