Good day, and welcome to the Motorsport Games Inc. Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Ben Rossiter-Turner, Vice President. Please go ahead.

Thank you, and welcome to Motorsport Games third quarter 2023 earnings conference call and webcast. On today's call is Motorsport Games’ Chief Executive Officer, Stephen Hood; and Chief Financial Officer, Jason Potter. By now, everyone should have access to the company's third quarter 2023 earnings press release filed today after market close. This is available on the Investor Relations section of Motorsport Games' website at www.motorsportgames.com. During the course of this call, management may make forward-looking statements within the meaning of U.S. federal securities laws. These statements are based on management’s current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Except as required by law, the company undertakes no obligation to update any forward-looking statements made on this call or to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to today's press release and the company's filings with the SEC, including its most recent quarterly report on Form 10-Q for the quarter ended September 30, 2023, for a detailed discussion of certain risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. In today's conference call, we will refer to certain non-GAAP financial measures such as adjusted EBITDA as we discuss the third quarter 2023 financial results. You will find a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures as well as other related disclosures in the press release issued earlier today. And now, I'd like to turn over the call over to Stephen Hood, Chief Executive Officer of Motorsport Games. Stephen?

Thank you to all the participants joining this conference call today. This past quarter has been a continuation of the incredible efforts to steer our business to future success. This work undertaken by the Board and senior leadership team has started to deliver recognizable tangible results, and I'm very happy to walk you through the positive achievements we have accomplished thus far. I would first like to announce Stanley Beckley as our interim Chief Financial Officer, effective November 8, 2023. Stanley will pick up the reins from Jason Potter, continuing the exemplary work to drive positive change to our business. Stanley is an incredibly detail orientated individual with unflinching financial discipline that aligns perfectly with our need to leave no stone unturned in building this business into something we know it can become. Stanley is a fantastic addition to our team, and his energy and enthusiasm will maintain our momentum. My sincere thanks to Jason, who is alongside me today on this call, for his expertise, guidance and support through the restructuring period over the last several months. Jason has committed to assisting the leadership team as and when needed, accelerating the onboarding of Stanley and providing valuable knowledge over the next few weeks and months. I'm very excited about this next phase, and we owe Jason for the effort in providing this launch pad. Now, please allow me to bring you up to speed on the results of a proudly announced comprehensive assessment of the company's position and projects. The sale of the NASCAR license in early October generated net cash proceeds of 3.7 million to the company at closing, plus an additional 1 million in deferred consideration that will fall payable over the next 15 months, subject to the satisfaction of certain conditions. This sale significantly reduces our…

Thank you, Stephen, and good evening, everyone. As with previous earnings calls, I won't be offering any forward-looking guidance today. Instead, I will focus on providing an update on our financial results and highlights from the third quarter 2023. Revenues were 1.7 million, up 0.5 million or 38.5% when compared to the same period in the prior year. Higher digital game and DLC sales are the primary drivers for the increase, driven in part by the release of NASCAR Heat 5 - Next Gen Car Update DLC in June 2023, which were partially offset by reduction in Esports revenue due to the timing of the commenced '23, '24 Le Mans virtual series season compared to '20 to '23 season, which commenced in September 2022. Net loss for the quarter was 3.5 million, a decrease of 5 million when compared to the same period of the prior year. The change in net loss was primarily driven by 4.6 million reduction in marketing development and general and administrative expenses, as well as the 0.5 million increase in revenue previously discussed. Consequently, EPS for the quarter was negative $1.28 compared to negative $7.29 in the same period in the prior year. The reduction in overhead spend was in part driven by actions taken under the company's 2022 restructuring program, which has helped us lower our overhead cost by approximately 6.7 million on an annualized basis as of September 30, 2023, exceeding our target of 4 million in annualized savings by the end of 2023. These savings were achieved through changes in global headcount, reducing certain overhead expenditures and improvements in our internal processes. We are reporting an adjusted EBITDA loss of 2.4 million for the third quarter of 2023 compared to an adjusted EBITDA loss of 6.5 million for the same period in…

In closing, I thank our shareholders for their time and support. Thank you for joining us today. And now let's go to questions. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Michael Kupinski with Noble Capital Markets. Please go ahead.

Thank you and thanks for taking the question. A quick one. I was wondering if you can just kind of tell us, is the company current on all of its obligations on its existing licenses and so forth. And was just wondering if you can add a little color on -- and I'm sorry for joining a little late at this, if you've already discussed this, on your British Touring Car license and what were the reasons behind that? Can you just give us an update on that?

Hi, Michael. Good to hear from you. So I'll answer the first part. And then maybe Stephen will give you an update on BTCC. In respect to obligations and being current, as disclosed in the Form 10-Q [indiscernible] that we have disclosed in there that we are behind with some of the payments in respect to the BTCC license. In essence, there was some ongoing payments that need to be made under that license agreement and that was one of the drivers behind the termination from BTCC this week.

And so I was just wondering in terms of the additional -- the cash that you have currently, does that -- do you have enough cash to kind of make those payments whole in terms of the other licenses or is that a part of the funding that you'll be needing?

The amount that we have under the BTCC specifically is 0.4 million, subject to the termination [indiscernible] is a result of the termination this week and is disclosed in Form 10-Q. But we're obviously looking to engage in conversations with BTCC on that point specifically and we’ll get some clarity as to where they’re standing. I think from a financing perspective as a whole, we look at what our cash fund has been and it’s come down tremendously when we compare to the prior year and even prior quarters. So we're happy with where the cash fund is heading directionally. You should see us about 0.4 million average monthly to Q3 which we’ve just never been close to before. And so obviously factoring all that in, when we’re looking at our future fund and we think we will do one additional funding we’ll need and it covers any costs and any residual payments that are required and any purchase commitments.

Got you. And I'm sorry if this is covered in the 10-Q, but what other licenses are you behind on? And are there -- is there a risk at this point? Are you trying to give us a gauge of how those maybe negotiations are going with those licensees?

So the remaining kind of two primary licensees are the Le Mans license and the INDYCAR license. We’re not presently behind on payments on either of those arrangements. But obviously they've come with minimum multi-guarantees and now our payment schedules associated with those, we will have to look to adhere to in the future, even coming months.

Got you. And I know that you went through a tremendous reorganization and consolidation. Are there further expenses that you can cut at this point, or are you now at the base level where you feel you need to be?

Yes. I think this week hasn't been easy for us. There has been some tough decisions around that we obviously have to make, some changes from a restructuring side of things and try and reduce some of the overhead at a more sustainable level. We've tried to do that as much as we can. But of course, we'll continue to review our cost base and we'll always look for opportunities to reduce [indiscernible] that matches the organization today. And so this is something we'll continuously review and always look to improve upon and make sure we’re efficient as possible.

All right. That's all I have. Good luck to you guys.

All right. Then this concludes our conference. Thank you for attending today's presentation.