AUSTIN, Texas, April 22, 2024 (GLOBE NEWSWIRE) -- Lottery.com Inc. (NASDAQ:LTRY, LTRYW))) ("Lottery.com" or the "Company"), a leading technology company in the lottery and gaming sector, is pleased to announce the nomination of Warren Macal to its Board of Directors.   Macal will be seated as a director at the Company's next Board of Directors meeting following the successful completion of required background checks.   Macal's nomination follows the December 2023 $18 million investment commitment from Prosp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Registrant's telephone number, including area code: (737) 309-4500 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, par value $0.001 per share | LTRY | The Nasdaq Stock Market LLC | | Warrants to p ...

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 September 30, 2023 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 ...

Financial Performance - Total revenue for Q2 2023 was $655,344, a decrease of 65.3% compared to $1,885,171 in Q2 2022[19] - Gross profit for the six months ended June 30, 2023, was $1,144,743, down from $1,553,882 in the same period of 2022, reflecting a decline of 26.3%[19] - The net loss for Q2 2023 was $4,256,059, compared to a net loss of $15,448,942 in Q2 2022, showing an improvement of 72.5%[19] - For the six months ended June 30, 2023, the net loss was $7,478,525, a significant improvement compared to a net loss of $50,107,387 for the same period in 2022[23] - The company reported a basic and diluted net loss per common share of $1.67 for Q2 2023, compared to $6.09 for Q2 2022[19] Assets and Liabilities - Total assets decreased to $76,395,635 as of June 30, 2023, down from $79,380,253 at the end of 2022, a decline of 3.7%[17] - Cash and cash equivalents decreased to $54,359 from $102,766 at the end of 2022, representing a decline of 47.3%[17] - Total current liabilities increased to $21,629,193 as of June 30, 2023, compared to $17,563,768 at the end of 2022, an increase of 23.5%[17] - The accumulated deficit as of June 30, 2023, was $215,665,735, up from $208,187,210 at the end of 2022, indicating a worsening financial position[17] - Total stockholders' equity decreased to $54,766,442 as of June 30, 2023, down from $61,816,485 at the end of 2022, a decline of 11.4%[17] Operational Updates - The company resumed ticket sales operations on April 25, 2023, as part of its plans to recommence operations[31] - The company has been focusing on restarting its core business after operational cessation in July 2022 due to insufficient financial resources[29] - The company’s B2B API Platform resumed limited operations in April 2023, while the B2C Platform is anticipated to become operational in Q4 2023[186] - The Company has developed a three-phase plan to recommence operations, with Phase 1 involving the relaunch of the B2B API platform, which resumed limited operations in April 2023[197] - The Company expects to relaunch its B2C platform in the fourth quarter of 2023, initially targeting customers in Texas[198] Financing and Capital Structure - The company has historically funded its activities almost exclusively through debt and equity financing, and plans to continue raising funds through private placements and debt issuances[35] - The company requires additional financing to execute its business plan, but there are no assurances that it will be successful in raising the necessary capital[37] - The Company entered into a credit facility with United Capital Investments London Limited on July 26, 2023, following an event of default notice from Woodford, to secure alternative funding[110] - The Company entered into the UCIL Loan Agreement as an alternative funding source after not receiving timely funding from Woodford, following default notices received on July 21 and July 25, 2023[165] - The Company received approximately $976,000 of a potential $2.5 million funding from Woodford Eurasia Assets, Ltd., with a 12% annual interest rate, as of June 30, 2023[103] Legal and Compliance Issues - The Company is involved in a litigation case with alleged damages exceeding $4.6 million related to breach of contract and misrepresentation[146] - The Company won a judgment of $16.5 million against J. Streicher Financial for breach of contract, along with $397,036.94 in attorney's fees[148] - The Company is pursuing all legal means to collect on the judgment against J. Streicher until fully satisfied[149] - The Company is not in compliance with Nasdaq's continued listing requirements and is working towards regaining compliance[200] Stock and Equity - A 1-for-20 Reverse Stock Split was implemented on August 9, 2023, affecting the number of shares of common stock and outstanding equity awards[114] - As of June 30, 2023, there were 2,527,045 shares of common stock outstanding, with no additional shares issued during the three months ended June 30, 2023[119] - The Company recognized a beneficial conversion feature of $8,480,697 as additional paid-in capital related to convertible debt[129] - The maximum number of shares that could be issued under the 2015 Stock Option Plan was 22,500[131] - The 2021 Equity Incentive Plan allows for an annual increase in share reserve equal to 5% of the total outstanding shares of common stock[132] Revenue and Customer Base - Significant customers accounted for 100% of revenue for the six months ended June 30, 2023, compared to 24% in the same period of 2022[48] - The average gross revenue per transaction was $8.57, with gross profit per transaction at $1.78, reflecting a gross margin of 20.75%[205] - The average transactions per user decreased to 13.06 from 17.18 in the same period of 2022[205] Miscellaneous - The Company incurred fees for gaming licenses that are capitalized and amortized over their estimated useful life[65] - The Company operates in one service line, providing lottery products and services, and is not organized around specific services or geographic regions[45] - The Company has maintained various pre-paid media credits to launch promotional campaigns aimed at encouraging prior customers to return to the platform[198] - The Company charges a minimum service fee of $0.50 for a $1 lottery game and $1 for a $2 lottery game in the U.S.[212]

Part I. Financial Information [Item 1. Consolidated Financial Statements](index=7&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company presents its unaudited condensed consolidated financial statements for the three months ended March 31, 2023 and 2022 [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Total assets | $77,745,122 | $79,380,253 | | Total current assets | $20,333,860 | $20,439,286 | | Cash | $40,914 | $102,766 | | Total liabilities | $19,012,459 | $17,563,768 | | Total current liabilities | $19,012,459 | $17,563,768 | | Total Equity | $58,732,663 | $61,816,485 | - The company's total assets decreased from **$79.38 million** at December 31, 2022, to **$77.75 million** at March 31, 2023, with cash significantly decreasing from **$102,766** to **$40,914** during the same period[18](index=18&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $620,229 | $3,630,692 | | Cost of revenue | $35,147 | $2,384,742 | | Gross profit | $585,082 | $1,245,950 | | Loss from operations | $(3,155,088) | $(30,680,968) | | Net loss | $(3,213,982) | $(34,897,457) | | Net loss attributable to Lottery.com Inc. | $(3,260,437) | $(34,750,964) | | Basic and diluted net loss per common share | $(0.06) | $(0.69) | - Revenue decreased by **83%** from **$3.63 million** in Q1 2022 to **$0.62 million** in Q1 2023, while net loss significantly improved from **$(34.90) million** to **$(3.21) million** due to reduced operating expenses[19](index=19&type=chunk) [Condensed Consolidated Statements of Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Condensed Consolidated Statements of Equity | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Common Stock (shares) | 50,540,906 | 50,540,906 | | Common Stock (amount) | $50,540 | $50,540 | | Additional paid-in capital | $267,907,707 | $267,549,357 | | Accumulated deficit | $(211,447,647) | $(208,187,210) | | Total Lottery.com Inc. stockholders' equity | $56,400,126 | $59,416,309 | - Total stockholders' equity decreased from **$59.42 million** at December 31, 2022, to **$56.40 million** at March 31, 2023, mainly due to the accumulated deficit increasing from **$(208.19) million** to **$(211.45) million**[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $(967,878) | $1,970,039 | | Net cash used in investing activities | $(896) | $(18,305) | | Net cash provided by financing activities | $1,021,016 | $(294,001) | | Net change in net cash and restricted cash | $(61,853) | $1,656,669 | | Cash and restricted cash at end of period | $40,913 | $34,295,639 | - The company experienced negative cash flow from operating activities of **$(0.97) million** in Q1 2023, a significant shift from positive cash flow of **$1.97 million** in Q1 2022[24](index=24&type=chunk) - Financing activities provided **$1.02 million** in Q1 2023, compared to using **$(0.29) million** in Q1 2022, primarily due to funding from Woodford[24](index=24&type=chunk)[238](index=238&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of Operations](index=12&type=section&id=1.%20Nature%20of%20Operations) - Lottery.com Inc provides domestic and international lottery products and services and acquired interests in Mexican iLottery operators in June 2021[27](index=27&type=chunk)[29](index=29&type=chunk) - On July 28, 2022, the company ceased most operations due to insufficient financial resources, with ticket sales resuming through its Texas retail network on April 25, 2023[30](index=30&type=chunk)[31](index=31&type=chunk) - A new wholly-owned subsidiary, Sports.Com, Inc, was formed on November 15, 2022, to expand into sports-related ventures[32](index=32&type=chunk) [2. Liquidity and Going Concern](index=12&type=section&id=2.%20Liquidity%20and%20Going%20Concern) - Recurring net losses, negative cash flows, an accumulated deficit of approximately **$211 million**, and working capital of **$1.3 million** raise substantial doubt about its ability to continue as a going concern[35](index=35&type=chunk)[37](index=37&type=chunk) - Management plans to meet operating cash flow requirements through financing activities, including a loan agreement with Woodford Eurasia Assets, Ltd[36](index=36&type=chunk) [3. Significant Accounting Policies](index=13&type=section&id=3.%20Significant%20Accounting%20Policies) - The financial statements are prepared on a going concern basis, with certain information condensed per Form 10-Q and Regulation S-X[39](index=39&type=chunk) - The October 29, 2021 Business Combination with Trident Acquisitions Corp was accounted for as a reverse recapitalization, with AutoLotto as the accounting acquirer[42](index=42&type=chunk)[43](index=43&type=chunk) - The company operates as one operating and reportable segment providing lottery products and services[46](index=46&type=chunk)[47](index=47&type=chunk) - Revenue is recognized when performance obligations are satisfied, with the company acting as a principal in transactions[71](index=71&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [4. Business Combination](index=20&type=section&id=4.%20Business%20Combination) - The Business Combination with Trident Acquisitions Corp (TDAC) on October 29, 2021, resulted in AutoLotto stockholders receiving approximately **3.0058 shares** of Lottery.com common stock for each AutoLotto share[85](index=85&type=chunk) - The transaction was treated as a reverse recapitalization, with approximately **$63.8 million** of Series B convertible notes converted into **9,764,511 shares** of Lottery.com common stock[86](index=86&type=chunk)[88](index=88&type=chunk) - AutoLotto received total net proceeds of approximately **$42.79 million** from TDAC's accounts, with total transaction costs of **$9.46 million**[90](index=90&type=chunk) [5. Property and Equipment, net](index=21&type=section&id=5.%20Property%20and%20Equipment,%20net) Property and Equipment, net | Category | March 31, 2023 | December 31, 2022 | | :---------------------- | :------------- | :---------------- | | Property and equipment, net | $84,408 | $108,078 | | Accumulated depreciation | $(2,083,785) | $(2,059,219) | | Depreciation expense (3 months) | $24,556 | $38,291 | - Net property and equipment decreased from **$108,078** at December 31, 2022, to **$84,408** at March 31, 2023, with depreciation expense of **$24,556** for the quarter[92](index=92&type=chunk) [6. Intangible assets, net](index=21&type=section&id=6.%20Intangible%20assets,%20net) Intangible assets, net | Category | March 31, 2023 (Net) | December 31, 2022 (Net) | | :---------------------- | :------------------- | :---------------------- | | Customer relationships | $512,365 | $568,615 | | Trade name | $1,801,528 | $1,907,778 | | Technology | $1,485,139 | $1,612,222 | | Software agreements | $7,775,556 | $8,481,389 | | Gaming license | $2,847,500 | $3,015,000 | | Internally developed software | $2,451,655 | $2,554,191 | | Domain name | $5,727,667 | $5,843,250 | | Total intangible assets, net | $22,601,410 | $23,982,445 | - Net intangible assets decreased from **$23.98 million** at December 31, 2022, to **$22.60 million** at March 31, 2023, with amortization expense of **$1,381,035** for the quarter[93](index=93&type=chunk)[94](index=94&type=chunk) [7. Notes Receivable](index=22&type=section&id=7.%20Notes%20Receivable) - As of March 31, 2023, the company had a secured promissory note agreement with a principal amount of **$2,000,000** outstanding, bearing **3.1%** annual interest[96](index=96&type=chunk) - This note was received for development work performed for a borrower intending to launch an online game outside the U.S[97](index=97&type=chunk) [8. Notes Payable and Convertible Debt](index=22&type=section&id=8.%20Notes%20Payable%20and%20Convertible%20Debt) - The company has Series A notes totaling **$771,500** outstanding, bearing **10%** interest, which are in default as of March 31, 2023[98](index=98&type=chunk) - A remaining balance of **$185,095** from Series B convertible notes is no longer convertible and has been reclassified to notes payable[103](index=103&type=chunk) - The company entered a loan agreement with Woodford Eurasia Assets, Ltd for up to **$2.5 million** (with potential for **$52.5 million**), accruing **12%** interest (**22%** upon default), with approximately **$1.6 million** received to date[104](index=104&type=chunk) - Amounts borrowed from Woodford are convertible into common stock at the lender's option, subject to beneficial ownership limitations[105](index=105&type=chunk)[107](index=107&type=chunk) - The company also has short-term loans, including a **$150,000** Promissory Note with the SBA, and notes payable totaling **$2,336,081** related to the TinBu acquisition, which are in default[111](index=111&type=chunk)[113](index=113&type=chunk) [9. Stockholders' Equity](index=24&type=section&id=9.%20Stockholders'%20Equity) - As of March 31, 2023, there were **50,540,906 shares** of common stock outstanding, with no preferred stock issued[115](index=115&type=chunk)[116](index=116&type=chunk) - Public Warrants to purchase common stock became exercisable 30 days after the October 29, 2021 Business Combination and will expire five years thereafter[117](index=117&type=chunk)[118](index=118&type=chunk) - As of March 31, 2023, **488,296 warrants** were outstanding and exercisable at a weighted average exercise price of **$1.52**[121](index=121&type=chunk) - A unit purchase option for **1,750,000 Units** was sold to an underwriter, exercisable at **$12.00** per Unit, and expires on May 29, 2023[123](index=123&type=chunk) [10. Stock-based Compensation Expense](index=27&type=section&id=10.%20Stock-based%20Compensation%20Expense) - The company recognized **$358,349** of stock compensation expense related to employee restricted stock grants for the three months ended March 31, 2023[135](index=135&type=chunk) - As of March 31, 2023, unrecognized stock-based compensation associated with restricted stock awards is **$4,061,294**, to be expensed over the next **2.83 years**[135](index=135&type=chunk) - The 2021 Equity Incentive Plan initially reserved **13,130,368 shares** of Class A common stock for issuance, with an annual increase based on **5%** of outstanding shares[129](index=129&type=chunk) [11. Income Taxes](index=29&type=section&id=11.%20Income%20Taxes) - The company uses the asset and liability method for income taxes, recognizing deferred tax assets and liabilities for temporary differences and carry-forwards[138](index=138&type=chunk) - A valuation allowance is established to reduce deferred tax assets to expected realizable amounts[138](index=138&type=chunk) [12. Commitments and Contingencies](index=29&type=section&id=12.%20Commitments%20and%20Contingencies) - The company has indemnification agreements with various parties, with maximum potential future payments being unlimited[139](index=139&type=chunk) - Holders of Digital Securities are entitled to **7%** of net sweepstakes revenue, with an obligation of approximately **$5,632** for 2021 remaining unsatisfied[140](index=140&type=chunk) - The company is involved in litigation, including a complaint from TinBu Plaintiffs seeking over **$4.6 million** in damages[143](index=143&type=chunk) - In Q1 2022, **$30,000,000** in cash was pledged as security for a line of credit, which was foreclosed upon by Provident Bank in October 2022 due to default[144](index=144&type=chunk) - The company obtained a **$16.5 million** judgment against J Streicher Financial, LLC for breach of contract, with ongoing collection efforts[145](index=145&type=chunk)[147](index=147&type=chunk) [13. Related Party Transactions](index=31&type=section&id=13.%20Related%20Party%20Transactions) - The company had an outstanding balance of **$13,000** for borrowing arrangements with individual founders as of March 31, 2023[149](index=149&type=chunk) - A service agreement with Master Goblin Games, LLC was terminated in January 2023 after a **$53,000** payment[150](index=150&type=chunk)[151](index=151&type=chunk) [14. Subsequent Events](index=31&type=section&id=14.%20Subsequent%20Events) - On April 22, 2023, the company signed an exclusive affiliate agreement with International Gaming Alliance (IGA) to supply Texas lottery tickets in the Dominican Republic[152](index=152&type=chunk) - On April 25, 2023, the company recommenced its ticket sales operations through its Texas retail network[153](index=153&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company discusses its financial condition and operational results, focusing on its internal investigation, operational cessation, and restart efforts [Overview](index=32&type=section&id=Overview) - An internal investigation in July 2022 revealed non-compliance with laws and issues with internal accounting controls, leading to the termination of the CFO[156](index=156&type=chunk) - Financial statements for 2021 and Q1 2022 were deemed unreliable, leading to an operational cessation on July 29, 2022, and furloughing of most employees[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - In December 2022, the company secured a loan agreement with Woodford Eurasia Assets, Ltd for up to **$2.5 million** (with potential for **$52.5 million**) to fund operations restart[164](index=164&type=chunk) - The company acquired Global Gaming in June 2021, gaining **80%** equity in Mexican iLottery operators Aganar and JuegaLotto for international expansion[172](index=172&type=chunk) [Operations Prior to Operational Cessation](index=35&type=section&id=Operations%20Prior%20to%20Operational%20Cessation) - Prior to the Operational Cessation, the company offered B2C and B2B platforms for remote lottery game purchases and a Data Service[174](index=174&type=chunk) - The B2C Platform is currently not operational but is anticipated to relaunch in Q3 2023, while the B2B API Platform resumed limited operations in April 2023[175](index=175&type=chunk) - The WinTogether platform, which administered sweepstakes for charitable causes, suspended its relationship with the company on March 29, 2023[176](index=176&type=chunk)[177](index=177&type=chunk) - Wholly-owned subsidiaries TinBu, Aganar, and JuegaLotto continued to operate with decreased expenses and consistent or slightly decreased revenue post-cessation[178](index=178&type=chunk)[179](index=179&type=chunk)[182](index=182&type=chunk) - The company acquired the Sports.com domain name in December 2021 and formed Sports.com, Inc in November 2022 for sports data distribution[183](index=183&type=chunk) [Plans for Recommencement of Company Operations](index=36&type=section&id=Plans%20for%20Recommencement%20of%20Company%20Operations) - The company has a three-phase plan to recommence operations, starting with the B2B API Platform, followed by the B2C Platform in Q3 2023, and then other business lines[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - The company is not in compliance with Nasdaq's continued listing requirements, and delisting could severely impact stock value and capital raising ability[189](index=189&type=chunk)[190](index=190&type=chunk) - The ability to continue operations is dependent on obtaining new financing, raising substantial doubt about the company's going concern ability[191](index=191&type=chunk) [Performance Measures](index=37&type=section&id=Performance%20Measures) - The company uses operating metrics such as transactions per user and gross margin per transaction to evaluate its B2C business performance[192](index=192&type=chunk)[193](index=193&type=chunk) Performance Measures | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Transactions per user | n/a | 12.58 | | Tickets per transaction | n/a | 3.68 | | Gross revenue per transaction | n/a | $8.75 | | Gross profit per transaction | n/a | $1.30 | | Gross margin per transaction | n/a% | 14.9% | - Due to the operational cessation, performance metrics for Q1 2023 are not available, indicating a halt in B2C platform activity compared to Q1 2022[194](index=194&type=chunk) [Components of Our Results of Operations (Prior to the Operational Cessation)](index=39&type=section&id=Components%20of%20Our%20Results%20of%20Operations%20(Prior%20to%20the%20Operational%20Cessation)) - Revenue from the B2C Platform included the retail value of lottery games and a service fee; this platform is currently not operational[201](index=201&type=chunk)[202](index=202&type=chunk) - Revenue from the B2B API involved a mark-up on lottery game costs and a service fee, with limited operations resuming in April 2023[203](index=203&type=chunk) - Data Services revenue comes from subscriptions for access to global lottery data and was not impacted by the Operational Cessation[204](index=204&type=chunk) - Operating costs included personnel costs, professional fees, general and administrative expenses, and depreciation and amortization[205](index=205&type=chunk)[206](index=206&type=chunk) [Key Trends and Factors Affecting Our Results](index=39&type=section&id=Key%20Trends%20and%20Factors%20Affecting%20Our%20Results) - International operations face challenges from foreign currency fluctuations, inflation, and political instability, which are expected to materially impact revenues in fiscal 2023[207](index=207&type=chunk) - The introduction of Project Nexus, a proprietary blockchain-enabled gaming platform, is subject to risks like implementation delays and integration issues[208](index=208&type=chunk) - Intense competition in the online lottery market requires increased operating expenses for marketing, compliance, and M&A activities[209](index=209&type=chunk) [Current Plan of Operations](index=40&type=section&id=Current%20Plan%20of%20Operations) - The primary revenue drivers for the next 12 months are the resumed B2B API platform and the launch of Sports.com, with the liquidity gap to be covered by financing[210](index=210&type=chunk) - Beyond 12 months, plans include re-launching the B2C Platform, expanding domestically and internationally, and enhancing the mobile application[211](index=211&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) [Revenue](index=41&type=section&id=Revenue) Revenue | Metric | Q1 2023 | Q1 2022 | $ Change | % Change | | :------ | :------ | :------ | :------- | :------- | | Revenue | $620,229 | $3,630,692 | $(3,010,463) | -83% | - Revenue decreased by **$3.0 million (83%)** due to the Cessation of Operations, with a **$1.2 million** decrease in lottery-related revenue and **$1.8 million** in non-recurring project revenue from Q1 2022[216](index=216&type=chunk) [Cost of Revenue](index=41&type=section&id=Cost%20of%20Revenue) Cost of Revenue | Metric | Q1 2023 | Q1 2022 | $ Change | % Change | | :------------- | :------ | :------ | :------- | :------- | | Cost of revenue | $35,147 | $2,384,742 | $(2,349,595) | -99% | - Cost of revenue decreased by **$2.35 million (99%)** primarily due to the decrease in lottery games sold domestically following the Cessation of Operations[217](index=217&type=chunk) [Gross Profit](index=41&type=section&id=Gross%20Profit) Gross Profit | Metric | Q1 2023 | Q1 2022 | $ Change | % Change | | :---------- | :------ | :------ | :------- | :------- | | Gross profit | $585,082 | $1,245,950 | $(660,868) | -53% | - Gross profit decreased by **$661,000 (53%)** due to the overall decrease in revenue, particularly non-recurring, higher-margin project-related revenue in 2022[218](index=218&type=chunk) [Operating Costs and Expenses](index=41&type=section&id=Operating%20Costs%20and%20Expenses) Operating Costs and Expenses | Metric | Q1 2023 | Q1 2022 | $ Change | % Change | | :-------------------------- | :---------- | :---------- | :----------- | :------- | | Personnel costs | $1,257,434 | $24,402,866 | $(23,145,432) | -95% | | Professional fees | $739,928 | $3,137,950 | $(2,398,022) | -76% | | General and administrative | $337,328 | $3,012,177 | $(2,674,849) | -89% | | Depreciation and amortization | $1,405,480 | $1,373,925 | $31,555 | 2% | | Total operating expenses | $3,740,170 | $31,926,918 | $(28,186,748) | -88% | | Loss from operations | $(3,155,088) | $(30,680,968) | $27,525,880 | -90% | - Total operating expenses decreased by **$28.2 million (88%)**, primarily driven by a **$23.1 million** reduction in personnel costs and significant cuts in professional and administrative fees[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[224](index=224&type=chunk) - Depreciation and amortization increased slightly by **2%** to **$1.41 million**, mainly due to the amortization of intangibles placed in service mid-2022[225](index=225&type=chunk) [Other (Income) Expense, Net](index=43&type=section&id=Other%20(Income)%20Expense,%20Net) Other (Income) Expense, Net | Metric | Q1 2023 | Q1 2022 | $ Change | % Change | | :------------ | :----- | :---------- | :--------- | :------- | | Interest expense | $23 | $3,981 | $(3,958) | -99% | | Other expense | $58,871 | $4,189,144 | $(4,130,273) | -99% | | Total other expenses, net | $58,894 | $4,193,125 | $(4,134,231) | -99% | - Total other expenses, net, decreased by **$4.13 million (99%)**, primarily due to a non-recurring expense of approximately **$4.2 million** in Q1 2022[228](index=228&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's sole source of liquidity is the Woodford Loan Agreement, with **$900,000** remaining available to fund the business restart[229](index=229&type=chunk)[230](index=230&type=chunk) - The company's lack of material revenue, significant debt, and reliance on future financing raise substantial doubt about its ability to continue as a going concern[231](index=231&type=chunk) - As of March 31, 2023, **$1.6 million** of convertible debt from Woodford is outstanding[232](index=232&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) Cash Flow Activity | Cash Flow Activity | Q1 2023 | Q1 2022 | | :-------------------------- | :---------- | :---------- | | Net cash used in operating activities | $(968,000) | $1,970,039 | | Net cash used in investing activities | $(1,000) | $(18,000) | | Net cash provided by financing activities | $1,000,000 | $(300,000) | - Operating cash flow shifted from a **$1.97 million** inflow in Q1 2022 to a **$0.97 million** outflow in Q1 2023, while financing cash flow improved from a **$0.3 million** outflow to a **$1 million** inflow due to Woodford funding[236](index=236&type=chunk)[238](index=238&type=chunk) [Emerging Growth Company Accounting Election](index=44&type=section&id=Emerging%20Growth%20Company%20Accounting%20Election) - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[239](index=239&type=chunk) [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Key estimates and assumptions include the recoverability of long-lived assets and inventory obsolescence[240](index=240&type=chunk) - The company is evaluating the impact of ASU 2016-02 (Leases) and ASU 2016-13 (Credit Losses), with the latter's adoption deferred until January 2023[241](index=241&type=chunk)[242](index=242&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Lottery.com Inc is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a 'smaller reporting company'[243](index=243&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) The company identifies material weaknesses in its internal controls and outlines ongoing remediation efforts [Evaluation of Disclosure Controls and Procedures](index=45&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management concluded that disclosure controls and procedures were not effective as of March 31, 2023, due to material weaknesses in internal control[246](index=246&type=chunk) - Third-party accounting consultants were retained to perform additional analysis to ensure financial statements were prepared in accordance with GAAP[246](index=246&type=chunk) - Efforts to strengthen internal controls over accounting and financial reporting are ongoing[247](index=247&type=chunk) [Material Weakness in Internal Control Over Financial Reporting](index=46&type=section&id=Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) - Material weaknesses include insufficient personnel with complex accounting knowledge, ineffective review processes, and incomplete segregation of duties[248](index=248&type=chunk) - Deficiencies in revenue recognition controls led to an overstatement of approximately **$52.1 million** in revenue for 2021, requiring restatement of financial statements[249](index=249&type=chunk) - Remediation steps include adding accounting personnel, adopting more rigorous review processes, and improving segregation of duties[250](index=250&type=chunk) [Changes in Internal Control Over Financial Reporting](index=46&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during Q1 2023, except for the ongoing remediation efforts[252](index=252&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company details material legal proceedings, including collection efforts, a class action lawsuit, and a breach of contract complaint [J. Streicher](index=47&type=section&id=J.%20Streicher) - The company obtained a **$16.5 million** judgment against J Streicher Financial, LLC for breach of contract, plus **$397,036.94** in attorney's fees[255](index=255&type=chunk) - Partial payments of **$75,000** and **$50,000** have been received, but Streicher failed to make a subsequent **$75,000** payment, leading to further legal action[255](index=255&type=chunk) [Preston Million Class Action](index=47&type=section&id=Preston%20Million%20Class%20Action) - A class action lawsuit was filed against the company and former officers alleging violations of Federal Securities Laws, including materially false and misleading statements[256](index=256&type=chunk) - The company filed a motion to dismiss the amended complaint on April 3, 2023[256](index=256&type=chunk) [TinBu Complaint](index=48&type=section&id=TinBu%20Complaint) - TinBu Plaintiffs filed a complaint against Lottery.com alleging breach of contract and misrepresentation with damages exceeding **$4.6 million**[258](index=258&type=chunk) - The company intends to oppose Plaintiffs' Motion for Court Default and respond to discovery requests[258](index=258&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) The company refers to the comprehensive list of risk factors detailed in its Annual Report on Form 10-K - The company's actual results could differ materially from forward-looking statements due to risks described in the 'Risk Factors' section of its Annual Report on Form 10-K[259](index=259&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[260](index=260&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states there were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[261](index=261&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[262](index=262&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) This section states there is no other information to report for the period - No other information to report[263](index=263&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q - Exhibits include certifications (31.1, 32.1) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[264](index=264&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 ...

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 September 30, 2022 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 ...

Part I. Financial Information [Consolidated Financial Statements](index=7&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The unaudited financial statements for H1 2022 reveal significant distress, including a cash drop, increased liabilities, a large net loss, and operational cessation [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The June 30, 2022 balance sheet shows a severe cash decline, quadrupled liabilities due to a contingent liability, and decreased total equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2022 | Dec 31, 2021 (Restated) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $369,322 | $32,638,970 | | Restricted Cash | $30,000,000 | $0 | | Total current assets | $51,457,944 | $55,840,989 | | Total assets | $113,633,386 | $104,534,006 | | **Liabilities & Equity** | | | | Total current liabilities | $12,167,546 | $10,532,638 | | Commitments & Contingencies | $30,000,000 | $0 | | Total liabilities | $42,169,068 | $10,533,807 | | Accumulated deficit | $(198,295,525) | $(148,188,138) | | Total Equity | $71,464,318 | $94,000,199 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q2 2022 revenue plummeted 81% year-over-year, leading to a $15.4 million net loss, while the H1 2022 net loss widened to $50.1 million Q2 2022 vs Q2 2021 Performance (Unaudited) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenue | $1,885,171 | $9,878,497 | | Gross Profit | $307,932 | $8,815,142 | | Total operating expenses | $15,910,316 | $7,743,321 | | Income (loss) from operations | $(15,602,384) | $1,071,821 | | Net loss attributable to Lottery.com | $(15,356,422) | $(1,418,571) | | Basic and diluted EPS | $(0.30) | $(0.06) | H1 2022 vs H1 2021 Performance (Unaudited) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenue | $5,515,863 | $15,340,036 | | Gross Profit | $1,553,882 | $11,329,700 | | Total operating expenses | $47,837,234 | $13,010,145 | | Loss from operations | $(46,283,352) | $(1,680,445) | | Net loss attributable to Lottery.com | $(50,107,386) | $(6,874,605) | | Basic and diluted EPS | $(1.00) | $(0.29) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2022, the company used $0.6 million in operating cash and saw a net decrease in total cash of $2.3 million Cash Flow Summary for Six Months Ended June 30 (Unaudited) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(599,509) | $(4,334,560) | | Net cash used in investing activities | $(1,179,978) | $(3,107,452) | | Net cash (used in) provided by financing activities | $(479,096) | $14,535,596 | | **Net Change in Cash and Restricted Cash** | **$(2,269,648)** | **$7,093,584** | | Cash and Restricted Cash - End of Period | $30,369,322 | $7,252,076 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes disclose an operational cessation in July 2022, substantial doubt about its going concern status, and critical subsequent events like new financing - On July 28, 2022, the Board determined the company **lacked sufficient financial resources** to fund operations, leading to an effective cessation of operations and furloughing of employees starting July 29, 2022[31](index=31&type=chunk)[162](index=162&type=chunk) - Management has concluded that there is **substantial doubt about the Company's ability to continue as a going concern** due to recurring net losses, negative cash flows, and an accumulated deficit of approximately **$198 million**[36](index=36&type=chunk)[38](index=38&type=chunk) - As of June 30, 2022, the company had **restricted cash of $30,000,000** pledged as collateral, which was later seized by the bank in October 2022 to extinguish a partner's debt[149](index=149&type=chunk) - Subsequent to the quarter end, the company secured a loan agreement with Woodford Eurasia Assets, Ltd on December 7, 2022, for up to **$2.5 million**, crucial for restarting operations[169](index=169&type=chunk) - Several notes payable are in default, including Series A Notes with an outstanding balance of **$771,500** and notes related to the TinBu acquisition with a balance of **$2,357,744**[108](index=108&type=chunk)[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses severe operational challenges, an internal investigation revealing control issues, the cessation of operations, and a plan for recommencement [Recent Developments](index=37&type=section&id=Recent%20Developments) An internal investigation uncovered non-compliance and control issues, leading to an operational halt and a new loan agreement to secure liquidity - An independent investigation revealed **non-compliance with state and federal laws** and issues with internal accounting controls, leading to the termination of the CFO on July 1, 2022[183](index=183&type=chunk) - On July 29, 2022, the company **effectively ceased operations** and furloughed the majority of its employees due to insufficient financial resources[186](index=186&type=chunk) - On December 7, 2022, the company secured a loan agreement with Woodford for up to **$2.5 million** to restart operations, which accrues interest at 12% and is convertible into common stock[192](index=192&type=chunk) [Operations and Plans for Recommencement](index=39&type=section&id=Operations%20and%20Plans%20for%20Recommencement) The company has a three-phase plan to restart its core B2B and B2C platforms, contingent on securing sufficient capital - The company has a **three-phase plan to recommence operations**: - **Phase 1:** Relaunch B2B API Platform (resumed limited operations in April 2023) - **Phase 2:** Resume B2C Platform Operations (expected Q3 2023) - **Phase 3:** Restore other business lines and projects[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - Despite the operational halt of the parent company, wholly-owned subsidiaries **TinBu (Data Services), Aganar, and JuegaLotto (Mexico operations) have continued to operate**[206](index=206&type=chunk)[207](index=207&type=chunk)[210](index=210&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q2 2022 revenue fell 81% due to non-recurring project revenue, while operating expenses surged 105%, resulting in a $15.4 million net loss Comparison of Three Months Ended June 30, 2022 and 2021 | Metric | Q2 2022 | Q2 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $1,885,171 | $9,878,497 | (81)% | | Gross Profit | $307,932 | $8,815,142 | (97)% | | Total Operating Expenses | $15,910,316 | $7,743,321 | 105% | | Loss from Operations | $(15,602,384) | $1,071,821 | (1,556)% | | Net Loss | $(15,448,941) | $(1,418,571) | 1,159% | - The primary driver for the Q2 revenue decrease was **$8.0 million of non-recurring project-related revenue** from business partners in Q2 2021[244](index=244&type=chunk) - Personnel costs for Q2 2022 surged by **370% to $9.5 million**, mainly due to a **$6.7 million increase in stock compensation expense**[247](index=247&type=chunk)[248](index=248&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company's critical liquidity position relies solely on a new loan agreement, and its financial state raises substantial doubt about its going concern status - The company's primary source of liquidity is a loan agreement with Woodford, with **$1.25 million remaining available**[273](index=273&type=chunk) - The company's current financial state, lack of revenue, and significant debt raise **substantial doubt about its ability to continue as a going concern** for the next 12 months[274](index=274&type=chunk) Cash Flow Summary for Six Months Ended June 30 | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(0.6M) | $(4.3M) | | Net cash used in investing activities | $(1.2M) | $(3.1M) | | Net cash (used in)/provided by financing activities | $(0.5M) | $14.5M | [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Lottery.com Inc is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide this information as it qualifies as a **'smaller reporting company'**[288](index=288&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of June 30, 2022, due to material weaknesses in internal control over financial reporting - Management concluded that **disclosure controls and procedures were not effective** as of the end of the reporting period[290](index=290&type=chunk) - **Material weaknesses** were identified in internal control over financial reporting, including a lack of sufficient accounting personnel and ineffective review processes[291](index=291&type=chunk) - A specific control deficiency related to revenue recognition resulted in an **overstatement of revenue by approximately $52.1 million** for the year ended December 31, 2021, which required a restatement[292](index=292&type=chunk) - The company is implementing remediation steps, but these measures are **not yet fully remediated**[293](index=293&type=chunk) Part II. Other Information [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several material legal proceedings, including a class-action lawsuit and a breach of contract complaint - **J. Streicher Lawsuit:** The company sued J. Streicher Financial to recover **$16.5 million** and won a summary judgment, though collection efforts are ongoing[298](index=298&type=chunk) - **Preston Million Class Action:** A securities class-action lawsuit was filed against the company and former officers/directors, alleging **materially false and misleading statements**[299](index=299&type=chunk) - **TinBu Complaint:** Former owners of TinBu, LLC filed a complaint against the company alleging breach of contract and misrepresentation, seeking damages over **$4.6 million**[300](index=300&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) The report refers to the company's Amended Annual Report on Form 10-K/A for a detailed description of risk factors - For a detailed discussion of risk factors, the report directs readers to the **'Risk Factors' section of its Amended Annual Report on Form 10-K/A**[301](index=301&type=chunk) [Other Items (Items 2, 3, 4, 5, 6)](index=54&type=section&id=Other%20Items) No material information was reported under Items 2-5 for the quarter, while Item 6 lists the exhibits filed with the report - No information was reported for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) - Item 6 lists exhibits filed with the 10-Q, including a Business Loan Agreement and officer certifications[306](index=306&type=chunk)

Revenue and Profitability - Revenue for the three months ended March 31, 2022, was $21,150,892, a significant increase from $5,461,539 in the same period of 2021, representing a growth of approximately 287%[17] - Gross profit for the same period was $17,985,423, compared to $2,514,558 in 2021, indicating a gross margin improvement[17] - Gaming revenue decreased to $2,301,275 in Q1 2022 from $3,232,448 in Q1 2021, while other revenue surged to $18,849,617 from $2,229,091[166] - For the three months ended March 31, 2022, total revenues for Lottery.com and Global Gaming combined were $6,500,276, while the net loss attributable to shareholders was $(5,463,205)[85] - The company reported transactions per user increased to 12.58 in Q1 2022 from 9.46 in Q1 2021, indicating improved user engagement[190] - Gross revenue per transaction decreased to $8.75 in Q1 2022 from $10.16 in Q1 2021, reflecting pricing trends and market conditions[190] Expenses and Losses - The net loss attributable to Lottery.com Inc. for Q1 2022 was $15,687,753, compared to a net loss of $5,456,034 in Q1 2021, reflecting a year-over-year increase in losses[17] - Operating expenses for Q1 2022 totaled $33,804,723, a substantial increase from $5,266,824 in Q1 2021, primarily driven by personnel costs[17] - Total operating expenses for the three months ended March 31, 2022, were $33,804,723, a 542% increase from $5,266,824 in the same period in 2021[212] - The company expects to incur greater operating expenses in the short term to maintain its competitive edge and support growth initiatives, including merger and acquisition activities[211] Assets and Liabilities - Total current assets increased to $99,682,065 as of March 31, 2022, up from $98,458,461 at the end of 2021[16] - Cash and cash equivalents decreased to $50,795,889 as of March 31, 2022, down from $62,638,970 at the end of 2021[16] - Total liabilities as of March 31, 2022, were $10,845,303, slightly up from $10,146,454 at the end of 2021[16] - As of March 31, 2022, net property and equipment amounted to $121,293, a decrease from $141,279 as of December 31, 2021, reflecting a depreciation expense of $38,291 for the three months ended March 31, 2022[86] Stock and Equity - The company reported a basic and diluted net loss per common share of $0.33 for Q1 2022, compared to $0.24 for Q1 2021[17] - The weighted average common shares outstanding for basic and diluted calculations were 46,832,919 for Q1 2022, up from 22,888,700 in Q1 2021[153] - The Company recognized a beneficial conversion feature of $8,480,697 as additional paid-in capital related to its convertible debt[143] - The Company issued multiple Convertible Promissory Notes totaling $38,893,733 during the year ended December 31, 2021, with a balance of $0 for Series B Convertible Notes as of that date[121] Acquisitions and Business Combinations - The company completed a business combination with AutoLotto on October 29, 2021, which resulted in a change of name and headquarters to Spicewood, Texas[25] - The total purchase price for the acquisition of Global Gaming was $10,989,691, consisting of $10,530,000 in cash and 687,439 shares of common stock valued at $0.67 per share[81] - The acquisition of Global Gaming included an 80% ownership interest, grossed up to $13,215,843 to reflect the 20% minority interest in the acquirees[81] - The company accounted for the business combination as a reverse recapitalization, treating AutoLotto as the accounting acquirer[74] Revenue Recognition and Business Model - The company recognizes revenue when control of the promised goods or services is transferred to customers, in accordance with ASC 606[56] - The company operates a B2C platform for remote lottery purchases and a B2B API for commercial partners, focusing on both domestic and international markets[26] - The company derives revenue from LotteryLink Credits, service fees from the B2C platform, revenue share from the B2B API, and subscription fees from its Data Service[171] Future Plans and Developments - The company is developing Project Nexus, a proprietary blockchain-enabled gaming platform aimed at improving user experience and handling high volumes of traffic, with the initial phase implemented in Q2 2022[180] - The company expects to grow its brand through the WinTogether platform, which supports charitable causes and incentivizes donations through sweepstakes, potentially providing a scalable source of revenue[172] - The company aims to expand its B2C offerings into new domestic and international jurisdictions and enter additional agreements for its B2B API[171] Miscellaneous - The company launched LotteryLink, an affiliate marketing program, in Q3 2021, which allows affiliates to earn a percentage of revenues from new customers they refer[182] - The company acquired the domain name sports.com in December 2021, exploring opportunities in legal sports gaming, including sports lottery games[171] - The company had no income tax expense or benefit recorded for the three months ended March 31, 2022 or 2021[154]

Financial Data and Key Metrics Changes - First quarter revenue was $21.2 million, representing a 287% increase from the first quarter of 2021 [19] - Adjusted EBITDA totaled $7.7 million, compared to negative adjusted EBITDA of $2.6 million in the first quarter of 2021 [25] - The company ended the quarter with nearly $51 million in cash and only $3.5 million in debt [17][26] Business Line Data and Key Metrics Changes - Revenue growth was driven by the sale of LotteryLink credits to affiliates, which were used for various services [19] - Gross profit was $18 million, up $15.5 million from the previous year [19] - Operating expenses were $33.8 million, including $22.2 million related to restricted stock awards [21] Market Data and Key Metrics Changes - The lottery market in the US presents a significant opportunity with over $100 billion in annual sales, with only about 5% of these purchases being online [28] - The company anticipates receiving approvals to operate in five new domestic jurisdictions by the end of 2022 [34] Company Strategy and Development Direction - The company is focusing on expanding its LotteryLink program to grow its user base efficiently [29] - Project Nexus has been launched to improve capability, security, and scalability, which will support marketing efforts [33] - The company is expanding its direct-to-consumer advertising campaigns targeting audiences with the highest return on investment [36] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the affiliate model as the most effective way to expand the user base [29] - The company is optimistic about scaling its marketing campaigns and improving customer acquisition costs [39] - Management noted that the initial success of the grocery promotional program has provided valuable insights for future campaigns [31] Other Important Information - The company has a strong balance sheet, which provides the necessary capital to invest in strategic growth initiatives [18] - The company is working to bring more responsibilities in-house to reduce public company expenses [23] Q&A Session Summary Question: Expected returns on direct-to-consumer marketing dollars - Management indicated that the return on investment remains strong with a lifetime value (LTV) of about $175 per user [46] Question: Timeline for ramping direct-to-consumer sales - Management expects to see some results in the current quarter, with growth continuing moving forward [47] Question: Reason for suspending LotteryLink campaign - The suspension was due to a contractual conflict with the state lottery in that jurisdiction [49] Question: Confidence in collecting receivables - Management expressed confidence in collecting the receivables, noting that half are not due until the end of the quarter [56]