DEF 14A: Lottery.com Seeks Stockholder Approval for Reverse Stock Split to Maintain Nasdaq Listing

Lottery.com is asking stockholders to approve a reverse stock split proposal at its upcoming annual meeting to regain compliance with Nasdaq's minimum bid price requirement.

Summary

• Lottery.com Inc. is holding its 2024 Annual Meeting of Stockholders virtually on February 20, 2025, at 10 a.m. Central Time.
• The meeting will address several proposals, including the election of a Class II director, a reverse stock split, ratification of the appointment of Boladale Lawal & Co. as the independent registered public accounting firm, and an advisory vote on adjourning the meeting to solicit additional proxies.
• The company is seeking approval for a reverse stock split of its common stock at a ratio between one-for-two and one-for-thirty, with the exact ratio to be determined by the Board of Directors.
• The primary reason for the reverse stock split is to increase the per-share trading price to regain compliance with Nasdaq listing requirements, specifically the minimum bid price rule of $1.00 per share.
• If the reverse stock split is not approved and implemented, Lottery.com risks being delisted from Nasdaq, which could negatively impact the stock's liquidity and price.
• The Board recommends voting FOR all proposals, including the reverse stock split.
• As of December 31, 2024, there were 12,080,919 shares of common stock outstanding and entitled to vote.
• The company's reports on Forms 10-K, 10-Q, 8-K and all amendments to those reports are available without charge through the SECs website.

Sentiment

Score: 4

Explanation: The document is primarily focused on a reverse stock split to avoid delisting, which is generally viewed negatively. While the company expresses optimism, the underlying situation suggests financial challenges.

Positives

• The Board believes that maintaining the listing of our Common Stock on Nasdaq is in the best interests of the Company and our stockholders.
• The Board believes that the Reverse Stock Split will result in a higher per share trading price, which is intended to enable us to maintain the listing of our Common Stock on Nasdaq and generate greater investor interest in the Company.
• The Board also believes that the expected increased market price per share of our Common Stock as a result of implementing a Reverse Stock Split could improve the marketability and liquidity of our Common Stock and encourage interest and trading in our Common Stock.

Negatives

• The company is currently not in full compliance with the continued listing standards of Nasdaq.
• The company risks having its securities delisted by Nasdaq if the Minimum Trading Price is not restored.
• Delisting could also impair the Companys ability to raise capital and/or trigger defaults and penalties under its outstanding agreements or securities.
• There can be no assurance that the Reverse Stock Split will result in our meeting and maintaining the $1.00 minimum closing price requirement.
• The reduced number of outstanding shares of our Common Stock resulting from the Reverse Stock Split could adversely affect the liquidity of our Common Stock.
• Based on the experience of certain other companies that have effected reverse stock splits, the Reverse Stock Split could result in a devaluation of our market capitalization and the trading price of our Common Stock, on an actual or an as-adjusted basis.

Risks

• Failure to regain compliance with Nasdaq listing requirements could lead to delisting.
• The reverse stock split may not result in a sustained increase in the stock price.
• Delisting from Nasdaq could negatively impact the company's ability to raise capital.
• The reduced number of outstanding shares of our Common Stock resulting from the Reverse Stock Split could adversely affect the liquidity of our Common Stock.
• The Reverse Stock Split may leave certain stockholders with one or more odd lots, which are stock holdings in amounts of less than 100 shares of our Common Stock.

Future Outlook

The company aims to regain compliance with Nasdaq listing requirements through the proposed reverse stock split. The Board retains the flexibility to implement the reverse stock split or abandon it based on market conditions.

Management Comments

• The Board believes that stockholder approval of amendments granting our Board this discretion, rather than approval of a specified stock split ratio, provides our Board with maximum flexibility to react to then-current market conditions and, therefore, is in the best interests of the Company and its stockholders.
• Our Board reserves the right to abandon the Reverse Stock Split without further action by our stockholders at any time before the effectiveness of our Certificate of Amendment, even if the Reverse Stock Split has been authorized by our stockholders.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from major exchanges due to low stock prices. The success of a reverse stock split in maintaining listing and attracting investors varies widely and depends on the company's underlying performance and market conditions.

Comparison to Industry Standards

• Many companies facing similar situations, such as delisting warnings from Nasdaq or NYSE, have implemented reverse stock splits.
• The effectiveness of a reverse stock split depends on the company's ability to improve its financial performance and investor confidence following the split.
• Companies like DryShips Inc. have used reverse stock splits multiple times to maintain listing compliance, but this strategy has not always led to long-term success.
• Other companies, such as Titan Machinery Inc., have seen positive results after implementing a reverse stock split, with their stock price increasing and maintaining compliance with listing requirements.

Stakeholder Impact

• Shareholders may experience a change in the number of shares they own due to the reverse stock split.
• The reverse stock split aims to maintain the company's listing on Nasdaq, which could benefit shareholders by maintaining liquidity and access to capital markets.
• Employees and other stakeholders could be affected by the company's ability to raise capital and continue operations, which is tied to maintaining its Nasdaq listing.

Next Steps

• Stockholders to vote on the proposals at the Annual Meeting on February 20, 2025.
• The Board will determine whether to implement the reverse stock split and at what ratio, based on market conditions and other factors.
• The company will file a Form 8-K to announce the voting results of the Annual Meeting.

Key Dates

Keywords

reverse stock split, Nasdaq, annual meeting, proxy statement, listing requirements, common stock, delisting, stockholders, Boladale Lawal & Co., director election