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]
Lottery(LTRY) - 2023 Q2 - Quarterly Report