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Item 8.01. Other Events.
As previously reported, on February 11, 2021, HC2 Holdings 2 Inc. (now known as Innovate 2) (“Innovate”) and Continental General Insurance Company (“Continental”), former minority stockholders of 704Games, filed a complaint (the “HC2 and Continental Complaint”) in the U.S. District Court for the District of Delaware against Motorsport Games Inc. (the “Company”), the Company’s former Chief Executive Officer and Executive Chairman, the Company’s former Chief Financial Officer, and the manager of Driven Lifestyle Group LLC, formerly known as Motorsport Network, LLC, which is the Company’s majority shareholder (“Driven Lifestyle”). The complaint was later amended and added Leo Capital Holdings LLC (“Leo Capital”) as an additional plaintiff and the controller of Driven Lifestyle as an additional individual defendant. On July 28, 2023, Wesco Insurance Company (“Wesco”) filed a complaint in state court in Florida (the “Coverage Action”) against the Company, as well as the other defendants involved in the litigation related to the HC2 and Continental Complaint (the “Underlying Action”). The Company had previously submitted the Underlying Action for coverage under a management liability policy issued by Hallmark Specialty Insurance Company (“Hallmark”) and an excess policy with Wesco (the “Wesco Policy”). The Company is an insured party under the management liability policy issued by Hallmark and the Wesco Policy. Wesco’s complaint sought declaratory relief to determine Wesco’s obligations to the defendants under an excess policy of insurance issued to the Company by Wesco for the Underlying Action. Wesco claimed that there was no coverage afforded to the defendants for the Underlying Action under the Wesco Policy.
On June 2, 2025 (the “Effective Date”), Wesco and Driven Lifestyle entered into a Settlement and Release Agreement (the “Settlement Agreement”), which provides that (1) within thirty (30) calendar days after the Effective Date, Wesco shall pay the sum of $800,000 to Driven Lifestyle (the “Settlement Payment”) and (2) within ten (10) calendar days after the receipt of the Settlement Payment, Wesco and Driven Lifestyle shall file stipulations to dismiss the Coverage Action with prejudice. The Settlement Agreement also provides for a release of claims by Wesco and Driven Lifestyle, including on behalf of their direct and indirect subsidiaries.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Motorsport Games Inc. | ||
| Date: June 6, 2025 | By: | /s/ Stephen Hood |
| Stephen Hood | ||
| Chief Executive Officer and President | ||