Lottery(LTRY) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section covers unaudited condensed financial statements, management's analysis, market risk, and controls for Q1 2019 Item 1. Financial Statements This section presents the unaudited condensed financial statements, including the balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with comprehensive notes detailing the company's business, accounting policies, and specific financial activities for the quarter ended March 31, 2019 Condensed Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, as of March 31, 2019 Condensed Balance Sheet Highlights (Unaudited): | Item | March 31, 2019 | December 31, 2018 | | :----------------------------------- | :------------- | :---------------- | | ASSETS | | | | Cash | $1,105,693 | $1,255,817 | | Total Current Assets | $1,170,770 | $1,319,660 | | Marketable securities held in Trust Account | $208,882,256 | $207,753,062 | | Total Assets | $210,054,226 | $209,073,922 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Account payable and accrued expenses | $117,714 | $159,512 | | Income taxes payable | $598,537 | $373,794 | | Promissory note – related party | $425,000 | $425,000 | | Total Current Liabilities | $1,141,251 | $958,306 | | Total Liabilities | $6,175,896 | $5,990,407 | | Common stock subject to possible redemption | $198,878,327 | $198,083,507 | | Total Stockholders' Equity | $5,000,003 | $5,000,008 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $210,054,226 | $209,073,922 | Condensed Statements of Operations This section outlines the company's financial performance, presenting net income or loss for Q1 2019 and 2018 Condensed Statements of Operations Highlights (Unaudited): | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Operating costs | $226,217 | $4,728 | | Loss from operations | $(226,217) | $(4,728) | | Interest income | $1,232,149 | — | | Unrealized gain on marketable securities | $16,170 | — | | Income (loss) before provision for income taxes | $1,022,102 | $(4,728) | | Provision for income taxes | $(227,287) | — | | Net income (loss) | $794,815 | $(4,728) | | Basic and diluted net loss per common share | $(0.02) | $(0.00) | - Net income for the three months ended March 31, 2019, was $794,815, a significant improvement from a net loss of $4,728 in the prior year, primarily driven by interest income and unrealized gains on marketable securities held in the Trust Account[13] Condensed Statements of Changes in Stockholders' Equity This section details changes in the company's equity accounts for the period ended March 31, 2019 Condensed Statements of Changes in Stockholders' Equity Highlights (Unaudited): | Item | January 1, 2019 | March 31, 2019 | | :----------------------------------- | :-------------- | :------------- | | Common Stock (Shares) | 7,070,627 | 7,083,746 | | Common Stock (Amount) | $7,071 | $7,084 | | Additional Paid-in Capital | $3,591,212 | $2,796,379 | | Retained Earnings | $1,401,725 | $2,196,540 | | Total Stockholders' Equity | $5,000,008 | $5,000,003 | | Net income for the period | — | $794,815 | | Change in value of common stock subject to possible redemption | — | $(794,833) | Condensed Statements of Cash Flows This section summarizes cash flows from operating, investing, and financing activities for Q1 2019 Condensed Statements of Cash Flows Highlights (Unaudited): | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $794,815 | $(4,728) | | Net cash used in operating activities | $(269,249) | $(4,728) | | Net cash provided by investing activities | $119,125 | — | | Net cash provided by financing activities | — | $200,153 | | Net Change in Cash | $(150,124) | $195,425 | | Cash – Ending | $1,105,693 | $338,828 | - Cash decreased by $150,124 in Q1 2019, primarily due to cash used in operating activities, partially offset by cash withdrawn from the Trust Account for investing activities[21] Notes to Unaudited Condensed Financial Statements This section provides detailed explanations and disclosures for the unaudited condensed financial statements NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS This note describes the company's formation, IPO, and primary objective of a business combination - Trident Acquisitions Corp. is a blank check company formed in Delaware on March 17, 2016, for the purpose of effecting a business combination[24] Initial Public Offering and Private Placement Proceeds: | Event | Date | Gross Proceeds | | :----------------------------------- | :--------- | :------------- | | Initial Public Offering (17,500,000 units) | June 1, 2018 | $175,000,000 | | Private Placement (1,150,000 Private Units) | June 1, 2018 | $11,500,000 | | Over-allotment option (2,625,000 Units) | June 5, 2018 | $26,250,000 | | Total deposited in Trust Account | June 5, 2018 | $205,275,000 | - The company has until December 1, 2019, to consummate a Business Combination, failing which it will redeem 100% of outstanding Public Shares[38] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines key accounting principles and policies, including GAAP compliance and redeemable common stock - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations, with certain disclosures condensed or omitted[41] - The Company is an 'emerging growth company' under the JOBS Act and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[45][46] - Common stock subject to possible redemption is classified as temporary equity at redemption value, outside of stockholders' equity, due to redemption rights outside the Company's control[55] - Net loss per common share is computed using the two-class method, excluding shares subject to possible redemption from basic loss per share calculation as they only participate in Trust Account earnings[59] NOTE 3. INITIAL PUBLIC OFFERING This note details the terms and proceeds of the company's IPO, including units, price, and warrant conditions Initial Public Offering Details: | Item | Details | | :----------------------------------- | :----------------------------------- | | Units Sold | 20,125,000 (including over-allotment) | | Purchase Price per Unit | $10.00 | | Unit Composition | One share of common stock and one Public Warrant | | Public Warrant Exercise Price | $11.50 per share | NOTE 4. PRIVATE PLACEMENT This note describes the private placement of units to insiders, including price, composition, and proceeds allocation Private Placement Details: | Item | Details | | :----------------------------------- | :----------------------------------- | | Private Units Purchased by Insiders | 1,150,000 | | Purchase Price per Private Unit | $10.00 | | Aggregate Purchase Price | $11,500,000 | | Unit Composition | One share of common stock and one Private Warrant | | Private Warrant Exercise Price | $11.50 per share | | Proceeds Allocation | Added to Trust Account | | Expiration if no Business Combination | Private Warrants expire worthless | NOTE 5. RELATED PARTY TRANSACTIONS This note discloses related party transactions, including insider shares, loans, and administrative fees - Initial stockholders were issued 5,031,250 'insider shares' for an aggregate of $33,654, with 656,250 shares no longer subject to forfeiture after the underwriters' over-allotment option was fully exercised[68] - VK Consulting loaned the Company $425,000, payable upon the consummation of a Business Combination[72] - The Company pays VK Consulting a monthly fee of $7,500 for office space and administrative services, totaling $22,500 for the three months ended March 31, 2019[73] NOTE 6. COMMITMENTS AND CONTINGENCIES This note outlines the company's contractual obligations and potential liabilities, such as registration rights - Holders of insider shares, Private Units, and shares from Working Capital Loans are entitled to registration rights, allowing them to demand registration of their securities[75] Underwriting and Warrant Fees: | Fee Type | Amount/Rate | Condition | | :----------------------------------- | :---------- | :----------------------------------- | | Deferred Underwriting Fee | $5,031,250 | Payable in cash upon closing of a Business Combination | | Warrant Solicitation Fee | 5% of exercise price | Payable for each Public Warrant exercised 12 months after IPO effective date (excluding certain periods) | NOTE 7. STOCKHOLDERS' EQUITY This note details authorized and outstanding stock, and public warrant exercise and redemption terms Authorized and Outstanding Shares: | Share Type | Authorized | Issued and Outstanding (March 31, 2019) | | :----------------------------------- | :--------- | :-------------------------------------- | | Preferred Stock ($0.001 par value) | 1,000,000 | 0 | | Common Stock ($0.001 par value) | 100,000,000 | 7,083,746 (excluding redeemable shares) | - Public Warrants become exercisable 30 days after a Business Combination or 12 months from the IPO closing, provided an effective registration statement is in place. They expire five years after a Business Combination or earlier upon redemption or liquidation[81] - The Company may redeem Public Warrants at $0.01 per warrant if the common stock price equals or exceeds $16.00 for 20 trading days within a 30-day period, with 30 days' prior notice and an effective registration statement[82][84] NOTE 8. FAIR VALUE MEASUREMENTS This note explains the fair value hierarchy for marketable securities in the Trust Account, classified as Level 1 - The Company classifies its marketable securities held in the Trust Account as Level 1 assets in the fair value hierarchy, reflecting quoted prices in active markets for identical assets[89][90] Fair Value of Marketable Securities Held in Trust Account: | Description | Level | March 31, 2019 | December 31, 2018 | | :----------------------------------- | :---- | :------------- | :---------------- | | Marketable securities held in Trust Account | 1 | $208,882,256 | $207,753,062 | NOTE 9. SUBSEQUENT EVENTS This note confirms no material events requiring adjustment or disclosure occurred after the balance sheet date - The Company evaluated subsequent events up to the financial statement issuance date and found no events requiring adjustment or disclosure[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results, highlighting its status as a blank check company, the generation of non-operating income from the Trust Account, and its liquidity strategy for a future business combination Overview This section describes the company's purpose as a blank check company for a business combination - Trident Acquisitions Corp. is a blank check company formed to effect a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization, or similar business combination[93] Results of Operations This section analyzes the company's financial performance, focusing on non-operating income and net results - The Company has not engaged in any operations or generated revenues to date, with activities focused on its formation, IPO, and identifying a target for a Business Combination[94] Net Income (Loss) Comparison: | Period | Net Income (Loss) | | :----------------------------------- | :---------------- | | Three months ended March 31, 2019 | $794,815 | | Three months ended March 31, 2018 | $(4,728) | Liquidity and Capital Resources This section discusses the company's financial resources, including Trust Account funds and cash, and its funding strategy Liquidity and Capital Resources as of March 31, 2019: | Item | Amount | | :----------------------------------- | :------------- | | Marketable securities in Trust Account | $208,882,256 | | Cash held outside Trust Account | $1,105,693 | | Cash used in operating activities (Q1 2019) | $(269,249) | - Substantially all funds in the Trust Account are intended for acquiring a target business and related expenses, including a deferred underwriting fee[100] - Cash held outside the Trust Account is primarily used to identify and evaluate target businesses, perform due diligence, and negotiate a Business Combination[101][102] - The Company may need additional financing if costs exceed estimates or if a significant number of public shares are redeemed, potentially through issuing additional securities or incurring debt[104] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements affecting the company's financial position - The Company did not have any off-balance sheet arrangements as of March 31, 2019[105] Contractual obligations This section details the company's limited contractual obligations, primarily administrative fees - The Company has no long-term debt, capital lease, or operating lease obligations, but is committed to a monthly fee of $7,500 to VK Consulting for administrative services[106] Critical Accounting Policies This section highlights key accounting policies requiring significant judgment, such as redeemable common stock - The Company accounts for common stock subject to possible redemption as temporary equity, measured at fair value, due to redemption rights outside its control[108] - Net loss per common share is calculated using the two-class method, excluding redeemable common stock from basic net loss per share as these shares only participate in Trust Account earnings[109] Recent accounting standards Management believes recent accounting pronouncements will not materially affect the Company's financial statements - Management does not believe that any recently issued, but not yet effective, accounting pronouncements would have a material effect on the Company's financial statements if currently adopted[110] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk Due to the short-term nature of investments in U.S. government treasury bills and money market funds within the Trust Account, the company believes it has no material exposure to interest rate risk - The Company's investments in the Trust Account are primarily in short-term U.S. government treasury bills or money market funds, resulting in no material exposure to interest rate risk[111] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2019, and there were no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures This section details management's assessment of the effectiveness of the company's disclosure controls - The principal executive officer and principal financial and accounting officer concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2019[113] Changes in Internal Control over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting - There were no changes in internal control over financial reporting during the fiscal quarter ended March 31, 2019, that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[114] PART II. OTHER INFORMATION This section provides additional information on equity sales, use of proceeds, and required exhibits Item 5. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities This section details the Initial Public Offering of 20,125,000 Units at $10.00 each, generating $201.25 million, and the associated offering costs. It also mentions the sale of a unit purchase option to the underwriter and the allocation of net proceeds to the Trust Account Use of Proceeds This section outlines the allocation of proceeds from the IPO and Private Placement, including fees and Trust funds Initial Public Offering Proceeds and Allocation: | Item | Amount | | :----------------------------------- | :------------- | | Total Gross Proceeds from IPO | $201,250,000 | | Underwriting Fee | $5,031,250 | | Deferred Underwriting Commissions | $5,031,250 | | Other Offering Costs | $1,039,364 | | Total Net Proceeds (IPO + Private Units) | ~$206,679,386 | | Amount placed in Trust Account | $205,275,000 | | Cash held outside Trust Account (March 31, 2019) | $1,105,693 | - The Company sold a unit purchase option to the underwriter for $100, allowing the purchase of up to 1,750,000 Units at $10.00 per unit, exercisable after November 29, 2018, or a Business Combination[121] - Proceeds in the Trust Account are invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds investing in direct U.S. government treasury obligations[123] Item 6. Exhibits This item lists the exhibits filed as part of the Form 10-Q, including certifications from the principal executive and financial officers and XBRL taxonomy documents - Exhibits filed include certifications of the Principal Executive Officer and Principal Financial Officer pursuant to the Securities Exchange Act and Sarbanes-Oxley Act, as well as XBRL Instance, Calculation, Schema, Definition, Labels, and Presentation Linkbase Documents[127] PART III. SIGNATURES This section contains the official signatures of the company's executive and financial officers, certifying the report Signatures The report is signed by Ilya Ponomarev, Chief Executive Officer, and Vadim Komissarov, President, Chief Financial Officer and Director, on May 15, 2019, certifying its compliance with Exchange Act requirements - The report was signed on May 15, 2019, by Ilya Ponomarev, Chief Executive Officer, and Vadim Komissarov, President, Chief Financial Officer and Director[131]