Item 3. Legal Proceedings
Item
3. Legal Proceedings.
The
Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.
In addition, the Company is a party to several material legal proceedings, which are described below. The outcome of litigation is inherently
uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s
expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
J.
Streicher
On
July 29, 2022, the Company filed its original Verified Complaint for Breach of Contract and Specific Performance (the “Streicher
Complaint”) against J. Streicher Financial, LLC (“Streicher”) in the Court of Chancery of the State of Delaware (the
“Chancery Court”), styled AutoLotto, Inc. dba Lottery.com v. J. Streicher Financial, LLC (Case No. 2022-0661-MTZ) .
In the Streicher Complaint, the Company alleged that Streicher breached the contract entered into by the parties on March 9, 2022 and
demanded that Streicher return $16,500,000.00 it owed to the Company. On September 26, 2022, the Chancery Court entered an order in favor
of the Company, Granting with Modifications Company’s Motion for Partial Summary Judgment in the amount of $16,500,000.00
(the “Streicher Judgment”). On October 27, 2022, the Chancery Court further awarded the Company $397,036.94 in attorney’s
fees (the “Fee Order”). On November 15, 2022, the Company initiated efforts against Streicher to seek collections on the
Judgment. On December 8, 2022, the Company’s prior attorney Skadden, Arps, Slate, Meagher & Flom, LLP (“Skadden”)
filed its Combined Motion to Withdraw as Counsel and For a Charging Lien in amount of $3,024,201.17 for legal fees unpaid by Company
(“Skadden’s Motion”). On December 30, 2022, the Company filed its response to Skadden’s Motion, alleging that
the Chancery Court should deny Skadden’s Motion for a Charging Lien as a matter of law or, in the alternative, limit the
charging lien to the amount of the attorneys’ fees awarded by the Fee Order. As of the date of this Report, the Chancery Court
has not set Skadden’s Motion for an oral hearing, nor has it entered an order on the motion. On January 20, 2023, faced with post-judgment
discovery and depositions, Streicher remitted a partial payment towards the Judgment in the amount of $75,000.00. On February 13, 2023,
Streicher made another payment towards the Judgment in the amount of $50,000.00 and had agreed to make another payment in the amount
of $75,000.00 on February 28, 2023, which it failed to make. The Company intends to fully collect on the Judgment and shall pursue all
legal and equitable means to enforce the Judgment against Streicher until the Judgment is fully satisfied. See “ Item 1A. Risk
Factors - Legal Proceedings Risks - We may not recover amounts owed to us from J. Streicher Financial, LLC ” for further information.
Preston
Million Class Action
On
August 19, 2022, Preston Million filed the Class Action Complaint (the “Class Action Complaint”) against the Company
and certain former officers and directors of the Company in the United States District Court for Southern District of New York (the “SDNY”),
styled Preston Million, Individually and on Behalf of All Others Similarly Situated vs. Lottery.com, Inc. f/k/a Trident Acquisitions
Corp., Anthony DiMatteo, Matthew Clemenson and Ryan Dickinson (Case No. 1:22-cv-07111-JLR) . The Class Action Complaint alleged violations
by all defendants of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) 15 U.S.C. §§
78j(b), 78t(a), as amended by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), U.S.C. § 78u-4 et seq .
(collectively “Federal Securities Laws”). On November 18, 2022, the SNDY ordered the appointment of RTD Bros, LLC, Todd Benn,
Tom Benn and Tomasz Rzedian (collectively “Lottery Investor Group”) as lead plaintiff and Glancy Prongay & Murray, LLP
as lead counsel for plaintiffs and for the class in the case. On December 5, 2022, the Court stipulated a Scheduling Order in
the case. On January 12, 2023, the Company’s legal counsel timely filed its Notice of Appearance . On January 31, 2022, plaintiffs
filed their Amended Complaint adding Kathryn Lever, Marat Rosenberg, Vadim Komissarov, Thomas Gallagher, Gennadii Butkevych, Ilya
Ponomarev as additional defendants in the case. The Amended Complaint alleges, among other things, that defendants made materially
false and misleading statements in violation of Section 10(b),14(a) and 20(a) of the Exchange Act and plaintiffs seek compensatory damages,
reasonable cost and expenses including counsel fees and expert fees. Pursuant to the Scheduling Order , the Company filed its motion
to dismiss the Amended Complaint on April 3, 2023, under the newly consolidated caption and its proposed order to dismiss the matter.
Plaintiffs are expected to file their opposition to the motion to dismiss no later than May 18, 2023, which would trigger the Company’s
deadline to file its reply brief in support of their motion to dismiss no later than June 20, 2023.
TinBu
Complaint
On
March 13, 2023, John Brier, Bin Tu and JBBT, LLC (collectively, the “TinBu Plaintiffs”) filed its original complaint against
Lottery.com, Inc. f/k/a AutoLotto, Inc. and its wholly-owned subsidiary TinBu, LLC (“TinBu”) in the Circuit Court of the
13 th Judicial District in and for Hillsborough County, Florida (the “TinBu Complaint”). The Complaint alleges
breach of contract(s) and misrepresentation with alleged damages in excess of $4.6 million. The parties agreed to extend the Company’s
and its subsidiary’s deadline to respond until May 1, 2023. On May 2, 2023, the Company and its subsidiary retained local counsel
who filed a Notice of Appearance on behalf of the Company and TinBu and filed a Motion for Enlargement requesting the Court to extend
its deadline to file its initial response to the Complaint by an additional 30 days (the “Motion for Enlargement”). As of
the date of this Report, the Motion for Enlargement has not been set for a hearing. On May 5, 2023, Plaintiffs filed their Motion for
Court Default (“Plaintiffs’ Motion for Default”), despite Company’s Motion for Enlargement. As of the date of
this Report, the Plaintiffs’ Motion for Default has not been set for a hearing. The Company intends to oppose Plaintiffs’
Motion for Default. On May 9, 2023, Plaintiffs served Plaintiffs’ First Request for Admissions (the “RFA”) to the Company.
The parties have agreed to an extension of time to respond to the RFA. The Company intends to respond in a timely manner or make necessary
objections to the RFA. On June 5, 2023, the Company and TinBu filed its original Answer and Affirmative Defenses to the TinBu Complaint.
Item
4. Mine Safety Disclosures.
Not
applicable.
53
PART
II
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