Motorsport Games has adopted a one-year poison pill and strengthened its shareholder-meeting rules after investment firm Red Oak Partners rapidly accumulated roughly 11% of the Nasdaq-listed racing-game publisher.
The company said its board approved the stockholder rights plan after observing “recent significant accumulations” of its shares and concluding that Motorsport Games’ market price did not reflect the company’s inherent value or long-term prospects. Motorsport Games did not identify the investors that prompted the action and said it was not responding to a specific takeover proposal.
Red Oak is the clearest publicly disclosed accumulation, although nothing in the filings establishes that it was the sole, or even primary, reason for the board’s decision.
Red Oak and its affiliated funds reported beneficial ownership of 442,644 Motorsport Games shares, representing 10.6% of the company, as of June 30. Subsequent purchases on July 1 and July 2 increased the position to 458,581 shares, or approximately 11% of the outstanding Class A stock. That places the firm relatively close to the rights plan’s 12.5% trigger.
Under the plan, Motorsport Games will distribute one preferred-stock purchase right for each outstanding Class A share held as of Aug. 3. If an investor or coordinated group reaches 12.5% beneficial ownership, other stockholders could acquire shares at a substantial discount, diluting the investor that crossed the threshold. Derivative positions can also count toward the calculation.
Investors already above 12.5% are grandfathered, but generally cannot acquire additional shares without triggering the plan. The rights expire July 20, 2027, unless the board terminates or redeems them earlier.
Motorsport Games also filed a Form 8-A registering the preferred-stock purchase rights under Section 12(b) of the Securities Exchange Act for Nasdaq. That filing implements the rights plan rather than creating an additional defensive mechanism.
Red Oak Has an Activist Track Record
Red Oak Partners is a Boca Raton, Florida-based investment manager founded by David Sandberg in 2003. Its long fund says it targets underfollowed and mispriced North American micro- and small-cap companies using value, catalyst-driven and event-driven strategies.
The fund also says it may “opportunistically employ shareholder activism” to create value.
That approach has previously extended to board representation. In 2023, Red Oak nominated directors and submitted stockholder proposals at staffing company GEE Group. The parties later reached a cooperation agreement under which Sandberg and J. Randall Waterfield joined GEE Group’s board, while Red Oak withdrew its nominations and accepted standstill and voting restrictions.
Its Motorsport Games investment, however, was reported on Schedule 13G rather than the Schedule 13D typically used when an investor intends to influence control. Red Oak certified that the shares had not been acquired and were not being held for the purpose of changing or influencing control of Motorsport Games. That certification describes its stated intent at the time of filing; it does not prevent the firm from later changing its plans and making a different disclosure.
A review by The Esports Advocate of Red Oak’s public materials and readily available SEC ownership filings did not identify another disclosed investment in a video-game publisher, esports company, sim-racing platform, or motorsports-rights business.
The public filings reviewed by TEA also do not identify any relationship between Red Oak and Sharp Arrow Global Tech Ventures, former Motorsport Games parent Driven Lifestyle Group, or a named competitor of Motorsport Games.
Board Tightens Meeting Rules
The poison pill was accompanied by a separate Form 8-K detailing amended and restated bylaws adopted on July 22.
The new bylaws give the board or meeting chair broad authority over stockholder meetings, including the agenda, attendance, speaking time, questions, recording devices and participation. The meeting chair may adjourn or recess a meeting for any or no stated reason, while the board may postpone or cancel a meeting after providing public notice.
The amendments also expand the advance-notice and disclosure requirements for outside director nominations and stockholder proposals. Among other information, a nominating investor may have to disclose its ownership, derivatives, agreements with other parties, investment intent, legal proceedings, relationships with the company, and plans that would ordinarily appear in a Schedule 13D.
Director candidates can also be required to complete company questionnaires, provide representations concerning conflicts and outside compensation, and participate in interviews with the board.
Those provisions do not prevent a proxy contest, but they give the board additional procedural tools and make an outside nomination campaign more demanding.
Driven Lifestyle’s Control Was Removed in April
The timing is notable because Motorsport Games only recently dismantled the voting structure through which Driven Lifestyle Group, formerly Motorsport Network, had controlled the company.
In April, Motorsport Games agreed to repurchase 904,395 Class A shares from Driven Lifestyle for $4.11 per share, or approximately $3.7 million. Driven Lifestyle also surrendered all 700,000 of its Class B shares, which carried enhanced voting rights. It retained 254,453 Class A shares following the transaction.
The cancellation of the Class B shares removed Driven Lifestyle’s super-voting control and made accumulations of ordinary Class A stock more consequential.
Governance amendments that became effective in May also eliminated the ability of stockholders to take action by written consent, requiring stockholder decisions to be made at a formally called meeting. The poison pill and the July bylaw changes add further board protections around that meeting-based process.
Sharp Arrow and Pimax Remain Central to Ownership
Sharp Arrow Global Tech Ventures remains Motorsport Games’ largest disclosed investor.
The British Virgin Islands partnership participated in a $2.5 million private placement completed in April 2025. Motorsport Games described the financing as being led by virtual-reality headset manufacturer Pimax, and its 2026 proxy filing identifies Pimax Innovation Co. Limited as an affiliate of Sharp Arrow.
Sharp Arrow is controlled by its general partner, Zhibin “Robin” Weng, the founder of Pimax. The investment also resulted in the appointment of Sharp Arrow-backed nominee Guoquan “Paul” Huang to the Motorsport Games board and gave the investor certain participation and management-nomination rights.
A Motorsport Games ownership table published before the Driven Lifestyle repurchase listed Sharp Arrow as beneficially owning approximately 1.46 million shares, including shares underlying pre-funded warrants, representing 26.82% of the applicable Class A total. An updated Sharp Arrow ownership filing reflecting the reduced post-repurchase share count was not identified in TEA’s review.
Because Sharp Arrow already exceeds the poison pill’s 12.5% threshold, its existing position is generally grandfathered. Additional acquisitions could trigger the plan, depending on the rights agreement’s beneficial-ownership calculations and applicable exemptions.
Sharp Arrow’s board representation and existing commercial relationship with Motorsport Games distinguish it from Red Oak, whose position was reported as passive.
Improved Results, but a History of Nasdaq Pressure
The governance changes arrive as Motorsport Games’ operating performance has improved following several years of liquidity pressure, licensing retrenchment, and Nasdaq compliance issues.
The company reported first-quarter revenue of approximately $4 million, up 129% year over year, along with $1 million in net income and $1.6 million in operating cash flow. Revenue growth was primarily driven by Le Mans Ultimate, downloadable content, and RaceControl subscriptions.
Motorsport Games held $5.9 million in cash at the end of March. The balance fell to approximately $3.8 million by the end of April, primarily because of the Driven Lifestyle share repurchase, partly offset by operating cash flow and a drawdown under a Citibank credit facility.
Nasdaq notified Motorsport Games in November 2024 that its stockholders’ equity had fallen below the exchange’s $2.5 million continued-listing requirement. The company regained compliance in April 2025 following the Pimax-led financing. None of the July filings disclosed a new Nasdaq deficiency.
