Lottery(LTRY) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Consolidated Financial Statements The company reports a net loss of $7.3 million for H1 2025 and a significant accumulated deficit, raising going concern doubts Condensed Consolidated Balance Sheets Total assets remained stable at $53.1 million, while a working capital deficit of $15.3 million indicates liquidity challenges Condensed Consolidated Balance Sheet Highlights (in USD) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Total Current Assets | $17,187,985 | $15,892,458 | | Total Assets | $53,071,846 | $52,942,271 | | Total Current Liabilities | $32,397,111 | $30,397,442 | | Total Liabilities | $32,397,111 | $30,397,442 | | Total Equity | $20,674,733 | $22,544,829 | | Accumulated Deficit | $(270,879,151) | $(263,468,728) | Condensed Consolidated Statements of Operations and Comprehensive Loss Revenue declined in H1 2025, but net loss narrowed to $7.2 million due to significantly lower operating expenses Statement of Operations Summary (in USD) | Period | Revenue | Gross Profit | Operating Expenses | Net Loss Attributable to Lottery.com Inc. | Basic & Diluted EPS | | :--- | :--- | :--- | :--- | :--- | :--- | | Q2 2025 | $191,762 | $29,029 | $3,976,541 | $(3,878,027) | $(0.13) | | Q2 2024 | $256,998 | $211,428 | $6,101,122 | $(5,880,070) | $(1.12) | | H1 2025 | $415,611 | $90,410 | $7,518,179 | $(7,219,313) | $(0.27) | | H1 2024 | $516,317 | $386,960 | $11,871,483 | $(11,474,407) | $(2.18) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased, while financing activities provided $3.1 million in cash during H1 2025 Cash Flow Summary for the Six Months Ended June 30 (in USD) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,242,854) | $(1,446,045) | | Net cash used in investing activities | $(608,314) | $0 | | Net cash provided by financing activities | $3,124,463 | $700,000 | | Net change in cash | $194,533 | $(873,115) | | Cash at end of period | $262,568 | $513,289 | Notes to Condensed Consolidated Financial Statements Notes detail a strategic rebranding, a significant going concern warning, and numerous subsequent corporate actions and acquisitions - In July 2025, the company began doing business as SEGG Media Corporation, reflecting a strategic shift to focus on Sports, Entertainment, and Gaming[24][25] - Management has identified conditions that raise substantial doubt about the company's ability to continue as a going concern, citing recurring net losses and an accumulated deficit of approximately $270.9 million[36][38] - The company implemented a 1-for-20 Reverse Stock Split effective August 9, 2023, to regain compliance with Nasdaq listing requirements[129][130] - Subsequent to the quarter end, the company announced several major strategic moves, including a partnership with Super League Kerala and acquisitions of DotCom Ventures Inc and the GXR World Sports Platform[168][170][174] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a strategic pivot, ongoing liquidity challenges, and improved net loss despite decreased revenue - The company is executing a "Buy-and-Build" strategy to accelerate operations in the sports, entertainment, and gaming markets[179] - The company regained compliance with the Nasdaq Bid Price Listing Rule on June 20, 2025, but warns that delisting remains a risk[183][184] - A three-phase plan is in place to recommence gaming operations, starting with sweepstakes in April 2025 and targeting a B2C platform relaunch for late 2025[231][232][233][234] - The company's low cash balance and recurring losses raise substantial doubt about its ability to continue as a going concern, with future operations dependent on obtaining new financing[239][283] Results of Operations Both Q2 and H1 2025 saw decreased revenue but significantly improved net losses due to major cuts in operating expenses Comparison of Results for the Three Months Ended June 30 (in thousands USD) | Metric | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $192 | $257 | $(65) | -25% | | Gross Profit | $29 | $211 | $(182) | -86% | | Total Operating Expenses | $3,977 | $6,101 | $(2,124) | -35% | | Net Loss | $(3,992) | $(5,972) | $1,980 | -33% | Comparison of Results for the Six Months Ended June 30 (in thousands USD) | Metric | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $416 | $516 | $(101) | -20% | | Gross Profit | $90 | $387 | $(297) | -77% | | Total Operating Expenses | $7,518 | $11,871 | $(4,353) | -37% | | Net Loss | $(7,287) | $(11,726) | $4,439 | -38% | Liquidity and Capital Resources The company faces a critical liquidity shortage and its ability to continue as a going concern depends on securing new financing - The company's primary need for liquidity is to fund the restart of its business operations, re-hire employees, and pay expenses[282] - Net cash used in operating activities was $1.4 million for the three months ended June 30, 2025, consistent with the prior year period[289] - Financing activities provided $965,000 in cash for the three months ended June 30, 2025, which was crucial for funding operations[290] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from this disclosure as a smaller reporting company - As a "smaller reporting company," the Company is exempt from providing quantitative and qualitative disclosures about market risk[296] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective due to ongoing material weaknesses in internal financial reporting - Management identified material weaknesses in internal control over financial reporting, including a lack of sufficient personnel with appropriate accounting knowledge[299] - These control deficiencies led to an overstatement of revenue by approximately $52.1 million in 2021, which required a financial restatement[300] - The company has begun remediation steps, but the material weaknesses have not been fully remediated[302] Part II. Other Information Item 1. Legal Proceedings The company is involved in several material legal proceedings, including a securities class action and contract disputes - Preston Million Class Action: A securities class action lawsuit is proceeding against the company and certain former officers regarding post-merger financial representations[309] - TinBu/Global Gaming Data Litigation: The company is in a legal dispute with the former owners of its TinBu subsidiary, involving claims of breach of contract and trade secret misappropriation[310][313][314] - Woodford Eurasia Assets, Ltd. Litigation: Legal actions initiated by former lender Woodford in both the UK and the US have been dismissed or voluntarily withdrawn[316][317][319] - Dawn Nettles Class Action: A class action lawsuit filed in Texas alleging fraud and manipulation of lottery games was voluntarily dismissed by the plaintiff[328] Item 1A. Risk Factors The company faces significant operational risks from the complex and varying lottery laws across U.S. jurisdictions - A significant risk is the need to adapt the business model to comply with varying lottery laws in each U.S. jurisdiction[331][332] - Certain states, such as Pennsylvania, Illinois, and Texas, have enacted laws that prohibit or criminalize certain courier services or fees, posing challenges to the company's business model[333] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported for the period[335] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None reported for the period[336] Item 5. Other Information No other material information was required to be disclosed for the period - None reported for the period[338] Item 6. Exhibits This section lists filed exhibits, including loan agreements, purchase agreements, and required officer certifications - Exhibits filed include agreements related to the Woodford loan, UCIL loan, and recent acquisitions such as Galaxy Racer, Veloce Esports, and DotCom Ventures[339] - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits[339]