UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

☒ For the quarterly period ended June 30, 2025

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _________________

 

Commission File Number: 001-38508

 

Lottery.com Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		81-1996183
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
5049 Edwards Ranch, 4th Floor, Fort Worth, Texas		76109
(Address of principal executive offices)		(zip code)

 

(737) 309-4500

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.001 par value		SEGG		The Nasdaq Stock Market LLC
Warrants to purchase one share of common stock, each at an exercise price equivalent to $230.00		LTRYW		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☐ Yes ☒ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

 

As of August 18, 2025, 39,402,750 shares of common stock, par value $0.001 per share were issued and outstanding.

 

 

 

TABLE OF CONTENTS

 

	Page
Part I. Financial Information
Item 1. Consolidated Financial Statements	1
Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024	F-1
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024 (unaudited)	F-2
Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2025 and 2024 (unaudited)	F-3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited)	F-4
Notes to Condensed Consolidated Financial Statements (unaudited)	F-5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3. Quantitative and Qualitative Disclosures about Market Risk	16
Item 4. Controls and Procedures	16
Part II. Other Information
Item 1. Legal Proceedings	18
Item 1A. Risk Factors	21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3. Defaults Upon Senior Securities	22
Item 4. Mine Safety Disclosures	22
Item 5. Other Information	22
Item 6. Exhibits	22

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements about the financial condition, results of operations, earnings outlook and prospects of Lottery.com Inc. (“Lottery.com”, the “Company”, “we” or “us”). Forward-looking statements appear in a number of places in this Report, including, without limitation, under the heading in Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

 

Forward-looking statements are based on the current expectations of the management of Lottery.com and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors discussed and identified in the section entitled “Risk Factors” in our Annual Report on Form 10-K/A for the year ended December 31, 2024 (the Amended “Annual Report”) which was filed on April 22, 2025 and in this Report, as such factors may be updated in our periodic reports filed with the Securities and Exchange Commission (the “SEC”), as well as the following:

 

	●	The findings of the previously disclosed internal investigations and other matters have exposed us to legal proceedings, regulatory investigations and inquiries, and have resulted in significant legal and other expenses, and significant time and attention from our senior management, as well as causing other adverse impacts.
	●	We and certain of our former officers are, and in the future, we or our officers and directors may become, the subject of legal proceedings, investigations and inquiries by governmental agencies with respect to the findings of the above matters, which could have a material adverse effect on our reputation, business, financial condition, and results of operations, which could result in additional claims and material liabilities.
	●	We have been named as a defendant in a number of lawsuits filed by purchasers of our securities, including class action lawsuits that could have a material adverse impact on our business, financial condition, results of operation and cash flows, and our reputation.
	●	Matters relating to or arising from our previous restatement and the internal investigations, including adverse publicity and potential concerns from our users, customers or others with whom we do business, have had and could continue to have an adverse effect on our business and financial condition.
	●	We need additional capital to, among other things, support and restart our operations, re-hire employees, complete acquisitions and pay expenses. Such capital may not be available on commercially acceptable terms, if at all. If we do not receive the additional capital, we may be forced to curtail or abandon our plans to recommence our operations and we may need to permanently cease our operations.

 

 

	●	If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the trading price of our common stock and warrants may be materially and adversely affected.
	●	Our inability to compete with other forms of entertainment for consumers’ discretionary time and income.
	●	Economic downturns, inflation, geopolitical and political and market conditions beyond our control.
	●	Negative events or media coverage relating to our business, our management and directors.
	●	Our inability to attract and retain users, including our ineffectiveness to appear in Internet search engine listings.
	●	Our continued ability to successfully use domain names to promote and increase the value of our brand.
	●	Scrutiny by stakeholders with respect to responsible gaming conduct.
	●	Our ability to achieve profitability and growth in our primary markets: sports, gaming, and entertainment.
	●	The effectiveness of our marketing efforts in developing and maintaining our brand and reputation.
	●	The vulnerability of our information systems to disruptions in communications, cyberattacks and disruptions caused with respect thereto, including an inability to securely maintain personal and other proprietary user information.
	●	Our inability to adapt to changes in the Internet, mobile or personal devices, or new technology platforms or network infrastructures, including AI.
	●	The exposure of our online infrastructure to risks relating to distributed ledger technology.
	●	Our inability to comply with complex, ever-changing and multi-jurisdictional regulatory regimes and other legal requirements applicable to the gaming industries.
	●	Geopolitical shifts and changes in applicable laws or regulations or the manner in which they are interpreted.
	●	Our inability to successfully expand geographically and acquire and integrate new operations.
	●	Our dependence on third-party service providers to timely perform services or provide software component products for our product offerings and the processing of user payments and withdrawals.
	●	Our inability to maintain successful relationships and/or agreements with third-party service provider affiliates.

 

 

	●	Failure of third-party service providers to protect, enforce, or defend intellectual property rights required to fulfill contractual obligations required for the operation of our business.
	●	The ongoing responsibility of maintaining compliance with the regulatory and other requirements of being a public company.
	●	We have had periods of non-compliance with Nasdaq listing standards in the past and we may not be able to maintain compliance with Nasdaq’s continued listing standards in the future.
	●	Limited liquidity and trading of our securities.
	●	Lenders may not loan us the amounts they agreed to under existing loan agreements.
	●	Our obligations under certain loan agreements are secured by a first priority security interest in substantially all of our assets and if we were to default, we could be required to curtail or abandon our business plans and operations.
	●	The issuance and sale of common stock upon conversion of the amounts owed or upon exercise of the warrants issued to Woodford, UCIL, Univest, or Generating Alpha Ltd (as defined herein) under their loan agreements may depress the market price of our common stock and cause substantial dilution.
	●	We currently owe a significant amount of money under our loan agreements, which we may not be able to repay on the terms provided therein.

 

The risks described herein or in the “Risk Factors” sections of our other public filings referenced above are not exhaustive. Other sections of this Report describe additional factors that could adversely affect our business, financial condition or results of operations. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

	Page
Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024	F-1
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024 (unaudited)	F-2
Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2025 and 2024 (unaudited)	F-3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited)	F-4
Notes to Condensed Consolidated Financial Statements (unaudited)	F-5

 

 

LOTTERY.COM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		June 30, 2025				December 31, 2024
		(UNAUDITED)				(AUDITED)
ASSETS
Current assets:
Cash		$	262,570			$	68,035
Accounts receivable			580,451				494,129
Prepaid expenses			14,458,252				14,449,333
Other current assets			1,886,712				880,961
Total current assets			17,187,985				15,892,458
Notes receivable			2,000,000				2,250,000
Investments			250,000				250,000
Goodwill			9,061,675				9,061,675
Intangible assets, net			11,684,840				12,569,165
Property and equipment, net			2,660				12,124
Other long-term assets			12,884,686				12,906,849
Total assets		$	53,071,846			$	52,942,271
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade payables		$	8,708,766			$	8,241,311
Deferred revenue			196,429				250,000
Notes payable - current			5,280,918				6,110,777
Accrued interest			1,213,458				1,218,864
Accrued and other expenses			12,834,858				12,161,311
Other liabilities			4,162,682				2,415,179
Total current liabilities			32,397,111				30,397,442
Long-term liabilities:
Convertible debt, net - non current			-				-
Other long-term liabilities			-				-
Total long-term liabilities			-				-
Commitments and contingencies (Note 13)			-				-
Total liabilities			32,397,111				30,397,442
Equity
Controlling Interest
Equity Controlling Interest
Preferred Stock, par value $0.001, 1,000,000 shares authorized, none issued and outstanding			-				-
Common stock, par value $0.001, 500,000,000 shares authorized, 32,429,034 and 18,326,855 issued and outstanding June 30, 2025 and December 31, 2024, respectively			32,429				18,327
Additional paid-in capital			290,627,791				283,913,433
Accumulated other comprehensive loss			47,435				16,880
Accumulated deficit			(270,879,151	)			(263,468,728	)
Total Lottery.com Inc. stockholders’ equity			19,828,504				20,479,912
Noncontrolling interest			846,229				2,064,917
Total Equity			20,674,733				22,544,829
Total liabilities and stockholders’ equity		$	53,071,844			$	52,942,271

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

LOTTERY.COM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2025				2024				2025				2024
Revenue		$	191,762			$	256,998			$	415,611			$	516,317
Cost of revenue			162,733				45,570				325,201				129,357
Gross profit			29,029				211,428				90,410				386,960
Operating expenses:
Personnel costs			438,966				1,789,986				1,125,603				2,774,665
Professional fees			1,339,869				1,545,083				2,429,077				3,564,038
General and administrative			1,123,574				1,435,307				1,862,541				2,917,052
Depreciation and amortization			1,074,132				1,330,746				2,100,958				2,615,728
Total operating expenses			3,976,541				6,101,122				7,518,179				11,871,483
Income (loss) from operations			(3,947,512	)		$	(5,889,694	)			(7,427,769	)		$	(11,484,523	)
Other expenses
Interest (income) expense			64,422				121,814				(60,119	)			224,031
Other (income) expense			(24,033	)			(43,992	)			(88,605	)			8,684
Total other expenses (income), net			40,389				77,822				(148,724	)			232,715
Net loss before income tax		$	(3,987,901	)		$	(5,967,516	)		$	(7,279,045	)		$	(11,717,238	)
Income tax expense (benefit)			4,150				4,150				8,300				8,300
Net loss			(3,992,051	)			(5,971,666	)			(7,287,345	)			(11,725,538	)
Other comprehensive loss
Foreign currency translation adjustment, net			78,762				46,971				50,042				149,185
Comprehensive loss			(3,913,289	)			(5,924,695	)			(7,237,303	)			(11,576,353	)
Net income attributable to noncontrolling interest			(35,262	)			(44,625	)			(17,990	)			(101,946	)
Net loss attributable to Lottery.com Inc.			(3,878,027	)			(5,880,070	)			(7,219,313	)			(11,474,407	)
Net loss per common share
Basic and diluted		$	(0.13	)		$	(1.12	)		$	(0.27	)		$	(2.18	)
Weighted average common shares outstanding
Basic and diluted			29,018,752				5,235,591				26,355,589				5,270,490

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

LOTTERY.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

For the Three and Six Months Ended June 30, 2025 and 2024

 

		Shares				Amount				Capital				Deficit				Income				Equity				Interest				Equity
		Common Stock								Additional Paid-In				Accumulated				Accumulated Other Comprehensive				Total AutoLotto Inc. Stockholders’				Noncontrolling				Total Stockholders’
		Shares				Amount				Capital				Deficit				Income				Equity				Interest				Equity
Balance as   of December 31, 2023			2,877,045				2,877				269,690,569				(235,132,590	)			(91,667	)			34,469,189				2,120,176				36,589,618
Stock based compensation			1,851,277				1,851				3,652,273												358,349								358,349
Other comprehensive loss																			16,673				16,673								16,673
Stock issued in lieu of cash
Stock issued in lieu of cash, shares
Net loss															(5,708,979	)							(5,708,979	)			(67,640	)			(5,328,077	)
Balance as of March 31, 2024			4,728,322			$	4,728			$	273,342,842			$	(240,841,569	)			(74,994	)		$	32,431,007			$	2,052,789			$	34,483,796
Stock based compensation			2,613,210				2,613				4,009,542												(4,012,156	)							358,349
Conversion of Debt to Equity			105,440				105				137,491												137,596								137,596
Other comprehensive loss																			(51,595	)			(51,595	)							(51,595	)
Net loss															(5,969,320	)							(5,969,320	)			(44,624	)			(6,013,944	)
Balance as of June 30, 2024			7,446,972				7,446				277,489,875				(246,810,889	)			(101,946	)			30,559,843				2,008,165				32,568,008
Balance as of December 31, 2024			18,326,855			$	18,327			$	283,913,433			$	(263,468,728	)			16,880			$	20,479,912			$	2,064,916			$	22,544,829
Stock based compensation			612,569				613				210,407												211,020								211,020
Stock issued in lieu of cash			7,760,636				7,760				2,665,648												2,673,408								2,673,408
Other comprehensive loss																			(199,163	)			(199,163	)							(199,163	)
Net loss															(3,306,468	)							(3,306,468	)			(17,272	)			(3,323,740	)
Balance as of March 31, 2025			26,700,060				26,700				286,789,488				(266,775,196	)			(182,283	)			19,858,709				2,047,645				21,906,534
Balance			26,700,060				26,700				286,789,488				(266,775,196	)			(182,283	)			19,858,709				2,047,645				21,906,534
Stock based compensation			2,454,485				2,454				1,644,358												1,646,812								1,646,812
Conversion of Debt to Equity			2,564,794				2,565				1,718,258												1,720,823								1,720,823
Stock issued in lieu of cash			710,044				710				475,687												476,397								476,397
Other comprehensive loss																			229,718				229,718								229,718
Prior Period Adjustment															(225,928	)							(225,928	)			(1,166,154	)			(1,392,082	)
Net loss															(3,878,027	)							(3,878,027	)			(35,262	)			(3,913,289	)
Balance as of June 30, 2025			32,429,383				32,429				290,627,791				270,879,151				47,435				19,828,504				846,229				20,674,733
Balance			32,429,383				32,429				290,627,791				270,879,151				47,435				19,828,504				846,229				20,674,733

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

LOTTERY.COM INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Six Months Ended June 30, 2025 and 2024

 

		2025				2024
		Six Months Ended June 30,
		2025				2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss attributable to Lottery.com Inc.		$	(7,219,313	)		$	(11,474,407	)
Adjustments to reconcile net income to net cash used in operating activities:
Loss Attributable to noncontrolling interest			35,262				(88,359	)
Depreciation and amortization			908,044				2,615,728
Common stock granted for compensation and as payment in lieu of cash payments for accrued liabilities			3,149,806				7,530,796
Changes in assets and liabilities:
Accounts receivable			(86,322	)			(215,894
Prepaid expenses			(6,356	)			(29,125	)
Other current assets			-				(261,451	)
Other long term assets			22,163
Trade payables			467,455				84,844
Accrued and other expenses			673,547				432,918
Deferred revenue			(53,571	)			(53,571	)
Other liabilities			(128,163	)			-
Accrued interest			(5,406	)			216,369
Other long-term liabilities			-				-
Net cash (used in) provided by operating activities			(2,242,854	)			(1,446,045	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from collection of note receivable			250,000				-
Payments made as deposits made for acquisitions			(858,314	)
Net cash used in investing activities			(608,314	)			-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (Payments) from sale of common stock under put arrangement			1,528,024				-
Proceeds/ (Payments) from exercise of options and warrants			(261,393	)			-
Proceeds (Payments) from convertible notes			1,857,832				700,000
Net cash provided by financing activities			3,124,463				700,000
Net effect of exchange rate changes on Cash			(78,762	)			(127,070	)
NET CHANGE IN NET CASH AND RESTRICTED CASH			194,533				(873,115	)
CASH AND RESTRICTED CASH - BEGINNING OF YEAR			68,035				359,826
CASH AND RESTRICTED CASH - END OF PERIOD		$	262,568			$	513,289
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash		$	-			$	-
Taxes paid in cash		$	-			$	-

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

LOTTERY.COM INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2025

 

Note 1. Nature of Operations

 

Description of Business

 

Lottery.com Inc. (formerly Trident Acquisitions Corp) (“TDAC”, “Lottery.com”. “SEGG Media” or “the Company”), was formed as a Delaware corporation on March 17, 2016. On October 29, 2021, we consummated a business combination (the “Business Combination”) with AutoLotto, Inc. (“AutoLotto”). Following the closing of the Business Combination (the “Closing”) we changed our name from “Trident Acquisitions Corp.” to “Lottery.com Inc.” and the business of AutoLotto became our business. In connection with the Business Combination the Company moved its headquarters from New York, New York to Texas. In July 2025, the Company began doing business as SEGG Media Corporation. The name change is reflective of the Company’s shift to focusing on market segments in sports, entertainment, and gaming.

 

The Company owns and operates three premium domain brands: Sports.com, Concerts.com, and Lottery.com representing the Company’s three operating focuses: Sports, Entertainment, and Gaming.

 

Sports

 

Sports.com is a next-generation global sports streaming and content platform designed to meet the evolving demands of digital audiences. Focused on delivering premium short-form video, curated articles, and eventually live event coverage, the platform combines mobile-first accessibility, AI-driven personalization, and community engagement to create a unified experience for fans worldwide.

 

The business will launch with an ad-supported freemium model and scale toward subscription and pay-per-view offerings upon achieving key user milestones. Initial target markets include the United States, Latin America (LATAM), India, and the Gulf Cooperation Council (GCC) regions with fast-growing streaming adoption and underserved sports segments. The platform will also build strategic partnerships with regional sports leagues, influencers, and brands to accelerate content acquisition and market penetration.

 

Additionally, the Company will develop, produce and distribute compelling sports-focused films, docuseries, and premium digital content. This new arm of the business will serve as the cornerstone of the Company’s global expansion into entertainment media and immersive storytelling.

 

The Company has two wholly-owned subsidiaries to support the operations of the Sports-related activities: Sports.com Media Group Ltd and Sports.com Studios Ltd.

 

Entertainment

 

The Company is pursuing multiple revenue models in the entertainment vertical. Through TicketStub.com, the Company has a platform which allows it to generate revenue via direct-to-consumer ticket sales and through affiliate commissions with both first and second tier ticketing services. Concerts.com will focus on delivering free and subscription-based content related to the music industry. Features will include live and recorded concert streaming, music instruction, a licensed and fan-produced merchandise marketplace, and entertainment news.

 

The Company’s majority owned subsidiary, DotCom Ventures, Inc., operates two brands to support the operations of entertainment related activities: TicketStub.com and Concerts.com.

 

Gaming

 

The Company is an independent third-party lottery game service. It offers a platform that it developed and operates to enable the remote purchase of legally sanctioned lottery games in the U.S. and abroad (the “Platform”). The Company’s revenue generating activities are focused on (i) offering the Platform via the Lottery.com app and our websites to users located in the U.S. and international jurisdictions where the sale of lottery games is legal and our services are enabled for the remote purchase of legally sanctioned lottery games (our “B2C Platform”); (ii) offering an internally developed, created and operated business-to-business application programming interface (“API”) of the Platform to enable commercial partners in permitted U.S. and international jurisdictions to purchase certain legally operated lottery games from the Company and resell them to users located within their respective jurisdictions (“B2B API”); (iii) delivering global lottery data, such as winning numbers and results, and sports data, such as scores and statistics, to commercial digital subscribers and provide access to other proprietary, anonymized transaction data pursuant to multi-year contracts (“Data Service”); and (iv) transition Lottery.com into a high-authority, content-rich website that provides comprehensive information about lotteries, including results, analysis, comparisons, tools, and regulatory context and drive revenue through a Cost-per-Acquisition (CPA) or Revenue-Share model with third-party partners .

 

As a provider of lottery products and services, the Company is required to comply with, and its business is subject to, regulation in each jurisdiction in which the Company offers the B2C Platform, or a commercial partner offers users access to lottery games through the B2B API. In addition, it must also comply with the requirements of federal and other domestic and foreign regulatory bodies and governmental authorities in jurisdictions in which the Company operates or with authority over its business. The Company’s business is additionally subject to multiple other domestic and international laws, including those relating to the transmission of information, privacy, security, data retention, and other consumer focused laws, and, as such, may be impacted by changes in the interpretation of such laws.

 

 

Note 2. Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned operating subsidiaries. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). All intercompany accounts and transactions have been eliminated in consolidation.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and classification of liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern.

 

Pursuant to the requirements of the Financial Accounting Standards Board’s ASC Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

 

In connection with the Company’s Operational Cessation, the Company has experienced recurring net losses and negative cash flows from operations and has an accumulated deficit of approximately $270.9 million and working capital of approximately negative $15.3 million on June 30, 2025. For the quarter ended June 30, 2025, the Company sustained a loss of $3.9 million. For the year ending December 31, 2024 the Company sustained a net loss of $28.2 million. The Company sustained a loss from operations of $25.5 and $60.0 million for the years ending December 31, 2023, and 2022, respectively. Subsequently, the Company sustained additional operating losses and anticipates additional operating losses for the next twelve months. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company has historically funded its activities almost exclusively from debt and equity financing. Management’s plans in order to meet its operating cash flow requirements include financing activities such as private placements of its common stock, preferred stock offerings, and issuances of debt and convertible debt. Although Management believes that it will be able to continue to raise funds by sale of its securities to provide the additional cash needed to meet the Company’s obligations as they become due beginning with a loan agreement the Company entered into with United Capital Investments London Limited. (“UCIL”) on July 21, 2023, the Plans for Recommencement of Company Operations require substantial funds to implement and there is no assurance that the Company will be able to continue raising the required capital.

 

The Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements depends on its ability to execute the business plan for the relaunch of its core business, launch additional international lottery operations, and expand operations in Mexico and offerings of sweepstake, as well as successful monetization of Sports.com, and keeping expenditures in line with available operating capital. Such conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

 

Impact of Trident Acquisition Corp. Business Combination

 

We accounted for the October 29, 2021 Business Combination as a reverse recapitalization whereby AutoLotto was determined as the accounting acquirer and Trident Acquisition Corp. (“TDAC”) as the accounting acquiree. This determination was primarily based on:

 

		●	former AutoLotto stockholders having the largest voting interest in Lottery.com Inc. (“Lottery.com”);
		●	the board of directors of Lottery.com having 7 members, and AutoLotto’s former stockholders having the ability to nominate the majority of the members of the board of directors;
		●	AutoLotto management continuing to hold executive management roles for the post-combination company and being responsible for the day-to-day operations;
		●	the post-combination company assuming the Lottery.com name;
		●	Lottery.com maintaining the pre-existing AutoLotto headquarters; and the intended strategy of Lottery.com being a continuation of AutoLotto’s strategy.

 

Accordingly, the Business Combination was treated as the equivalent of AutoLotto issuing stock for the net assets of TDAC, accompanied by a recapitalization. The net assets of TDAC are stated at historical cost, with no goodwill or other intangible assets recorded.

 

While TDAC was the legal acquirer in the Business Combination, because AutoLotto was determined as the accounting acquirer, the historical financial statements of AutoLotto became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the financial statements included in the accompanying consolidated financial statements reflect (i) the historical operating results of AutoLotto prior to the Business Combination; (ii) the combined results of the Company and AutoLotto following the closing of the Business Combination; (iii) the assets and liabilities of AutoLotto at their historical cost; and (iv) the Company’s equity structure for all periods presented.

 

In connection with the Business Combination transaction, we have converted the equity structure for the periods prior to the Business Combination to reflect the number of shares of the Company’s common stock issued to AutoLotto’s stockholders in connection with the recapitalization transaction. As such, the shares, corresponding capital amounts and earnings per share, as applicable, related to AutoLotto convertible preferred stock and common stock prior to the Business Combination have been retroactively converted by applying the exchange ratio established in the Business Combination.

 

Non-controlling Interest

 

Non-controlling interest represents the proportionate ownership of Aganar and JuegaLotto, held by minority members and reflects their capital investments as well as their proportionate interest in subsidiary losses and other changes in members’ equity, including translation adjustments.

 

Segment Reporting

 

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing operating performance. Under the provisions of ASC 280, Segment Reporting, the Company is not organized around specific services or geographic regions. The Company operates in one service line, providing lottery products and services.

 

 

We determined that our Chief Financial Officer is the Chief Operating Decision Maker, and he uses financial information, business prospects, competitive factors, operating results and other non-U.S. GAAP financial ratios to evaluate our performance, which is the same basis on which our results and performance are communicated to our Board of Directors. Based on the information described above and in accordance with the applicable literature, management has concluded that we are organized and operated as one operating and reportable segment on a consolidated basis for each of the periods presented.

 

Concentration of Credit Risks

 

Financial instruments that are potentially subject to concentrations of credit risk are primarily cash. Cash holdings are placed with major financial institutions deemed to be of high-credit-quality in order to limit credit exposure. The Company maintains deposits and certificates of deposit with banks which may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit and money market accounts which are not FDIC insured. In addition, deposits aggregating approximately $12,970 on June 30, 2025 are held in foreign banks. Management believes the risk of loss in connection with these accounts is minimal.

 

Use of Estimates

 

The preparation of the financial statements requires management to make estimates and assumptions to determine the reported amounts of assets, liabilities, revenue and expenses. Although management believes these estimates are reasonable, actual results could differ from these estimates. The Company evaluates its estimates on an ongoing basis and prepares its estimates on historical experience and other assumptions the Company believes to be reasonable under the circumstances.

 

Reclassifications

 

Certain balances have been reclassified in the accompanying consolidated financial statements to conform to the current year presentation. These reclassifications had no effect on the balances of current or total assets and prior year’s net loss or accumulated deficit.

 

Foreign currency translation

 

Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. Dollars are translated into U.S. Dollars using period-end exchange rates. Global Gaming operates in Mexican Pesos and the base currency for Sports.com Media Group Ltd. (formerly S&MI Ltd.) is British Pounds. Assets and liabilities are translated using period-end exchange rates. Sales, costs and expenses are translated at the average exchange rates in effect during the reporting period. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive income (loss).

 

Cash and Restricted Cash

 

As of June 30, 2025 and December 31, 2024, cash was comprised of cash deposits. From time-to-time cash deposits with some banks may exceed federally insured limits with the majority of cash held in one financial institution. Management believes all financial institutions holding its cash are of high credit quality and does not believe the Company is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

 

The Company had no marketable securities as of June 30, 2025 and December 31, 2024.

 

 

Accounts Receivable

 

The Company through its various merchant providers pre-authorizes forms of payment prior to the sale of digital representation of lottery games to minimize exposure to losses related to uncollected payments and does not extend credit to the user of the B2C Platform or the commercial partner of the B2B API, which are its customers, in the normal course of business. The Company estimates its bad debt exposure each period and records a bad debt provision for accounts receivable it believes it may not collect in full. In the fall of 2024, the Company completed a project whereby certain older items in accounts receivable for the TinBu subsidiary were offset against the allowance for uncollectible receivables, resulting in a reduction in the number of individual items in accounts receivable which were aged greater than 90 days and the total amount for them. At the completion of this project, the balance in the allowance for uncollectible receivables was $22,016. At the end of 2024 the Company increased the allowance for uncollectible receivables by $10,984. At December 31, 2024 the allowance for uncollectible receivables was $33,000 whereas, before the project described above, it was $94,270 at December 31, 2023. The Company did not change its allowance for uncollectible receivables as of June 30, 2025. At June 30, 2025 the allowance for uncollectible receivables was $33,000. The Company has not incurred bad debt expense historically.

 

Prepaid Expenses for Advertising Credits

 

Prepaid expenses consist of payments made on contractual obligations for services to be consumed in future periods. The Company entered into an agreement with two third parties to provide advertising services and issued equity instruments as compensation for the advertising services (“Prepaid advertising credits”). The Company expenses the service as it is performed by the third parties. The value of the services provided were used to value these contracts, except for the year ended December 31, 2021 the Company reserved for potential inability to realize $2,000,000 of prepaid advertising credits in future periods. For the period ending December 31, 2024, the Company determined that approximately an additional $4,745,000 of prepaid advertising credits purchased during 2017 and 2018 may not be able to be fully utilized. As a result, the Company decreased prepaid expenses by $4,745,000 and increased its reserve for loss of prepaid advertising credits by $4,745,000. Prepaid expenses are included in current assets on the consolidated balance sheets. The Company has remaining prepaid expenses of $14,458,252 and $14,451,896 on June 30, 2025 and December 31, 2024, respectively.

 

Investments

 

On August 2, 2018, AutoLotto purchased 186,666 shares of Class A-1 common stock of a third-party business development partner representing 4% of the total outstanding shares of the Company. As this investment resulted in less than 20% ownership, it was accounted for using the cost basis method.

 

Property and equipment, net

 

Property and equipment are stated at cost. Depreciation and amortization are generally computed using the straight-line method over estimated useful lives ranging from 3three to five years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset. Routine maintenance and repair costs are expensed as incurred. The costs of major additions, replacements and improvements are capitalized. Gains and losses realized on the sale or disposal of property and equipment are recognized or charged to other expense in the consolidated statement of operations.

 

Depreciation of property and equipment is computed using the straight-line method over the following estimated useful lives:

Schedule of Depreciation of Property and Equipment 

Computers and equipment			3 years
Furniture and fixtures			5 years
Software			3 years

 

Leases

 

Right-of-use assets (“ROU assets”) represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Variable lease payments are not included in the calculation of the right-of-use asset and lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred. As most of the leases do not provide an implicit rate, the Company would use its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Otherwise, the implicit rate would be used when readily determinable. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

Under the available practical expedient, the Company accounts for the lease and non-lease components as a single lease component for all classes of underlying assets as both a lessee and lessor. Further, management has elected a short-term lease exception policy on all classes of underlying assets, permitting the Company to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less).

 

 

Internal Use Software Development

 

Software development costs incurred internally to develop software programs to be used solely to meet our internal needs and applications are capitalized once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the intended function. Additionally, we capitalize qualifying costs incurred for upgrades and enhancements to existing software that result in additional functionality. Costs related to preliminary project planning activities, post-implementation activities, maintenance and minor modifications are expensed as incurred. Internal-use software development costs are amortized on a straight-line basis over the estimated useful life of the software.

 

Goodwill and Other Intangible Assets

 

Goodwill represents the excess of the cost of assets acquired over the fair value of the net assets at the date of acquisition. Intangible assets represent the fair value of separately recognizable intangible assets acquired in connection with the Company’s business combinations. The Company evaluates its goodwill and other intangibles for impairment on an annual basis or whenever events or circumstances indicate that an impairment may have occurred in accordance with the provisions of ASC 350, “Goodwill and Other Intangible Assets”.

 

Revenue Recognition

 

Under the new standard, Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, the Company recognizes revenues when the following criteria are met: (i) persuasive evidence of a contract with a customer exists; (ii) identifiable performance obligations under the contract exist; (iii) the transaction price is determinable for each performance obligation; (iv) the transaction price is allocated to each performance obligation; and (v) when the performance obligations are satisfied. Revenues are recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services.

 

Lottery game revenue

 

Items that fall under this revenue classification include:

 

Lottery game sales

 

The Company’s performance obligations of delivering lottery games are satisfied at the time in which the digital representation of the lottery game is delivered to the user of the B2C Platform or the commercial partner of the B2B API, and therefore are recognized at a point in time. The Company receives consideration for lottery game sales at the time of delivery to the customer, which may be the user or commercial partner, as applicable. There is no variable consideration related to lottery game sales. As each individual lottery game delivered represents a distinct performance obligation and consideration for each game sale is fixed, representing the standalone selling price, there is no allocation of consideration necessary.

 

In accordance with Accounting Standards Codification (“ASC”) 606, the Company evaluates the presentation of revenue on a gross versus net basis dependent on whether the Company is a principal or agent. In making this evaluation, some of the factors that are considered include whether the Company has control over the specified good or services before they are transferred to the customer. The Company also assesses whether it is primarily responsible for fulfilling the promise to provide the goods or services, has inventory risk, and has discretion in establishing the price. For all of the Company’s transactions, management concluded that gross presentation is appropriate, as the Company is primarily responsible for providing the performance obligation directly to the customers and assumes fulfillment risk of all lottery game sales as it retains physical possession of lottery game sales tickets from time of sale until the point of redemption. The Company also retains inventory risk on all lottery game sales tickets as they would be responsible for any potential winnings related to lost or unredeemable tickets at the time of redemption. Finally, while states have the authority to establish lottery game sales prices, the Company can add service fees to ticket prices evidencing its ability to establish the ultimate price of the lottery tickets being sold.

 

 

Other associated revenue

 

The Company’s performance obligations in agreements with certain customers are to provide a license of intellectual property related to the use of the Company’s tradename for marketing purposes by partners of the Company. Customers pay a license fee up front. The transaction price is deemed to be the license issue fee stated in the contract. The license offered by the Company represents a symbolic license which provides the customer with the right to use the Company’s intellectual property on an ongoing basis with continued support throughout the term of the contract in the form of ongoing maintenance of the underlying intellectual property. There is no variable consideration related to these performance obligations.

 

Arrangements with multiple performance obligations

 

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, management allocates revenue to each performance obligation based on its relative standalone selling price. Management generally determines standalone selling prices based on the prices charged to customers.

 

Deferred Revenue

 

The Company records deferred revenue when cash payments are received or due in advance of any performance, including amounts which are refundable.

 

Payment terms vary by the type and location of the customer and the products or services offered. The period between invoicing and when payment is due is not significant. For certain products or services and customer types, management requires payment before the products or services are delivered to the customer.

 

Contract Assets

 

Given the nature of the Company’s services and contracts, it has no contract assets.

 

Taxes

 

Taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions, that are collected by us from a customer, are excluded from revenue.

 

Cost of Revenue

 

Lottery Specific Operations. Cost of revenue consists primarily of variable costs, comprising (i) the cost of procurement of lottery games, minus winnings to users, additional expenses related to the sale of lottery games, including, commissions, affiliate fees and revenue shares; and (ii) payment processing fees on user fees, including chargebacks imposed on the Company. Other non-variable costs included in cost of revenue include affiliate marketing credits acquired on a per-contract basis.

 

From Non-Lottery Operations. Cost of revenue consists of (i) fixed direct costs and/or variable costs incurred for content or services provided by third parties in connection with generating revenue; and (ii) payment processing fees on user fees, including chargebacks imposed on the Company. Other variable costs include underlying costs of tickets for events and sweepstakes prizes.

 

Stock-based Compensation

 

Effective October 1, 2019, the Company adopted ASU 2018-07, Compensation - “Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting” (“ASC 718”), which addresses aspects of the accounting for nonemployee share-based payment transactions and accounts for share-based awards to employees in accordance with ASC 718, Stock Compensation. Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the estimated service period (generally the vesting period) on the straight-line attribute method.

 

 

Income Taxes

 

For both financial accounting and tax reporting purposes, the Company reports income and expenses based on the accrual method of accounting.

 

For federal and state income tax purposes, the Company reports income or loss from their investments in limited liability companies on the consolidated income tax returns. As such, all taxable income and available tax credits are passed from the limited liability companies to the individual members. It is the responsibility of the individual members to report the taxable income and tax credits, and to pay any resulting income taxes. Therefore, the income and losses incurred by the limited liability companies have been consolidated in the Company’s tax return and provision based upon its relative ownership.

 

Income taxes are accounted for in accordance with ASC 740, “Income Taxes” (“ASC 740”), using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefit will not be realized.

 

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position; and (ii) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

 

Generally, the taxing authorities can audit the previous three years of tax returns and in certain situations audit additional years. For federal tax purposes, the Company’s 2020 through 2024 tax years generally remain open for examination by the tax authorities under the normal three-year statute of limitations. For state tax purposes, the Company’s 2019 through 2024 tax years remain open for examination by the tax authorities under the normal four-year statute of limitations.

 

Fair Value of Financial Instruments

 

The Company determines the fair value of its financial instruments in accordance with the provisions of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

 

	●	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
	●	Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability
	●	Level 3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability.

 

Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available.

 

The classification of an asset or liability in the hierarchy is based upon the lowest level of input that is significant to the measurement of fair value.

 

 

Fair value of stock options and warrants

 

Management uses the Black-Scholes option-pricing model to calculate the fair value of stock options and warrants. Use of this method requires management to make assumptions and estimates about the expected life of options and warrants, anticipated forfeitures, the risk-free rate, and the volatility of the Company’s share price. In making these assumptions and estimates, management relies on historical market data.

 

Recent Accounting Pronouncements

 

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and other (Topic 350) (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value limited to the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. The amendments in this ASU are effective for goodwill impairment tests in fiscal years beginning after December 15, 2021, and early adoption is permitted. The Company is currently evaluating this new standard and management does not currently believe it will have a material impact on its consolidated financial statements, depending on the outcome of future goodwill impairment tests.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Adoption of ASU 2016-13 will require the Company to use forward-looking information to formulate its credit loss estimates. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating this new standard and currently does not expect it to have a significant impact on the Company’s consolidated financial statements.

 

In December 2019, the FASB issued ASU No 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2021, and early adoption is permitted. The Company is currently evaluating this new standard and currently does not expect it to have a significant impact on the Company’s consolidated financial statements.

 

In October 2020, the FASB issued ASU No. 2020-09, Debt (Topic 470) (“ASU 2020-09”). ASU 2020-09 amendments to SEC paragraphs pursuant to SEC release NO. 33-10762 amends terms related to Debt Guarantors and Issuers of Guaranteed Securities Registered or to be Registered with the SEC. The Company is currently evaluating the timing of adoption and impact of the updated guidance on its financial statements.

 

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to enhance the reportable segment disclosures. The guidance will require additional disclosures about significant segment expenses. The guidance is effective for the public companies with fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the impact of this standard.

 

Note 3. Business Combination

 

TDAC Combination

 

On October 29, 2021, the Company and AutoLotto consummated the transactions contemplated by the Merger Agreement. At the Closing, each share of common stock and preferred stock of AutoLotto that was issued and outstanding immediately prior to the effective time of the Merger (other than excluded shares as contemplated by the Merger Agreement) was cancelled and converted into the right to receive approximately 3.0058 shares (the “Exchange Ratio”) of Lottery.com. common stock.

 

 

The Merger closing was a triggering event for the Series B convertible notes, of which $63.8 million was converted into 164,426 shares of AutoLotto that were then converted into 488,225 shares of Lottery.com common stock using the Exchange Ratio.

 

At the Closing, each option to purchase AutoLotto’s common stock, whether vested or unvested, was assumed and converted into an option to purchase a number of shares of Lottery.com common stock in the manner set forth in the Merger Agreement.

 

The Company accounted for the Business Combination as a reverse recapitalization whereby AutoLotto was determined as the accounting acquirer and TDAC as the accounting acquiree. Refer to Note 2, Summary of Significant Accounting Policies, for further details. Accordingly, the Business Combination was treated as the equivalent of AutoLotto issuing stock for the net assets of TDAC, accompanied by a recapitalization. The net assets of TDAC are stated at historical cost, with no goodwill or other intangible assets recorded.

 

The accompanying consolidated financial statements and related notes reflect the historical results of AutoLotto prior to the merger and do not include the historical results of TDAC prior to the consummation of Business Combination.

 

Upon the closing of the transaction, AutoLotto received total gross proceeds of approximately $42,794,000, from TDAC’s trust and operating accounts. Total transaction costs were approximately $9,460,000, which principally consisted of advisory, legal and other professional fees and were recorded in additional paid in capital. Cumulative debt repayments of approximately $11,068,000, inclusive of accrued but unpaid interest, were paid in conjunction with the close, which included approximately $5,475,000 repayment of notes payable to related parties, and approximately $5,593,000 payment of accrued underwriter fees.

 

Pursuant to the terms of the Business Combination Agreement, the holders of issued and outstanding shares of AutoLotto immediately prior to the Closing (the “Sellers”) were entitled to receive up to 300,000 additional shares of Common Stock (the “Seller Earnout Shares”) and Vadim Komissarov, Ilya Ponomarev and Marat Rosenberg (collectively the “TDAC Founders”) were also entitled to receive up to 200,000 additional shares of Common Stock (the “TDAC Founder Earnout Shares” together with the Seller Earnout Shares, the “Earnout Shares”). One of the earnout criteria had not been met by the December 31, 2021 deadline thus no earnout shares were granted specific to that criteria. 150,000 of the Seller Earnout Shares and 100,000 TDAC Founder Earnout Shares were still eligible Earnout Shares until December 31, 2022. The criteria were not met by December 31, 2022 and those earnout shares were not granted. All of the potential earnout shares were forfeited as of December 31, 2022.

 

Global Gaming Acquisition

 

On June 30, 2021, the Company completed its acquisition of 100 percent of equity of Global Gaming Enterprises, Inc., a Delaware corporation (“Global Gaming”), which holds 80% of the equity of each of Medios Electronicos y de Comunicacion, S.A.P.I de C.V. (“Aganar”) and JuegaLotto, S.A. de C.V. (“JuegaLotto”). JuegaLotto is federally licensed by the Mexico regulatory authorities with jurisdiction over the ability to sell international lottery games in Mexico through an authorized federal gaming portal and is licensed for games of chance in other countries throughout Latin America. Aganar has been operating in the licensed Lottery market in Mexico since 2007 and is licensed to sell Mexican National Lottery draw games, instant win tickets, and other games of chance online with access to a federally approved online casino and sportsbook gaming license and additionally issues a proprietary scratch lottery game in Mexico under the brand name Capalli. The opening balance of the acquirees has been included in our consolidated balance sheet since the date of the acquisition. Since the acquirees’ financial statements were denominated in Mexican pesos, the exchange rate of 22.0848 pesos per dollar was used to translate the balances.

 

The net purchase price was allocated to the assets and liabilities acquired as per the table below. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The fair values of the acquired intangible assets were determined using Level 3 inputs which were not observable in the market.

 

 

The total purchase price of $10,989,691, consisting of cash of $10,530,000 and 687,439 shares of common stock of AutoLotto at $0.67 per share. The total consideration transferred was approximately $10,055,214, reflecting the purchase price, net of cash on hand at Global Gaming and the principal amount of certain loans acquired. The purchase price is for an 80% ownership interest and is therefore grossed up to $13,215,843 to reflect the 20% minority interest in the acquirees. The purchase price was allocated to the identified tangible and intangible assets acquired based on their estimated fair values at the acquisition date as follows:

Schedule of Identified Tangible and Intangible Asset Acquired 

Cash		$	517,460
Accounts receivable, net			34,134
Accounts receivable - Other
VAT (net)
Prepaids			5,024
Property and equipment, net			2,440
Other assets, net			65,350
Intangible assets			8,590,000
Goodwill			4,940,643
Total assets		$	14,155,051
Accounts payable and other liabilities		$	(387,484	)
Director’s Loan *
Customer deposits			(134,707	)
Related party loan			(417,017	)
Total liabilities		$	(939,208	)
Total net assets of Acquirees		$	13,215,843

 

Goodwill recognized in connection with the acquisition - is primarily attributed to an anticipated growing lottery market in Mexico that is expected to be achieved from the integration of these Mexican entities. None of the goodwill is expected to be deductible for income tax purposes.

 

Following are details of the purchase price allocated to the intangible assets acquired.

Schedule of Intangible Assets Acquired 

Category		Fair Value
Customer relationships		$	410,000
Gaming licensees			4,020,000
Trade names and trademarks			2,540,000
Technology			1,620,000
Total Intangibles		$	8,590,000

 

S&MI Ltd Acquisition

 

On September 1, 2024, the Company finalized an agreement for the acquisition of S&MI, Ltd. (the “Share Purchase and Sale Agreement”), wherein the Purchase Price was the total equivalent of One Million Dollars USD ($1,000,000.00) in restricted stock units of common shares in the Company (the “Payment-In-Kind”) fixed at Three Dollars USD ($3.00) per share (the “Fixed Price”). The Purchase Price is to be paid out over five payments on the following schedule: The first payment of $150,000 in restricted common stock (50,000 shares) of the Company is due and payable on September 1, 2024 (the “Completion Date” the “First Issuance Date”). The remaining payments in restricted common stock to the shareholders of S&MI Ltd. by the Company will be made as follows: (i) a second payment of $212,500 (70,833 shares) due on or before the 31st day following ninety days after the Completion Date (the Second Issuance Date”); (ii) a third payment, of $212,500 (70,833 shares) due on or before the 31st day following ninety days after the Second Issuance Date (the Third Issuance Date”); (iii) a fourth payment of $212,500 (70,833 shares) due on or before the 31st day following ninety days after the Third Issuance Date (the “Fourth Issuance Date”); and (vi) a fifth and final payment of $212,500 (70,834 shares) due on or before the 31st day following ninety days after the Fourth Issuance Date.

 

In the event that the closing price of the restricted stock units of common shares of the Company to be issued to the shareholders of S&MI, Ltd. is lower than the Fixed Purchase Price on the six (6) month anniversary of any issuance date of said shares (collectively the “Anniversary Issuance Price”), then the Fixed Purchase Price shall be adjusted downward to the volume-weighted average price (“VWAP”) of the common stock for the five (5) consecutive trading days immediately preceding the six (6) month anniversary date of said issuance date. Accordingly, the Company shall be obligated to tender to the shareholders of S&MI, Ltd. additional restricted common shares of the Company to make up the difference between the Fixed Purchase Price and the Anniversary Issuance Price.

 

The opening balance of S&MI Ltd has been included in our consolidated balance sheet since the date of the acquisition. Since the S&MI Ltd’s financial statements were denominated in British Pounds, the exchange rate of 1.3141 pounds per dollar was used to translate the balances.

 

The net purchase price was allocated to the assets and liabilities acquired as per the table below. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The fair values of the acquired intangible assets were determined using the valuation analysis performed by a third-party valuation firm.

 

The total purchase price of $1,000,000 consists of 333,333 shares of common stock at $3.00 per share. The total consideration transferred after net assets and assumption of long-term debt was approximately $440,000, reflecting the purchase price, net of cash on hand at S&MI Ltd and the principal amount of certain loans assumed by the Company. The purchase price is for a 100% ownership interest. The purchase price was allocated to the identified tangible and intangible assets acquired based on their estimated fair values at the acquisition date as follows:

  Schedule of Identified Tangible and Intangible Asset Acquired

Accounts receivable, net			124,928
Other Receivables			50,817
Intangible assets			234,000
Goodwill			1,315,000
Total assets		$	1,724,745
Accounts payable and other liabilities		$	(175,543	)
Director’s Loan			(558,632	)
Total liabilities		$	(734,175	)
Total net assets of Acquiree		$	990,570

 

 

Note 4. Property and Equipment, net

 

Property and equipment, net as of June 30, 2025 and December 31, 2024, consisted of the following:

Schedule of Property and Equipment 

		June 30, 2025				December 31, 2024
Computers and equipment		$	123,911			$	123,911
Furniture and fixtures			16,900				16,900
Software			2,026,200				2,026,200
Property and equipment			2,159,596				2,167,011
Accumulated depreciation			(2,156,971	)			(2,154,887	)
Property and equipment, net		$	2,660			$	12,124

 

Depreciation expense for the three months ended June 30, 2025 was $1,579 and was $2,831 for the three months ended June 30, 2024.

 

Note 5. Prepaid Expenses

 

Prepaid expenses consist primarily of advertising credits from two top tier media organizations that operate in the United States. The advertising credits were obtained in return for warrants, shares of common stock and shares of preferred stock. The agreements do not specify a time period for utilizing these credits and there is no requirement to provide cash or other consideration in connection with utilizing them. The balance can be utilized at any time at the mutual consent of the parties. The Company expects to begin utilizing these credits in the second half of 2025 and anticipates fully utilizing all of them by the end of 2026. Accordingly, they are presented as current assets.

 

Note 6. Notes Receivable

 

On March 22, 2022, the Company entered into a 3three-year secured promissory note agreement with a principal amount of $2,000,000. The note bears simple interest at the rate of approximately 3.1% annually, due upon maturity of the note. The note is secured by all assets, accounts, and tangible and intangible property of the borrower and can be prepaid any time prior to its maturity date. As of June 30, 2025, the entire $2,000,000 in principle was outstanding.

 

This note was received in consideration for a portion of the development work that the Company performed for the borrower who had intended to use the Company’s technology to launch its own online game in a jurisdiction outside the U.S., where the Company is unlikely to operate.

 

Note 7. Write-Off of Goodwill and Intangibles

 

As required by ASC 350 Intangibles – Goodwill and Other Impairment and ASC 360 – Impairment Testing: Long-Lived Assets, in connection with preparing the consolidated financial statements for the period ended December 31, 2024, management conducted a review as to whether there are conditions or circumstances that may indicate the impairment of its long-lived assets, goodwill and other indefinite-lived intangible assets.

 

The Company reviewed the goodwill and intangibles acquired in the acquisitions of TinBu, LLC and Global Gaming Enterprises, Inc., the domain names and software purchased from third parties, and software developed in-house. Each of TinBu, Global Gaming, and Lottery.com is considered a reporting unit for application of the annual review for potential impairment.

 

The Company performed a valuation of each of the reporting units described above, using discounted cash flow methodologies and estimates of fair market value. Given the results of the quantitative assessment, the Company determined that the goodwill for the TinBu and Global Gaming reporting units was impaired. For the year ended December 31, 2023, the Company recognized goodwill impairment charges of $5.65 million for the TinBu reporting unit and $1.06 million for the Global Gaming reporting unit. The total impairment charges related to goodwill were $6.71 million. In addition, it was determined that there was an impairment of certain intangible assets related to Global Gaming. For the year ended December 31, 2023, the Company recorded impairment charges of $488 thousand to trade names and trademarks and $312 thousand to technology acquired from Global Gaming. The total impairment charges to intangible assets were $800 thousand.

 

Additionally, in connection with completion of the tax provision for 2023, a transaction which had been recorded for the year ended December 31, 2021 was reevaluated and a decision was made that it should not have been recorded and should be reversed. Specifically, at the end of 2021, a decision was made to increase goodwill related to the acquisition of Global Gaming Enterprises, Inc. due to an incorrect conclusion that “an adjustment should be made to goodwill for the recording of related deferred tax liabilities as the Company released $1.6 million of valuation allowance since the additional deferred tax liabilities represent a future source of taxable income”. This approach improperly accelerated the effects of future amortization of intangible assets related to Global Gaming, resulting in inappropriately releasing part of a valuation allowance for deferred taxes which is not in compliance with GAAP. At that time, the Company recorded an increase to goodwill for Global Gaming and an income tax benefit each in the amount of $1,653,067. We reversed this transaction by reducing goodwill for Global Gaming by $1,653,067 and increased accumulated deficit to remove the income tax benefit which was incorrectly recorded for year ended December 31, 2021.

 

Similarly, the Company performed an impairment analysis for the three months ended September 30th, 2024 and as a result of that analysis it was determined that impairment charges were necessary. Impairments of goodwill for $1.6 million against Tinbu’s goodwill and $1.9 million against Global Gaming’s goodwill were recorded and an impairment of $817,000 against intangibles of Global Gaming was recorded. This consisted of impairments against Trade Names & Technology in the amount of $547,000, Technology in the amount of $119,000, and Customer Relationships in the amount of $150,000. There were no other impairments identified or recorded for the year ended December 31, 2024.

 

 

Note 8. Intangible assets, net

 

Gross carrying values and accumulated amortization of intangible assets:

Schedule of Finite Lived Intangible Assets Amortization Expenses 

		June 30, 2025																December 31, 2024
						Gross												Gross
		Useful				Carrying				Accumulated								Carrying				Accumulated
		Life				Amount				Amortization				Net				Amount				Amortization				Net
Amortizing intangible assets
Customer relationships			6 years			$	1,352,200			$	(1,324,867	)		$	27,333			$	1,352,200			$	(1,318,033	)		$	34,167
Trade name			6 years				2,577,000				(2,388,167	)			188,833				2,577,000				(2,314,769	)			262,231
Technology			6 years				3,254,800				(2,817,212	)			1,937,588				3,254,800				(2,737,567	)			517,233
Software agreements			6 years				14,450,000				(12,790,000	)			1,247,500				14,450,000				(11,545,000	)			2,905,000
Gaming license			6 years				4,020,000				(2,680,000	)			1,340,000				4,020,000				(2,345,000	)			1,675,000
Internally developed software			2 - 10 years				3,316,923				(1,627,839	)			1,689,084				3,316,923				(1,450,754	)			2,342,969
Domain name			15 years				6,935,000				(2,247,583	)			4,687,417				6,935,000				(2,016,417	)			4,832,565
						$	35,905,923			$	(25,875,668	)		$	11,117,755			$	35,905,923			$	(23,727,540	)		$	12,569,165

 

Amortization expense with respect to intangible assets for the three months ended June 30, 2025 and 2024 totaled $1,073,190 and $1,327,914, respectively, and for the six months ended June 30, 2025 and 2024 totaled $2,098,298 and $2,610,050, respectively, which is included in depreciation and amortization in the Statements of Operations. The Company determined that there was an impairment of long-lived assets of $412,450 during the year ended December 31, 2022, which relates to a project no longer being pursued by the Company. In connection with the annual review of goodwill and intangibles for the year ended December 31, 2023, the Company determined that it was necessary to write down goodwill by $5,650,000 for TinBu and $1,060,200 for Global Gaming. The total impairment charges related to goodwill were $6,710,200 for the year ended December 31, 2023. It was also determined that there was impairment of certain intangible assets related to Global Gaming. As a result, for the year ended December 31, 2023 the Company recorded impairment charges of $488,300 to trade names and trademarks and $311,500 to technology acquired from Global Gaming. The total impairment charges to intangible assets for the year ended December 31, 2023 were $798,800.

 

Similarly, the Company performed an impairment analysis for the three months ended September 30, 2024 and as a result of that analysis it was determined that impairment charges were necessary. Impairments of goodwill for $1.6 million against Tinbu’s goodwill and $1.9 million against Global Gaming’s goodwill were recorded and $817,000 against intangibles of Global Gaming was recorded. This consisted of impairments against Trade Names & Technology in the amount of $547,000, Technology in the amount of $119,000, and Customer Relationships in the amount of $150,000. There were no other impairments identified or recorded for the year ended December 31, 2024.

 

Estimated amortization expense for years of useful life remaining is as follows:

Schedule of Estimated Amortization Expense 

Years ending December 31,		Amount
2025		$	3,204,573
2026			2,197,764
2027			999,241
2028			663,025
2029			643,941
Thereafter			3,409,213
Total		$	11,117,755

 

The Company had software development costs of $476,850 related to projects not placed in service as of both June 30, 2025 and December 31, 2024, which is included in intangible assets in the Company’s consolidated balance sheets. Amortization will be calculated using the straight-line method over the appropriate estimated useful life when the assets are put into service.

 

 

Note 9. Notes Payable and Convertible Debt

 

Secured Convertible Note

 

In connection with the Lottery.com domain purchase, the Company issued a secured convertible promissory note (“Secured Convertible Note”) with a fair value of $935,000 that matured in March 2021. The Company used the fair value of the Secured Convertible Note to value the debt instrument issued. In March 2021, the Secured Convertible Note was fully converted into 69,910 shares of the Company’s common stock.

 

Series A Notes

 

From August to October 2017, the Company entered into seven Convertible Promissory Note Agreements with unaffiliated investors for an aggregate amount of $821,500. The notes bear interest at 10% per year, are unsecured, and were due and payable on June 30, 2019. The parties verbally agreed to extend the maturity of the notes to December 31, 2021. As of both June 30, 2025 and December 31, 2024, the balance due on these notes was $771,500. The Company could not prepay the loan without consent from the noteholders. As of December 31, 2021, there were no Qualified Financing events, that trigger conversion, this included the TDAC combination. As of both June 30, 2025, and December 31, 2024 the remaining outstanding balance of $771,500 relates to notes that are no longer convertible which have been reclassified to Notes Payable as per the agreement. Accrued interest on the Series A notes payable was $318,909 on June 30, 2025.

 

Series B Notes

 

From November 2018 to December 2020, the Company entered into multiple Convertible Promissory Note agreements with unaffiliated investors for an aggregate amount of $8,802,828. The notes bear interest at 8% per year, are unsecured, and were due and payable on dates ranging from December 2020 to December 2021. For those notes maturing on or before December 31, 2020, the parties entered into amendments in February 2021 to extend the maturity of the notes to December 21, 2021. The Company could not prepay the loans without consent from the noteholders.

 

During the year ended December 31, 2021, the Company entered into multiple Convertible Promissory Note agreements with unaffiliated investors for an aggregate amount of $38,893,733. The notes bear interest at 8% per year, are unsecured, and are due and payable on dates ranging from December 2021 to December 2022. The Company could not prepay these loans without consent from the noteholders. As of December 31, 2021, the Series B Convertible Notes had a balance of $0.

 

During the year ended December 31, 2021, the Company entered into amendments with six of the Series B promissory noteholders to increase the principal value of the notes. The additional principal associated with the amendments totaled $3,552,114. The amendments were accounted for as a debt extinguishment, whereby the old debt was derecognized and the new debt was recorded at fair value. The Company recorded loss on extinguishment of $71,812 as a result of the amendment which was reported in “Other expenses” on the consolidated statements of operations and comprehensive loss.

 

As of October 29, 2021, all except $185,095 of the series B convertible notes were converted into 488,226 shares of Lottery.com common stock after accounting for the 1:20 reverse stock split that took place on August 9, 2023. December 31, 2021, the remaining notes comprising the outstanding balance of $185,095 were no longer convertible and were reclassified to notes payable See Note 9. Accrued interest on this note payable as of June 30, 2025 was $86,990.

 

 

Short term loans

 

On June 29, 2020, the Company entered into a Promissory Note with the U.S. Small Business Administration (“SBA”) for $150,000. The loan has a 30thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments were deferred for twelve months after the date of disbursement. The loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of default and other provisions customary for a loan of this type. As of both June 30, 2025 and December 31, 2024, the balance of the loan was $150,000. As of June 30, 2025, the accrued interest on this note was $7,499.

 

In August 2020, the Company entered into three separate note payable agreements with three individuals for an aggregate amount of $37,199. The notes bear interest at a variable rate, are unsecured, and the parties have verbally agreed the notes would be due upon a qualifying financing event. As of both June 30, 2025 and December 31, 2024, the balance of the loans totaled $13,000.

 

Notes payable

 

On August 28, 2018, in connection with the purchase of the entire membership interest of TinBu, the Company entered into several notes payable for $12,674,635 with the sellers of the TinBu and a broker involved in the transaction. The notes had an interest rate of 0%, and original maturity date of January 25, 2022. The notes payable were modified during 2021 to extend the maturity to June 30, 2022 and change the interest rate to include simple interest of 4.1% per annum effective October 1, 2021. Each of the amendments were evaluated and determined to be loan modifications and accounted for accordingly.

 

As of both June 30, 2025 and December 31, 2024, the balance of the notes was $2,336,081. Accrued interest on these notes was $362,910 on June 30, 2025.

 

Note 10. Stockholders’ Equity

 

Reverse Split

 

On August 9, 2023, the Company amended its Charter to implement, effective at 5:30 p.m., Eastern time, a 1-for-20 Reverse Stock Split. At the effective time of the Reverse Stock Split, every 20 shares of common stock either issued and outstanding or held as treasury stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. Stockholders who would have otherwise been entitled to fractional shares of common stock as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares. In addition, as a result of the Reverse Stock Split, proportionate adjustments will be made to the number of shares of common stock underlying the Company’s outstanding equity awards, the number of shares issuable upon the exercise of the Company’s outstanding warrants and the number of shares issuable under the Company’s equity incentive plans and certain existing agreements, as well as the exercise, grant and acquisition prices of such equity awards and warrants, as applicable. The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders on August 7, 2023 and was subsequently approved by the Board of Directors on August 7, 2023.

 

The effects of the Reverse Stock Split have been reflected in this Quarterly Report on Form 10Q for all periods presented.

 

Preferred Stock

 

Pursuant to the Company’s charter, the Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.001 per share. Our board of directors has the authority without action by the stockholders, to designate and issue shares of preferred stock in one or more classes or series, and the number of shares constituting any such class or series, and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of preferred stock, including, without limitation, dividend rights, conversion rights, redemption privileges and liquidation preferences, which rights may be greater than the rights of the holders of the common stock. As of June 30, 2025, there were no shares of preferred stock issued and outstanding.

 

 

Common Stock

 

Our Charter authorizes the issuance of an aggregate of 500,000,000 shares of Common Stock, par value $0.001 per share. The shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable. Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the DGCL. Unless our Board determines otherwise, we will issue all shares of our common stock in an uncertificated form. Holders of our Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. The holders of Common Stock do not have cumulative voting rights in the election of directors. Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our Common Stock will be entitled to receive pro rata our remaining assets available for distribution.

 

As of June 30, 2025 and December 31, 2024, 32,429,384 and 18,326,855 shares of Common Stock, respectively, were outstanding. During the three months ended June 30, 2025, the Company issued the following shares of common stock.

 

Schedule of Common Stock

Schedule of Common Stock
Conversion of debt to equity			2,454,485
Stock issued in lieu of cash			2,564,794
Issuance of Common Stock converted for Convertible Notes			710,044
Total			5,729,323
Shares outstanding, balance			5,729,323

 

Public Warrants

 

The Public Warrants became exercisable 30 days after the Closing; the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The S-1 registration became effective November 24, 2021. The Public Warrants will expire five years after October 29, 2021, which was the completion of the TDAC Combination or earlier upon redemption or liquidation.

 

The Company may redeem the Public Warrants:

 

	●	in whole and not in part;
	●	at a price of $0.01 per warrant;
	●	upon a minimum of 30 days’ prior written notice of redemption;
	●	if, and only if, the last sale price of the Company’s common stock equals or exceeds $320.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
	●	if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.

 

 

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. These warrants cannot be net cash settled by the Company in any event.

 

After giving effect to the Business Combination, as of March 31, 2025 there were Public Warrants outstanding for the issuance of 20,125,000 shares of common stock of the Company, which total includes previously issued warrants of AutoLotto, now warrants of Lottery.com Inc. In addition other warrants from 2015 and 2018 are exercisable for the purchase of an aggregate of 19,784 shares of common stock of the Company, the majority of which will expire in October of 2025.

 

An adjustment was made to the Company’s warrants based on the 1-for-20 split ratio. The adjustment was made automatically. The number of shares of common stock issued subject to stock options, warrants, or convertible securities was automatically decreased by the split ratio and the exercise price or conversion ratio will automatically be proportionately increased by the same split ratio.

 

Private Warrants

 

Private warrants of TDAC issued before the business combination were forfeited and did not transfer to the surviving entity.

 

Common Stock Warrants

 

The Company did not issue any warrants during the three months ended June 30, 2025. During the year ended December 31, 2024, the Company issued 458,370 warrants to a third-party consulting firm and 1,996,713 warrants as part of the commitment fee pursuant to the Stock Purchase Agreement with Generating Alpha. The 24,415 outstanding warrants issued prior to January 1, 2023 are fully vested and have a weighted average remaining contractual life of 2.7 years. The 2.5 million warrants issued during 2024 are fully vested and have a weighted average remaining contractual life of 3.5 years. The Company did not incur any expense for the three months ended June 30, 2025 and recorded expenses of $693,397 for the year ended December 31, 2024.

Schedule of Common Stock Warrant

										Weighted
						Weighted				Average
						Average				Remaining				Aggregate
		Number of				Exercise				Contractual				Intrinsic
		Shares				Price				Life (years)				Value
Outstanding at December 31, 2024			2,479,478				0.29				3.74				1,893,794
Granted			-				-				-
Exercised			-				-				-
Forfeited/cancelled			-				-				-
Outstanding at June 30, 2025			2,479,878			$	0.29				3.49			$	2,710,316

 

  

Earnout Shares

 

As detailed in Note 4 - as part of the TDAC Combination as of December 31, 2021 a total of 5,000,000 Earnout Shares were eligible for issuance until December 31, 2022. Conditions for the earnout were not met and the potential earnout shares were forfeited on December 31, 2022.

 

Note 11. Stock-based Compensation

 

Expense 2015 Stock Option Plan

 

Prior to the closing of the Business Combination, AutoLotto had the AutoLotto, Inc. 2015 Stock Option/Stock Issuance Plan (the “2015 Plan”) in place. Under the 2015 Plan, incentive stock options may be granted at a price not less than fair market value of the common stock (110% of fair value to holders of 10% or more of voting stock). If the Common Stock is at the time of grant listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. If the Common Stock is at the time not listed on any Stock Exchange, then the Fair Market Value shall be determined by the Board of Directors or the Committee acting in its capacity as administrator of the Plan after taking into account such factors as the Plan Administrator shall deem appropriate. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed Twenty-Two Thousand Five Hundred (22,500). Options are exercisable over periods not to exceed 10 years (five years for incentive stock options granted to holders of 10% or more of voting stock) from the date of grant. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives. The Plan Administrator may not impose a vesting schedule upon any option grant or the shares of Common Stock subject to that option which is more restrictive than twenty percent (20%) per year vesting, with the initial vesting to occur not later than one (1) year after the option grant date. However, such limitation shall not be applicable to any option grants made to individuals who are officers of the Corporation, non-employee Board members or independent consultants.

 

2021 Equity Incentive Plan

 

In connection with the Business Combination, our board of directors adopted, and our stockholders approved, the Lottery.com 2021 Incentive Award Plan (the “2021 Plan”) under which 616,518 shares of Class A common stock were initially reserved for issuance. The 2021 Plan allows for the issuance of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock or cash-based awards. The number of shares of the Company’s Class A common stock available for issuance under the 2021 Plan increases annually on the first day of each calendar year, beginning on and including January 1, 2022 and ending on and including January 1, 2031 by a number of shares of Company common stock equal to five percent (5%) of the total outstanding shares of Company common stock on the last day of the prior calendar year. Notwithstanding the foregoing, the Board may act prior to January 1st of a given year to provide that there will be no such increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of Company common stock than would otherwise occur pursuant to the preceding sentence.

 

 

Stock Options

 

The Company did not issue any new stock options during the quarter ended June 30, 2025. The following table shows stock option activity for the year ended December 31, 2024 and quarter ended June 30, 2025:

Schedule of Stock Option Activity 

																		Weighted
														Weighted				Average
		Shares				Outstanding				Average				Remaining				Aggregate
		Available				Stock				Exercise				Contractual				Intrinsic
		for Grant				Awards				Price				Life (years)				Value
Outstanding at December 31, 2024			1,011,737				1,018,565			$	2.00				2.8			$	944,544
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited/cancelled			-				-				-				-
Outstanding at June 30, 2025			1,011,737				1,018,565			$	2.00				3.1			$	944,544

 

Restricted awards

 

The Company awards restricted stock to employees, directors, and certain outside consultants from time to time which are granted with various vesting terms including immediate vesting, service-based vesting, and performance-based vesting. In accordance with ASC 718, the Company has classified the restricted stock as equity.

 

For such issuances, the measurement date is the date of grant, and the Company recognizes compensation expense for the grant of the restricted shares, over the service period for the restricted shares that vest over a period of time and for performance-based vesting awards, the Company recognizes the expense when management believes it is probable the performance condition will be achieved. As of June 30, 2025 and December 31, 2024, unrecognized stock-based compensation associated with the restricted stock awards is $0 and $0 respectively.

 

The Company had restricted stock activity summarized as follows:

Schedule of Restricted Stock Awards Activity 

						Weighted
						Average
		Number of				Grant
		Shares				Fair Value
Outstanding at December 31, 2024			-			$	-
Granted			3,101,277				1.40
Vested			3,101,277				1.40
Forfeited/cancelled			-				-
Restricted shares unvested at June 30, 2025			-				-
Granted **			3,101,277				1.40
Vested **			2,669,932				1.05
Forfeited/cancelled			-
Restricted shares unvested at June 30, 2025			-			$	-

 

**	Of the shares granted during the quarter ending June 30, 2025 approximately 1.75M shares were granted in lieu of making cash payments to satisfy accrued liabilities and approximately 900K shares were issued to compensate for consulting services incurred during the quarter.

 

 

Note 12. Income Taxes

 

We are required to file federal and state income tax returns in the United States. The preparation of these tax returns requires us to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by us. In consultation with our tax advisors, we base our tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various federal and state taxing authorities in the jurisdictions in which we file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by us (“uncertain tax positions”) and, therefore, may require us to pay additional taxes. As required under applicable accounting rules, we accrue an amount for our estimate of additional income tax liability, including interest and penalties, which we could incur as a result of the ultimate or effective resolution of the uncertain tax positions. We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

 

Note 13. Commitments and Contingencies

 

Indemnification Agreements

 

The Company enters into indemnification provisions under its agreements with other entities in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of June 30, 2025 and December 31, 2024.

 

Digital Securities

 

In 2018, the Company commenced an offering and issuance (the “LDC Offering”) of 285 million revenue participation interests (the “Digital Securities”) of the net raffle revenue of LDC Crypto Universal Public Company Limited (“LDC”). The Digital Securities do not have any voting rights, redemption rights, or liquidation rights, nor are they tied in any way to other equity securities of LDC or the Company nor do they otherwise hold any rights that a holder of equity securities of LDC or the Company may have or that a holder of traditional equity securities or capital stock may have. Rather, each of the holders of the Digital Securities has a pro rata right to receive 7% of the net raffle revenue. If the net raffle revenue is zero for a given period, holders of the Digital Securities are not eligible to receive any cash distributions from any raffle sweepstakes of LDC for such period. For the years ended December 31, 2024, December 31, 2023, and December 31, 2022, the Company did not incur any obligations to the holders of the outstanding Digital Securities. For the year ended December 31, 2021, the Company incurred an obligation to pay an aggregate amount of approximately $5,632 to holders of the outstanding Digital Securities. The Company did not satisfy those obligations during the three months ended June 30, 2025 or the years ended December 31, 2024, 2023, 2022, or 2021.

 

 

Leases

 

The Company leased office space in Spicewood, Texas which expired January 31, 2024 and had continued to utilize that facility on a month-to-month basis with monthly rent of $1,669 per month until August 31, 2024. On September 1, 2024, the Company moved its headquarters to Fort Worth, Texas under a membership agreement with monthly cost of $154. Additionally, the Company had leased retail space in Waco, Texas which expired on December 31, 2024 with monthly rent of $2,434. The space in Waco Texas was retained on a month to month basis until April 30, 2025. The Company also leases a campus in Boca Raton Florida for $25,000 per month under a 12 month lease agreement that commenced on August 1, 2024 and continues thru July 31, 2025. 2025. As of the date of this report, the lease for the campus has not been renewed and the Company is now renting the campus month-to-month, pending a decision by the Company on entering into a new lease for the space. For the three months ended June 30, 2025 and 2024 rent expense was $82,302 and $12,309, respectively.

 

As of June 30, 2025, future minimum rent payments due under non-cancellable leases with initial are as follows:

Schedule of Future Minimum Rent Payments Due Under Non-Cancellable Leases 

Years ending December 31,		Amount
2025			25,000
Thereafter			-
Total		$	25,000

 

Litigation and Other Loss Contingencies

 

As of June 30, 2025, there were no pending proceedings that are deemed to be materially detrimental. The Company is a party to legal proceedings in the ordinary course of its business. The Company believes that the nature of these proceedings is typical for a company of its size and scope. See Part II, Item 1 for additional information.

 

Note 14. Related Party Transactions

 

The Company has entered into transactions with related parties. The Company regularly reviews these transactions; however, the Company’s results of operations may have been different if these transactions were conducted with nonrelated parties.

 

Christopher Gooding, a director of the Company appointed on August 10, 2023, is an attorney licensed in the United Kingdom who previously provided some limited consulting services to the Company’s outside general counsel on few select U.K. legal matters that could potentially impact the Company. Mr. Gooding was compensated for his limited services separately from his compensation as a director of the Company. Mr. Gooding began providing the limited consulting service to the Company outside general counsel in February 2024. He was paid a total of $264,000 in 2024 for his limited consulting services. His compensation for the limited consulting services provided during the three months ended June 30, 2025 was $72,000. Mr. Gooding ended his limited consulting services to the Company’s outside general counsel on the few select U.K. legal matters at the close of business on June 30, 2025, in order to maintain his indepencce as director of the Company. Other than any matters wherein Mr. Gooding is a named defendant along with the Company, Mr. Gooding strictly provides his opinions on all Board matters, legal or otherwise, as an independent member of the Board of Directors and in no other capacity, and without any additional compensation from the Company or its outside general counsel.

 

During the quarter ended September 30, 2024, the Company entered into a borrowing arrangement with Robert Stubblefield, the Company’s Chief Financial Officer, to provide funding for certain operating expenses of the Company. At September 30, 2024 the Loan amount was $57,682. Additional amounts were provided by Mr. Stubblefield during the quarter ended December 31, 2024. The loan amount at year end was $67,941. The Loan was issued at zero percent interest. In February of 2025, the Company granted shares of common stock which repaid the loan in full.

 

Note 16. Subsequent Events

 

Corporate Name Change

 

On July 7, 2025. the Company announced that it was rebranding under the name Sports Entertainment Gaming Global Media Corporation (SEGG) to reflect the broadened focus on three key pillars: sports, entertainment, and gaming. The legal name of the Company will remain “Lottery.com Inc.” until the formal name change to “SEGG Media Corporation” is approved by the Company’s shareholders which is expected to occur before the end of September 2025. The Company’s shares began trading under the ticker symbol (Nasdaq: SEGG) effective July 8, 2025. The Company’s warrants continue to trade under the ticker symbol (Nasdaq: LTRYW).

 

Sports.com All-Sports Arena, designed by David Lloyd

 

The Company announced that it had entered into a binding Letter of Intent (“LOI”) with David Lloyd on July 9, 2025. The LOI allows the Company to acquire the rights to David Lloyd’s All-Sports Area in Boca Raton, FL at a $14 million valuation. The facility is a 100,000 square-foot brick-built arena already completed in the heart of Boca Raton. The terms of LOI state that the facility will be branded as “Sports.com All-Sports Arena, designed by David Lloyd.” The venue will be the first of its kind in Florida, blending state-of-the-art sporting infrastructure with cutting-edge co-working and business amenities.

 

Veloce Esports Limited Investment

 

On July 14, 2025, the Company announced that it had entered into a Subscription Agreement (the “Subscription Agreement”) and a Call Option Agreement (the “Call Option”) with Veloce Esports Limited (“Veloce”). The agreements outline the intent of the Company to purchase a minimum of 12.4% and up to a 51% ownership stake in Veloce. In its most recent fiscal year ended March 2025, Veloce reported £12.8 million ($17.5 million USD) in revenue. Veloce   has built the world’s largest racing and gaming media network with more than 750 million monthly digital views and reaches a rapidly growing Gen-Z and millennial audience.

 

The Subscription Agreement calls for the Company to pay Veloce £5,675,444.74 GBP (the “Purchase Price”), approximately $7,594,677.54 US dollars, in two tranches. Tranche One shall be an all-cash payment of Two Million British Pounds Sterling, (£2,000,000) (approximately equivalent as of the time of the transaction to $2,676,415.77 US dollars). In return for the Tranche One payment, the Company will receive 1,663 A1 shares of Veloce stock valued at £1,224.74 per share (approximately equivalent to $1,639.01 US dollars) and a commensurate ownership stake of 4.74%. The Tranche Two remaining payment of the Purchase Price will be for £3,675,444.74 (approximately equivalent to $4,918,659.05 US dollars) of which a not less than £1,187,500.00 (approximately equivalent to $1,589,165.94 US dollars) must be in cash with the remaining balance of £2,487,944.74 (approximately equivalent to $3,29,508.98 US dollars) paybale in either cash or restricted shares of common stock of the Company to be applied towards the Purchase Price at a fixed price per Company share of One Dollar USD ($1.00) per share (the “Fixed Price”) irrespective of the trading price of the Company’s common stock on the Tranche Two payment date. Completion of Tranche Two will result in the Company receiving 3,000 A1 shares of Veloce stock valued at £1,224.74 per share (approximately equivalent to $1,639.01 US dollars) per share resulting in the Company’s minimally owning 12.4% of Veloce. Further as a result of the completion of Tranche Two, he Company will receive two director seats on Veloce’s Board of Directors.

 

The separate Call Option Agreement allows the Company to purchase newly issued share capital in Veloce at a pre-money £50,000,000 valuation (approximately equivalent to $66,907,363.01 US dollars) towards its Fifty-One (51%) percent optimal target ownership interest. To fully exercise its Call Option, the Company must have already completed payments defined above as Tranche One and Tranche Two, and have made offers to Veloce’s shareholders to purchase up to 51% of Veloce’s issued and outstanding shares. The Call Option expires October 31, 2025. The Company will be granted control of the Veloce Board of Directors upon successful completion of both the Subscription Agreement and Call Option Agreement wherein the Company gains 51% ownership of Veloce’s issued and outstanding shares. Payments to the Veloce shareholders under the Call Option Agreement can be made in cash or in shares of the Company’s common stock or a combination of the two.

 

 

Super League Kerala (“SLK”) Partnership

 

On July 17, 2025, the Company announced its first official football league partnership in the Indian subcontinent through a five-year commercial agreement with the Super League Kerala (“SLK”), valued at more than $11.6 million. The agreement establishes SEGG Media and Sports.com as the exclusive global commercial and broadcast partner for SLK.

 

The partnership will allow SEGG Media to deliver a free and paid subscription model through the Sports.com super app, enabling fans to engage with SLK matches in multiple languages, backed by real-time stats, fantasy integration, and on-demand replays. The deal also includes commercial inventory for local and global sponsors, creating a scalable paid advertising engine tied to viewership growth.

 

DotCom Ventures Inc. Acquisition

 

One July 22, 2025, the Company entered into a Share Purchase and Sale Agreement (the “Agreement”) with DotCom Ventures Inc. (“DVI”) which outlined the intent of the Company to purchase the entire issued share capital and assets including the domain names concerts.com and ticketstub.com from DVI.

 

The Agreement calls for the Company to pay DVI Five Million Dollars ($5,000,000) as consideration for Majority Interest (51%). The parties mutually agree that at Closing, the Company shall have the option at its sole discretion to pay DVI the Purchase Price as follows: (i) in cash; (ii) as Payment-In-Kind (as defined below) equivalent to the Purchase Price; or (iii) a combination of cash and Payment-In-Kind (as defined below) equivalent to the Purchase Price. The term “Payment-In-Kind shall be defined as restricted stock units of common shares of the Company to be applied towards the Purchase Price at a fixed price of Three Dollar USD ($3.00) per share (the “Fixed Price”) irrespective of the trading price of the Company stock at the execution of this Agreement or the Closing Date. At Closing, in the event that the Company elects to make a Payment-In-Kind for any portion of the Purchase Price, the Company shall cause to be issued to Seller the equivalent in restricted stock units of common shares in Lottery.com to be applied towards the Purchase Price. Seller shall receive the Payment-In-Kind within three business days following the Closing Date. Any Payment-In-Kind made as part of the consideration to satisfy any portion of the Purchase Price shall carry full piggyback registrations rights for the benefit of Seller.

 

In the event the closing price of the restricted stock units of common shares in the Company to be issued to Seller as Payment-In-Kind at Closing is lower than the Fixed Price at the close of trading on April 30, 2026 (the “Reprice Date”), then the Fixed Price will be adjusted downward to the VWAP of the common stock for the five (5) consecutive trading days immediately preceding the Reprice Date (the “Market Price”). Accordingly, Buyer will be obligated to tender Seller additional restricted stock units of common shares in the Company to true up the difference between the Fixed Price and the Market Price (the “True-Up”).

 

At Closing, Seller will grant to Buyer the right to purchase the balance of the issued and outstanding shares of common stock of DVI held by Seller in excess of the Subject Shares as follows (the “Option”): (i) Ten Thousand (10,000) shares for One Million Dollars ($1,000,000.00) cash by not later than December 31, 2025; (ii) Fifteen Thousand (15,000) shares for One Million Five Hundred Thousand Dollars ($1,500,000.00) cash by not later than May 31, 2026; (iii) Five Thousand (5,000) shares for Five Hundred Thousand Dollars ($500,000.00) cash by not later than December 31, 2025; and (iv) Nineteen Thousand (19,000) shares for Two Million Dollars ($2,000,000.00) in either shares or cash by not later than May 31, 2026 (the “Final Payment”). The Final Payment will be made by Buyer in cash or stock or a combination of both at the election of Buyer; provided that the issuance price of any such shares of SEGG common stock will be at the VWAP of the common stock for the five (5) consecutive trading days immediately preceding the exercise date. At Closing, the Option will be deemed to be coupled with an interest and irrevocable, except that a portion of the Option will be revoked automatically upon the expiration of the funding deadlines set forth above without full payment of the corresponding funding obligation to Seller.

 

GXR World Sports Platform Acquisition

 

On July 29, 2025, the Company entered into an Asset Purchase Agreement (the “Agreement”) with Galaxy Racer Holdings Limited, a BVI entity (“GXR”) As consideration for the Assets, Buyer will, at Closing pay and deliver to Seller (or its designees) the sum of Ten Million Dollars USD ($10,000,000.00) (the “Purchase Price”) for 100% of the Assets defined as the GXR Platform and App, the GXR tech stack, all users, and all licenses. Integration between the GXR platform and the Sports.com app will evolve the combination into Sports.com Super App. The platform will offer an all-in-one digital ecosystem built for the modern sports audience combining live streaming; community chat hubs; stats-based social media; e-commerce; real-money and fantasy sports gaming; real time translations; and sports news.

 

The Agreement calls for the Company to pay GXR Five Million One Hundred Thousand Dollars ($5,100,000) of the Purchase Price as Payment-In-Kind (as defined below) equivalent to the Purchase Price. The term “Payment-In-Kind” shall be defined as restricted stock units of common shares in the Company to be applied towards the Purchase Price at a fixed price of Three Dollars USD ($3.00) per share (the “Fixed Price”) irrespective of the trading price of the Company’s common stock at the execution of this Agreement or the Closing Date. At Closing, Buyer shall cause to be issued to Seller (or its designees) the equivalent in restricted stock units of common shares in the Company to be applied towards the Purchase Price. Seller (or its designees) shall receive the Payment-In-Kind within three business days following the Closing Date. Any Payment-In-Kind made as part of the consideration to satisfy any portion of the Purchase Price shall carry full piggyback registrations rights for the benefit of Seller (or its designees). The Company will also pay GXR (or its designees) Four Million Nine Hundred Thousand Dollars USD ($4,900,000.00) by transferring 49% ownership interest in to be newly, formed wholly owned entity of the Company (“NewCo”) to be domiciled at the discretion of Buyer which shall hold all Assets free and clear of any encumbrances.

 

As part of the transaction, Paul Roy, Founder and CEO of GXR, will serve as a Director of Newco” which is being created to house the Sports.com Super App. With more than two decades of leadership experience spanning video gaming, esports, and global sports media, Paul Roy will contribute to the integration strategy and long-term growth of Sports.com’s global operations.

 

  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes appearing elsewhere in this Report contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events may differ materially from those expressed or implied in such forward-looking statements as a result of various factors, including those set forth in the section entitled “Cautionary Note Regarding Forward-Looking Statements” included herein and the sections entitled “Risk Factors” included in this Report and in our Annual Report on Form 10-K/A for the year ended December 31, 2024 (our “Annual Report”).

 

Overview

 

During FY 2024, the Company addressed legacy issues while successfully regaining full compliance with Nasdaq’s continued listing rules and restarting operations on a limited basis in order to stage Lottery.com for growth in FY 2025. The cornerstone of the Company’s operational progress for FY 2025 has been driven by technology, product and service/capability enhancements. This progress is driven primarily by the execution of the Company’s “Buy-and-Build” strategy which identifies revenue-producing assets which have the capability to accelerate the Company’s operations in the sports, entertainment, and gaming markets.

 

This Report is reflective of the Company’s commitment to transparency, integrity, and responsible corporate governance. The investment commitments from United Capital Investments London Limited and Generating Alpha outlined in this report are evidence of investor belief in Management’s capability to resume core lottery and gaming operations, launch additional international lottery operations, and expand operations in Mexico and offerings of sweepstakes, as well as successful monetization of Sports.com, entrance into the entertainment market, and expand all the Company’s brand across the globe.

 

Nasdaq Listing

 

On May 2, 2025, Lottery.com Inc. (the “Company” or “Lottery.com”) received a letter from the Nasdaq Listings Qualifications Staff (“Nasdaq Staff”) Indicating they had determined that the Company failed to comply with Nasdaq’s shareholder approval requirements set forth in Listing Rule 5635(c) (the “Approval Rule”).

 

The Company was notified that it was required to obtain shareholder approval under the Approval Rule prior to the establishment of a 2023 Employees’ Directors’ and Consultants Stock Issuance and Option Plan (the “2023 Plan”) and the Ad Hoc Grants and the shares issued in connection therewith. The Company reported on a Form 8-K on July 3, 2025 that the only Incentive Award Plan for the Company  is “The Lottery.com 2021 Incentive Award Plan” (the “2021 Plan”) which was approved by the shareholders and registered by the Company on Form S-8 dated April 6, 2022, and that all Awards granted from October 2023 forward have been granted in accordance with the 2021 Plan.

 

As reported on form 8-K filed on May 9, 2025, the Company received written notice from Nasdaq indicating that its bid price for its common stock had closed at less than $1 per share over the previous 30 consecutive business days, and as a result, the Company did not comply with Nasdaq Listing Rule 8510©(3)(A) (the “Bid Price Listing Rule”). However, under the Listing Rules, the Company was provided a 180-calendar day grace period to regain compliance

 

On June 20, 2025 Lottery.com received a letter from Nasdaq determining that as a result of the Company’s common stock closing at a bid price at or above $1.00 for twenty consecutive business days, the Company had regained compliance with the Bid Price Listing Rule. Nasdaq has closed the matter.

 

If the Company’s securities are delisted from Nasdaq due to non-compliance with listing rules, it could be more difficult to buy and sell the Company’s common stock and warrants or to obtain accurate quotations, and the price of the Company’s common stock and warrants could suffer a material decline. Delisting could also impair the Company’s ability to raise capital and/or trigger defaults and penalties under its outstanding agreements or securities. Further, even if we lose but are able to regain compliance with Nasdaq listing requirements, there is no guarantee that we will be able to maintain our listing for any period of time.

 

Delisting from Nasdaq could also result in negative publicity. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and/or warrants and the ability of our stockholders to sell our common stock and/or warrants in the secondary market. If our common stock and/or warrants are delisted by Nasdaq, our common stock and/or warrants may be eligible to trade on an over-the-counter quotation system, such as the OTCQB Market, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our common stock and/or warrants. In the event our common stock and/or warrants are delisted from The Nasdaq Global Market, we may not be able to list our common stock and/or warrants on another national securities exchange or obtain quotation on an over-the counter quotation system.

 

 

Loan Agreement with Woodford

 

On December 7, 2022, the Company entered into a loan agreement with Woodford Eurasia Assets, Ltd. (“Woodford”), (the “Woodford Loan Agreement”) pursuant to which Woodford agreed to provide the Company with up to $52.5 million, subject to certain conditions and requirements, of which, per the Company’s books and records $798,351 was received by June 30, 2025 and is owed pursuant to the terms of the Woodford Loan Agreement. Amounts borrowed accrue interest at the rate of 12% per annum (or 22% per annum upon the occurrence of an event of default) and are due within 12 months of the date of each loan advance. Amounts borrowed can be repaid at any time without penalty.

 

Amounts borrowed pursuant to the Woodford Loan Agreement are convertible, at Woodford’s option, into shares of the Company’s common stock, beginning 60 days after the first loan date at the rate of 80% of the lowest publicly available price per share of common stock within 10 business days of the date of the Loan Agreement (which was equal to $5.60 per share), subject to a 4.99% beneficial ownership limitation and a separate limitation preventing Woodford from holding more than 19.99% of the issued and outstanding common stock of the Company, without the Company obtaining shareholder approval for such issuance.

 

Conditions to the Woodford Loan Agreement included the resignation of four prior members of the Board (Lisa Borders, Steven M. Cohen, Lawrence Anthony DiMatteo and William Thompson, all of whom resigned from the Board in September 2022), and the appointment of two new independent directors. Subsequent loans under the Woodford Loan Agreement also required the Company to comply with all listing requirements, unless waived by Woodford. The Woodford Loan Agreement also allowed Woodford to nominate another director to the Board of Directors, in the event any independent member of the Board of Directors resigned.

 

Proceeds of the loans could only be used by to restart the Company’s operations and for general corporate purposes agreed to by Woodford.

 

The Woodford Loan Agreement included confidentiality obligations, representations, warranties, covenants, and events of default, which are customary for a transaction of this size and nature. Included in the Loan Agreement are covenants prohibiting us from (a) making any loan in excess of $1 million or obtaining any loan in an amount exceeding $1 million without the consent of Woodford, which consent may not be unreasonably withheld; (b) selling more than $1 million in assets; (c) maintaining less than enough assets to perform our obligations under the Loan Agreement; (d) encumbering any assets, except in the normal course of business, and not in an amount to exceed $1 million; (e) amending or restating our governing documents; (f) declaring or paying any dividend; (g) issuing any shares which negatively affects Woodford; and (h) repurchasing any shares.

 

The Company also agreed to grant warrants to purchase shares of common stock to Woodford (the “Woodford Warrants”) in an amount equal to 15% of the Company’s then issued and outstanding shares of common stock. Each Woodford Warrant has an exercise price equal to the average of the closing price of the Company’s common stock for each of the ten days prior to the first amount being debited from the bank account of Woodford, which equates to an exercise price of $5.60 per share. In the event the Company fails to repay the amounts borrowed when due or Woodford fails to convert the amount owed into shares, the exercise price of the warrants may be offset by amounts owed to Woodford, and in such case, the exercise price of the warrants will be subject to a further 25% discount.

 

In connection with our entry into the Woodford Loan Agreement, the Company also entered into a Loan Agreement Deed, Debenture Deed and Securitization, with Woodford (the “Security Agreement”), which provides Woodford with a first floating charge security interest over all present and future assets of the Company in order to secure the repayment of amounts owed under the Loan Agreement.

 

On June 12, 2023, the Company entered into an amendment of the Woodford Loan Agreement (the “Woodford Loan Agreement Amendment”). The Woodford Loan Agreement Amendment provides that Woodford shall henceforth be able to convert, in whole or in part, the outstanding balance of its loan into the conversion shares at a conversion price that represents a further 25% discount to the original conversion price of 20%. The validity and application of the Woodford Loan Agreement Amendment is disputed by the Company.

 

Despite requests from the Company, Woodford has repeatedly amongst other things: failed to prove the amounts borrowed by the Company or claimed to have been advanced by Woodford to the Company; failed to indicate if it would accept accelerated payment of those verified amounts; failed to provide an anti-money laundering acceptable account to which payment could be made by the Company and failed to explain failure to respond to requests for other funding to be accepted in the context of the Woodford Loan Agreement; failed to respond to requests for funding under the accordion facility of the Woodford Loan Agreement; and failed to respond to allegations of money laundering and conspiracy to defraud the Company and the matter has been referred to the Company’s legal counsel.

 

Information regarding ongoing legal proceedings with Woodford can be found in the “Legal Proceedings” section of this form.

 

 

Loan Agreement with United Capital Investments London Limited

 

The Company entered into a credit facility (the “UCIL Credit Facility”), which is represented by a loan agreement, which was initially entered into on July 26, 2023, and was amended and restated on August 8, 2023, and subsequently amended on August 18, 2023 and amended and restated on February 16, 2024, the “UCIL Loan Agreement”). The UCIL Loan Agreement is with United Capital Investments London Limited (“UCIL”), an entity in which each of Matthew McGahan, the Company’s Chief Executive Officer and Chair of the Company’s Board, and Barney Battles, a former member of the Board, have a direct or indirect interest. The decision by the Company to enter into the UCIL Loan Agreement followed an acknowledgment by the Company that it had not received the requisite funding on a timely basis that it expected from Woodford, despite the Company making several requests to Woodford for said funding under the Woodford Loan Agreement. Moreover, the Board of Directors determined that it was in the best interest of the Company and its stockholders to enter into the UCIL Loan Agreement with UCIL, as an alternative lender to Woodford, upon receiving an event of default notice on July 21, 2023 (the “Default Notice”) and an event of default and crystallization notice on July 25, 2023 (the “Crystallization Notice”) from Woodford under the Woodford Loan Agreement. Neither McGahan or Battles participated in the vote on the UCIL agreement to ensure proper independence and correct corporate governance. On July 24, 2023, the Company responded to the Default Notice disputing that an event of default had occurred given the Company’s earlier announcement that UCIL had agreed to enter into a funding arrangement with the Company. On July 27, 2023, the Company replied to the Crystallization Notice denying that an event of default occurred or continued, and further asserted that Woodford’s attempt for crystallization was inappropriate and unlawful under the Woodford Loan Agreement. Given the uncertainty of the continued financing under the Woodford Loan Agreement, the Board of Directors sought to secure and formalize the Company’s alternative funding by entering into the UCIL Loan Agreement.

 

Placement Agent Agreement with Univest Securities, LLC 

 

As reported on form 8-K filed with the SEC on February 6, 2024, on December 6, 2023, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with Univest Securities, LLC (the “Placement Agent”), whereby the Placement Agent agreed to act as placement agent in connection with the Company’s offering (“Offering”) of convertible debt with warrant coverage at 50% up to $1,000,000; consisting of a convertible promissory note (each, a “Convertible Note” or collectively, the “Convertible Notes”), and a common stock purchase warrant (each, a “Warrant”, or collectively, the “Warrants”) to purchase shares of common stock of the Company, par value $0.001 per share (the “Common Stock”) which include specific registration rights (“Registration Rights”), directly to one or more investors (each, an “Investor” and, collectively, the “Investors”) through the Placement Agent.

 

On February 1, 2024, the parties agreed to increase the offering amount from $1,000,000 to $5,000,000. All other terms and conditions of the offering remained the same. The Securities shall be offered and sold pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).

 

Business Combination

 

On October 29, 2021, we, as AutoLotto, Inc (“AutoLotto”), consummated the Business Combination with Trident Acquisitions Corp. (“TDAC” and after the Business Combination described herein, the “Company”), pursuant to the terms of that certain Business Combination Agreement, dated as of February 21, 2021 (the “Business Combination Agreement”), by and among TDAC, Trident Merger Sub II Corp., a wholly-owned subsidiary of TDAC (“Merger Sub”) and AutoLotto. Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into AutoLotto with AutoLotto surviving the merger as a wholly owned subsidiary of TDAC, which was renamed “Lottery.com Inc.” The aggregate value of the consideration paid by TDAC to the holders of AutoLotto common stock in the Business Combination (excluding shares that could have been be issued to former AutoLotto stockholders (the “Sellers”) as earnout consideration) was approximately $440 million, consisting of approximately 2,000,000 shares of common stock valued at $220.00 per share. In addition, each Seller was eligible to receive its pro rata portion of 150,000 Seller Earnout Shares and each Founder Holder was eligible to receive one-third of 100,000 Founder Holders Earnout Shares, subject to adjustments in the normal course of business. Conditions for the Earnout Shares were not met and all of the potential Earnout Shares were forfeited.

 

Board of Directors

 

On May 13, 2025, the Board of Directors of the Company appointed Mr. Marc Bircham as a member of its Board of Directors. Mr. Bircham will also serve as Executive Director of Sports.com. He is a seasoned executive, entrepreneur, and former international footballer with a dynamic career that spans professional sports, business development, and strategic leadership. In his career, Marc has spearheaded international growth, led complex acquisition projects, and forged high-value partnerships across the sports and entertainment industries.

 

Mr. Bircham is eligible to participate in the Company’s equity compensation plans commensurate with all other Directors.

 

Reverse Stock Split

 

On August 9, 2023, the Company amended its Charter to implement, effective at 5:30 p.m., Eastern time, a 1-for-20 Reverse Stock Split. At the effective time of the Reverse Stock Split, every 20 shares of common stock either issued and outstanding or held as treasury stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. Stockholders who would have otherwise been entitled to fractional shares of common stock as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares. In addition, as a result of the Reverse Stock Split, proportionate adjustments will be made to the number of shares of common stock underlying the Company’s outstanding equity awards, the number of shares issuable upon the exercise of the Company’s outstanding warrants and the number of shares issuable under the Company’s equity incentive plans and certain existing agreements, as well as the exercise, grant and acquisition prices of such equity awards and warrants, as applicable. The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders on August 7, 2023 and was subsequently approved by the Board of Directors on August 7, 2023.

 

The effects of the Reverse Stock Split have been reflected in this Quarterly Report on Form 10Q for all periods presented.

 

International Expansion

 

In June 2021, we closed the acquisition of Global Gaming, which holds 80% of the equity of each of Aganar and JuegaLotto. Aganar operates in the licensed Online Lottery market in Mexico and is licensed to sell Mexican National Lottery draw games, instant win tickets, and other games of chance online with access to a federally approved online casino and sportsbook gaming license. JuegaLotto is licensed by Mexico authorities to commercialize international lottery games in Mexico through an authorized gaming portal and to commercialize games of chance in other countries throughout Latin America. As of the date of this Report, according to Statista, the estimated size of the Latin American lottery market is $.68 billion with a compound annual growth rate projected at 6.05% through 2028. Furthermore, it is projected that there will be 3,000,000 online lottery players in the South American lottery market alone by 2028. Based on these projections, we believe these acquisitions will provide opportunities for growth of our international operations throughout Mexico and Latin America as we expand our portfolio of products and expose our existing products to new markets.

 

The Company completed the acquisition of Spektrum Ltd from PlusEvo Ltd through a Share Purchase Agreement (SPA) executed on March 13, 2025. This acquisition, valued at $1.5 million in common stock at $3 per share, supports Lottery.com’s strategic expansion and the development of Lottery.com International. The acquisition provides the Company with a compliant platform to support lottery, sweepstakes and social gaming operations in dozens of international jurisdictions.

 

 

Operations Prior to Operational Cessation

 

Prior to the Operational Cessation, the Company was a provider of domestic and international lottery products and services. As an independent third-party lottery game service, we offered a platform that we developed and operated to enable the remote purchase of legally sanctioned lottery games in the U.S. and abroad (the “Platform”). Our revenue generating activities included (i) offering the Platform via our Lottery.com app and our websites to users located in the U.S. and international jurisdictions where the sale of lottery games was legal and our services were enabled for the remote purchase of legally sanctioned lottery games (our “B2C Platform”); (ii) offering an internally developed, created and operated business-to-business application programming interface (“API”) of the Platform, which enabled our commercial partners, in permitted U.S. and international jurisdictions, to purchase certain legally operated lottery games from us and to resell them to users located within their respective jurisdictions (“B2B API”); and (iii) delivering global lottery data, such as winning numbers and results, and subscriptions to data sets of our proprietary, anonymized transaction data pursuant to multi-year contracts to commercial digital subscribers (“Data Service”).

 

Mobile Lottery Game Platform Services

 

Both our B2C Platform and our B2B API provided users with the ability to purchase legally sanctioned draw lottery games via a mobile device or computer, securely maintain their acquired lottery game, automatically redeem a winning lottery game, as applicable, and receive support, if required, for the claims and redemption process. Our registration and user interfaces were designed to be easy to use, provide for the creation of an account and purchase of a lottery game with minimum friction and without the creation of a mobile wallet or requirement to pre-load minimum funds and - importantly - to provide instant confirmation of the user’s lottery game numbers, whether selected at random or picked by the user. Users of our B2C Platform services paid a service fee and, in certain non-U.S. jurisdictions, a mark-up on the purchase price. Prior to the Operational Cessation, we generated revenue from this service fee and mark-up. Our B2B API Platform resumed limited operations during the month of April 2023. As of the date of this Report, our B2C Platform is not currently available in the US.

 

The WinTogether Platform

 

Prior to the Operational Cessation, we operated and administered all sweepstakes offered by WinTogether, a registered 501(c)(3) charitable organization (“WinTogether”), which was formed in April 2020 to support charitable, educational, and scientific causes. In consideration of our operation of the WinTogether platform and administration of the sweepstakes, we received a percentage of the gross donations to a campaign, from which we paid certain dividends and all administration costs.

 

On April 1, 2024, Lottery.com resumed its sweepstakes offerings through its partnership with the WinTogether.org foundation. In April 2025, Sports.com sponsored a sweepstakes to support the Florida International University surrounding the Formula 1 Crypto.com Miami Grand Prix 2025.

 

Current Operations

 

Despite the Operational Cessation, the Company’s subsidiaries have continued to operate. While the operational activities of these subsidiaries vary, from the Operational Cessation through the date of this Report, each of TinBu, Aganar and JuegaLotto has decreased its expenses and has had its revenue decrease from pre-Operational Cessation levels.

 

Data Services

 

In 2018, we acquired TinBu, LLC (“TinBu”), a digital publisher and provider of lottery data results, jackpot results, and other data, as a wholly-owned subsidiary. Through TinBu, our Data Service delivers daily results of over 800 domestic and international lottery games from more than 40 countries, including the U.S., Canada, and the United Kingdom, to over 400 digital publishers and media organizations.

 

Our technology pulls real time primary source data, and, in some instances, we acquire data from dedicated data feeds from the lottery authorities. Our data is constantly monitored to ensure accuracy and timely delivery. We are not required to obtain licenses or approvals from the lottery authorities to pull this primary source data or to acquire the data from such dedicated feeds. Commercial acquirers of our Data Service pay a subscription for access to the Data Service and, for acquisition of certain large data sets, an additional per record fee.

 

We additionally enter into multi-year contracts pursuant to which we sell proprietary, anonymized transaction data pursuant to multi-year agreements and in accordance with our Terms of Service in consideration of a fee and in other instances provide the Data Service within a bundle of provided services.

 

 

Lottery.com

 

On June 24, 2025, The Company appointed Tim Scoffham and CEO of Lottery.com International Limited,. In this role, Scoffham will oversee, the Company’s iGaming and international lottery division focused on delivering secure, compliant, and entertaining lottery experiences across key global markets. His leadership will focus on aligning commercial, media, and technology platforms, bolstering regulatory partnerships, and unlocking scalable, revenue-generating opportunities in high-growth jurisdictions.

 

Aganar and JuegaLotto

 

On June 30, 2021, we acquired 100% of the equity of Global Gaming Enterprises, Inc., a Delaware corporation (“Global Gaming”), which holds 80% of the equity of each of Medios Electronicos y de Comunicacion, S.A.P.I de C.V. (“Aganar”) and JuegaLotto, S.A. de C.V. (“JuegaLotto”). JuegaLotto is federally licensed by the Mexican regulatory authorities with jurisdiction over the ability to commercialize lottery games in Mexico through an authorized federal gaming portal and to commercialize games of chance in other countries throughout Latin America. Aganar has been operating in the licensed Online Lottery market in Mexico since 2007 and has certain rights to sell Mexican National Lottery draw games, instant win tickets, and other games of chance online.

 

Nook Holdings, Ltd

 

On September 28, 2023, the Company entered into Stock Purchase Agreement with the shareholders of Nook Holdings Limited (“Nook”), a private limited Company incorporated and registered in the Abu Dhabi Global Market, Abu Dhabi, United Arab Emirates (“UAE”). The total purchase price is approximately $2.314 million. The Company made payments totaling $137,500 in the fourth quarter of 2023 and made additional deposits totaling $323,606 in the first six months of 2025 for a cumulative total of $461,002 as of June 30, 2025 and anticipates the transaction closing in the third quarter of 2025 or as otherwise agreed by the parties. Nook is known for its innovative approach to co-working in Dubai and has procured 200 licenses for individuals and companies in the sports, health and wellness sector seeking access to Dubai and the broader Middle Eastern market. With its exclusive partnership with the Dubai Multi-Commodities Centre Free Zone (DMCC), Nook offers a wide range of services, including business setup support, insurance, VAT registration, and networking opportunities for like-minded sports entrepreneurs. As part of the acquisition, Nook will be rebranded under the Sports.com umbrella.

 

Sports.com

 

In December 2021, we finalized the acquisition of the domain name https://sports.com. On March 26, 2025, the Company registered Sports.com as a fictious name in the state of Florida under AutoLotto, Inc. Content provided by Sports.com is currently available worldwide as a website and a mobile application. The website was relaunched in August 2025.

 

As reported on form 8-K filed with the SEC on August 20, 2024, the Company entered into a Share Purchase and Sale Agreement (the “Purchase Agreement”) with S&MI Ltd. (“S&MI”), whereby it agreed to pay the shareholders of S&MI a total of $1,000,000 in restricted common stock at a valuation of $3.00 per share for the acquisition of S&MI. In accordance with the Purchase Agreement:

 

The first payment of $150,000 in restricted common stock (50,000 shares) of the Company is due and payable not later than the first business date following the Completion Date. The remaining payments in restricted common stock to the shareholders of S&MI Ltd. by the Company will be made as follows:

 

(i) a second payment of $212,500 (70,833 shares) due on or before one hundred and twenty-one (121) days following the Closing Date; (ii) a third payment, of $212,500 (70,833 shares) due on or before two hundred and twelve (212) days following the Completion Date; (iii) a fourth payment of $212,500 (70,833 shares) due on or before three hundred and one (301) days following the Closing Date and (vi) a final and fifth payment of $212,500 (70,834 shares) due on or before three hundred and ninety-six (396) days following the Closing Date. The terms and conditions set forth in the MOU shall be incorporated into a definitive agreement to be entered into by the parties with a Closing Date on or before September 1, 2024 or as otherwise agreed to by the parties.

 

In addition, the Company has agreed to make available to the business of SportLocker.com, cash, media credits or combination thereof over the twelve months following the Closing Date as additional capital investment into the business plan, to facilitate brand awareness, user acquisition and general performance marketing and promotion, influencer and subscription campaigns and branding activities of S&MI’s streaming and social engagement, subject to the Company successfully raising a minimum of new capital.

 

On March 7, 2024, the Company, announced by press release that it had launched the “Sports.com App”. The App (which is available for download for free from all major app stores) connects sports content with audiences worldwide. By uniting a diverse community of sports enthusiasts across various genres, demographics, and countries, Sports.com plans to eliminate multiple cultural barriers and foster a global sports community.

 

On March 28, 2024, the Company, announced by press release that it had obtained the rights to live stream the March 31, 2024 heavyweight title fight between Frazier Clarke and Fabio Wardley. The live stream was available to view for free for millions of sports fans in Africa, via the Sports.com website.

 

The live streaming event is the result of a partnership between Sports.com, BOXXER, the fast-growing UK boxing promotional company, and Sky Sports in the UK and Ireland. Sports.com has entered into an agreement with BOXXER to provide live coverage through the Sports.com platform in Africa, via local telecom partners such as Vodacom, which will provide free access to millions of viewers.

 

This partnership underscores Sports.com’s commitment to bringing inclusivity, innovation, and entertainment to sports. To view the live streaming event on Sports.com, African-based sports fans were able to sign up via local mobile operators to watch the fight on the Sports.com platform. Sports.com’s strategic intent is to provide more such content to sports fans in underserved markets including those in the Middle East and Africa.

 

In February 2025, the Company entered into a multi-year multi-year global partnership with Soccerex, the world’s leading soccer business event organizer. The Agreement makes Sports.com the title sponsor for six global events including Soccerex 2025 for MENA, Europe and USA to be held in Cairo, Amsterdam and Miami, respectively.

 

This collaboration provides the Company with an influential platform to engage with key stakeholders in the football industry, further solidifying Sports.com’s position at the intersection of sports, technology and entertainment. Working with the Soccerex team and its community presents an opportunity to build brand awareness internationally for the Company’s gaming, content and entertainment brands.

 

In May 2025, the Company entered into sponsorship agreements with Louis Foster and Calum Ilott, drivers in the NTT IndyCar Series, and Sebastain Murray, a driver in the INDY NXT by Firestone series. The agreements provide the Company’s brands with exposure throughout the 2025 racing seasons with vehicle and attire logo placement and social media postings by the drivers.

 

 

On June 17, 2025, the Company appointer Tamer Hassan as president of Sports.com Studios, Ltd. In this role, Hassan will lead the division’s creative and strategic efforts to develop, produce and distribute compelling sports-focused films, docuseries, and premium digital content. This new arm of the business will serve as the cornerstone of Sports.com’s global expansion into entertainment media and immersive storytelling.

 

On June 24, 2025, The Company appointed Tim Scoffham and CEO of Sports.com Media Group, Ltd. In this role, Scoffham will oversee the strategic integration and international expansion of Sports.com Media, a premium digital sports content and engagement platform. His leadership will focus on aligning commercial, media, and technology platforms, bolstering regulatory partnerships, and unlocking scalable, revenue-generating opportunities in high-growth jurisdictions.

 

Plans for Recommencement of Company Operations

 

As noted above, since the Operational Cessation, the Company has had minimal day-to-day operations and has primarily focused on restarting certain of its core businesses. The Company has developed a three-phase plan to recommence its gaming operations, which plan is outlined below The sequence is subject to change.

 

Phase 1 - Resume Sweepstakes Operations. The Company resumed its sweepstakes operations in April 2025 in conjunction with the WinTogether trust. The event was marketed under the DonateTo.Win brand. The launch was limited to Florida residents and awarded a prize for a VIP experience at the 2025 Formula 1 Crypto.com Miami Grand Prix 2025. The launch confirmed that the core sweepstakes platform is fully operational and ready to scale for nationwide events. The Company is planning additional events in the remainder of 2025 offering pirzes related the Company’s business’ in the entertainment and sports markets.

 

Phase 2 - Resume B2C Platform Operations. The Company believes that it will be in a position to relaunch its B2C Platform by the end of 2025. As of the date of this Report, the Company expects that it will initially relaunch its B2C Platform to customers in international jurisdictions for a period of time before rolling it out to other jurisdictions, including the resumption of sales in the US. The Company plans to limit the rollout in order to give it additional time to properly vet and confirm compliance with local, state and federal rules related to ticket procurement and distribution. For more information, see “Item 1A. Risk Factors. The Company has also maintained various pre-paid media credits that it expects to use to launch and maintain promotional campaigns geared towards encouraging prior customers to return to the Platform and to acquire new customers.

 

Phase 3 - Other Business Lines and Projects. The Company expects to monetize the Sports.com brand, offer TicketStub.com services in international jurisdictions, and expand the Concerts.com platform beyond ticket reselling, and partnering with licensed providers in international jurisdictions to supply digital lottery games, and reviving other products and services that were under development when the Operational Cessation occurred.

 

 

As of the date of this Report, the current estimated cash balance of the Company and subsidiaries is approximately $36,799. The Company believes that this cash on hand, along with future borrowings, will be sufficient for the Company to resume its core operations.

 

As of the date of this Report, our common stock and warrants are traded on The Nasdaq Stock Market LLC (“Nasdaq”) under the ticker symbols “SEGG” and “LTRYW,” respectively. As of the date of this Report, we are not in compliance with Nasdaq’s continued listing requirements (the “Listing Rules”). Under its new management, the Company continues to work to improve its disclosure and reporting controls. Also, the Company plans to continue to strengthen and improve its systems of internal control over financial reporting and invest in additional legal, accounting, and financial resources.

 

If the Company’s securities are delisted from Nasdaq, it could be more difficult to buy or sell the Company’s common stock and warrants or to obtain accurate quotations, and the price of the Company’s common stock and warrants could suffer a material decline. Delisting could also impair the Company’s ability to raise additional capital needed to fund its operations and/or trigger defaults and penalties under outstanding agreements or securities of the Company.

 

There can be no assurance that we will have sufficient capital to support our operations and pay expenses, repay our debt, or that additional funds will be available on favorable terms, if at all. We may not be able to restart our operations or generate sufficient funding to support such operations in the future. The Company’s ability to continue its current operations, prepare and refile required reports, and restart its prior operations, is dependent upon obtaining new financing. Future financing options available to the Company include equity financings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. Equity financings may include sales of common stock. Such financing may not be available on terms favorable to the Company or at all. The terms of any financing may adversely affect the holdings or rights of the Company’s stockholders and may cause significant dilution to existing stockholders. There can be no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company, if at all, which would have a material adverse effect on its business, financial condition and results of operations, and it could ultimately be forced to discontinue its operations and liquidate. These matters, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is defined as within one year after the date that the financial statements are issued. The accompanying financial statements do not contain any adjustments to reflect the possible future effects on the classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

 

 

Components of Our Results of Operations

 

Our Revenue

 

Revenue from B2C Platform [when operational]. Our revenue is the retail value of the acquired lottery game and the service fee charged to the user, which we impose on each lottery game purchased from our B2C Platform. The amount of the service fee is based upon several factors, including the retail value of the lottery game purchased by a user, the number of lottery games purchased by a user, and whether such user is located within the U.S. or internationally. Currently, in the U.S, the minimum service fee is $0.50 for the purchase of a $1 lottery game and $1 for the purchase of a $2 lottery game; the service fee for additional lottery games purchased in the same transaction is 6% of the face value of all lottery games purchased. For example, the service fee for the purchase of five $2 tickets is $1.60, comprised of the $1 base service fee, plus 6% of the aggregate value of the face value of all lottery games purchased. The Company has not operated its B2C platform in the US since July 2022. The Company does operate B2C business in Mexico through our wholly-owned subsidiary, Global Gaming.

 

Internationally, B2C sales in jurisdictions where we do not have direct or indirect authority generate an immaterial amount of revenue, and we are assessing our operations in these jurisdictions. As discussed above, our B2C Platform is not currently operational in the US.

 

Data Services. Commercial acquirers of our Data Service pay a subscription for access to the Data Service and, for acquisition of certain large data sets, an additional per record fee. The Company additionally enters into multi-year contracts pursuant to which it sells proprietary, anonymized transaction data pursuant to multi-year agreements and in accordance with our Terms of Service in consideration of a fee. Our Data Services operations were not impacted by the Operational Cessation.

 

Our Operating Costs and Expenses

 

Personnel Costs. Personnel costs include salaries, payroll taxes, health insurance, worker’s compensation and other benefits for management and office personnel.

 

Professional Fees. Professional fees include fees paid for legal and financial services, accountants and other professionals.

 

General and Administrative. General and administrative expenses include marketing and advertising expenses, office and facilities lease payments, travel expenses, bank fees, software dues and subscriptions, expensed research and development (“R&D”) costs and other fees and expenses.

 

Depreciation and Amortization. Depreciation and amortization expenses include depreciation and amortization expenses on real property and other assets.

 

 

Key Trends and Factors Affecting Our Results

 

The following describes the trends associated with our business prior to the Operational Cessation that have impacted, and which we expect will continue to impact, our business and results of operations in a material way:

 

International operations. We face challenges related to expanding our footprint globally and the related process of obtaining the licenses and regulatory approvals necessary to provide services and products within new and emerging markets. The international jurisdictions where we operate and seek to expand have been subject to increasing foreign currency fluctuations against the U.S. dollar, inflationary pressures and political and economic instability. We expect these trends to continue during fiscal 2025 and believe they are likely to affect consumer spending, which could have a material impact on our revenues. As a result, it may take longer to achieve projected revenue gains or generate cash in any such regions affected or any new foreign jurisdiction into which we expand.

 

Introduction of a new gaming platform. We developed a proprietary, blockchain-enabled gaming platform, which we named Project Nexus. Project Nexus is designed to handle high levels of user traffic and transaction volume, while maintaining expediency, security, and reliability in (i) the processing of lottery game sales, (ii) fulfillment of retail requirements of the B2C Platform, (iii) the administrative and back-office functionality required by our B2B API, and (iv) the requirements of our claims and redemption process. We expect to utilize this platform to launch new products, including any proprietary products we may introduce. The introduction of new technology like Project Nexus is subject to risks including, among other things, implementation delays, issues successfully integrating the technology into our solutions, or the possibility that the technology does not produce the expected benefits.

 

Our growth plans and the competitive landscape. Our direct competitors operate in the global entertainment and gaming industries and, like us, seek to expand their product and service offerings with integrated products and solutions. Our short-to-medium term focus is on increasing our penetration in our existing U.S. jurisdictions by increasing direct to consumer marketing campaigns, introducing our B2C Platform into new U.S. and select foreign jurisdictions and acquiring synergistic regulated and sports betting enterprises domestically and abroad.

 

Competition in the sale of online lottery games has significantly increased in recent years, is currently characterized by intense price-based competition, and is subject to changing technology, shifting needs and frequent introductions of new games, development platforms and services. To maintain our competitive edge alongside other established industry players (many of which have more resources, or capital), we expect to incur greater operating expenses, such as increased marketing expenses, increased compliance expenses, increased personnel and advisory expenses associated with being a public company, additional operational expenses and salaries for personnel to support expected growth, additional expenses associated with our ability to execute on our strategic initiatives including our aim to undertake merger and acquisition activities, as well as additional capital expenditures associated with the ongoing development and further implementation of Project Nexus.

 

Current Plan of Operations

 

As of the date of this Report, the Company’s primary revenue drivers are its data business and lottery ticket sales in Mexico and describe the revenue from S&MI. It is anticipated that operational costs for the next 12 months through August 31, 2026 will be greater than revenues. It is anticipated that the liquidity gap will be satisfied by equity investment or debt incurred, of which there is no assurance.

 

Within the next 12 months, the Company plans to continue to resume domestic lottery operations and expand international operations. Moreover, the Company plans to enhance its mobile application to include pool plays, ticket subscriptions, loyalty programs and various gamification modules.

 

The Company is moving forward with its previously announced plans to monetize the Sports.com brand. Those plans include introducing an advertising-supported subscription model; the creation and licensing of original content through Sports.com Studios; and completing the acquisition of Nook and marketing business licenses to companies in the sports, health and wellness markets seeking access to Dubai and the broader Middle Eastern market.

 

The acquisition of DotCom Ventures Inc. introduces additional revenue streams for us including concert and sporting events ticket sales, an entertainment focused marketplace of concert memorabilia, live streaming of concert events, and ticket sales in international jurisdictions.

 

 

Results of Operations

 

Our consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

 

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

 

The following table summarizes our results of operations for the three months ended June 30, 2025 and June 30, 2024, respectively.

 

		For the three months Ended June 30,
		2025				2024				$ Change				% Change
Revenue		$	191,762			$	256,998				(65,236	)			-25	%
Cost of revenue			162,733				45,570				117,163				257	%
Gross profit			29,029				211,428				(182,399	)			-86	%
Operating expenses:
Personnel costs			438,966				1,789,986				(1,351,020	)			-75	%
Professional fees			1,339,869				1,545,083				(205,214	)			-34	%
General and administrative			1,123,574				1,435,307				(311,733	)			-22	%
Depreciation and amortization			1,074,132				1,330,746				(256,614	)			-19	%
Total operating expenses			3,976,541				6,101,122				(2,124,581	)			-35	%
Loss from operations			(3,947,512	)		$	(5,889,694	)			1,942,182				-33	%
Other expenses
Interest expense			64,422				121,814				(57,392	)			-47	%
Other (income) expense			(24,033	)			(43,992	)			19,959				-45	%
Total other expenses, net			40,389				77,822				(37,433	)			-48	%
Net loss before income tax		$	(3,987,901	)		$	(5,967,516	)			1,979,615				-33	%
Income tax expense (benefit)			4,150				4,150				0				0	%
Net loss			(3,992,051	)			(5,971,666	)			1,979,615				-33	%

 

Revenue.

 

Revenue. Revenue for the three months ended June 30, 2025 was $192,000, a decrease of $65,000, or 25%, compared to revenue of $257,000 for the three months ended June 30, 2024. The decrease is the net effect of decreases of $50,000 for Global Gaming and $62,000 for TinBu in 2025 vs 2024 offset by $47,000 in revenue for the S&MI subsidiary which was not present in the three months ended June 30, 2024.

 

Cost of Revenue. Cost of revenue includes product costs, commission expense to affiliates and commercial partners, and merchant processing fees. Cost of revenue for the three months ended June 30, 2025 was $163,000 thousand, an increase of $117,000, or 257%, compared to cost of revenue of $46,000 for the three months ended June 30, 2024. The primary driver of the increase is $130,000 in cost of revenue for the S&MI subsidiary which was not present in the three months ended June 30, 2024 which was partially offset by a decrease of $13,000 for Global Gaming in the three months ended June 30, 2025.

 

Gross Profit. Gross profit for the three months ended June 30, 2025 was $29,000 compared to $211,000 for the three months ended June 30, 2024, a decrease of $182,000, or 86%. The decrease in gross profit resulted from the decreases in revenue for Global Gaming and Tinbu and the net impact of costs and revenue for S&MI during the period which were not present in the three months ended June 30, 2025.

 

 

Operating Costs and Expenses.

 

		For the three months Ended June 30,
		2025				2024				$ Change				% Change
Operating expenses:
Personnel costs			438,966				1,789,986				(1,225,603	)			-75	%
Professional fees			1,339,869				1,545,083				(205,214	)			-13	%
General and administrative			1,123,574				1,435,307				(311,733	)			-22	%
Depreciation and amortization			1,074,132				1,330,746				(256,614	)			-19	%
Total Operating Expenses			3,976,541				6,101,122				(2,124,581	)			-35	%
Loss from operations			(3,947,512	)			(5,889,694	)			1,942,182				-33	%

 

Operating expenses for the three months ended June 30, 2025 were $3.9 million, a decrease of $2.1 million, or 35%, compared to $6.1 million for the three months ended June 30, 2024. The decrease was primarily driven by a decrease of $1.4 million in personnel costs accompanied by decreases in professional fees $205,000, along with decreases in general and administrative expenses by $312,000 and depreciation and amortization by $257,000. Reasons for these decreases are described below.

 

Personnel Costs. Personnel costs were $439,000 for the three months ended June 30, 2025, a decrease of $1.4 million from $1.8 million for the three months ended June 30, 2024. The decrease is because expenses recorded in the three months ended June 30, 2024 for shares of common stock and related payroll taxes granted to officers for retention and their contributions to the turnaround and accrual of wages related to the TinBu subsidiary did not reoccur during the three months ended June 30, 2025.

 

Professional Fees. Professional fees decreased by $205,000 or 13%, from $1.5 million for the three months ended June 30, 2024 to $1.3 million for the three months ended June 30, 2025. The increase was due to expenses incurred for outside attorneys, other consultants, and directors in the three months ended June 30, 2025. Activity levels for the business, and these types of expense were lower for the same period in 2024.

 

 

General and Administrative. General and administrative expenses were $1.1 million, for the three months ended June 30, 2025, a decrease of $312,000 or 22% from $1.4 million for the three months ended June 30, 2024. A primary driver of the reduction is lower accrual for franchise taxes in the three months ended June 30, 2025 than the three months ended June 30, 2024.

 

Depreciation and Amortization. Depreciation and amortization decreased $257,000, or 19%, from $1.33 million for the three months ended June 30, 2024 to $1.07 million for the three months ended June 30, 2025. The decrease was primarily driven by write-offs to intangible assets related to Global Gaming in 2023 and 2024 resulting in a decrease of approximately $112,000 for the three months ended June 30, 2025, a decrease of approximately $99,000 because Tinbu intangibles became fully amortized in the summer of 2024, and a decrease of approximately $46,000 related to other intangible assets becoming fully amortized at the end of 2024.

 

Other (Income) Expense, Net.

 

		For the three months Ended June 30,
		2025				2024				$ Change				% Change
Other expenses
Interest expense			64,422				121,814				(57,392	)			-47	%
Other (income) expense			(24,033	)			(43,992	)			19,959				-45	%
Total other expenses, net			40,389				77,822				(37,433	)			-48	%

 

Interest Expense. Interest expense for the three months ended June 30, 2025 was $64,000 vs interest expense of $122,000 for the three months ended June 30, 2024, a decrease of $57,000 or 47%. Interest expense relates to notes payable from the time of the business combination plus interest on more recent convertible notes from Woodford, UCIL, and Univest. Interest accrual for convertible debt was lower for the three months ended June 30, 2025 due to lower balances for convertible debt as a result of conversions to equity.

 

Other (Income) Expense. Other (Income) for the three months ended June 30, 2025 was $24,000 vs $44,000 for the three months ended June 30, 2024, an decrease of $20,000 or 45%. The amount for June 30 2024 is the result of a reclassification of expenses.

 

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

 

The following table summarizes our results of operations for the six months ended June 30, 2025 and June 30, 2024, respectively.

 

		For the six months Ended June 30,
		2025				2024				$ Change				% Change
Revenue		$	415,611			$	516,317				(100,706	)			-20	%
Cost of revenue			325,201				129,357				195,844				151	%
Gross profit			90,410				386,960				(296,550	)			-77	%
Operating expenses:
Personnel costs			1,125,603				2,774,665				(1,649,062	)			-59	%
Professional fees			2,429,077				3,564,038				(1,134,961	)			-32	%
General and administrative			1,862,541				2,917,052				(1,054,511	)			-36	%
Depreciation and amortization			2,100,958				2,615,728				(514,770	)			-20	%
Total operating expenses			7,518,179				11,871,483				(4,353,304	)			-37	%
Loss from operations			(7,427,769	)		$	(11,484,523	)			4,056,754				-35	%
Other expenses
Interest expense			(60,119	)			224,031				(284,150	)			-127	%
Other expense			(88,605	)			8,684				(97,289	)			-1,120	%
Total other expenses, net			(148,724	)			232,715				(381,439	)			-164	%
Net loss before income tax		$	(7,279,045	)		$	(11,717,238	)			4,438,193				-38	%
Income tax expense (benefit)			8,300				8,300				0				0	%
Net loss			(7,287,345	)			(11,725,538	)			4,438,193				-38	%

 

 

Revenue. Revenue for the six months ended June 30, 2025 was $416,000, a decrease of $101,000, or 20%, compared to revenue of $516,000 for the six months ended June 30, 2024. The decrease is the net effect of decreases of $103,000 for Global Gaming and $86,000 for TinBu in 2025 vs 2024 offset by $88,000 in revenue for the S&MI subsidiary which was not present in the six months ended June 30, 2024.

 

Cost of Revenue. Cost of revenue includes product costs, commission expense to affiliates and commercial partners, and merchant processing fees. Cost of revenue of $325,000 for the six months ended June 30, 2025 was an increase of $196,000 or 151% compared with $129,000 for the six months ended June 30, 2024. The primary driver of the increase is $239,000 in cost of revenue for the S&MI subsidiary which was not present in the six months ended June 30, 2024 which was partially offset by a decrease of $43,000 for Global Gaming in the six months ended June 30, 2025.

 

Gross Profit. Gross profit for the six months ended June 30, 2025 was $90,000 compared to $387,000 for the six months ended June 30, 2024, a decrease of $297,000, or 77%. The decrease in gross profit resulted from the decreases in revenue for Global Gaming and Tinbu, the decrease in cost of revenue for Global Gaming, and the net impact of costs and revenue for S&MI during the period which were not present in the three months ended June 30, 2025.

 

Operating Costs and Expenses.

 

		For the six months Ended June 30,
		2025				2024				$ Change				% Change
Operating expenses:
Personnel costs			1,125,603				2,774,665				(1,649,062	)			-59	%
Professional fees			2,429,077				3,564,038				(1,134,961	)			-32	%
General and administrative			1,862,541				2,917,052				(1,054,511	)			-36	%
Depreciation and amortization			2,100,958				2,615,728				(514,133	)			-20	%
Total operating expenses			7,518,179				11,871,483				4,353,304				-37	%
Loss from operations			(7,427,769	)		$	(11,484,523	)			4,056,754				-35	%

 

Operating expenses for the six months ended June 30, 2025 were $7.5 million, a decrease of $4.4 million, or 37%, compared to $11.9 million for the six months ended June 30, 2024. The decrease was primarily driven by a decrease of $1.6 million in personnel costs accompanied by an decreases in professional fees of $1.1million, a decrease in general and administrative expenses of $1.05 million and a decrease in depreciation and amortization by $515,000. Reasons for these decreases are described below.

 

Personnel Costs. Personnel costs decreased by $1.6 million or 59% from $2.8 million for the six months ended June 30, 2024, to $1.1 million for the six months ended June 30, 2025. The decrease is because expenses recorded in the six months ended June 30, 2024 for shares of common stock and related payroll taxes granted to officers for retention and their contributions to the turnaround and accrual of wages related to the TinBu subsidiary did not reoccur during the six months ended June 30, 2025.

 

Professional Fees. Professional fees decreased by $1.1 million, or 32%, from $3.6 million for the six months ended June 30, 2024 to $2.4 million for the six months ended June 30, 2025. The increase was due to expenses incurred for outside attorneys, other consultants, and directors in the six months ended June 30, 2025.

 

 

General and Administrative. General and administrative expenses decreased $1.0 milliion, or 36%, from $2.9 for the six months ended June 30, 2024 to $1.9 milliion for the six months ended June 30, 2025. A primary driver of the reduction is lower accrual for franchise taxes in the six months ended June 30, 2025 than the six months ended June 30, 2024.

 

Depreciation and Amortization. Depreciation and amortization decreased $515,000 or 20%, from $2.62 million for the three months ended June 30, 2024 to $2.1 million for the six months ended June 30, 2025. The decrease was primarily driven by write-offs to intangible assets related to Global Gaming in 2023 and 2024 resulting in a decrease of approximately $225,000 for the six months ended June 30, 2025, a decrease of approximately $139,000 because Tinbu intangibles became fully amortized in the summer of 2024, and a decrease of approximately $146,000 related to other intangible assets becoming fully amortized at the end of 2024.

 

Other (Income) Expense, Net.

 

		For the six months Ended June 30,
		2025				2024				$ Change				% Change
Other expenses
Interest expense			(60,119	)			224,031				(284,150	)			-127	%
Other expense			(88,605	)			8,684				(97,289	)			-1,120	%
Total other expenses, net			(148,724	)			232,715				(381,439	)			-164	%

 

Interest Expense (Income). Interest income for the six months ended June 30, 2025 was $60,000 vs interest expense of $224,000 for the six months ended June 30, 2024, a decrease of $284,000 or 127%. Interest accrual for convertible debt was lower for the six months ended June 30, 2025 due to lower balances for convertible debt as a result of conversions to equity. Additionally, an accrual for $196,000 was recorded in the three months ended March 31, 2025 for accrued interest income on a note receivable.

 

Other Expense. Other income was $89,000 for the six months ended June 30, 2025 vs. $9,000 of other expense for the six months ended June 30, 2024.

 

Liquidity and Capital Resources

 

Prior to the Operational Cessation, our primary need for liquidity was to fund working capital requirements of our business, growth, capital expenditures and for general corporate purposes. Our primary source of liquidity had historically been funds generated by financing activities. Upon the Closing of the business combination on October 29, 2021, we received net proceeds of approximately $42.8 million in cash.

 

Following the Operational Cessation, our primary need for liquidity has been to fund the restart of our business operations, re-hire employees and pay our expenses. The most likely source of such future funding presently available to us is through additional borrowings under loan agreements or through the issuance of equity or debt securities. If lenders do not advance us amounts as agreed under loan agreements or we are otherwise not able to secure the necessary capital to restart our operations, hire new employees, and obtain funding sufficient to support and restart our operations, we may be forced to permanently cease our operations, sell off our assets and operations, and/or seek bankruptcy protection, which could cause the value of our securities to become worthless.

 

These conditions, along with our current lack of material revenue producing activities, and significant debt, raise substantial doubt about our ability to continue as a going concern for the next 12 months. For more information, see Note 2 - Significant Accounting Policies, Going Concern to the consolidated financial statements included herein.

 

Prior Convertible Debt Obligations

 

Prior to the Closing, we funded our operations through the issuance of convertible promissory notes.

 

From August to October 2017, the Company entered into seven Convertible Promissory Note Agreements with unaffiliated investors for an aggregate amount of $821,500. The notes bore interest at 10% per year, were unsecured, and were due and payable on June 30, 2019. The Company and the noteholders executed amendments in February 2021 to extend the maturity date to December 21, 2021.

 

From November 2019 through October 28, 2021, we issued approximately $48.2 million in aggregate principal amount of Series B convertible promissory notes. The notes bore interest at 8% per year, were unsecured, and were due and payable on dates ranging from December 2020 to December 2022. For those promissory notes that would have matured on or before December 31, 2020, the parties extended the maturity date to December 21, 2021 through amendments executed in February 2021. The amendments also allowed for automatic conversion to equity as a result of the Business Combination. Nearly all of the aforementioned promissory notes automatically converted into shares of Common Stock or were terminated pursuant to their terms, as applicable, in connection with the Closing. Those that remain outstanding do not have conversion terms that were triggered by the Closing.

 

Immediately prior to the Closing, approximately $60.0 million of convertible debt was converted into equity of AutoLotto.

 

As of June 30, 2025, we had $1,925,242 of convertible debt outstanding. A portion of this debt has matured and is theoretically in default.

 

See “-Recent Developments- Loan Agreement with Woodford” and “Loan Agreement with United Capital Investments London Limited” above for additional information.

 

Cash Flows

 

Net cash used in operating activities was $1.4 million for the three months ended June 30, 2025, compared to net cash used in operating activities of $1.4 million for the three months ended June 30, 2024.

 

Net cash used in investing activities during the three months ended June 30, 2025 was $0, which was the same as for the prior year.

 

Net cash provided by financing activities was $965,000 for the three months ended June 30, 2025, compared to net cash provided of $965,000 for the three months ended June 30, 2024, which was $320 thousand lower year over year.

 

 

Emerging Growth Company Accounting Election

 

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and have elected to take advantage of the benefits of this extended transition period. We expect to remain an emerging growth company through the end of the 2026 fiscal year and we expect to continue to take advantage of the benefits of the extended transition period. This may make it difficult or impossible to compare the financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions for emerging growth companies because of the potential differences in accounting standards used.

 

Critical Accounting Policies and Estimates

 

Our financial statements and the related notes thereto included elsewhere in this Report are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The preparation of financial statements requires management to make estimates and assumptions that affect the reporting values of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The more significant estimates and assumptions are those used in determining the recoverability of long-lived assets. Accordingly, actual results could differ from those estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flow will be affected.

 

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Annual Report and the notes to the audited financial statements appearing elsewhere in the Annual Report. During the six months ended June 30, 2025, there were no material changes to our critical accounting policies from those discussed in our Amended 2024 Annual Report. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This guidance requires recognition of most lease liabilities on the balance sheet to give investors, lenders, and other financial statement users a more comprehensive view of a company’s long-term financial obligations, as well as the assets it owns versus leases. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2021, and for interim periods within annual periods after December 15, 2022. In July 2018, the FASB issued ASU 2018-11 making transition requirements less burdensome. The standard provides an option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in the Company’s financial statements. We are currently evaluating the impact that this guidance will have on our financial statements as well as the expected adoption method. The adoption of this standard did not have a material impact on our financial statements.

 

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”, as additional guidance on the measurement of credit losses on financial instruments. The new guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. In addition, the guidance amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The new guidance is effective for all public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual periods beginning after December 15, 2018. In October 2019, the FASB approved a proposal which grants smaller reporting companies additional time to implement FASB standards on current expected credit losses (CECL) to January 2023. As a smaller reporting company, we will defer adoption of ASU No. 2016-13 until January 2023. We are currently evaluating the impact this guidance will have on our condensed consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company” as defined by Rule 10(f)(1) of Regulation S-K, the Company is not required to provide this information.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As previously disclosed, in connection with the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Original 2021 Annual Report”) on April 1, 2022, our management, with the participation of our then Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2021. Based on their evaluation, our then Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting with respect to our financial statement close and reporting process.

 

In connection with the filing of Amendment No. 1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2021 (the “Amended 2021 Annual Report”), our management, with the participation of our Chief Executive Officer, reevaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2021 and determined they were not effective due to the material weaknesses in our internal control over financial reporting with respect to our financial statement close and reporting process. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosures.

 

Material Weakness in Internal Control Over Financial Reporting

 

In connection with the audit of our condensed consolidated financial statements included in this Report, our management identified material weaknesses in our internal control over financial reporting as of December 31, 2024 and 2023 relating to deficiencies in the design and operation of the procedures relating to the closing of our financial statements. These include: (i) our lack of a sufficient number of personnel with an appropriate level of knowledge and experience in accounting for complex or non-routine transactions, (ii) the fact that our policies and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions were either not designed and in place or not operating effectively; (iii) our inability to complete the timely closing of financial books at the quarter and fiscal year end, and (iv) incomplete segregation of duties in certain types of transactions and processes.

 

Specifically, management did not design and maintain sufficient procedures and controls related to revenue recognition including those related to ensuring accuracy of revenue recognized from non-routine transactions such as the sales of LotteryLink Credits. As a result, we determined that there was an overstatement of revenue in the consolidated statement of operations of approximately $52.1 million during the year ended December 31, 2021, which required a restatement of the previously issued financial statements for the year ended December 31, 2021 contained in the Amended 2021 Annual Report.

 

 

We have begun implementing remediation steps to improve our internal control over financial reporting and to remediate the identified material weaknesses, including (i) adding personnel with sufficient accounting knowledge; (ii) adopting a more rigorous period-end review process for financial reporting; (iii) adopting improved period close processes and accounting processes, and (iv) clearly defining and documenting the segregation of duties for certain transactions and processes. Management has expanded and will continue to enhance our system of identifying transactions and evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. We intend to continue take steps to remediate the material weaknesses described above and further continue re-assessing the design of controls, the testing of controls and modifying processes designed to improve our internal control over financial reporting. The Company plans to continue to assess its internal controls and procedures and intends to take further action as necessary or appropriate to address any other matters it identifies or are brought to its attention. We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time. The implementation of our remediation will be ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We may also conclude that additional measures may be required to remediate the material weaknesses in our internal control over financial reporting.

 

We cannot assure you that the measures we take will be sufficient to remediate the material weaknesses we identified or avoid the identification of additional material weaknesses in the future. If the steps we take do not remediate the material weaknesses in a timely manner, there could continue to be a reasonable possibility that this control deficiency or others could result in another material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely basis.

 

For more information, see “Item 1A. Risk Factors - Public Company Operating Risks - If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the trading price of our common stock and warrants may be materially and adversely affected.”

 

Changes in Internal Control Over Financial Reporting

 

Except as otherwise described herein, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. In addition, the Company is a party to several material legal proceedings, which are described below. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.

 

On July 29, 2022, the Company filed its original Verified Complaint for Breach of Contract and Specific Performance (the “Streicher Complaint”) against J. Streicher Financial, LLC (“Streicher”) in the Court of Chancery of the State of Delaware (the “Chancery Court”), styled AutoLotto, Inc. dba Lottery.com v. J. Streicher Financial, LLC (Case No. 2022-0661-MTZ). In the Streicher Complaint, the Company alleged that Streicher breached the contract entered into by the parties on March 9, 2022 and demanded that Streicher return $16,500,000 it owes to the Company. On September 26, 2022, the Chancery Court entered an order in favor of the Company, Granting with Modifications Company’s Motion for Partial Summary Judgment in the amount of $16,500,000 (the “Streicher Judgment”). On October 27, 2022, the Chancery Court further awarded the Company $397,037 in attorney’s fees (the “Fee Order”). On November 15, 2022, the Company initiated efforts against Streicher to seek collections on the Judgment. On December 8, 2022, the Company’s prior attorney Skadden, Arps, Slate, Meagher & Flom, LLP (“Skadden”) filed its Combined Motion to Withdraw as Counsel and For a Charging Lien in amount of $3,024,201 for legal fees unpaid by Company (“Skadden’s Motion”). On December 30, 2022, the Company filed its response to Skadden’s Motion, alleging that the Chancery Court should deny Skadden’s Motion for a Charging Lien as a matter of law or, in the alternative, limit the charging lien to the amount of the attorneys’ fees awarded by the Fee Order. As of the date of this Report, the Chancery Court has not set Skadden’s Motion for an oral hearing, nor has it entered an order on the motion. On January 20, 2023, faced with post-judgment discovery and depositions, Streicher remitted a partial payment towards the Judgment in the amount of $75,000. On February 13, 2023, Streicher made another payment towards the Judgment in the amount of $50,000 and had agreed to make another payment in the amount of $75,000 on February 28, 2023, which it failed to make. The Company intends to fully collect on the Judgment and shall pursue all legal and equitable means to enforce the Judgment against Streicher until the Judgment is fully satisfied.

 

Preston Million Class Action

 

On August 19, 2022, Preston Million filed a Class Action Complaint (the “Class Action Complaint”) against the Company and certain former officers and directors of the Company in the United States District Court for Southern District of New York (the “SDNY”), styled Preston Million, Individually and on Behalf of All Others Similarly Situated vs. Lottery.com, Inc. f/k/a Trident Acquisitions Corp., Anthony DiMatteo, Matthew Clemenson and Ryan Dickinson (Case No. 1:22-cv-07111-JLR). The Class Action Complaint alleged violations by all defendants of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) 15 U.S.C. §§ 78j(b), 78t(a), as amended by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), U.S.C. § 78u-4 et seq. (collectively “Federal Securities Laws”). On November 18, 2022, the SNDY ordered the appointment of RTD Bros, LLC, Todd Benn, Tom Benn and Tomasz Rzedian (collectively “Lottery Investor Group”) as lead plaintiff and Glancy Prongay & Murray, LLP as lead counsel for plaintiffs and for the class in the case. On December 5, 2022, the Court stipulated a Scheduling Order in the case. On January 12, 2023, the Company’s legal counsel timely filed its Notice of Appearance. On January 31, 2022, plaintiffs filed their Amended Complaint adding Kathryn Lever, Marat Rosenberg, Vadim Komissarov, Thomas Gallagher, Gennadii Butkevych, Ilya Ponomarev as additional defendants in the case. The Amended Complaint alleges, among other things, that defendants made materially false and misleading statements in violation of Section 10(b),14(a) and 20(a) of the Exchange Act and plaintiffs seek compensatory damages, reasonable costs and expenses including counsel fees and expert fees. Pursuant to the Scheduling Order, the Company filed its motion to dismiss the Amended Complaint on April 3, 2023, under the newly consolidated caption and its proposed order to dismiss the matter. Plaintiffs were expected to file their opposition to the motion to dismiss no later than May 18, 2023, which would trigger the Company’s deadline to file its reply brief in support of their motion to dismiss no later than June 20, 2023. On February 6, 2024, the SDNY granted the Company’s Motion to Dismiss. On June 12, 2024, plaintiffs amended their complaint (the “Third Amended Complaint”). On July 12, 2024, the Company filed its motion to dismiss the Third Amended Complaint (the “MTD Third Amended Complaint”). On August 8, 2024, the plaintiffs filed their response in opposition to the MTD Third Amended Complaint. The Company filed its reply on August 22, 2024 to plaintiffs’ response in opposition to the MTD Third Amended Complaint. On February 25, 2025, the Court granted in part and denied in part the MTD Third Amended Complaint (the “Order). As set forth in the Order, the Class Plaintiffs’ Section 10(b) claim shall proceed against Defendant Dickinson and the Company based on post−merger representations regarding Lottery’s financial performance and financial reporting. Class Plaintiffs’ and Hoffman’s Section 20(a) claim premised on Section 10(b) shall likewise proceed against Defendant Dickinson. Class Plaintiffs’ Section 14(a) claim shall proceed against the Company and Defendants DiMatteo, Clemenson and Dickinson with respect to certain legal and regulatory compliance statements in the Proxy. The remainder of Plaintiffs claims were dismissed, including all claims against Komissarov. The Court also ordered that Plaintiffs shall have leave to amend within twenty−one (21) days of this opinion and order. On March 13, 2025, the Court granted Plaintiff Hoffman’s motion for leave for additional time to amend his complaint. Accordingly, Hoffman’s’ Third Amended Complaint shall be due April 24, 2025. Defendants’ motions to dismiss shall be due June 30, 2025; Plaintiff Hoffman’s opposition brief will be due August 14, 2025; and Defendants’ reply briefs shall be due September 17, 2025.

 

TinBu Complaint

 

On March 13, 2023, John Brier, Bin Tu and JBBT, LLC (collectively, the “TinBu Plaintiffs”) filed its original complaint against Lottery.com, Inc. f/k/a AutoLotto, Inc. and its wholly-owned subsidiary TinBu, LLC (“TinBu”) in the Circuit Court of the 13th Judicial District in and for Hillsborough County, Florida (the “TinBu Complaint”). The Complaint alleges breach of contract(s) and misrepresentation with alleged damages in excess of $4.6 million. The parties agreed to extend the Company’s and its subsidiary’s deadline to respond until May 1, 2023. On May 2, 2023, the Company and its subsidiary retained local counsel who filed a Notice of Appearance on behalf of the Company and TinBu and filed a Motion for Enlargement requesting the Court to extend its deadline to file its initial response to the Complaint by an additional 30 days (the “Motion for Enlargement”). As of the date of this Amended Report, the Motion for Enlargement has not been set for a hearing. On May 5, 2023, Plaintiffs filed their Motion for Court Default (“Plaintiffs’ Motion for Default”), despite Company’s Motion for Enlargement. As of the date of this Amended Report, the Motion for Enlargement has not been set for a hearing. The Company intends to oppose Plaintiffs’ Motion for Default. On May 9, 2023, Plaintiffs served Plaintiffs’ First Request for Admissions (the “RFA”) to the Company. On October 13, 2023, the Court granted the Defendants’ Motion to Stay Litigation and Discovery pending a ruling on its Motion to Compel Arbitration. On November 16, 2023, the Court granted Defendants’ Motion to Compel Arbitration in Texas. The parties await a signed written order from the Court to that effect. The TinBu Plaintiffs have appealed the Court’s Order to Compel Arbitration in Texas.

 

On July 19, 2024, the Company received notice that the Tinbu Plaintiff’s requested a voluntary dismissal of their claims. The Tinbu Complaints have been voluntarily dismissed without prejudice by the District Court of Appeal of the State of Florida Second District and the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, indicating that no further action will be pursued by the plaintiffs in Florida State Court at this time. The District Court of Appeals also denied the Tinbu Plaintiff’s motion for attorney’s fees and costs.

 

 

Global Gaming Data

 

On November 14, 2023, the Company and its wholly owned subsidiary TinBu, LLC (“TinBu”) (collectively, “Plaintiffs”) filed a separate lawsuit in the United States District Court for the Middle District of Florida (“MDF”) against John J. Brier, Jr. (“Brier”), Bin Tu (“Tu”), and Global Gaming Data, LLC (“GGD”) (collectively, “Defendants”), which was subsequently amended on November 21, 2023, for damages and injunctive relief arising out of Defendants’ various violations of the Federal Defend Trade Secrets Act (“DTSA”), the Florida Uniform Trade Secrets Act (“FUTSA”) and the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), and for breaches of contract and breaches of various fiduciary duties, including the duty of loyalty, in a case styled Lottery.com, Inc. f/k/a AutoLotto, Inc. and TinBu, LLC v. John J. Brier, Jr., Bin Tu, & Global Gaming Data, LLC (Case No.: 8:23-cv-2594-KKM-TGW).

 

In response, Defendants asserted counterclaims against Plaintiffs, essentially filing exactly the same claims they previously alleged in the Hillsborough County Circuit Court Action that had been compelled to arbitration, and they also joined JBBT to the lawsuit. The Company sought dismissal of the counterclaims, as well as a Temporary Restraining Order.  The request for temporary injunctive relief was denied by the MDF in February 2024, and on June 11, 2024, the MDF also denied Plaintiffs’ motion to dismiss, allowing the litigation to move forward.  On June 25, 2024, Plaintiffs filed their answer and affirmative defenses to Defendants’ counterclaims. On December 5, 2024, the parties participated in a court-ordered mediation; however, no resolution was reached.

 

On February 25, 2025, Plaintiffs’ claims were dismissed without prejudice for failure to prosecute, and Defendants immediately moved for default judgment on their counterclaims.  On March 14, 2025, the Court entered an order denying without prejudice Defendants’ Motion for various deficiencies in the filing.  On March 18, 2025, Defendants filed an Amended Motion for Default Judgment on their Counterclaims, followed by additional support for their purported damages on April 25, 2025.  The Company engaged new counsel, who made an appearance on June 5, 2025, and thereafter sought and obtained additional time to respond to Defendants’ filings.  On August 6, 2025, Plaintiffs filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction, or in the Alternative, Motion to Set Aside Default and Compel Arbitration, which was renewed on August 14, 2025.  At the same time, Plaintiffs also submitted opposition briefing and supporting evidence to contradict Defendants’ filings relating to damages evidence.  Defendants’ reply to Plaintiffs filings is due to be filed on August 29, 2025.  In the interim, the MDF has stayed all deadlines in the case management order and has cancelled any pretrial proceedings, pending resolution on the parties’ motions.

 

Woodford Eurasia Assets, Ltd.

 

Woodford Eurasia Assets, Ltd. (“Woodford”) filed a complaint in the High Court of Justice in London chancery Division. October 16, 2023, The High Court of Justice in London Chancery Division (“the Court”) dismissed an application for injunctive relief initiated by Woodford against the Company. (Case: FL-2023-000023. Woodford Eurasia Assets Limited v Lottery.com Inc.) The Court characterized Woodford’s application as “fundamentally misconceived” and ordered Woodford to pay the Company’s legal costs. Woodford subsequently, on the Judges’ recommendation, withdrew the proceedings.

 

Woodford filed an additional action in the United States District Court for the District of Delaware on February 14, 2024 in Case No. 23-1317-GBW. Woodford subsequently filed a Notice of Voluntary Dismissal Without Prejudice, which stated that Woodford provides notice of dismissal of all claims without prejudice against Defendants Lotttery.com and its directors.

 

With the dismissal of this lawsuit by Woodford, no further action is required by Lottery.com or its directors at this time. The Company is determining its next course of action in resolving any further matters regarding Woodford.

 

The validity and application of the Woodford Loan Agreement Amendment is disputed by the Company.

 

Despite requests from the Company, Woodford has repeatedly amongst other things: failed to prove the amounts borrowed by the Company or claimed to have been advanced by Woodford to the Company; failed to indicate if it would accept accelerated payment of those verified amounts; failed to provide an anti-money laundering acceptable account to which payment could be made by the Company and failed to explain failure to respond to requests for other funding to be accepted in the context of the Woodford Loan Agreement; failed to respond to requests for funding under the accordion facility of the Woodford Loan Agreement; and failed to respond to allegations of money laundering and conspiracy to defraud the Company and the matter has been referred to the Company’s legal counsel.

 

McTurk

 

On June 10, 2024, the Company and Matthew McGahan (“McGahan”) (Company and McGahan collectively, “Defendants”) filed their Notice of Removal and No Answer Motion to Dismiss a state court complaint filed by Sharon A. McTurk (“McTurk”), Rutherford Enterprises, LLC (“Rutherford”), SJB Solutions, LLC (“SJB”) and Astra Supply Chain, LLC (“Astra”) McTurk, Rutherford, SJB and Astra (collectively, “Plaintiffs” or “Appellant”)) alleging fraudulent and negligent misrepresentation, aiding and abetting, and conspiracy by Defendants. On July 2, 2024, McGahan filed his Motion to Dismiss for Lack of Personal Jurisdiction and Defendants filed their Motion to Dismiss for Failure to State a Claim and Supporting Memorandum of Law (“Motions to Dismiss”). On July 19, 2024, Plaintiffs filed their response to the Motions to Dismiss. Defendants filed their reply on August 29, 2024 to Plaintiffs response to Defendants’ Motions to Dismiss. On February 25, 2025, the Court entered an Order granting Defendants’ Motion to Dismiss for Failure to State a Claim (the “Order”). Accordingly, Plaintiffs’ complaint was dismissed with prejudice. All pending deadlines and hearings were terminated, and any other pending motions were denied as moot. Plaintiffs filed a notice of appeal as to the Order and subsequently filed Appellants’ Brief. On June 16, Appellee’s filed their Answer Brief with the 11th Circuit and on filed and served the Supplemental Appendix to Appellees’ Answer Brief.

 

Honey Tree Trading

 

On September 4, 2024, Honey Tree Trading, LLC (“Honey Tree” or “Plaintiff”) filed a verified original complaint (the “Complaint”) against Lottery.com (“Lottery.com” or the “Company”) and directors Matthew Howard McGahan (“McGahan”), Christopher Gooding (“Gooding”), Paul Jordan (“Jordan”), Tamer Hassan (“Hassan”) and Warren Macal (“Macal” together with McGahan, Gooding, Jordan and Hassan, the “Individual Defendants” and, collectively Lottery.com, the “Defendants”) in Delaware Chancery Court alleging, amongst other things, breach of contract by the Company with respect to certain notes and warrants and breach of fiduciary duties by the Individual Defendants. (CA. No. 2024-0921-NAC: styled Honey Tree Trading, LLC v. Lottery.com Inc., et al.). On October 10 ,2024, Honey Tree amended its Complaint by filing an amended verified complaint (the “Amended Complaint”) and a motion to expedite proceedings (the “Motion”). On November 6, 2024, at a hearing on Plaintiff’s Motion (the “Hearing”) and on the issue of breach of fiduciary duties against the Individual Defendants, Honey Tree’s counsel informed the Court that, “[t]here is no question that Honey Tree is presently a shareholder and was a shareholder at the time it presented its pleading.” On November 12, 2024, Plaintiff’s counsel informed the Court that “Honey Tree did own shares prior to the filing of the Amended Complaint but sold them prior to that filing; and (ii) Honey Tree did not subsequently purchase shares of Lottery.com until November 7, 2024, the day after the [H]earing,” (Plaintiff’s Admission”). Following Plaintiff’s Admission on November 13, 2024, Plaintiff dismissed without prejudice its claims against Hassan and Macal (the “Dismissal”). The Court ordered the Dismissal on November 15, 2024. On December 13, 2024, Plaintiff filed amended its Amended Complaint by filing a second amended verified complaint (the “Second Amended Complaint”) and a renewed motion to expedite proceedings (the “Second Motion to Expedite”) against the Company and remaining Individual Defendants. In accordance with a briefing stipulation entered by the Court on December 11, 2023, defendants shall answer the Second Amended Complaint and file its opposition to the Second Motion to Expedite by January 13, 2025. On January 13, 2025, the Company and Individual Defendants timely filed their Answer to the Second Amended Complaint, an Opposition to Motion to Expedite and a Partial Motion to Dismiss. On March 6, 2025, Plaintiff notified the Court that it withdraws its Motion to Expedite. On April 25, 2025, Plaintiff filed its Motion to Dismiss Count IV of the Second Amended Complaint as Moot. The motion was granted and Count IV of the Second Amended Complaint was dismissed by the Court.

 

 

Manna World Ministries

 

On September 8, 2023, Manna World Ministries and Summit Church (collectively, the “Plaintiffs”) filed a civil lawsuit in the San Diego Superior Court, North County Division, under case number 37-2023-00039279-CU-CO-NC. The action was brought against Ryan Dickinson, Matthew Clemenson, Lawrence Dimatteo, Encircle, Inc., Paul King, LAD Holdings Group, LLC, MC Holdings Group, LLC, RD Holdings, LLC, and Jeff Sparrow (collectively, the “Defendants”). The Plaintiffs allege that the Defendants defaulted on a personal loan totaling $2,700,000, which was purportedly secured by their personal shares of stock in Lottery.com Inc. (the “Company”). On April 4, 2024, the Plaintiffs filed an amended complaint naming the Company as an additional defendant. The Company subsequently filed an answer and asserted affirmative defenses on December 6, 2024, denying all allegations of wrongdoing. The Company has stated its intent to vigorously contest the claims and to pursue all legal remedies available.

 

PR Fire Limited

 

On April 22, 2024, the Company, by and through its outside legal counsel, issued a cease and desist notice to PR Fire Limited, a U.K. based firm and Mr. Samuel Allcock, its CEO, for unlawful attempts to manipulate the public markets by disseminating false and misleading statements about the Company, its current officers and directors in certain articles caused to be published by PR Fire Limited. The Company’s outside legal counsel reported the matter to the proper authorities.

 

On April 24, 2024, the Company, by and through its outside legal counsel, issued a cease-and-desist notice to certain individuals and entities in participation with a common scheme and acting in concert to financial harm to the Company by privately and publicly disseminating false and misleading statements about the Company, its current officers and directors. The Company’s outside legal counsel reported the matter to the proper authorities.

 

Dawn Nettles

 

On February 14, 2025, Dawn Nettles, et. al (“Nettles” or “Plaintiff”) filed a verified original class action (the “Complaint”) against Lottery.com (“Lottery.com” or the “Company”), Rook TX LP, Gary N. Grief, IGT Solutions Corporation (“IGT”) (collectively the “Defendants”) in the District Court of Harris County, 333rd Judicial District (the “Court”) alleging that the Defendants engaged in systematic fraud, misappropriated lottery funds, illegally sold tickets across state lines, and manipulated the outcome of lottery games, including, but not limited to the April 22, 2023 Lotto Texas drawing. On March 25, 2025, the judge issued a ruling that the claims against IGT be dismissed without prejudice. Nettles filed a notice on May 30, 2025 that she is “taking a Nonsuit Without Prejudice Against All Parties Effective Immediately.” The Notice, under Texas Rule of Civil Procedure 162, terminated the case effective immediately.

 

Jerry R. Reed

 

On April 8, 2025, Jerry. R. Reed, “Reed” or the “Plaintiff”) brought an action against AL Tx Management, LLC; AutoLotto, Inc; Matthew Clemeson; Colossus Bets Limited; Ryan Dickinson; Lawrence Anthony Dimatteo III; Lottery Now Inc; Lottery.com, Inc. (“Lottery.com” or the “Company”); Bernard Marantelli; Qawi and Quddus, Inc.; Zeljeko Ranogajec; Rook GP, LLC; Rook TX LP; and White Swan Data Limited (collectively the “Defendants”) (Case No. 25-BC03A-0007), styled Jerry B. Reed vs. Rook TX LP, Rook GP LLC, Colossusbets Limited, Lottery.com, Inc., Autolotto, Inc., Lottery Now, Inc., ALTX Management, LLC, Qawi and Quddus, Inc., d/b/a Luck Zone, Lawrence Anthony “Tony” Dimatteo II , Matthew Clemensen, Ryan Dickinson, Zelko Ranogajec a/k/a John Wilson, White Swan Data Limited, Bernard Marantelli; In the Business Court of Texas, Third Division; REMOVED: Case No. D-1-GN-25-002446; 353rd District Court; Travis County, Texas; alleging illegal game-rigging and money-laundering during the April 22, 2023 Lotto Texas drawing. Plaintiff seeks recovery of funds which he claims should have been included in the Lotto Texas jackpot he won on May 17, 2023.

 

 

Item 1A. Risk Factors.

 

As of the date of this Report, there have been no material changes to the risk factors disclosed in the Company’s Annual Report, other than as set forth below. In addition, we may disclose additional changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

 

Our business model and the conduct of our operations may have to vary in each U.S. jurisdiction where we do business to address the unique features of applicable law to ensure we remain in compliance with that jurisdiction’s laws. Our failure to adequately do so may have an adverse impact on our business, financial condition, and results of operations.

 

Lottery laws vary among U.S. jurisdictions. This means that our business model and the conduct of our operations may have to vary in each jurisdiction where we do business to ensure we remain in compliance with applicable laws. For example, some jurisdictions prohibit lottery ticket courier services, while some jurisdictions in the U.S. prohibit charging certain fees to the user, and further still, some jurisdictions require us to be licensed or registered, which will require us to incur certain costs in connection with the licensing or registration process. In each U.S. jurisdiction, we may be required to structure our business model and conduct our operations differently to address the unique features of applicable law.

 

Many of the U.S. jurisdictions in which we have historically done business or anticipate doing business in the future require that lottery game tickets be sold only by licensed retailers and prohibit sale or resale of lottery tickets at prices in excess of the purchase price designated by the applicable regulatory authority. Because lottery tickets are typically considered bearer instruments, we can purchase tickets on behalf of our users and customers and charge certain service fees within the limits of the applicable laws in each U.S. jurisdiction. In most cases, with Virginia being a notable exception, the laws do not specifically prohibit users from engaging our services to purchase lottery tickets on their behalf. However, certain types of fees are prohibited in certain jurisdictions. For example, Pennsylvania prohibits “any fee associated with the acquisition or transportation of lottery tickets or shares” and Illinois law prohibits service charges, handling fees or other costs added to the established price of a ticket. On June 25, 2025, Texas enacted a law to criminalize the sale of lottery tickets by couriers. In those states and other states with similar prohibitions, we need to structure our business model to comply with the relevant laws while still endeavoring to operate profitably.

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

Exhibit Number		Description
10.1		Amendment and Restatement Agreement in respect of Loan Agreement (Deed), dated as of June 12, 2023, between Lottery.com and Woodford Eurasia Assets Ltd. (incorporated by reference to Exhibit 10.28 of the Annual Report on Form 10-K filed by Lottery.com with the SEC on June 15, 2023).
10.2		Loan Agreement, dated as of July 26, 2023, by and between Lottery.com Inc. and United Capital Investments London Limited (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Lottery.com with the SEC on August 1, 2023).
10.3		Amended and Restated Loan Agreement, dated as of August 8, 2023, by and between Lottery.com Inc. and United Capital Investments London Limited (incorporated by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q filed by Lottery.com with the SEC on August 22, 2023).
10.4		Amendment to Amended and Restated Loan Agreement, dated as of August 18, 2023, by and between Lottery.com Inc. and United Capital Investments London Limited (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Lottery.com with the SEC on August 24, 2023).
10.5		Entry into Stock Purchase Agreement for the Acquisition of Nook Holdings Limited
10.6*		Asset Purchase Agreement between Lottery.com and Galaxy Racer Holdings Ltd dated as of July 30, 2025
10.7*		Subscription Agreement between Lottery.com Inc. and Veloce Esports Limited dates as of July 11, 2025
10.71*		Deed of Adherence between Lottery.com Inc. and Veloce Esports Limited dates as of July 11, 2025
10.72*		Subscription Agreement Variation Letter between Lottery.com Inc. and Veloce Esports Limited dates as of July 11, 2025
10.73*		Second Subscription Agreement Variation Letter between Lottery.com Inc. and Veloce Esports Limited dates as of July 31, 2025
10.74*		Third Subscription Agreement Variation Letter between Lottery.com Inc. and Veloce Esports Limited dates as of August 18, 2025
10.40*		Share Purchase and Sale Agreement between Lottery.com and DotCom Ventures Inc. dated July 22, 2025
10.50*		Nook Holdings Share Purchase Agreement
10.51*		Amendment 1 to Nook Holdings Share Purchase Agreement
31.1*		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2*		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1**		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2**		Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*		Inline XBRL for the cover page of this Amended Quarterly Report on Form 10-Q/A included in the Exhibit 101 Inline XBRL Document Set

 

* Filed herewith.

 

** Furnished herewith.

 

 

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 thereunto duly authorized.

 

	Lottery.com Inc.
	By:	/s/ Matthew McGahan
	Name:	Matthew McGahan
	Title:	Chief Executive Officer
		(Principal Executive Officer)
	Lottery.com Inc.
	By:	/s/ Robert J. Stubblefield
	Name:	Robert J. Stubblefield
	Title:	Chief Financial Officer
		(Principal Accounting/Financial Officer)
Dated: August 19, 2025