SEGG 10-K & 10-Q changes, risk factors and insider trading
Sports Entertainment Gaming Global Corp (also LTRYW) · Nasdaq · Services-Prepackaged Software · CIK 1673481 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We have incurred significant losses and require additional capital; substantial doubt exists regarding our ability to continue as a going concern.”
New heading “Our strategic repositioning from a lottery-focused business to a diversified sports, entertainment and gaming media platform involves substantial execution risk.”
New heading “Our acquisition strategy exposes us to integration, valuation and impairment risk.”
New heading “Our business depends significantly on premium domain assets and digital traffic, and our ability to monetize such assets is uncertain.”
New heading “Our forecasts, projections and internal plans are subject to significant uncertainty and may differ materially from actual results.”
New heading “We operate in highly regulated industries, and changes in law or regulation could restrict our operations and increase compliance costs.”
New heading “Adverse interpretations of federal statutes and related enforcement priorities could materially impair our business.”
New heading “We have identified material weaknesses in internal control over financial reporting; our remediation efforts may not be successful.”
New heading “Our ability to fund operations depends in part on third-party financing sources that may not be available when needed.”
New heading “Our debt agreements contain covenants that may restrict operations and financing flexibility.”
New heading “Our obligations may be secured by substantially all of our assets; enforcement could materially harm the Company.”
New heading “Conversions and warrant exercises could cause substantial dilution and depress our stock price.”
New heading “We may not have sufficient funds to repay indebtedness, and our indebtedness increases financial risk.”
New heading “We will likely require additional financing, which may be highly dilutive and may adversely affect our stock price.”
Removed heading “In July 2022, the Company furloughed the majority of its U.S. employees and suspended U.S. lottery game sales operations after determining that it did not have sufficient financial resources to fund these operations or pay certain existing obligations, including U.S. payroll and related obligations. As a result, the Company may not be able to continue as a going concern in the U.S.”
Removed heading “We need additional capital to, among other things, support and restart our U.S. operations, re-hire or hire employees and engage contractors and pay our 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.”
Removed heading “Competition in the sports media market could impair our ability to generate revenue from Sports.com”
Removed heading “Consumer trends in paying for streaming content may have an adverse impact on the Sports.com subscription service.”
Removed heading “Prior to the U.S. 2022 Operational Cessation, Internet search engines drove traffic to our U.S. B2C Platform and our user growth could decline and our business, financial condition, and results of operations would be adversely affected if we fail to appear prominently in search results when we recommence U.S. operations.”
Removed heading “Any failure to offer high-quality user support may harm our relationships with users and could adversely affect our reputation, brand, business, financial condition, and results of operations.”
Removed heading “Our business could be adversely impacted by changes in the Internet and mobile device accessibility of users.”
Removed heading “We operate in a rapidly evolving industry and if we fail to successfully develop, market, or sell new products or adopt new technology platforms, it could materially adversely affect our business, results of operations, and financial condition.”
Removed heading “We may not timely and effectively scale and adapt our technology and network infrastructure to ensure that our Platform is accessible, which would adversely affect our business, reputation, financial condition, and results of operations.”
Removed heading “Our Platform may be vulnerable to risks, both foreseen and unforeseen, arising from our application of distributed ledger technology.”
Removed heading “A jurisdiction may enact, amend, or reinterpret laws and regulations governing our operations in ways that impair our revenues, cause us to incur additional legal and compliance costs and other operating expenses, or are otherwise not favorable to our existing operations or planned growth, all of which may have a material adverse effect on us or our results of operations, cash flow, or financial condition.”
Removed heading “If there is a final determination on the applicability of the Wire Act to our operations and it is determined or codified that the Wire Act extends to transmission of lottery games in interstate or foreign commerce, certain of our operations that are not currently restricted by statute or practice to a state’s territorial boundaries may be negatively impacted or eliminated, which may have a material adverse effect on our business, financial conditions, and results of operations.”
Removed heading “If the Interstate Wagering Amendment is interpreted or applied to prohibit transmissions to foreign countries, it could have a negative impact on our business, financial condition, and results of operations.”
Removed heading “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.”
Removed heading “Illegal, improper, or otherwise inappropriate activity of our couriers, whether or not occurring while performing their duties for us, could expose us to liability and adversely affect our business, reputation, brand, financial condition, and results of operations.”
Removed heading “Our business model depends upon the compatibility between our B2C Platform and the major mobile and other operating systems and upon third-party platforms for the distribution of our product offerings. If Google Play or the Apple App Store or other mobile download sites prevent users from downloading our apps or if our advertising is blocked or rejected from being delivered to our users, our ability to grow our revenue, profitability, and prospects may be adversely affected.”
Removed heading “We rely on third-party providers for validation services regarding our users, and if such providers fail to perform adequately, provide inaccurate information, or we do not maintain business relationships with them, our business, financial condition, and results of operations could be adversely affected.”
Removed heading “We rely on third-party payment processors to process payments and withdrawals made by our users, and if we cannot manage our relationships with such third parties and other payment-related risks, our business, financial condition, and results of operations could be adversely affected.”
Removed heading “Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation and changes in regulations, both inside and outside of the U.S. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations.”
Removed heading “United Capital Investments London Limited, (“UCIL”) may not loan us the amounts they agreed to under their amended and restated loan agreements, and Univest Securities, LLC (“Univest” or our “Placement Agent”) may not be successful in whole or in part in placing our Offering. If UCIL fails to provide us with funding, and the Placement Agent is less than fully successful, we may be forced to curtail or even abandon our plan to recommence our operations and we may need to permanently cease our operations.”
Removed heading “We are subject to certain covenants while amounts are outstanding under the loan agreements which may restrict our ability to undertake future activities, including issuing additional shares of common stock.”
Removed heading “The issuance and sale of common stock upon conversion of the amounts owed or upon exercise of the warrants issued to either Woodford or UCIL under each’s loan agreement may depress the market price of our common stock and cause substantial dilution.”
Removed heading “We currently owe a significant amount of money under our Loan Agreements which we may not be able to repay.”
Largest changes
“Notwithstanding the above, currently, there is no definitive ruling from the U.S. Supreme Court on the issue, and the courts in other U.S. Circuits might take a different position. Because many of the Company’s operations occur outside the jurisdiction of the First Circuit and the Fifth Circuit, and because the First Circuit did not set aside the 2019 Opinion, we are still monitoring the potential impact of the 2019 Opinion on our business. If courts outside the First Circuit, Fifth Circuit or the U.S. …”see in full comparison
“Each loan agreement includes confidentiality obligations, representations, warranties, covenants, and events of default, which are customary for transactions of this size and nature. …”see in full comparison
“The UCIL loan agreement provides for a credit facility (the “Credit Facility”) consisting of (a) funding in the principal amount of up to $1,000,000 to be paid in tranches over time and as requested by the Company (the “Initial Loan”), wherein in return for the Initial Loan the Company shall issue to UCIL a number of warrants (the “Warrants”) to purchase shares of the Company’s common stock (“common stock”) in an amount representing at least 4.5% but not exceeding 15% of the Company’s issued and outstanding common stock on the date of such issuance; …”see in full comparison
Risks Relating tosee in full comparisonthePriorRestatements of our Consolidated Financial Statements, Our Ability to Continue as a Going Concern,Management, Our Internal Controls and Related Matters
“If we are not able to restart our operations, hire new employees and engage new contractors, 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, or seek bankruptcy protection or a corporate reorganization, which could cause the value of our securities to become worthless, or at best, become devalued in the marketplace 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 …”see in full comparison
“In July 2022, the Company furloughed the majority of its U.S. employees and suspended U.S. lottery game sales operations after determining that it did not have sufficient financial resources to fund these operations or pay certain existing obligations, including U.S. payroll and related obligations. As a result, the Company may not be able to continue as a going concern in the U.S.”see in full comparison
Full comparison: every changed paragraph (161)
Risks
Relating to thePrior Restatements of our
Consolidated Financial Statements, Our Ability to Continue as a Going Concern,Management, Our Internal Controls
and Related Matters
The
aforementioned issues have
had and could continue to have material adverse impacts on the Company. The Company and certain of our former
officers are the subject
of a number of legal proceedings, investigations and inquiries with respect to cited issues and have been named
as a defendant in a number
of lawsuits, including class action lawsuits. The Company incurred significant costs in connection with its
internal investigations, including
legal expenses and costs associated with the restatement and adjustments to its financial statements.
We may also incur material costs
associated with our indemnification arrangements with our current and former directors and certain of
our officers, as well as other indemnitees.
Moreover, an unfavorable outcome in any of these matters could result in significant damages,
additional penalties or other remedies imposed
against the Company, or the Company’s former directors or officers, which could
harm our reputation, business, financial condition,
results of operations or cash flows. In addition, an unfavorable outcome in any of
these matters could exceed coverage provided, if any,
under potentially applicable insurance policies, which is limited. For example, we currently do not have an effective director and officer
liability insurance policy in place for our current officers and directors and may not have the financial resources or otherwise be able
to obtain a director and officer liability insurance at reasonable cost or terms in the future. These issues have also led to material
adverse impacts on our operations, our reputation and our relationships
with business partners, as well as material adverse impacts on
our financial position, including incurred costs and expenses and our
ability to raise new capital in the future.
These
investigations and inquiries and any other similar or related future legal proceedings, investigations or inquiries are subject to inherent
uncertainties, and the actual costs to be incurred relating to these matters depend upon many unknown factors. We are unable to predict
the outcome of any of these legal proceedings, investigations, and inquiries, and we could be forced to expend significant resources
in the defense of one or more of these actions. There is also the risk that we may not prevail in any proceeding involving us. Cooperating
with, as well as monitoring and defending against, any of these actions is time-consuming for management and detracts from their ability
to fully focus our internal resources pertaining to our business operations. In addition, we have already incurred and may continue to
incur substantial legal fees and costs as well as internal administrative time, in connection with such matters. We are also generally
obligated, to the extent permitted by law, when applicable, to indemnify our current and former directors and officers who may be named
in these or similar actions; moreover, we do not currently have an effective director and officer liability insurance policy in place
for our current officers and directors.actions. We are not currently able to estimate the possible cost to us from these matters, as we cannot
be certain how long they may take to resolve or the possible amount of any civil penalties or damages, if any, that we may be required
to pay. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages. Decisions
adverse to our interests in these actions could result in damages, fines, penalties, consent orders or other sanctions against the Company
or our officers, or in changes to our business practices, among others, any of which could have a material adverse effect on our cash
cash flow, results of operations and financial position.
We
cannot predict the outcome of these lawsuits. The matters that led to our Internal Investigation and our financial restatement have exposed
us to increased risks of litigation, regulatory proceedings and government enforcement actions. We and our current and former directors
and officers may, in the future, be subject to additional litigation relating to such matters. Subject to certain limitations, we are
obligated to indemnify our current and former directors and officers in connection with such lawsuits and any related litigation or settlements
amounts. Regardless of the outcome, these lawsuits, and any other litigation that may be brought against us or our current or former
directors and officers, could be time-consuming, result in significant expense and divert the attention and resources of our management
and other key employees. An unfavorable outcome in any of these matters could result in significant damages, additional penalties or
other remedies imposed against us, our current or former directors or officers, which could harm our reputation, business, financial
condition, results of operations or cash flows. In addition, an unfavorable outcome in any of these matters could exceed coverage provided,
if any, under potentially applicable insurance policies, which is limited. Following disclosure of the results of our Internal Investigation,
we have had difficulties in obtaining desirable insurance coverage, or any insurance coverage, regarding legal proceedings, investigations
and inquiries, and we cannot assure you with any certainty that we will be able to obtain such coverage in the future.
Matters
relating to or arising from the restatements of financial filing restatements,filings, the investigations and regulatory inquiries,
including adverse publicity
connected to these matters as well as other concerns, coupled with 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 have incurred significant losses and require additional capital; substantial doubt exists regarding our ability to continue as a going concern.
We have a history of operating losses and negative cash flows and have previously reduced operations due to liquidity constraints. We expect to continue to incur expenses as we rebuild infrastructure, personnel, compliance systems and operations and pursue growth initiatives, including acquisitions and commercialization of digital assets. Our financial statements include a going concern explanatory paragraph. Our ability to continue as a going concern depends on our ability to raise additional capital, execute our strategy and generate sustainable revenues. There can be no assurance that we will be successful in doing so.
If we are unable to obtain adequate financing or generate sufficient cash flow, we may be required to delay, scale back or discontinue operations, restructure obligations, sell assets, or seek protection under applicable bankruptcy laws.
In July 2022, the Company
furloughed the majority of its U.S. employees and suspended U.S. lottery game sales operations after determining that it did not have
sufficient financial resources to fund these operations or pay certain existing obligations, including U.S. payroll and related obligations.
As a result, the Company may not be able to continue as a going concern in the U.S.
In July 2022, the Company furloughed
the majority of our employees and ceased its operations after determining that it did not have sufficient financial resources to fund
our operations or pay certain existing obligations, including payroll and related obligations. As of December 31, 2024, the Company owed
approximately $3.94 million in outstanding U.S. payroll obligations, which amount remains unpaid. Since our U. S. business is largely
dependent on the efforts and talents of our employees and contractors, particularly those who are our developers and engineers, and the
provision of ongoing services to customers by our employees and contractors, the loss of these employees and contractors has and may
continue to result in the inability of the Company to operate its business and technology, meet its obligations to customers, maintain
key customer relationships and revenue, and fulfill its contractual obligations.
In order for the Company to fully
restart its U. S. operations, it must raise sufficient capital to re-hire or hire additional employees. Qualified employees may not be
available for hire, or may require salaries or benefits in excess of what we paid persons in similar positions previously, due to
among other things, inflation and other economic factors, the need to hire such persons away from their current jobs and the negative
impact that the furlough has had on our reputation.
If
we are not able to restart our operations, hire new employees and engage new contractors, 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, or seek bankruptcy
protection or a corporate reorganization, which could cause the value of our securities to become worthless, or at best, become devalued
in the marketplace 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 during the next 12 months. The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include
any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable
to continue as a going concern. The financial statements included herein also include a going concern footnote.
We need additional capital
to, among other things, support and restart our U.S. operations, re-hire or hire employees and engage contractors and pay our 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.
We need to raise capital to,
among other things, support and restart our U.S. operations, re-hire or hire employees, engage contractors and pay our expenses. The most
likely source of future funds presently available to us will be through future borrowings under one or more loan agreements or through
the sale of equity or debt. We may have difficulty obtaining additional funding, and we may have to accept terms that would adversely
affect our stockholders. For example, the terms of any future financings, similar to the UCIL Loan Agreement, may impose restrictions
on the manner in which we conduct our business, including our ability to pay dividends. Additionally, lending institutions or private
investors may impose restrictions on a future decision by us to make capital expenditures, acquisitions or significant asset sales. Obtaining
additional financing involves certain risks, including:
If
funds advanced under our current loan agreements are inadequate to meet our needs, or we are unable to raise additional funds, we
may not be able to raise enough capital to recommence our operations and operate our business. Consequently, we may be forced to curtail
or even abandon our plan to recommence our operations and we may need to permanently cease our operations.
Further,
the operating relationship between the Company and some of its partners, such as the minority owners of Aganar and JuegaLotto, may be
negatively impacted by the Company’s lack of liquidity. If these relationships were to become strained or be terminated entirely,
it could have a material adverse effect on our reputation, business, financial condition, including our ability to raise new capital,
cash flows and results of operations.
In
connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2021, we and our
independent independent
registered public accounting firm identified certain material weaknesses in our internal control over financial
reporting as of December
31, 2021. Such material weaknesses have not been fully remediated as of December 31, 2024.2025 but many have been addressed. As defined in
the standards established by
the U.S. Public Company Accounting Oversight Board, or PCAOB, a “material weakness” is a
deficiency, or combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the annual
or interim financial statements will not be prevented or detected on a timely
basis.
As
a result of the material weaknesses,
management has concluded that our internal control over financial reporting remained ineffective
as asof December 31, 2024.2025.
Our
ability to resumemaintain a timely filing schedule with respect to our SEC reporting is subject to a number of contingencies, including
whether whether
and how quickly we are able to effectively remediate the identified material weaknesses in our internal control over
financial reporting.
Our filing of our quarterly reports and annual reports has been delayed and we cannot assure you we will be
able to timely make our future
filings.
Our strategic repositioning from a lottery-focused business to a diversified sports, entertainment and gaming media platform involves substantial execution risk.
We are repositioning SEGG Media Corporation as a diversified sports, entertainment and gaming platform, including through the development and monetization of premium digital assets and the acquisition of media and gaming-adjacent businesses. This transformation requires successful execution across multiple disciplines, including traffic acquisition, product development, content operations, advertising and sponsorship monetization, technology infrastructure and regulatory compliance. We have limited operating history in certain of these verticals. If we fail to execute this strategy, our growth prospects, financial performance and valuation may be materially adversely affected.
Our acquisition strategy exposes us to integration, valuation and impairment risk.
We may pursue acquisitions as a core component of our growth strategy. Acquisitions involve significant risks, including overpayment, inaccurate valuation assumptions, integration challenges, diversion of management attention, loss of key personnel, undisclosed liabilities, regulatory approval risks, and failure to achieve anticipated synergies. Acquisitions may require significant cash, debt or equity financing and may be dilutive. If acquired businesses or assets fail to perform as expected, we may be required to record impairment charges relating to goodwill or intangible assets, which could materially adversely affect our results of operations and financial condition.
Our business depends significantly on premium domain assets and digital traffic, and our ability to monetize such assets is uncertain.
Our strategy includes commercialization of premium digital assets, including domain names and related brands. The value of such assets depends on traffic, consumer behavior, search engine rankings, brand recognition, intellectual property protection and successful monetization (including advertising, sponsorship, subscriptions, licensing or commerce). Search engine algorithm changes, increased competition, changes in platform policies, reputational issues, or failure to convert traffic into revenue could materially reduce the value of these assets and could require impairment charges.
Our forecasts, projections and internal plans are subject to significant uncertainty and may differ materially from actual results.
Any forecasts, targets or projections we provide (including in investor presentations or otherwise) are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation, regulatory developments, market adoption, consumer demand and competitive conditions. Our actual revenues, expenses, market share and profitability may differ materially from any projections. We may invest in the development or marketing of products, services or distribution channels that do not achieve commercial success, in which case we may not recover those investments and our operating results could be adversely affected.
Our
financial performance is
subject to U.S. and global economic conditions and their impact on levels of spending by potential users and
customers of our Platform
and acquirers of our Data Service. Economic recessions, or other economic conditions such as rising inflation
and interest rates, have
had, and may continue to have, far reaching adverse consequences across many industries, including the global
entertainment, lottery,
sweepstakes and promotions, and gaming industries, which may adversely affect our business, financial condition,
and results of operations.
There may be an increasing risk of a recession or inflationary economic impacts due to international trade
and monetary policy, variations
in interest rates and inflation, and acts or threats of acts of war, along with other economic challenges.
If the national and international
economic recoverygrowth slows or stalls, these economies experience another recession, or any of the relevant
regional or local economies suffers
a downturn, or if inflationary effects accelerate, we may experience a material adverse effect on
our business, financial condition, or
results of operations.
Competition
in the sports media market could impair our ability to generate revenue from Sports.com
The
landscape of the sports content industry is changing as traditional media companies are putting on a focus on developing original sports
content. In recent years, Apple, Netflix, Warner Brothers Discovery, and Amazon have produced original sports content and entered into
agreements to broadcast live sporting events. Their entry into the market could limit our ability to acquire streaming rights for live
sports events. Costs to produce original content may increase to the point where we cannot compete in the sector.
Consumer
trends in paying for streaming content may have an adverse impact on the Sports.com subscription service.
The
global video streaming market is expected to experience a compound annual growth rate of 17.8% over the next eight years, reaching a
value of $2.4 trillion by 2032. With more than 200 global streaming services, consumers are presented with a wide array of choices
where to spend their discretionary entertainment dollars. Since 2022, 25% of streaming subscribers have cancelled three or more
services. Additionally, 21% of subscribers indicated they intended to cancel at least one additional service in 2024. This trend may
negatively impact our ability to attract new customers or may increase the costs of both customer acquisition and
retention.
Our
business is particularly sensitive to reductions from time to time in discretionary consumer spending. Demand for entertainment and leisure
activities, including lottery play, can be affected by changes in the economy and consumer tastes, both of which are difficult to predict
and beyond our control. Unfavorable changes in general economic conditions, including recessions, economic slowdowns, sustained high
levels of unemployment, and rising prices and inflation, or the perception by consumers of weak or weakening economic conditions, may
reduce our users’ disposable income or result in fewer individuals engaging in entertainment and leisure activities, such as purchasing
lottery games through remote channels. SeveralOur factorsbusiness relatingmay tobe thisimpacted economicby downturn,several factors, including reductions in discretionary income
due to changes in employment conditions, as well as customer preferences regarding discretionary spending habits, have caused and will
likely continue to cause a reduction in consumer spending. As a result, fewer individuals may engage in gaming and lottery activities.
The effect of a decrease in consumer spending on entertainment and leisure activities due to unfavorable market conditions could reduce
the Company’s cash flows and revenues and therefore have a material and adverse impact on our results of operations. As a result,
we cannot ensure that demand for our offerings will remain constant or achieve our anticipated growth.
Our
ability to achieve growth in revenue in the future will depend, in large part, upon our ability to attract new playerscustomers to our offerings,
retain existing users of our offerings, and reactivate users in a cost-effective manner. Achieving growth in our community of users may
require us to increasingly engage in sophisticated and costly sales and marketing efforts, which may not make sense in terms of return
on investment. We have used and expect to continue to use a variety of free and paid marketing channels, in combination with the promotional
activity of in-state and multi-state issued lottery games, to achieve our objectives. For paid marketing, we intend to leverage a broad
array of advertising channels, which may include a combination of radio and social media platforms, such as Facebook, Instagram, and
X (formerly Twitter), affiliate marketing, paid and organic search engines, and other digital channels, such as mobile display. If the
search engines on which we rely modify their algorithms, change their terms around gaming and lottery, or if the prices at which we may
purchase listings increase, then our costs could increase, and fewer users may click through to our websites or download our application.
If links to our websites or application are not displayed prominently in online search results, if fewer users click through to our websites
or application, if our other digital marketing campaigns are not effective, or if the costs of attracting users via any of our current
methods significantly increase, then our ability to efficiently attract new users could be reduced, our revenue could decline, and our
business, financial condition, and results of operations could be harmed and could cause the value of our securities to decline or become
worthless.
In
addition, our ability to increase the number of users of our offerings will depend on user adoption of playing lottery games remotely
via a third-party application. Growthgrowth in the mobile and online lotterygaming industry and the level of demand for and market acceptance of
our product offerings is subject to a high degree of uncertainty. We cannot ensure that playersusers will use our products or that the industry
will achieve more widespread acceptance.
Prior to the U.S. 2022
Operational Cessation, Internet search engines drove traffic to our U.S. B2C Platform and our user growth could decline and our business,
financial condition, and results of operations would be adversely affected if we fail to appear prominently in search results when we
recommence U.S. operations.
Our
success depends in part on our ability to attract users through unpaid Internet search results on search engines like Google and Yahoo!.
The number of users we attract to our B2C Platform from search engines is due, in large part, to how and where our website ranks in unpaid
search results. These rankings can be affected by a number of factors, many of which are not under our direct control and may change
frequently. For example, a search engine may change its ranking algorithms, methodologies, or design layouts. As a result, links to our
web-based properties may not be prominent enough to drive traffic, and we may not know how or otherwise be in a position to influence
the results. In some instances, search engine companies may change these rankings in a way that promotes their own competing products
or services or the products or services of one or more of our competitors. Search engines may also adopt a more aggressive auction-pricing
system for keywords that would cause us to incur higher advertising costs or reduce our market visibility to prospective players. Our
websites have experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future. Any
reduction in the number of users directed to our B2C Platform could adversely affect our business, financial condition and results of
operations and could cause the value of our securities to decline or become worthless.
We
may be unable to continue to use the domain names that we use in our business or prevent third parties from acquiring and using
domain domain
names that infringe on, or are similar to, or otherwise decrease the value of our brand, trademarks, or service
marks.
We
also expect our operating expenses to increase in the future as we continue to invest for our future growth, which will negatively
affect affect
our results of operations if our total revenue does not increase. We cannot ensure that these investments will result in
substantial substantial
increases in our total revenue or improvements in our results of operations. In addition to the anticipated costs to
grow our business,
we also expect to incur significant additional legal, accounting, and other expenses as a public company. Once we
fully restart our U.S. operations,
any failure to increase our revenue or to manage our costs could prevent us from achieving or
maintaining profitability or positive cash
flow.
Although
sports, concerts and lottery games are offered on a year-round basis, there is seasonality in lottery game purchasing that may impact our
operations and operations
activities of our customers. The broad geographical mix of our user and customer base also impacts the
effect of seasonality, as users and customers
in different territories typically place differing importance on different lottery gamesevents and
those gamesevents often have different calendars.
For example, some multi-state games can have occasional increasingly high jackpot opportunities, which increase user attention and ticket
purchases, which further increases the jackpot. Such events may cause increases in our revenues. By contrast, low jackpot lottery games
or periods in which there is little promotional activity connected to lottery games in general may negatively impact the purchase of
lottery games.calendars Such fluctuations and uncertainties may negatively impact our cash flows.
Additionally,
the reputational impact of our Board and management changes, the Operational Cessation and the events contributing thereto have not been
quantified. It may require significant investment to restore the value in our brand, and the value of our brand may never return to prior
levels or may be permanently reduced as a result of previous events.
Promoting
awareness of our Platform
brands is important to our ability to grow our business and to attract new users and customers in the future, which
can be costly. We believe
that much of the growth in the number of users of our U.S.-based B2C Platform prior to the 2022 Operational Cessation was attributable
to our paid marketing initiatives. Our future marketing efforts may include a combination of bonus offerings, affiliate marketing programs,
social media engagement, radio, video, podcasts, search engine optimization, and keyword search campaigns. Our marketing initiatives may
become increasingly expensive and generating a meaningful return on these initiatives may become difficult.
Even if we successfully increase
revenue as a result of these marketing efforts, it may not offset the additional marketing expenses
we incur. If our marketing efforts
intended to help grow our business are not effective, we expect that our business, financial condition,
and results of operations would
be adversely affected.
The
industryindustries in which we operate isare subject to rapid and frequent changes in standards, technologies, products, and service offerings, as
well as in consumer demands and expectations and regulations. We must continuously make decisions regarding which offerings and technology
we should invest in to meet user and consumer demand in compliance with evolving industry standards and regulatory requirements, and
to grow we must continually introduce and successfully market new and innovative technologies, offerings, and enhancements to remain
competitive and effectively stimulate user and customer demand, acceptance, and engagement. Our ability to engage, retain, and increase
our user and customer base and to increase our revenue will depend heavily on our ability to successfully create new offerings, both
independently and together with third parties. We may introduce significant changes to our existing technology and offerings or develop
and introduce new and unproven products, services, and systems, any of which we may have little or no prior development or operating
experience. The process of developing new offerings and systems is inherently complex and uncertain, and new offerings may not be well
received by users, even if well-reviewed and of high quality. If we are unable to develop technology and products, services, and systems
that address users’ needs or enhance and improve our existing technology and offerings in a timely manner, it could have a material
adverse effect on our business, financial condition, and results of operations and could cause the value of our securities to decline
or become worthless.
Any
failure to offer high-quality user support may harm our relationships with users and could adversely affect our reputation, brand, business,
financial condition, and results of operations.
Our
ability to attract and retain qualified support personnel is dependent in part on the ease and reliability of our offerings, including
our ability to provide high-quality support. Users on our Platform have and will continue to depend on our support organization to resolve
any issues relating to our offerings, such as technical questions around how to use our app and web-based properties or information regarding
our Data Services. Our ability to provide effective and timely support when operations resume will be largely dependent on our ability
to attract and retain service providers who are qualified to support users and sufficiently knowledgeable regarding our offerings. As
we restart our business and reintroduce and improve our offerings, we will face challenges related to providing quality support services
at scale. As users in new domestic and international jurisdictions acquire our services, our support organization will face additional
challenges, including those associated with delivering support in languages other than English. The complex employment market and low
unemployment rates may impact the availability of service providers and as a result, our ability to provide effective and timely support
and an increase in response time. Any failure to provide efficient user support, or a market perception that we do not maintain high-quality
support, could adversely affect our reputation, brand, business, financial condition, and results of operations and could cause the value
of our securities to decline or become worthless.
Our
business could be adversely impacted by changes in the Internet and mobile device accessibility of users.
Our
business depends on users’ access to our offerings via a mobile device or personal computer and the Internet. We may operate in
jurisdictions that provide limited data or Internet connectivity, particularly as we expand into foreign markets. Internet access and
access to a mobile device or personal computer are frequently provided by companies with significant market power that could take actions
that degrade, disrupt, or increase the cost of consumers’ ability to access our offerings. In addition, the Internet infrastructure
that we and our users rely on in any particular geographic area may be unable to support the demands placed upon it and could interfere
with the speed and availability of our offerings. Any such failure in Internet or mobile device or computer accessibility, even for a
short period of time, could adversely affect our results of business, financial condition, and results of operations and could cause
the value of our securities to decline or become worthless.
We
operate in a rapidly evolving industry and if we fail to successfully develop, market, or sell new products or adopt new technology platforms,
it could materially adversely affect our business, results of operations, and financial condition.
Our
Platform and other software products are in a market characterized by rapid technological advances, evolving standards in software and
hardware technology, and frequent new product introductions and enhancements that may render existing products, services, and systems
obsolete. Competitors are continuously upgrading their product offerings with new features, functions, and content. In addition, we may
be required to refine our software and technology platform to address regulatory changes in the markets in which we operate or plan to
operate. In order to become competitive, we may need to periodically modify and enhance our technology platform and service offerings.
We
cannot assure you that we will be able to respond to rapid technological or regulatory changes in our industry. In addition, the introduction
of new products or updated versions of existing products and the underlying technology that supports such products has inherent risks,
including, but not limited to, risks concerning:
Developing,
enhancing and localizing software is expensive, and the investment in product development may involve a long payback cycle. However,
we believe that we must dedicate a significant number of resources to our developmental efforts to maintain our competitive position.
However, funding for such development efforts may not be available on favorable terms if at all, and we may not receive significant revenue
from these investments for several years, if at all. In addition, as we or our competitors introduce new or enhanced offerings, the demand
for our offerings, may decline.
We
may not timely and effectively scale and adapt our technology and network infrastructure to ensure that our Platform is accessible, which
would adversely affect our business, reputation, financial condition, and results of operations.
Once
we fully resume operations, we expect to make significant investments to improve the availability of our Platform and to enable rapid
releases of new features and services, funding permitting. However, it may become increasingly difficult to maintain and improve the
availability of our Platform, especially during peak usage times and as our Platform becomes more complex and if our user and customer
traffic increase. If our Platform is unavailable when users and customers attempt to access it or it does not respond as quickly as they
expect or it experiences capacity constraints due to an overwhelming number of users or customers accessing our Platform simultaneously,
users or customers may seek other offerings and may not return to our Platform as often in the future, or at all. This would adversely
affect our ability to attract users and customers and decrease the frequency with which they use our Platform. To the extent that we
do not effectively address capacity constraints, upgrade our systems as needed, or develop our technology and network architecture to
accommodate actual and anticipated changes in technology, our business, reputation, financial condition, and results of operations would
be adversely affected.
Our
Platform may be vulnerable to risks, both foreseen and unforeseen, arising from our application of distributed ledger technology.
Prior to the U.S. 2022 Operational
Cessation, our Platform utilized distributed ledger technology by preserving a cryptographic ledger of the user identification, draw identification,
ticket identification, and game numbers into an immutable ledger. The distributed ledger was append-only and kept a complete record of
all changes to the provided data that could not be deleted, modified, or overwritten. Distributed ledger technology is a relatively new,
evolving technology. Accordingly, the further development and future viability of this technology is generally undetermined with practical
and ideological challenges which may affect its further development or integration into our Platform.
We operate in highly regulated industries, and changes in law or regulation could restrict our operations and increase compliance costs.
Our operations are subject to federal, state and foreign laws and regulations governing, among other things, lottery and gaming activities, promotional programs, digital advertising, consumer protection, data privacy and payment processing. These regulatory regimes are complex and evolving. Changes in laws, regulations, interpretations or enforcement priorities could restrict or prohibit aspects of our business model, require additional approvals or licensure, increase compliance costs, result in fines or penalties, or require cessation of operations in certain jurisdictions.
Adverse interpretations of federal statutes and related enforcement priorities could materially impair our business.
Federal statutes affecting gaming and related activities, including interpretations of the Wire Act and other federal laws, have been subject to evolving interpretations and enforcement priorities. Although certain appellate decisions have limited the scope of the Wire Act to sports wagering, no definitive ruling from the U.S. Supreme Court exists. An adverse reinterpretation, enforcement action, or related regulatory development could materially restrict aspects of our operations and negatively affect our business and financial condition.
We are involved in, and may become involved in, litigation, investigations or other legacy matters that may be costly and could adversely affect our liquidity and operations.
Management's Discussion & Analysis (MD&A)
Not available: the section could not be located automatically in one of the filings (non-standard layout or incorporated by reference). See the original filing. Open the filing on SEC.gov.
What changed in the latest 10-Q
Risk Factors
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024”
Removed heading “Prior Convertible Debt Obligations”
Largest changes
“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.”see in full comparison
“Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024”see in full comparison
“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 in full comparison
“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. …”see in full comparison
“On July 17, 2025, the Company entered into 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. …”see in full comparison
Full comparison: every changed paragraph (82)
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.
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© (c)(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.
On October 16, 2025 Lottery.com received a letter from Nasdaq determining that, as a result of the Company’s retroactive action to abandon the 2023 Employees’, Directors’ and Consultants Stock Issuance and Option Plan and instead reflect that Ad Hoc grants were made pursuant to the 2021 Incentive Award Plan, the Company has regained compliance with Listing Rule 5635(c). Nasdaq has closed the matter.
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 JuneSeptember 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.
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,Woodford on a timely basis, 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.
The Business Combination Agreement, executed on February 21, 2021, facilitated the merger of Trident Merger Sub II Corp. into AutoLotto, with AutoLotto surviving as a wholly owned subsidiary of Trident Acquisitions Corp., which was subsequently renamed Lottery.com Inc. The transaction involved an aggregate consideration of approximately $440 million, comprising 200,000 shares of common stock valued at $2,200.00 per share. Additionally, the agreement provided for potential earnout shares for both Sellers and Founder Holders, subject to specific conditions. However, these conditions were not met, resulting in the forfeiture of all potential earnout shares.
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.
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 willalso
also serveserves as Executive Director of Sports.com. He is a seasoned executive, entrepreneur, and former international footballer with a dynamic
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.
Reverse
Stock SplitSplits
On
August 9,28, 2023,2025, the Company amended its Charter to implement, effective at 5:30 p.m., Eastern time, a 1-for-201-for-10 Reverse Stock Split.
At At
the effective time of the Reverse Stock Split, every 2010 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 20232025 Annual Meeting of Stockholders on
AugustFebruary 7,20, 20232025 and was subsequently approved by the Board of Directors on August 7,13, 2023.2025.
Previously, 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.
Despite
the Operational Cessation, the Company’s subsidiaries have continued to operate. While the operational activities of these subsidiaries
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. Additionally, Sports.com Media Group Ltd is operational and generating revenue. Both Concerts.com and TicketStub.com
remain operational while the Company invests in redesign the sites to better meet the demands of today’s live entertainment consumers.
Lottery.com International
On
June 24, 2025, The Company appointed Tim Scoffham and CEO of Lottery.com International Limited,.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 regulatorypermitted partnerships,
and unlocking scalable, revenue-generating opportunities in high-growth jurisdictions.
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$1,157,391 in the first sixnine months of 2025 for a cumulative total of $461,002$1,294,788 as of JuneSeptember 30, 2025
and and
anticipates the transaction closing in the thirdfourth 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.
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 towhich bewere held in Cairo,
Amsterdam and Miami, respectively.
On
June 24, 2025, Thethe 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,
scalable, revenue-generating opportunities in high-growth jurisdictions.
On July 17, 2025, the Company entered into 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, encompassing: exclusive international streaming rights across all territories; integrated gaming and fan engagement products; global sponsorship and brand activation rights; and distribution focus across the Indian subcontinent and MENA, especially targeting the vast Keralite diaspora in the Middle East, North America, and Europe.
Sports.com Studios Ltd, entered into a revenue-driven co-production partnership with GOATS Entertainment (Greatest Of All Time) on August 7, 2025. This alliance will transform the legacies of the world’s greatest athletes into cash-generative content assets, combining premium docuseries, exclusive merchandise, global fan activations, and immersive storytelling. The collaboration is designed to drive high-margin revenue streams across OTT, e-commerce, experiential and licensing platforms.
On Sept. 10, 2025, Sports.com Studios entered into a strategic global distribution partnership with the Døds Diving League (“DDL”), the official global platform for the world’s fastest-growing extreme sport. The partnership will be managed by Sports.com Studios Ltd, the newly launched sports content subsidiary of SEGG Media. The partnership will bring the thrill of Døds to millions of fans worldwide. Under the agreement, Sports.com Studios became a global distribution partner for DDL events, ensuring competitions and original content will be delivered through Sports.com platforms.
As
noted above, since the Operational Cessation, the Company has had minimal day-to-day operations and has primarily focused on restarting
restarting certain of its core businesses. The Company hasis developedexecuting on a three-phase planmulti-phase 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 pirzesprizes 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.jurisdictions. 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
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 – Master Affiliate Model for Lottery.com. The Company believes that the strength of the Lottery.com can be used to drive revenue through strategic affiliate relationships across the global lottery industry. The Company plans to offer an overarching Lottery.com loyalty and rewards program for all affiliates which allows the affiliate to concentrate on direct B2B sales while it delivers content and rewards which appeal to all lottery players. The program will be structured under a revenue-share model.
Phase
34 - Other Business Lines and Projects. The Company expects to continue 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
under development when the Operational Cessation occurred.
AsOur
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.
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.
Revenue-Share Arrangements Sports.com Media Group has entered into agreements with telcos which allow them to monetize Sports.com content to their users. Both parties share in the revenue.
Our
growth plans and the competitive landscape. Our direct competitors operate in the global entertainment and gaming industries
and, 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 brand penetration in ourU.S. existingand U.S.international jurisdictions by increasing direct to consumer marketing
campaigns, introducing our
B2C Platformentering into newaffiliate partnerships in U.S. and select foreign jurisdictions and acquiring synergistic regulatedenterprises domestically 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.
As
of the date of this Report, the Company’s primary revenue drivers are its data business andbusiness, lottery ticket sales in Mexico and
sponsorship describeand thelicensing revenuedeals fromwith S&MI.
Sports.com Media Group. It is anticipated that operational costs for the next 12 months through AugustSeptember 31,30, 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 resumereintroduce the Lottery.com brand to the domestic lottery operationsmarket and expand
international operations.
operations in gaming, sports, and entertainment. Moreover, the Company plans to enhance its mobile application to include pool plays, ticket
subscriptions, loyalty programs and
various gamification modules.
Three
Months Ended JuneSeptember 30, 2025 Compared to Three Months Ended JuneSeptember 30, 2024
The
following table summarizes our results of operations for the three months ended JuneSeptember 30, 2025 and JuneSeptember 30, 2024, respectively.
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 September 30, 2025 was $138,000, a decrease of $63,000, or 31%,
Junecompared to revenue of $201,000 for the three months ended September 30, 2024. The decrease is the net effect of decreases of $50,000
$38,000 for Global Gaming and $62,000 $24,000
for TinBu in 2025 vsand 2024 offset by
$47,000 in revenue1,000 for the
S&MI subsidiary which was not present in the three months ended June 30,vs 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 JuneSeptember 30, 2025 was $163,000$205,000 thousand, an increase of $117,000,
$119,000, or 257%,137%, compared to cost of
revenue of $46,000
$86,000 for the three months ended JuneSeptember 30, 2024. The primary driver ofFor the increasethree ismonths $130,000ended September 30, 2025 there were increases
of $63,000 in cost of revenue for the S&MI subsidiary
which wasand not present in the three months ended June 30, 2024 which was partially offset by a decrease of $13,000$59,000 for Global Gaming
offset in
by minor decreases for the threecore monthsLottery ended June 30, 2025.business.
Gross
Profit. Gross profit
for the three months ended June 30, 2025 was $29,000 compared to $211,000 for the three months ended JuneSeptember 30, 2025 was a loss of $67,000 compared to profit of $114,000 for the
three months ended September 30, 2024, a decrease of $182,000,
or 86%. The decrease in gross159%.
Gross profit resulted from the decreases in revenue for Global Gaming anddecreased by: $97,000, Tinbu andby the net impact of costs$23,000 and
revenue for S&MI duringby the period which were not present$62,000 in the three months ended June September
30, 2025.
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 September 30, 2025 were $4.7 million, an increase of $766,000, or 23%, compared to $3.8 million
Junefor the three months ended September 30, 2024. The decreaseincrease was primarily driven by a decreaseincreases of $1.4 million$817,000 in personnelGeneral and
administrative costs accompaniedand $407,000 in Professional fees offset by decreases in professional
feesPersonnel $205,000,costs alongof with decreases in general$319,000 and administrative expenses by $312,000 and depreciationDepreciation and amortization byof $257,000.
$28,000. 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.
GeneralPersonnel
andCosts. Administrative.Personnel General and administrative expensescosts were $1.1 million,$360,000 for the three months ended JuneSeptember 30, 2025, a decrease of
$312,000 $319,000 or 22%(47%) from $1.4 million
$679,000 for the three months ended JuneSeptember 30, 2024. AThe primarydecrease driveris primarily due to changes in the composition of the reduction is lower accrualteams for
the franchise
taxesparent incompany and TinBu subsidiary for the three months ended June 30,September 2025 thanas compared with the three months ended June September
30, 2024.
Professional Fees. Professional fees increased by $407,000 or 34%, from $1.2 million for the three months ended September 30, 2024 to $1.6 million for the three months ended September 30, 2025. The increase was due to expenses incurred for outside attorneys in the three months ended September 30, 2025. Activity levels for outside attorneys were lower for the same period in 2024.
General and Administrative. General and administrative expenses were $1.5 million, for the three months ended September 30, 2025, an increase of $817,000 or 120% from $681,000 for the three months ended September 30, 2024. Primary drivers of the increase for the three months ended September 30, 2025 vs the three months ended September 30, 2024 were: $140,000 for the Advisory Board, $375,000 for Sponsorships, $189,000 for Public Relations, and $70,000 business insurance premiums.
Depreciation
and Amortization.
Depreciation and amortization decreased $257,000,$28,000, or 19%,2%, from $1.33$1.21 million for the three months ended June September
30, 2024 to $1.07$1.18 million
for the three months ended JuneSeptember 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 September
30, 2025, a decrease of approximately
$99,000and 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.
Interest
Expense. Interest
expense for the three months ended JuneSeptember 30, 2025 was $64,000$68,000 vs interest expense of $122,000$127,000 for the
three months ended JuneSeptember 30, 2024,
a decrease of $57,000$59,000 or 47%.46%. 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 September 30, 2025 than for the three months ended September 30, 2024 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.
SixOther
Months(Income) EndedExpense. JuneOther (Income) was essentially flat for the three months ended September 30, 2025 Comparedcompared towith
the Sixthree Monthsmonths Endedended JuneSeptember 30, 20242024.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
The
following table summarizes our results of operations for the sixnine months ended June 30, 2025 and June 30, 2024, respectively.
Revenue.
Revenue for the
six nine months ended JuneSeptember 30, 2025 was $416,000,$553,000, a decrease of $101,000,$164,000, or 20%,23%, compared to revenue of $516,000 $717,000
for the sixnine months ended
June September 30, 2024. The decrease in revenue is the net effect of decreases of $103,000$141,000 for Global Gaming
and $86,000$108,000 for TinBu in 2025 vs 2024 offset
by $88,000an increase of $87,000 in revenue for the S&MI subsidiary which is because S&MI was not present infor the sixnine months endedin June2025 30,and only for one month in 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$530,000 for the sixnine months ended JuneSeptember 30, 2025 was an increase of $196,000$314,000 or 151%146% compared with $129,000 $216,000
for the sixnine months ended
June September 30, 2024. The primary driver of the increase is $239,000because S&MI was present for nine months in cost2025 and only for one month in 2024. Cost of revenue for the S&MI subsidiary whichTinBu was notessentially presentflat inand
the six months ended June 30, 2024 whichthere was partially offset by a decreasesmall of $43,000increase for Global Gaming in the six months ended June
30, 2025.Gaming.
Gross
Profit. Gross profit
for the sixnine months ended JuneSeptember 30, 2025 was $90,000$23,000 compared to $387,000$501,000 for the sixnine months ended June
September 30, 2024, a decrease of $297,000,
$478,000, or 77%.95%. The decrease in grossGross profit resulteddecreased fromby: the$156,000, decreases in revenue for Global Gaming and Tinbu, the decrease in cost of revenue
for Global Gaming, andTinbu theby net impact of costs$108,000, and revenue for
S&MI duringby the period which were not present$214,000 in the three months
ended JuneSeptember 30, 2025.
SEGG insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding SEGG (13F)
None of the 59 investors we track reported a position in their latest 13F.