10-Q/A: Lottery.com Amends Q1 2025 Report, Details Operations

Sentiment:

Amended Quarterly Report 15 October 2025 2:10 PM

Lottery.com Inc. filed an amended quarterly report for Q1 2025, revising financial statements and providing updates on its operational restart, strategic acquisitions, and ongoing legal challenges.

Delay expectedThe Nook Holdings acquisition, initially expected to close earlier, is now anticipated to close in the second quarter of 2025 or as otherwise agreed by the parties, with payments made in May 2025.The B2C Platform, which ceased operations in July 2022, is anticipated to become operational again by mid-year 2025, indicating a prolonged restart.

Capital raiseManagement's plans to meet operating cash flow requirements include financing activities such as private placements of common stock, preferred stock offerings, and issuances of debt and convertible debt.The company entered into a credit facility (UCIL Loan Agreement) with United Capital Investments London Limited.Entered into a placement agent agreement with Univest Securities, LLC for an offering of units (convertible promissory notes and common stock purchase warrants) up to $5,000,000.The Sponsorship Agreement with Sebastian Murray includes $50,000 in Company common stock.The Memorandum of Understanding with WA Technology Group Limited involves a payment of $500,000 in restricted common stock.

Worse than expectedReported a net loss of $3.295 million for Q1 2025, continuing a trend of recurring net losses.Revenue decreased by 14% and gross profit decreased by 65% in Q1 2025 compared to Q1 2024.Accumulated deficit increased to approximately $266.8 million, and working capital remains negative at $15.0 million.The company explicitly states "substantial doubt about the Company’s ability to continue as a going concern."Despite positive cash flow from operations in Q1 2025, the overall financial position remains precarious with significant debt and ongoing operational challenges.

Summary

Filed an Amended Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2025, to amend the Corporate Phone Number and Part I Item 1 Condensed Consolidated Statements of Cash Flows.
Reported a net loss of $3.295 million for the three months ended March 31, 2025, compared to a net loss of $5.754 million for the same period in 2024.
Revenue decreased by 14% to $223,849 for Q1 2025 from $259,319 in Q1 2024.
Gross profit decreased by 65% to $61,381 for Q1 2025 from $175,532 in Q1 2024.
Operating expenses decreased by 39% to $3.54 million for Q1 2025 from $5.77 million in Q1 2024, primarily due to reductions in professional fees, general and administrative expenses, personnel costs, and depreciation/amortization.
Net cash provided by operating activities was $924,900 for Q1 2025, a significant improvement from net cash used in operating activities of $1.1 million in Q1 2024.
Cash balance as of March 31, 2025, was $468,677, up from $68,035 at December 31, 2024.
Accumulated deficit reached approximately $266.8 million as of March 31, 2025, with working capital at approximately negative $15.0 million.
Completed the acquisition of Spektrum Ltd on March 13, 2025, valued at $1.5 million in common stock at $3 per share, to support international expansion.
Plans to relaunch its B2C Platform by mid-year 2025 in a limited number of US and international markets.
Ongoing legal proceedings include class action lawsuits, disputes with Woodford Eurasia Assets, and claims related to alleged fraudulent activities.

Sentiment

Score: 3

Explanation: While there are efforts to reduce operating expenses and strategic acquisitions are being pursued, the company continues to report significant net losses, negative working capital, and explicitly states "substantial doubt about its ability to continue as a going concern." The revenue and gross profit declines are concerning, and ongoing legal disputes add to the uncertainty. The positive cash flow from operations is a good sign, but it's not enough to offset the overall financial distress.

Positives

Net loss decreased by 43% to $3.295 million in Q1 2025 from $5.754 million in Q1 2024.
Operating expenses decreased by 39% ($2.3 million) in Q1 2025 compared to Q1 2024, driven by reductions in professional fees, general and administrative expenses, personnel costs, and depreciation/amortization.
Net cash provided by operating activities was $924,900 in Q1 2025, a significant improvement from net cash used in operating activities of $1.1 million in Q1 2024.
Cash balance increased significantly to $468,677 at March 31, 2025, from $68,035 at December 31, 2024.
Successfully acquired Spektrum Ltd on March 13, 2025, for $1.5 million in common stock, providing a compliant platform for international lottery, sweepstakes, and social gaming.
Launched the Sports.com app and partnered with BOXXER to stream live boxing matches in African nations, expanding content distribution.
Received notification from Nasdaq on April 10, 2024, confirming compliance with the Market Value of Publicly Held Shares (MVPHS) requirement.
Entered into a Sponsorship Agreement with Sebastian Murray for the INDY NXT by Firestone series, valued at $50,000 cash and $50,000 in common stock.
Entered into a Letter of Intent to purchase a minimum of 51% of Dotcom Ventures Inc., including the domain names concerts.com and ticketstub.com, for $5 million.

Negatives

Revenue decreased by 14% to $223,849 in Q1 2025 from $259,319 in Q1 2024.
Gross profit decreased by 65% to $61,381 in Q1 2025 from $175,532 in Q1 2024.
The S&MI subsidiary had a negative gross margin of $68,000 in Q1 2025.
Recurring net losses and negative cash flows from operations, with an accumulated deficit of approximately $266.8 million as of March 31, 2025.
Working capital was approximately negative $15.0 million as of March 31, 2025.
Outstanding payroll obligations of approximately $4.08 million as of March 31, 2025.
Ongoing substantial doubt about the ability to continue as a going concern.
Disputes with Woodford Eurasia Assets, Ltd. regarding loan amounts and funding requests.
Ongoing legal proceedings, including class action lawsuits and claims of fraudulent activities and game-rigging.
Acknowledged material weaknesses in internal control over financial reporting as of December 31, 2024 and 2023.
The B2C Platform is not currently available to the public.

Risks

Substantial doubt about the Company’s ability to continue as a going concern due to recurring net losses, negative cash flows, and significant accumulated deficit.
Need for additional capital to support and restart operations, re-hire employees, and pay expenses; such capital may not be available on commercially acceptable terms, if at all.
Failure to implement and maintain an effective system of internal controls could lead to inaccurate financial reporting, missed obligations, or fraud.
Circumstances leading to past delays in SEC filings and remediation efforts may continue to cause substantial delays.
Inability to compete with other forms of entertainment for consumers' discretionary time and income.
Exposure to economic downturns, inflation, geopolitical, political, and market conditions beyond control.
Negative events or media coverage relating to the business, management, lottery, or online gaming.
Inability to attract and retain users, including failure to appear in Internet search engine results.
Continued ability to use domain names to promote and increase brand value.
Scrutiny by stakeholders regarding responsible gaming and ethical conduct.
Inability to achieve profitability and growth in the newly-developed market for online lottery games.
Inability to profitably expand into new markets or capitalize on new industry trends.
Failure to offer high-quality user support.
Adverse impacts to user relationships from IT disruptions, vulnerability to cyberattacks, and inability to securely maintain user information.
Inability to adapt to changes in Internet, mobile, or new technology platforms.
Exposure of online infrastructure to risks related to new and untested distributed ledger technology.
Inability to comply with complex, ever-changing, multi-jurisdictional regulatory regimes and other legal requirements.
Impact of geopolitical shifts and changes in applicable laws or regulations.
Inability to successfully expand geographically and acquire/integrate new operations.
Dependence on third-party service providers for gaming platforms, product offerings, and payment processing.
Inability to maintain successful relationships with lottery organizations and affiliates.
Failure of third-party service providers to protect intellectual property rights.
Effectiveness of transition and compliance with regulatory requirements of being a newly public company.
Current non-compliance with Nasdaq listing standards and risk of future delisting.
Limited liquidity and trading of securities.
Lenders may not loan agreed amounts, and secured obligations could force curtailment of business plans upon default.
Issuance and sale of common stock upon conversion of debt or exercise of warrants may depress market price and cause substantial dilution.
Significant amount of money owed under Loan Agreements may not be repayable.
Ultimate effect of reverse stock split on market price is uncertain, may decrease liquidity and magnify market capitalization decline.

Future Outlook

The company anticipates additional operating losses for the next twelve months. It expects to relaunch its B2C Platform by mid-year 2025, initially in a limited number of US and international markets, and plans to restore other products and expand internationally. The company aims to monetize the Sports.com brand through advertising, original content, and business licenses in the Middle East and Africa, and enhance its mobile application with new features. Management believes current cash and future borrowings will be sufficient to resume core operations, but there is no assurance of obtaining the required capital.

Management Comments

"This Report is reflective of the Company’s commitment to transparency, integrity, and responsible corporate governance."
"The investment commitments from United Investments Capital London, Univest Securities LLC, and Prosperity Investment Management outlined in this report are evidence of investor belief in Management’s capability to resume core lottery and gaming operations, monetize the Sports.com brand, and expand all the Company’s brand across the globe."
"Although Management believes that it will be able to continue to raise funds by sale of its securities to provide the additional cash needed to meet the Company’s obligations as they become due..."
"Management has expanded and will continue to enhance our system of identifying transactions and evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications."

Industry Context

The company operates in the global entertainment and gaming industries, characterized by intense price-based competition and rapid technological changes. Its strategic acquisitions (Spektrum, Nook) and Sports.com initiatives align with industry trends towards global expansion, content monetization, and diversified gaming/sports offerings, particularly in underserved markets like Africa and the Middle East. The estimated Latin American lottery market size of $0.68 billion with a projected 6.05% CAGR through 2028, and 3 million online lottery players expected in South America by 2028, indicates significant growth opportunities for the company's international operations.

Comparison to Industry Standards

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Executive Director	NA	Marc Bircham	May 13, 2025	Appointment to the Board of Directors.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
New Plan Adoption	Adopted the 2023 Employees, Directors and Consultants Stock Issuance and Option Plan, authorizing issuance of up to 500,000 shares of common stock or options to employees, directors, and consultants. The Compensation Committee, consisting of Tamer T. Hassan, Paul S. Jordan, and Christopher Gooding, will administer the plan.	October 10, 2023	Aims to attract, retain, and motivate employees, directors, and consultants by providing proprietary interests in the company.
Internal Control Weaknesses	Acknowledged material weaknesses in internal control over financial reporting as of December 31, 2024 and 2023, including lack of sufficient personnel, ineffective policies for review/supervision, inability to timely close financial books, and incomplete segregation of duties.	NA	Could lead to inaccurate financial reporting, missed obligations, or fraud, impacting investor confidence.
Remediation Efforts	Implementing remediation steps for internal control weaknesses: adding personnel, adopting rigorous period-end review, improving period close processes, and defining/documenting segregation of duties.	Ongoing	Aims to improve financial reporting reliability and prevent fraud, but full remediation is ongoing and not yet assured.

Legal Proceedings

**J. Streicher Financial, LLC**: Company filed a complaint for breach of contract, awarded $16.5 million judgment plus $397,037 in attorney's fees. Efforts to collect are ongoing, with partial payments received ($75,000, $50,000). Prior attorney Skadden filed a motion for a charging lien of $3,024,201.
**Preston Million Class Action**: Class action lawsuit alleging violations of Sections 10(b), 14(a), and 20(a) of the Exchange Act. Court granted in part and denied in part the motion to dismiss the Third Amended Complaint on February 25, 2025, allowing claims against Defendant Dickinson and the Company to proceed based on post-merger representations.
**TinBu Complaint**: John Brier, Bin Tu, and JBBT, LLC filed a complaint alleging breach of contract and misrepresentation with alleged damages over $4.6 million. Court granted Defendants' motion to compel arbitration in Texas. TinBu Plaintiffs requested voluntary dismissal of their claims without prejudice.
**Global Gaming Data**: Company and TinBu, LLC filed a complaint against John J. Brier, Jr., Bin Tu, and Global Gaming Data, LLC for trade secret violations and breach of contract. Plaintiffs' claims were dismissed without prejudice for failure to prosecute on February 25, 2025.
**Woodford Eurasia Assets Limited**: Woodford filed actions in London and Delaware, both dismissed. Company disputes the validity and application of the Woodford Loan Agreement Amendment and alleges Woodford failed to prove borrowed amounts, provide an AML-acceptable account, and respond to funding requests and allegations of money laundering/conspiracy to defraud.
**McTurk**: Sharon A. McTurk, Rutherford Enterprises, LLC, SJB Solutions, LLC, and Astra Supply Chain, LLC filed a state court complaint alleging fraudulent and negligent misrepresentation, aiding and abetting, and conspiracy. Court granted Defendants' motion to dismiss for failure to state a claim on February 25, 2025. Plaintiffs filed a notice of appeal.
**Honey Tree Trading, LLC**: Filed a complaint alleging breach of contract by the Company and breach of fiduciary duties by individual directors. Plaintiff withdrew its motion to expedite and filed a motion to dismiss Count IV as moot.
**Manna World Ministries**: Civil lawsuit alleging default on a $2.7 million personal loan purportedly secured by personal shares of stock in Lottery.com Inc. Company named as an additional defendant in an amended complaint and intends to vigorously contest claims.
**PR Fire Limited**: Company issued cease and desist notices to PR Fire Limited and certain individuals for alleged market manipulation and disseminating false/misleading statements.
**Dawn Nettles**: Class action alleging systematic fraud, misappropriation of lottery funds, illegal ticket sales, and manipulation of lottery game outcomes. Claims against IGT dismissed without prejudice.
**Jerry R. Reed**: Action alleging illegal game-rigging and money-laundering during the April 22, 2023 Lotto Texas drawing, seeking recovery of funds.

Related Party Transactions

Christopher Gooding, a director, provides legal services to the Company through Amar Ali Law PLLC, compensated separately from his director role. Paid $72,000 for legal services in Q1 2025.
Robert Stubblefield, CFO, provided a zero-interest loan for operating expenses ($67,941 at year-end 2024), which was repaid in full with common stock in February 2025.
The UCIL Loan Agreement is with United Capital Investments London Limited (UCIL), an entity in which Matthew McGahan (CEO and Chair) and Barney Battles (former Board member) have a direct or indirect interest.

Stakeholder Impact

**Shareholders**: Potential for significant dilution from future equity financings and warrant exercises; risk of Nasdaq delisting impacting liquidity and share price; ongoing legal proceedings create uncertainty.
**Employees**: Approximately $4.08 million in outstanding payroll obligations as of March 31, 2025, from the 2022 operational cessation. Plans to re-hire employees are contingent on securing additional capital.
**Customers**: B2C Platform not currently operational, impacting service availability. Plans to relaunch by mid-year 2025.
**Creditors**: Significant debt outstanding under various loan agreements, with some notes theoretically in default. Disputes with Woodford Eurasia Assets highlight repayment challenges.
**Management/Directors**: Subject to ongoing legal proceedings and class action lawsuits. Christopher Gooding (director) and Robert Stubblefield (CFO) involved in related party transactions. Matthew McGahan (CEO) has an interest in UCIL, a lender.

Next Steps

Relaunch B2C Platform by mid-year 2025, initially in limited US and international markets.
Procure appropriate licensing and business services to launch in multiple African and Asian jurisdictions (scheduled for Q2 2025).
Restore other business lines and projects, such as supplying lottery tickets domestically and partnering internationally.
Monetize Sports.com brand through advertising-supported subscriptions, original content, and marketing business licenses in the Middle East and Africa.
Complete the acquisition of Nook Holdings Limited (anticipated in Q2 2025).
Enhance mobile application with pool plays, ticket subscriptions, loyalty programs, and gamification modules.
Continue efforts to improve disclosure and reporting controls and overhaul internal control over financial reporting.
Continue to assess internal controls and procedures and take further action as necessary.
Defendants' motions to dismiss in Preston Million case due June 30, 2025; Plaintiff Hoffman's opposition brief due August 14, 2025; Defendants' reply briefs due September 17, 2025.

Key Dates

Date	Description
March 17, 2016	Lottery.com Inc. (formerly Trident Acquisitions Corp) formed as a Delaware corporation.
August 2, 2018	AutoLotto purchased 186,666 shares of Class A-1 common stock of a third-party business development partner.
August 28, 2018	Company entered into several notes payable for $12,674,635 with sellers of TinBu and a broker.
October 1, 2019	Company adopted ASU 2018-07, Compensation Stock Compensation (Topic 718).
June 29, 2020	Company entered into a Promissory Note with the U.S. Small Business Administration (SBA) for $150,000.
August 2020	Company entered into three separate note payable agreements for an aggregate of $37,199.
June 30, 2021	Company acquired 100% of equity of Global Gaming Enterprises, Inc.
October 29, 2021	Consummated business combination with AutoLotto, Inc.; name changed to Lottery.com Inc.
November 24, 2021	S-1 registration statement became effective.
December 2021	Finalized acquisition of the Sports.com domain name.
January 4, 2022	AutoLotto entered into a Business Loan Agreement with bank prov for $30,000,000.
March 22, 2022	Company entered into a 3-year secured promissory note agreement for $2,000,000.
July 6, 2022	Company announced Audit Committee retained outside counsel for independent investigation.
July 20, 2022	Armanino LLP advised financial statements for 2021 and Q1 2022 should no longer be relied upon.
July 28, 2022	Board determined insufficient financial resources, leading to operational cessation.
July 29, 2022	Operational Cessation, furloughing majority of employees and suspending lottery game sales.
August 19, 2022	Preston Million filed a Class Action Complaint against the Company.
September 27, 2022	Armanino resigned as independent registered public accounting firm.
October 7, 2022	Audit Committee approved engagement of Yusufali & Associates, LLC as new independent registered public accounting firm.
October 12, 2022	AutoLotto defaulted on Business Loan, bank prov foreclosed on $30,000,000 Collateral Security.
December 7, 2022	Company entered into a loan agreement with Woodford Eurasia Assets, Ltd.
April 25, 2023	Company resumed ticket sales operations on a limited basis through its Texas retail network.
June 8, 2023	Nasdaq Panel reversed prior decision, granted continued listing subject to conditions.
June 12, 2023	Company entered into an amendment of the Woodford Loan Agreement.
June 15, 2023	Company's securities reinstated for trading on Nasdaq.
July 21, 2023	Received event of default notice from Woodford under the Woodford Loan Agreement.
July 26, 2023	Company entered into a credit facility with United Capital Investments London Limited (UCIL).
August 7, 2023	Reverse Stock Split approved by stockholders.
August 8, 2023	UCIL Loan Agreement amended and restated.
August 9, 2023	1-for-20 Reverse Stock Split implemented.
August 18, 2023	UCIL Loan Agreement further amended.
September 8, 2023	Manna World Ministries and Summit Church filed a civil lawsuit.
September 11, 2023	Share Purchase Agreement with Nook Holdings Limited signed.
September 28, 2023	Company entered into Stock Purchase Agreement with Nook Holdings Limited shareholders.
October 10, 2023	Board adopted the Lottery.com 2023 Employees Directors and Consultants Stock Issuance and Option Plan.
October 16, 2023	High Court of Justice in London dismissed Woodford's application for injunctive relief.
November 16, 2023	Woodford filed an additional action in the US District Court for the District of Delaware.
November 21, 2023	Company and TinBu, LLC filed their First Amended Verified Complaint against John J. Brier, Jr., Bin Tu, and Global Gaming Data, LLC.
November 29, 2023	Company received a letter from Nasdaq regarding non-compliance with MVPHS requirement.
December 6, 2023	Company entered into a placement agent agreement with Univest Securities, LLC.
December 18, 2023	Amendment to Nook Holdings Share Purchase Agreement signed, delaying closing to March 30, 2024.
February 1, 2024	Offering amount with Univest Securities, LLC increased from $1,000,000 to $5,000,000.
February 5, 2024	Company entered into a Memorandum of Understanding with WA Technology Group Limited (WATG).
February 14, 2024	Woodford filed a Notice of Voluntary Dismissal Without Prejudice.
March 7, 2024	Sports.com launched the Sports.com App.
March 28, 2024	Sports.com announced rights to live stream a heavyweight title fight in Africa.
April 1, 2024	Lottery.com resumed its sweepstakes offerings through partnership with WinTogether.org foundation.
April 4, 2024	Manna World Ministries and Summit Church filed an amended complaint naming the Company as an additional defendant.
April 10, 2024	Company received Nasdaq notification of compliance with MVPHS requirement.
April 22, 2024	Company issued cease and desist notice to PR Fire Limited.
April 24, 2024	Company issued cease-and-desist notice to individuals/entities for disseminating false statements.
September 1, 2024	Company completed the acquisition of S&MI Ltd.
September 4, 2024	Honey Tree Trading, LLC filed a verified original complaint against Lottery.com.
December 5, 2024	Parties in Global Gaming Data lawsuit participated in court-ordered mediation, resulting in an impasse.
February 14, 2025	Dawn Nettles filed a verified original class action against Lottery.com.
February 25, 2025	Court granted in part and denied in part the MTD Third Amended Complaint in Preston Million case.
February 25, 2025	Plaintiffs' claims in Global Gaming Data case dismissed without prejudice for failure to prosecute.
March 13, 2025	Company completed the acquisition of Spektrum Ltd from PlusEvo Ltd.
March 13, 2025	Court granted Plaintiff Hoffman's motion for leave for additional time to amend his complaint in Preston Million case.
March 14, 2025	Court denied Defendants Motion for Judgment as a Matter of Law in Global Gaming Data case.
March 25, 2025	Judge issued ruling dismissing claims against IGT in Dawn Nettles case.
March 26, 2025	Company registered Sports.com as a fictitious name in Florida.
March 31, 2025	End of the reporting period for the 10-Q/A.
April 1, 2025	Court denied as moot Defendants Motion for Partial Summary in Global Gaming Data case.
April 8, 2025	Jerry R. Reed brought an action alleging illegal game-rigging and money-laundering.
April 24, 2025	Court entered an order granting Defendants Amended Motion for Entry of Final Judgment in Global Gaming Data case.
April 25, 2025	Plaintiff in Honey Tree Trading case filed Motion to Dismiss Count IV as Moot.
May 2, 2025	Sports.com and Lottery.com entered into a Sponsorship Agreement with Sebastian Murray.
May 5, 2025	Additional payments totaling $125,000 made for Nook Holdings acquisition.
May 7, 2025	Lottery.com entered into a Letter of Intent with Dotcom Ventures Inc.
May 13, 2025	Mr. Marc Bircham appointed to the Board of Directors as an Executive Director.
May 14, 2025	Company received notice of effectiveness of Amendment No. 4 to its registration statement filed on Form S-1.
October 15, 2025	Date of filing of this Amended Quarterly Report on Form 10-Q/A.
December 31, 2026	Options may not be granted under the 2023 Employees, Directors and Consultants Stock Issuance and Option Plan after this date.

Recommendation

strong sell

The company faces severe financial distress, evidenced by recurring net losses, negative working capital, and an accumulated deficit of $266.8 million. The explicit "going concern" warning indicates a high risk of business failure. While operating expenses decreased and cash improved in Q1 2025, revenue and gross profit declined, and the company remains heavily reliant on external financing, which is not assured. Numerous ongoing legal proceedings, including class action lawsuits and disputes with lenders, create significant uncertainty and potential liabilities. The risk of Nasdaq delisting further threatens liquidity and investor confidence. Despite strategic acquisitions and future plans, the fundamental financial health and operational stability are critically weak, making the stock a high-risk, speculative investment with substantial downside potential.

Keywords

Lottery.com, SEC Filing, Quarterly Report, Financial Results, Net Loss, Operating Expenses, Going Concern, Nasdaq Listing, Acquisitions, Spektrum Ltd, Nook Holdings, Sports.com, Legal Proceedings, Internal Controls, Capital Raise, Gaming Industry, Online Lottery, Stock Issuance Plan

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