Motorsport Games (MSGM, Financials) shares surged 145.5% to close at $2.75 on April 17 at 5:08 p.m. ET, before falling 4.39% to $2.63 in after-hours trading, following the company's announcement that it raised approximately $2.5 million through a private placement led by virtual reality company Pimax, according to a statement from Motorsport Games.

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The company, which develops racing simulation games including Le Mans Ultimate, entered into a definitive agreement on April 11 with institutional and accredited investors, including an affiliate of Pimax Innovation Inc., to issue nearly 1.9 million shares of Class A common stock and a pre-funded warrant to purchase up to about 378,000 additional shares. The shares were priced at $1.10 each, while the pre-funded warrants carried an exercise price of $0.0001 per share. Motorsport Games said the offering represented a 33% premium over its April 10 closing price.

The company closed on $2.4 million of the transaction on April 11, with an additional $100,000 expected to close on April 15. The proceeds are intended to bolster working capital, fund corporate expenses, accelerate product development, and help the company regain compliance with the Nasdaq Capital Market's minimum stockholders' equity requirement.

As part of the agreement, investors who purchased at least 50.1% of the securities will have the right to appoint a Class II director to Motorsport Games' board, with a term ending at the 2026 annual meeting. They will also have the right to appoint an individual to the management team, subject to board approval.

Motorsport Games Chief Executive Officer Stephen Hood said in the statement that the investment, made at a premium, could boost shareholder confidence. He added that synergies with Pimax could improve the virtual reality offerings of Motorsport Games' racing titles.

Pimax Founder and Chairman Robin Weng said sim racing players are a vital part of the company's community and that Pimax plans to deepen its focus on immersive virtual reality experiences for this user base.