What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-04-03 compared with 2023-06-15 · 790 added, 728 removed, 1555 unchanged (49% of the section changed)

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among other adverse impacts.

previously disclosed in the Company’s Current Reports on Form 8-K, initially filed with the SEC on July 6, 2022 and July 22, 2022,

the Board retained outside counsel to conduct the Internal Investigation that revealed instances of non-compliance with state and federal

laws concerning the state in which tickets are procured as well as order fulfillment, and issues pertaining to the Company’s internal

accounting controls.

Certain of these issues contributed to the Company’s auditors’ determination that the Company’s

audited financial statements for the year ended December 31, 2021 and the unaudited financial statement for the quarter ended March 31,

2022, should no longer be relied upon and required restatement.

issues have had and could continue to have material adverse impacts on us.

We and certain of our former officers are the subject of a

number of legal proceedings, investigations and inquiries with respect to these issues and have been named as a defendant in a number

of lawsuits, including class action lawsuits.

We incurred significant costs in connection with the Internal Investigation, including

legal expenses and cost associated with the restatement and adjustment of our 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

Moreover, an unfavorable outcome in any of these matters could result in significant damages, additional penalties or other

remedies imposed against us, and/or 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.

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, including the Operational Cessation, 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.

Further, our senior management team devoted significant time to facilitate the Internal Investigation and is expected

to continue to devote significant time and efforts to address the impacts associated with or arising from the Internal Investigation.

cannot predict all impacts on us in connection with or arising from any of the foregoing.

Any unknown or new risks might result in a

material adverse effect on us.

of these issues contributed to the Company’s auditors’

determination that the Company’s audited financial statements

for the year ended December 31, 2021 and the unaudited financial statement for the quarter ended March 31, 2022, should no longer be

relied upon and required restatement.

a consequence, on May 10, 2023 and May 15, 2023 respectively, the Company filed with the SEC as amended reports the required restatements

of its year-end report for December 31, 2021 and for the quarter ended March 31, 2022.

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 the

Internal Investigation, including legal expenses and costs associated with the restatement and adjustment of our 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, and/or 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.

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

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.

Further, our senior management team has devoted significant time to facilitate the Internal Investigation

and is expected to continue to devote significant time and efforts to address the impacts associated with or arising from the Internal

Investigation.

cannot predict all impacts on the Company in connection with or arising from any of the foregoing.

Any unknown or new risks might result

in a material adverse effect on us.

and certain of our former officers are, and in the future, we or our officers and directors may become, the subject of legal proceedings,

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of our former officers are currently the subject of investigations and inquiries by the SEC and the U.S.

Department of Justice (the “DOJ”)

relating to the findings of the Internal Investigation and other matters, and we are cooperating fully with such investigations and inquiries.

In the future, we or our officers and directors may become the subject of legal proceedings, investigations and inquiries by governmental

agencies in various jurisdictions relating to the findings of Internal Investigation and other matters.

Department of Justice (the “DOJ”)

relating to the findings of the Internal Investigation and other matters.

The Company is cooperating fully with such investigations and

In the future, we or our officers and directors may become the subject of legal proceedings, investigations and inquiries

by governmental agencies in various jurisdictions relating to the findings of Internal Investigation and other matters.

investigations and inquiries and any other similar or related future legal proceedings, investigations or inquiries are subject to inherent

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and inquiries, and we cannot assure you with any certainty that we will be able to obtain such coverage in the future.

relating to or arising from the restatement and the Internal Investigation, including adverse publicity and 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

have been and could continue to be the subject of negative publicity focusing on the Internal Investigation and the restatement and adjustment

of our financial statements, and we may be adversely impacted by negative reactions from our users, customers or others with whom we

Concerns include the perception of the effort required to address our accounting and control environment, and the ability

for us to be a long-term provider to our customers.

Continued adverse publicity and potential concerns from our customers and business

partners or others could harm our business and have an adverse effect on our financial condition.

July 2022, we furloughed the majority of our employees and suspended our lottery game sales operations after determining that we did

not have sufficient financial resources to fund our operations or pay certain existing obligations, including our payroll and related

As a result, we may not be able to continue as a going concern.

July 2022, we furloughed the majority of our employees and ceased our operations after determining that we did not have sufficient financial

resources to fund our operations or pay certain existing obligations, including our payroll and related obligations.

relating to or arising from the restatements and the Internal Investigation, including adverse publicity and 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

have been and could continue to be the subject of negative publicity focusing on the Internal Investigation and the restatements and

adjustments to our financial statements, and we may be adversely impacted by negative reactions from our users, customers or others with

whom we do business.

Concerns include the perception of the effort required to address our accounting and control environment, and the

ability for us to be a long-term provider to our customers.

Continued adverse publicity and potential concerns from our customers and

business partners or others could harm our business and have an adverse effect on our financial condition.

July 2022, the Company furloughed the majority of its employees and suspended lottery game sales operations after determining that it

did not have sufficient financial resources to fund its operations or pay certain existing obligations, including payroll and related

As a result, the Company may not be able to continue as a going concern.

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, 2023, the Company owed approximately $1.6 million in outstanding payroll obligations, which amounts remain unpaid.

Since our business

is largely dependent on the efforts and talents of our employees, particularly our developers and engineers, and the provision of ongoing

services to customers by our employees, the loss of these employees 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.

order for the Company to restart its operations, it must raise sufficient capital to re-hire employees.

Qualified employees may not be

available for hire, and/or may require salaries or benefits in excess of what we paid persons in similar positions previously, due to

among other things, our need to hire such persons away from their current jobs and the negative impact that the furlough has had on our

we are not able to restart our operations, hire new employees, 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, and/or seek bankruptcy protection, which could

cause the value of our securities to become worthless.

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.

order for the Company to restart its operations, it must raise sufficient capital to re-hire or hire additional employees.

employees may not be available for hire, and/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.

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, and/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

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 for the next 12 months.

our ability to continue as a going concern during the next 12 months.

The accompanying financial statements have been prepared in accordance

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The financial statements included herein also include a going concern footnote.

need additional capital to, among other things, support and restart our operations, re-hire employees and pay our expenses.

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.

need to raise capital to, among other things, support and restart our operations, re-hire employees and pay our expenses.

The most likely

source of future funds presently available to us will be through future borrowings under the Loan Agreement or through the sale of equity

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 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:

additional equity or debt

financing may not be available to us on satisfactory terms, if at all;

if we raise additional

funds by issuing equity, equity-linked securities or debt securities, those securities may have rights, preferences or privileges

senior to the rights of our currently issued and outstanding equity or debt, and our existing stockholders may experience dilution;

loans or other debt instruments

may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions, which are not

acceptable to management or our Board;

we may not have sufficient

funds to repay our debt, which could lead us to default on our obligations;

the current environment

in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing.

Woodford does not advance us amounts owed under the Loan Agreement and/or we are unable to raise additional funds, we may not be able

to raise enough capital to recommence our operations and run 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

need additional capital to, among other things, support and restart our 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.

need to raise capital to, among other things, support and restart our 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 our initial

Woodford 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,

equity or debt financing may not be available to us on satisfactory terms, if at all;

we raise additional funds by issuing equity, equity-linked securities or debt securities, those securities may have rights, preferences

or privileges senior to the rights of our currently issued and outstanding equity or debt, and our existing stockholders may experience

or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation

provisions, which are not acceptable to management or our Board;

may not have sufficient funds to repay our debt, which could lead us to default on our obligations;

current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt

funds advanced under our current loan agreements are inadequate to meet our needs, and/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.

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.

we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations,

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materially and adversely affected.

connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2021, we and our

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 remediated as of December 31, 2022.

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

connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2021, we and our independent

registered public accounting firm identified certain material weaknesses in our internal control over financial reporting as of December

Such material weaknesses have not been fully remediated as of December 31, 2023.

As defined in the standards established by

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.

material weaknesses as of December 31, 2022 and 2021 identified include:

Lack of sufficient number

of personnel with an appropriate level of knowledge and experience in accounting for complex or non-routine transactions;

The fact that our policies

and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions were either not designed

and in place or not operating effectively;

Deficiencies in the design

and operations of the procedures relating to the timely closing of financial books at the quarter and fiscal year end;

Incomplete segregation

of duties in certain types of transactions and processes.

of sufficient number of personnel with an appropriate level of knowledge and experience in accounting for complex or non-routine

transactions;

fact that our policies and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions

were either not designed and in place or not operating effectively;

in the design and operations of the procedures relating to the timely closing of financial books at the quarter and fiscal year end;

segregation of duties in certain types of transactions and processes.

a result of the material weaknesses, management has concluded that our internal control over financial reporting was ineffective as of

December 31, 2022 and 2021.

December 31, 2022 and 2021, and these deficiencies remain uncorrected as of December 31, 2023.

intend to implement measures to remediate the identified material weaknesses.

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operations or financial results.

See “ Item 9A.

Controls and Procedures-Material Weaknesses in Internal Control Over Financial

Reporting .”

there can be no guarantee that the Internal Investigation and subsequent inquiries revealed all instances of inaccurate disclosure or

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10-K and Quarterly Reports on Form 10-Q.

In addition, once we become an “accelerated filer” and cease to be a “smaller

reporting company” as such terms are defined in the JOBS Act, our independent registered public accounting firm must attest to

In addition, once we become an “accelerated filer”

and cease to be a “smaller

reporting company”

as such terms are defined in the JOBS Act, our independent registered public accounting firm must attest to

and report on the effectiveness of our internal control over financial reporting.

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interactivity, and enjoyment than our offerings.

We compete with these and other forms of entertainment for our users’ discretionary

We compete with these and other forms of entertainment for our users’

discretionary

time and income.

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and globally following the financial crisis in 2008 through 2009,

and there appears to be an increasing risk of a recession or inflationary economic impacts due to international trade and monetary policy,

rising interest rates and inflation, and acts or threats of acts of war (including the ongoing war in Ukraine), along with other economic

If the national and international economic recovery 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.

and there may be an increasing risk of a recession or inflationary economic impacts due to international trade and monetary policy, rising

interest rates and inflation, and acts or threats of acts of war (including the ongoing war in the Ukraine and Middle East), along with

other economic challenges.

If the national and international economic recovery 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.

addition, changes in general market, economic, and political conditions in domestic and foreign economies or financial markets, including

those resulting from, for example:

the ongoing impact of the COVID-19 pandemic;

the ongoing effects of the COVID-19 pandemic;

rising interest rates and inflation;

geopolitical challenges,

including global security concerns in response to Russia’s continued war in Ukraine;

financial and credit market instability or

the unavailability of credit;

and fluctuation in stock markets, may reduce users’, customers’, or subscribers’ disposable

income and corporate budgets.

Any one of these changes could have a material adverse effect on our business, financial condition, or

results of operations and could cause the value of our securities to decline or become worthless.

including global security concerns in response to Russia’s continued war in Ukraine and regional wars in the Middle East;

and credit market instability or the unavailability of credit;

and fluctuation in stock markets, may reduce users’, customers’,

or subscribers’

disposable income and corporate budgets.

Any one of these changes could have a material adverse effect on our business,

financial condition, or results of operations and could cause the value of our securities to decline or become worthless.

in discretionary consumer spending could have an adverse effect on our business, financial condition, and results of operations.

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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

reduce our users’

disposable income or result in fewer individuals engaging in entertainment and leisure activities, such as purchasing

lottery games through remote channels.

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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.

we cannot ensure that demand for our offerings will remain constant or achieve our anticipated growth.

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opinion can significantly influence our business.

Unfavorable publicity regarding, for example, us, members of our management and Board,

Unfavorable publicity regarding, for example, our company, members of our management and Board,

our technology, our implementation of upgrades and changes to our technology, the quality of our Platform and its interfaces, our product

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legislation regarding the mobile purchase of lottery games from third-party providers, including with respect to the regulation or licensure

of couriers, or with respect to the legalization of online lottery game sales (“Online Lottery”), either of which may impact

our operations.

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and results of operations.

ability to achieve growth in revenue in the future will depend, in large part, upon our ability to attract new players 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

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 using 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.

ability to achieve growth in revenue in the future will depend, in large part, upon our ability to attract new players 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.

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.

addition, our ability to increase the number of users of our offerings will depend on user adoption of playing lottery games remotely

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names that infringe on, are similar to, or otherwise decrease the value of our brand, trademarks, or service marks.

have registered domain names that we use in, or are related to, our business, most importantly www.lottery.com and sports.com .

have registered domain names that we use in, or are related to, our business, most importantly www.lottery.com and www.

We believe our easily identifiable and definitional brands and domain names are one of our competitive strengths.

If we lose the ability

to use our domain names, especially www.lottery.com and sports.com , whether due to trademark claims, failure to renew applicable

registrations, or any other cause, we may be forced to incur significant expense in order to attempt to purchase rights to the domain

name in question, the failure of which would require us to market the relevant offerings under a new domain name, and we may be required

to change our brand, which could cause us substantial harm and expense, and could negatively impact our business, financial condition,

and results of operations.

to use our domain names, especially www.lottery.com and www.

sports.com , whether due to trademark claims, failure to renew

applicable registrations, or any other cause, we may be forced to incur significant expense in order to attempt to purchase rights to

the domain name in question, the failure of which would require us to market the relevant offerings under a new domain name, and we may

be required to change our brand, which could cause us substantial harm and expense, and could negatively impact our business, financial

condition, and results of operations.

We may not be able to obtain preferred domain names outside the U.S.

due to a variety of reasons.

our competitors and others could attempt to capitalize on our brand recognition by using domain names similar to ours.

We may be unable

to prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our

brand or our trademarks or service marks.

Protecting, maintaining, and enforcing our rights in our domain names may require litigation,

which could result in substantial costs and diversion of resources, all of which could, in turn, adversely affect our business, financial

condition, and results of operations and could cause the value of our securities to decline or become worthless.

are subject to risks related to corporate social responsibility, responsible gaming, reputation, and ethical conduct.

In addition, our competitors and others could attempt to capitalize on our brand recognition by using domain names similar to ours.

may be unable to prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease

the value of our brand or our trademarks or service marks.

Protecting, maintaining, and enforcing our rights in our domain names may

require litigation, which could result in substantial costs and diversion of resources, all of which could, in turn, adversely affect

our business, financial condition, and results of operations and could cause the value of our securities to decline or become worthless.

are subject to risks related to corporate social responsibility, responsible gaming, reputation, and ethical

factors influence our reputation and the value of our brands, including the perception held by our users, customers, business partners,

investors, regulatory authorities, other key stakeholders, and the communities in which we operate, such as our social responsibility,

corporate governance, and responsible gaming practices.

We have faced, and will likely continue to face, increased scrutiny related to

social, governance and responsible gaming activities, and our reputation and the value of our brands can be materially adversely harmed

if we fail to act responsibly in a number of areas, such as diversity and inclusion, workplace conduct, responsible gaming, human rights,

philanthropy, and support for local communities.

Any harm to our reputation could impact employee engagement and retention, and the willingness

of users, customers and partners to do business with us, which could have a materially adverse effect on our business, financial condition,

investors, regulatory authorities, key stakeholders, and the communities in which we operate, such as our social responsibility, corporate

governance, and responsible gaming practices.

We have faced, and will likely continue to face, increased scrutiny related to social,

governance and responsible gaming activities, and our reputation and the value of our brands can be materially adversely harmed if we

fail to act responsibly in a number of areas, such as diversity and inclusion, workplace conduct, responsible gaming, human rights, philanthropy,

and support for local communities.

Any harm to our reputation could impact employee engagement and retention, and the willingness of

users, customers and partners to do business with us, which could have a materially adverse effect on our business, financial condition,

and results of operations and could cause the value of our securities to decline or become worthless.

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Operational Risks

have incurred net losses in the past with negative cash flows and recently suspended our operations and may not be able to generate and

sustain profitability.

have a history of incurring net losses and have suspended significantly all of our operations since July 2022.

We may not be able to

achieve or maintain profitability in the future.

We experienced net losses of approximately $61.3 million for the year ended December

31, 2022, and experienced net losses of approximately $53.0 million and $5.80 million for the years ended December 31, 2022 and December

31, 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of approximately $209.1 million.

While we have received

some limited revenue since the Operational Cessation, we cannot predict when or whether we will be able to restart our operations and/or

whether or not we will be able to reach profitability at any time in the future.

have incurred net losses in the past with negative cash flows and suspended operations and may not be able to generate and sustain profitability.

have a history of incurring net losses and have suspended significantly our operations since July 2022, the Operational Cessation.

may not be able to achieve or maintain a needed level of profitability in the future.

We experienced net losses of approximately $24.7

million for the year ended December 31, 2023, and experienced net losses of approximately $60.0 million and $53.0 million for the years

ended December 31, 2022 and December 31, 2021, respectively.

As of December 31, 2023, we had an accumulated deficit of approximately

$233.8 million.

While we have received some limited revenue since the Operational Cessation, we cannot predict when or whether we will

be able to restart our operations and/or whether or not we will be able to reach profitability at any time in the future.

also expect our operating expenses to increase in the future as we continue to invest for our future growth, which will negatively affect

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these services as beneficial, or chooses not to use them as a result of concerns regarding security, safety, affordability, or for other

reasons, whether as a result of incidents on our Platform or on our competitors’ applications or otherwise, or instead adopts alternative

reasons, whether as a result of incidents on our Platform or on our competitors’

applications or otherwise, or instead adopts alternative

solutions that may arise, then the market for our Platform may not further develop, may develop slower than we expect, or may not achieve

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If we are unable to do so or otherwise provide products, services, and systems that users and

customers want, then our users or customers may become dissatisfied and use competitors’ services.

customers want, then our users or customers may become dissatisfied and use competitors’

If we are unable to continue

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may not be able to capitalize on trends and changes in the gaming and lottery industries, including due to the operational costs involved,

the laws and regulations governing these industries, and other factors.

the laws and regulations governing these industries in various jurisdictions, and other factors.

participate in new and evolving aspects of the mobile gaming and lottery industries.

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is deemed to be internet gaming, or our customers offer internet gaming, it is important to recognize that the laws relating to internet

gaming are evolving.

To varying degrees, governments have taken steps to change the regulation of internet wagering through the implementation

of new or revised licensing and taxation regimes, including the possible imposition of sanctions on unlicensed providers.

We cannot predict

the timing, scope or terms of the implementation or revision of any such state, federal or foreign laws or regulations, or the extent

to which any such laws and regulations may facilitate or hinder our strategy or be applicable to or impactful on our business, operations

and financial condition.

gaming are evolving literally by jurisdiction.

To varying degrees, governments have taken steps to change the regulation of internet

wagering through the implementation of new or revised licensing and taxation regimes, including the possible imposition of sanctions

on unlicensed providers.

We cannot predict the timing, scope or terms of the implementation or revision of any such state, federal or

foreign laws or regulations, or the extent to which any such laws and regulations may facilitate or hinder our strategy or be applicable

to or impactful on our business, operations and financial condition.

jurisdictions that authorize internet gaming, we may not be successful in offering our technology, content and services to internet gaming

operators, because we expect to face intense competition from our traditional competitors in the gaming and lottery industries, as well

operators, We expect to face intense competition from our traditional competitors in the gaming and lottery industries, as well

as a number of other domestic and foreign competitors (and, in some cases, the operators themselves), many of which have substantially

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Know-your-customer

and geo-location programs and technologies supplied by third parties are an important aspect of certain internet and mobile gaming products,

services, and systems, because they can confirm certain information with respect to players and prospective players, such as age, identity,

and location.

Payment processing programs and technologies, typically provided by third parties, are also a necessary feature of interactive

and mobile wagering products, services, and systems.

These programs and technologies are costly, and our use of them may have an adverse

impact on our results of operations, cash flows, and our financial condition.

Additionally, our products or services containing these

programs and technologies may not be available to us on commercially reasonable terms, if at all, and may not perform accurately or otherwise

and geo-location programs and technologies supplied to us by third parties are an important aspect of certain internet and mobile gaming

products, services, and systems, because they can confirm certain information with respect to players and prospective players, such as

age, identity, and location.

Payment processing programs and technologies, typically provided by third parties, are also a necessary

feature of interactive and mobile wagering products, services, and systems.

Moreover, we cannot provide any assurance that programs or

technologies supplied to us by third parties will always meet regulatory standards, which constitutes an economic and regulatory risk

Additionally, these programs and technologies are costly to implement, and our use of them may have an adverse impact on our results

of operations, cash flows, and our financial condition and overall business risk Also, our products or services containing these programs

and technologies may not be available to us on commercially reasonable terms, if at all, and may not perform accurately or otherwise

in accordance with required specifications, all of which may have a negative impact on our business, results of operations, and financial

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Additionally,

the reputational impact of our Board and management changes, the Operational Cessation and the events contributing thereto has not been

the reputational impact of our Board and management changes, the Operational Cessation and the events contributing thereto have not been

It may require significant investment to restore the value in our brand, and the value of our brand may never return to prior

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would be adversely affected.

we fail to detect fraud or misappropriation of proprietary information, including by our users, customers, and employees, our reputation

and brand may suffer, which could negatively impact our business, financial condition, and results of operations and can subject us to

investigations and litigation.

have in the past, and may in the future, incur losses from various types of fraud, which may include the use of stolen or fraudulent

payment card data, claims of unauthorized payments by a user and attempted payments by users with insufficient funds, referral fraud

by affiliates, fraud with respect to background checks, fraud by employees, including our couriers, and account takeovers of user accounts

by bad actors, or phishing.

Bad actors use increasingly sophisticated methods to engage in illegal activities involving personal information,

such as unauthorized use of another person’s identity, account information, or payment information and unauthorized acquisition

or use of payment card details, bank account information, and mobile phone numbers and accounts.

we fail to detect fraud or misappropriation of proprietary information, including by our users, customers, and employees and contractors,

our reputation and brand may suffer, which could negatively impact our business, financial condition, and results of operations and can

subject us to investigations and litigation.

have in the past incurred, and may in the future, incur losses from various types of fraud, which may include the use of stolen or

fraudulent payment card data, claims of unauthorized payments by a user and attempted payments by users with insufficient funds,

referral fraud by affiliates, fraud with respect to background checks, fraud by employees or contractors, including our couriers,

and account misappropriation by bad actors, or phishing.

Bad actors use increasingly sophisticated methods to engage in illegal

activities involving personal information, such as identity theft, payment or bank account information theft and the unauthorized

acquisition of mobile phone numbers and other accounts.

of fraud may involve various tactics, including collusion.

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diverted from other projects and requirements to correct these issues, which may delay other projects and the achievement of our strategic

addition, any misappropriation of, or access to, users’ or other proprietary information or other breach of our information security

addition, any misappropriation of, or access to, users’

or other proprietary information or other breach of our information security

could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply

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have an adverse effect on our business, financial condition, and results of operations.

may be liable for these acts of fraud.

may be held liable for these acts of fraud.

For example, under current payment card industry practices, we may be liable for use of funds

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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

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

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time we decided to execute any new initiative.

Creating additional offerings can also divert our management’s attention from other

business issues and opportunities.

Even if our new offerings attain market acceptance, those new offerings could exploit the market share

of our other product offerings or share of our users’ wallets in a manner that could negatively impact such offerings.

of our other product offerings or share of our users’

wallets in a manner that could negatively impact such offerings.

such offering expansion will increase the complexity of our business and place an additional burden on our management, operations, technical

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our user and customer base and engagement grows, and the amount and types of offerings we provide grow and evolve, we will need an increasing

amount of technical infrastructure, including network capacity and computing power, to satisfy our users’ and customers’

amount of technical infrastructure, including network capacity and computing power, to satisfy our users’

and customers’

Such infrastructure expansion may be complex, and unanticipated delays in completing these projects or availability of components

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our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers, breached due to employee

error, malfeasance, or other cybersecurity risks or disruptions.

Any such breach could compromise our networks and the information stored

there could be accessed, publicly disclosed, lost or stolen.

Any such access, disclosure, or other loss of information could result in

legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, fines,

and the payment of damages, restrictions on our ability to use data, disruption of our operations and the services we provide to users,

damage to our reputation, and a loss of confidence in our products, services, and systems, which could adversely affect our business.

or contractor error, malfeasance, or other cybersecurity risks or disruptions.

Any such breach could compromise our networks and the

information stored there could be accessed, publicly disclosed, lost or stolen.

Any such access, disclosure, or other loss of information

could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties,

fines, and the payment of damages, restrictions on our ability to use data, disruption of our operations and the services we provide

to users, damage to our reputation, and a loss of confidence in our products, services, and systems, which could adversely affect our

secure maintenance and transmission of personally identifiable information of our users is a critical element of our operations.

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service provider or business partner.

As a result, our users’ information may be lost, disclosed, accessed, or taken without our

users’ consent.

As a result, our users’

information may be lost, disclosed, accessed, or taken without our

We have experienced attempts to breach our systems and other similar incidents in the past and anticipate that

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unauthorized access to our sites, networks, and systems;

unauthorized access to and misappropriation of user information, including users’

personally identifiable information, or other confidential or proprietary information of ourselves or third parties;

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additional personnel and protection technologies, train employees, and engage third-party experts and consultants.

addition, any party who is able to illicitly obtain access to a user’s account could access the user’s transaction data or

personal information, resulting in the perception that our systems are insecure.

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are subject to various privacy laws in the U.S.

and internationally and we expect that new industry standards, laws and regulations will

continue to be proposed regarding privacy, data protection and information security in many jurisdictions, including the California Consumer

Privacy Act of 2018, which went effective January 1, 2020 and the California Consumer Privacy Rights Act (“CCPA”), which

went effective on January 1, 2023, which impose obligations for the handling, disclosure and deletion of personal information for California

and foreign jurisdictions and we expect that new industry standards, laws and regulations

will continue to be proposed regarding privacy, data protection and information security in many jurisdictions, including the California

Consumer Privacy Act of 2018, which went effective January 1, 2020 and the California Consumer Privacy Rights Act (“CCPA”),

which went effective on January 1, 2023, which impose obligations for the handling, disclosure and deletion of personal information for

California residents.

Virginia and other states have enacted, or are considering enacting, data privacy laws similar to the CCPA.

Certain of these

laws, including the CCPA also requires companies to give residents the ability to opt out of the sale of their personal information and

creates potential liability for companies that fail to take adequate steps to protect personal information where that failure results

of these laws, including the CCPA also requires companies to give residents the ability to opt out of the sale of their personal information

and creates potential liability for companies that fail to take adequate steps to protect personal information where that failure results

in a data breach.

the European Union, the General Data Protection Regulation (the “GDPR”) significantly expanded the rules on using personal

data and increased the risks of processing personal data.

the European Union, the General Data Protection Regulation of 2018 (the “GDPR”) significantly expanded the rules on using

personal data and increased the risks of processing personal data.

Some of the new requirements include:

accountability and transparency

requirements, which require those who control data to demonstrate and record compliance and provide certain detailed information

to users regarding the ways in which data is used and processed;

enhanced data consent requirements,

which includes “explicit” consent with regard to information the regulation classifies as sensitive data;

obligations to consider

data privacy as new products, services and systems are developed, including ways to limit accessibility of data as well as the amount

of information collected, processed, and stored;

constraints on using data

to profile users;

obligations to provide

users with personal data in a usable format on request and to erase personal data in certain circumstances;

reporting to data protection

authorities of potential breaches without undue delay (72 hours, where feasible).

international jurisdictions in which the Company operates, or its services are available, have implemented, or are considering implementing,

data privacy laws similar to the GDPR.

Our policies and procedures for compliance with data privacy laws, may not be implemented correctly

or our management, employees or agents may not comply with the new procedures.

Failure to comply with data privacy laws may have serious

accountability

and transparency requirements, which require those who control data to demonstrate and record compliance and provide certain detailed

information to users regarding the ways in which data is used and processed;

data consent requirements, which includes “explicit”

consent with regard to information the regulation classifies as

sensitive data;

to consider data privacy as new products, services and systems are developed, including ways to limit accessibility of data as well

as the amount of information collected, processed, and stored;

on using data to profile users;

to provide users with personal data in a usable format on request and to erase personal data in certain circumstances;

to data protection authorities of potential breaches without undue delay (72 hours, where feasible).

foreign jurisdictions in which the Company operates, or in which it has it services available, have implemented, or are considering implementing,

data privacy laws and regulations, many of which are similar to the GDPR.

Although we attempt to stay current with such developments

in the jurisdictions in which we or our subsidiaries operate, our policies and procedures for compliance with data privacy laws and regulations,

may not be up-to-date or implemented correctly or our management, employees or agents.

thereby not complying with current procedures.

Moreover, our third-party agents in foreign jurisdictions may likewise not implement policies and procedures that are the most current

for their jurisdiction, thereby creating a risk factor for us.

Failure to comply with data privacy laws and regulations may have serious

financial consequences.

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business could be adversely impacted by changes in the Internet and mobile device accessibility of users.

business depends on users’ access to our offerings via a mobile device or personal computer and the Internet.

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 internationally.

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.

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

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including, but not limited to, risks concerning:

product quality, including

the possibility of software or hardware defects, which could result in claims against us or the inability to sell our products;

the accuracy of our estimates

of user or customer demand, and the fit of the new products and features with users’ or customers’ needs;

the need to educate our

sales, marketing and services personnel to work with the new products and features, which may strain our resources and lengthen sales

market acceptance of initial

product releases;

competitor product introductions

or regulatory changes that render our new products obsolete.

quality, including the possibility of software defects, which could result in claims against us or the inability to sell our products;

accuracy of our estimates of user or customer demand, and the fit of the new products and features with users’

or customers’

need to educate our sales, marketing and services personnel to work with the new products and features, which may strain our resources

and lengthen sales cycles;

acceptance of initial product releases;

product introductions or regulatory changes that render our new products obsolete.

enhancing and localizing software is expensive, and the investment in product development may involve a long payback cycle.

we believe that we must dedicate a significant amount of resources to our development efforts to maintain our competitive position.

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.

we believe that we must dedicate a significant amount 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

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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 increases.

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

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changes in technology, our business, reputation, financial condition, and results of operations would be adversely affected.

Platform may be vulnerable to risks, both foreseen and unforeseen, arising from the new and untested nature of distributed ledger technology.

Platform may be vulnerable to risks, both foreseen and unforeseen, arising from our application of distributed ledger technology.

to the Operational Cessation, our Platform utilized distributed ledger technology by preserving a cryptographic ledger of the user identification,

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Distributed ledger technology

is a relatively new, untested and evolving technology.

Accordingly, the further development and future viability of this technology is

generally uncertain, and practical and ideological challenges, both known and unknown, may prevent its further development or integration

into the Platform.

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.

and Compliance Risks

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For example, the Interstate Wagering Amendment

§ 1301 (the “Interstate Wagering Amendment”) limits our ability to purchase lottery games for a user located

1301 (the “Interstate Wagering Amendment”) limits our ability to purchase lottery games for a user located

in one state from a lottery authority located in another state, except under certain limited circumstances, such as where the lottery

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have been several proposed state and federal bills to prohibit or restrict interactive or online lottery sales, some of which have been

For example, in 2015, the Minnesota legislature passed an amendment to the state’s lottery law prohibiting the sale

of scratch lottery tickets over the Internet.

In another case, the California legislature failed to pass assembly bill 1479 which would

have regulated lottery courier operations, leaving the status of couriers in a legal grey area.

In certain jurisdictions, the sale of

lottery tickets through couriers is expressly unlawful.

For example, it is a Class 1 misdemeanor to operate a lottery ticket courier

service within the Commonwealth of Virginia.

Laws restricting the sale of lottery tickets via the Internet, through mobile networks or

by courier, or that otherwise materially impact our operations, including those relating to sweepstakes, may be proposed or passed in

the future at either the federal or state level or by international governments.

For example, in April 2023, the Texas State Senate passed

Senate Bill 1820 (the “Texas Bill”), which would, among other things, prohibit online lottery gaming and the use of courier

services in Texas.

As of the date of this Report, the Texas Bill is under review of the Texas State House of Representatives.

Texas Bill is enacted into law as drafted, the new rules would be implemented by January 1, 2024.

Any proposal or passage of such laws

may reduce our revenues or require us to expend a significant amount of our funds and resources and incur additional legal and other

expenses, thereby creating a material adverse effect on us or our results of operations, cash flow, or financial condition.

in the executive branches of government at the state and federal level as well as internationally, may affect policies on lotteries and

mobile gaming.

For example, variations in the interpretation of The Federal Wire Act of 1961 (the “Wire Act”) by the Office

of Legal Counsel (the “OLC”) of the Department of Justice (the “DOJ”) has had a material impact on the online

gaming and lottery industry within the U.S.

For more information, see “- 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.

” We have and may from time to time in the future retain government affairs specialists in domestic

and international jurisdictions to advise elected and appointed officials regarding our perspectives on legislation and regulations related

to lottery and other aspects of our business, to monitor such legislation and regulations, and to otherwise provide us with advice regarding

our relations with such officials.

Such efforts, however, may not be successful in whole or in part and the change of such laws or policies

In certain jurisdictions, the sale of lottery tickets through couriers is expressly unlawful.

Laws restricting the sale of lottery tickets via the Internet, through mobile networks or by courier, or that otherwise materially impact

our operations, including those relating to sweepstakes, may be proposed or passed in the future at either the federal or state level

or by foreign governments.

For example, in 2023, the State of Texas passed Senate Bill 1820 (the “Texas Bill”), which among

other things, limited online lottery gaming and the use of courier services in Texas.

Any proposal or passage of such laws may reduce

our revenues or require us to expend a significant amount of our funds and resources and incur additional legal and other expenses, thereby

creating a material adverse effect on us or our results of operations, cash flow, or financial condition.

in the executive branches of government in the U.S.

as well as in foreign countries, may affect policies on lotteries and mobile gaming.

For example, variations in the interpretation of The Federal Wire Act of 1961 (the “Wire Act”) by the Office of Legal Counsel

(the “OLC”) of the Department of Justice (the “DOJ”) has had a material impact on the online gaming and lottery

industry within the U.S.

For more information, see “- 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.

We have and may from time to time in the future retain government affairs specialists in domestic and international

jurisdictions to advise elected and appointed officials regarding our perspectives on legislation and regulations related to lottery

and other aspects of our business, to monitor such legislation and regulations, and to otherwise provide us with advice regarding our

relations with such officials.

Such efforts, however, may not be successful in whole or in part and changes in such laws or policies

could have a material adverse effect on us or our results of operations, cash flow, or financial condition.

we believe that we are in compliance with all material domestic and international laws and regulatory requirements applicable to our

business, we cannot ensure that our activities or the activities of those third parties with whom we do business will not become the

subject of regulatory or law enforcement proceedings.

Further, lottery regulatory associations, including the Multi-State Lottery Association

(the “MUSL”), and certain lottery entities both domestically and internationally exercise significant authority regarding

the means and manner in which the lottery and its products are marketed and sold as well as the equipment, technology and services deployed

We cannot ensure that our activities or the activities of those third parties with whom we do business will not become the subject of

regulatory or law enforcement proceedings.

Further, lottery regulatory associations, including the Multi-State Lottery Association (the

“MUSL”), and certain lottery entities both domestically and internationally exercise significant authority regarding the

means and manner in which the lottery and its products are marketed and sold as well as the equipment, technology and services deployed

by retailers and resellers of such lottery products.

While we believe we are in compliance with all such applicable requirements, our

activities or the activities of those third parties with whom we do business may become the subject of further inquiries, investigations

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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.

Wire Act provides that anyone engaged in the business of betting or wagering that knowingly uses a wire communication facility for the

transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting

event or contest, or for the transmission of a wire communication that entitles the recipient to receive money or credit as a result

of bets or wagers, or for information assisting in the placing of bets or wagers, may be fined or imprisoned, or both.

However, the Wire

Act provides that it shall not be construed to prevent the transmission in interstate or foreign commerce of information for use in news

reporting of sporting events or contests, or for the transmission of information assisting in the placing of bets or wagers on a sporting

event or contest from a state or foreign country where betting on that sporting event or contest is legal into a state or foreign country

in which such betting is legal.

Wire Act of 1961 provides that anyone engaged in the business of betting or wagering that knowingly uses a wire communication facility

for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on

any sporting event or contest, or for the transmission of a wire communication that entitles the recipient to receive money or credit

as a result of such bets or wagers, or for information assisting in the placing of such bets or wagers, may be fined or imprisoned, or

However, the Wire Act provides that it shall not be construed to prevent the transmission in interstate or foreign commerce of

information for use in news reporting of sporting events or contests, or for the transmission of information assisting in the placing

of bets or wagers on a sporting event or contest from a state or foreign country where betting on that sporting event or contest is legal.

2011, there was uncertainty as to whether the Wire Act prohibited the conduct of intrastate lottery transactions via the Internet by

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Essentially, there was a debate with regard to whether all of the prohibitions

in the Wire Act applied only to bets or wagers on a “sporting event or contest” as used in the Wire Act, or all bets or wagers.

In late 2011, the OLC issued an opinion that concluded the conduct prohibited by the Wire Act was limited to sports gambling (the “2011

DOJ Opinion”).

in the Wire Act applied only to bets or wagers on a “sporting event or contest”

as used in the Wire Act, or all bets or wagers.

In late 2011, the OLC issued an opinion that concluded the conduct prohibited by the Wire Act was limited to sports gambling (the “2011

DOJ Opinion”).

Following the issuance of the 2011 DOJ Opinion, six state lotteries offered internet sales of scratch lottery games

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The New Hampshire federal district court declined, however, to issue a nationwide injunction in the case.

August 16, 2019, the DOJ appealed the New Hampshire federal district court’s decision to the First Circuit.

January 20, 2021, the First Circuit affirmed the District Court’s decision, determining that the Wire Act applies only to interstate

August 16, 2019, the DOJ appealed the New Hampshire federal district court’s decision to the First Circuit.

January 20, 2021, the First Circuit affirmed the District Court’s decision, determining that the Wire Act applies only to interstate

wire communications related to sporting events or contests.

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First Circuit declined to set aside the 2019 Opinion under the Administrative Procedure Act.

In addition to the First Circuit’s

decision, the Fifth Circuit has previously held the Wire Act prohibitions apply only to sports gambling.

September 15, 2022, the United States District Court for the District of Rhode Island entered an order siding with the First Circuit’s

interpretation of the Wire Act, and holding that “the Wire Act applies only to ‘bets or wagers on any sporting event or contest.’”

September 15, 2022, the United States District Court for the District of Rhode Island entered an order siding with the First Circuit’s

interpretation of the Wire Act, and holding that “the Wire Act applies only to ‘bets or wagers on any sporting event or contest.”

Notwithstanding

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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

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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.

Further, in such event, the DOJ or other federal regulatory

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with the laws of the state in which such lottery is operated.

The Interstate Wagering Amendment, enacted in 1994, sought to close a “loophole”

in the federal laws allowing the sale of lottery tickets across state lines “via computer transaction with no paper crossing state

The Interstate Wagering Amendment, enacted in 1994, sought to close a “loophole”

in the federal laws allowing the sale of lottery tickets across state lines “via computer transaction with no paper crossing state

lines.”

Interstate Wagering Amendment specifically provides:

“Whoever .

being engaged in the business of procuring for a person in

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that business is permitted under an agreement between the States in question or appropriate authorities of those States), knowingly transmits

in interstate or foreign commerce information to be used for the purpose of procuring such a ticket, chance, share, or interest”

shall have committed an offense under 18 U.S.C.

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to be used for the purpose of procuring a lottery ticket for a lottery conducted by a state to a person in another state.

is defined as “a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession

of the United States.” The definition of “foreign government” on the other hand, expressly excludes U.S.

Based on the use of the words “1 State” and “another State” and the omission of the term “foreign

country”, we believe the Interstate Wagering Amendment does not prohibit transmission of information for the purpose of procuring

“State”

is defined as “a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession

of the United States.”

The definition of “foreign government”

on the other hand, expressly excludes U.S.

Based on the use of the words “1 State”

and “another State”

and the omission of the term “foreign

country”, we believe the Interstate Wagering Amendment does not prohibit transmission of information for the purpose of procuring

tickets for persons in foreign countries.

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the purpose of procuring such tickets could also negatively impact our business.

For more information, see “ Regulatory and Compliance

For more information, see “

Regulatory and Compliance

Risks - 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.

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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

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For example, Pennsylvania prohibits

“any fee associated with the acquisition or transportation of lottery tickets or shares” and Illinois law prohibits service

“any fee associated with the acquisition or transportation of lottery tickets or shares”

and Illinois law prohibits service

charges, handling fees or other costs added to the established price of a ticket.

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In some cases, the remedy to such a situation may require the removal of a key executive or

employee and the mandatory redemption or transfer of such person’s equity securities.

currently hold a license issued by the Texas Lottery Commission to conduct the retail sale of lottery tickets in the State of Texas.

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and material costs, and any of which may have a material adverse effect on us or our results of operations, cash flow, or financial condition.

the extent that any stockholder, director, officer or key employee is required to submit to required background checks and provide disclosure

and fails to do so, or they or the Company fail to do so to the satisfaction of the relevant regulatory authority, such failure may jeopardize

the grant of a license, provide grounds for termination of an existing license, or result in the imposition of penalties.

any person or entity that fails or refuses to apply for a finding of suitability or a license within the prescribed period after being

advised by a competent authority that they are required to do so may be denied a license or found unsuitable, as applicable, which may

result in our being required to sever our relationship with such person or entity.

Further, we may be subject to disciplinary action

or suffer revocation of licensure if, following notification that a person or entity is disqualified or unsuitable, we:

To the extent that any stockholder, director, officer or key employee is required to submit to required background checks and provide

disclosure and fails to do so, or they or the Company fail to do so to the satisfaction of the relevant regulatory authority, such failure

may jeopardize the grant of a license, provide grounds for termination of an existing license, or result in the imposition of penalties.

Generally, any person or entity that fails or refuses to apply for a finding of suitability or a license within the prescribed period

after being advised by a competent authority that they are required to do so may be denied a license or found unsuitable, as applicable,

which may result in our being required to sever our relationship with such person or entity.

Further, we may be subject to disciplinary

action or suffer revocation of licensure if, following notification that a person or entity is disqualified or unsuitable, we:

any dividend or interest upon our shares;

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in the future.

we believe that we are in compliance with all material licensure requirements applicable to our operations, we cannot ensure that our

We cannot ensure that our

activities will remain in compliance or that we will continue to receive all licenses or license renewals for which we apply.

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we cannot ensure that our compliance program will prevent the violation of one or more laws or regulations, or that a violation by us,

an employee, a customer or an affiliate will not result in the imposition of a monetary fine or suspension or revocation of one or more

of our governmental licenses, findings of suitability, registrations, permits and approvals, which could have a material adverse effect

on us or on our results of operations, cash flow, or financial condition.

an employee, a customer, a subsidiary or an affiliate will not result in the imposition of a monetary fine or suspension or revocation

of one or more of our governmental licenses, findings of suitability, registrations, permits and approvals, which could have a material

adverse effect on us or on our results of operations, cash flow, or financial condition.

we are confident that we will face additional regulatory requirements as we expand, we cannot predict the effect of future regulatory

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by our ongoing compliance objectives and policies.

jurisdictions and most of the international jurisdictions in which we operate prohibit sales of lottery tickets to persons

under 18 years of age.

We have instituted know-your-customer requirements to aid our efforts in identifying minors and preventing them

from using our services.

jurisdictions and most of the foreign jurisdictions in which we operate prohibit sales of lottery tickets to persons under

18 years of age.

We have instituted know-your-customer requirements to aid our efforts in identifying minors and preventing them from

using our services.

In many cases, these requirements apply to our lottery retailer partners and may not apply to us.

Nevertheless,

if we fail to abide by these requirements, our partners may be reluctant to do business with us or the applicable regulatory authorities

Nevertheless, if

we fail to abide by these requirements, our partners may be reluctant to do business with us or the applicable regulatory authorities

may amend the requirements to apply specifically to us, to the extent that they do not already do so.

jurisdictions, especially international jurisdictions, are imposing more stringent rules with regard to underage and responsible gaming.

This trend could continue to spread and both U.S.

and international jurisdictions may strengthen underage and responsible gaming requirements.

In the event that any jurisdiction in which we operate mandates additional requirements regarding corporate social responsibility, responsible

jurisdictions, especially foreign jurisdictions, are imposing more stringent rules with regard to underage and responsible gaming.

trend could continue to spread and both U.S.

and foreign jurisdictions may strengthen underage and responsible gaming requirements.

the event that any jurisdiction in which we operate mandates additional requirements regarding corporate social responsibility, responsible

gaming, self-exclusion, or similar mandates, we may be required to undertake additional technological initiatives to remain in compliance.

Implementation of any such initiatives may present operational challenges and material costs and divert the attention of management and

systems developers and engineers, any of which may have a material adverse effect on us or our results of operations, cash flow, or financial

The failure to remain in compliance with underage and responsible gaming requirements or any amendments or additions to such

requirements could have a material adverse effect on us or on our business, results of operations, or financial condition.

our systems developers and engineers, any of which may have a material adverse effect on us or our results of operations, cash flow,

or financial condition.

The failure to remain in compliance with underage and responsible gaming requirements or any amendments or additions

to such requirements could have a material adverse effect on us or on our business, results of operations, or financial condition.

are subject to governmental laws and requirements of the U.S.

and various international jurisdictions in which we operate regarding anti-bribery,

and various foreign jurisdictions in which we operate regarding anti-bribery,

anti-corruption, economic and trade sanctions, anti-money laundering, and counter-terror financing.

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a digital company operating within the U.S.

and are subject to the jurisdiction of various governments and regulatory agencies, we are

accordingly subject to domestic and international laws regarding anti-bribery, anti-corruption, economic and trade sanctions, anti-money

and subject to the jurisdiction of various foreign governments and regulatory agencies, we

are accordingly subject to domestic and foreign laws regarding anti-bribery, anti-corruption, economic and trade sanctions, anti-money

laundering, and counter-terror financing.

operations and our growth plans, including in connection with our intent to expand into new markets and undertake strategic acquisitions

when we have sufficient funding to do so, may bring our officers, directors, employees, and representatives into contact with “foreign

officials” responsible for issuing or renewing governmental licenses, findings of suitability, registrations, permits and approvals,

when we have sufficient funding to do so, may bring our officers, directors, employees, and representatives into contact with “foreign

officials”

responsible for issuing or renewing governmental licenses, findings of suitability, registrations, permits and approvals,

or for otherwise enforcing governmental regulations and requirements.

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include the U.S.

Foreign Corrupt Practices Act (the “FCPA”), and the U.K.

Bribery Act 2010 (the “U.K.

Bribery Act”),

Foreign Corrupt Practices Act (the “FCPA”), and the U.K.

Bribery Act 2010 (the “U.K.

Bribery Act”),

as well as corresponding laws and regulations of the other countries where we do business.

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or retaining business or otherwise obtaining favorable treatment.

Bribery Act also prohibits non-governmental “commercial”

bribery and accepting bribes.

Our operations, trade practices, investment decisions, and partnering activities may be restricted as a

addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption.

Our international operations expose us to the risk of violating, or being accused of violating, anti-corruption laws and regulations.

Our failure to successfully comply with these laws and regulations may expose us to brand and reputational harm, as well as significant

addition, some of the foreign locations in which we operate lack a developed legal system and may experience elevated levels of corruption.

Our foreign operations expose us to the risk of inadvertently violating, or being accused of violating, anti-corruption laws and regulations.

Our failure to successfully comply with any such laws and regulations may expose us to brand and reputational harm, as well as significant

sanctions, including criminal fines, imprisonment, civil penalties, disgorgement of profits, and injunctions, as well as impacting our

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We are continuously developing,

and maintaining requirements to comply with applicable anti-corruption laws and regulations, however, there is no certainty that they

will effectively prevent violations for which we may be held responsible, or at all.

monitoring and maintaining the various governmental requirements to comply with applicable anti-corruption laws and regulations, however,

there is no certainty that they will effectively prevent violations for which we may be held responsible, or at all.

are currently required to comply with U.S.

economic and trade sanctions administered by the U.S.

Department of Treasury’s Office

of Foreign Assets Control (“OFAC”).

Department of Treasury’s Office

of Foreign Assets Control (“OFAC”).

Our Platform may be accessible from a sanctioned country in violation of applicable trade

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As part of our ongoing compliance efforts, we are implementing requirements to ensure that we do not violate

these laws and requirements, however, our failure to adequately implement such requirements, fully perform our compliance requirements,

or otherwise breach our compliance requirements with OFAC could result in our being subject to penalties, fines or other enforcement

these laws and regulations, however, our failure to adequately fulfill such requirements, fully perform any and all compliance requirements,

or otherwise breach any compliance requirements of the OFAC could result in our being subject to penalties, fines or other enforcement

process, support and execute financial transactions as part of our business and disburse funds on behalf of certain of our users, including

receiving payment card information and processing payments for and due to our users.

Accordingly, we may be subject to various anti-money

laundering and counter-terrorist financing laws and regulations around the world that prohibit, among other things, involvement in transferring

the proceeds of criminal or terrorist activities, including, in the U.S., the Bank Secrecy Act of 1970, as amended (the “BSA”),

and certain provisions of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism

Act of 2001 (the “Patriot Act”).

We have developed a risk-based anti-money laundering program that we are implementing, however,

in the event that we breach any of these laws and regulations that are applicable to us, we could be subject to significant civil fines,

penalties, inquiries, audits, investigations, enforcement actions, and criminal and civil liability.

Accordingly, we may be subject to various U.S.

foreign government anti-money laundering and counter-terrorist financing laws and regulations that prohibit, among other things, involvement

in transferring the proceeds, in whole or in part, for criminal or terrorist activities, including, for example, in the U.S., the Bank

Secrecy Act of 1970, as amended (the “BSA”), and certain provisions of the Uniting and Strengthening America by Providing

Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”).

Although we have developed

a risk-based anti-money laundering program that we are implementing, in the event that we breach any of these laws and regulations that

are applicable to us, we could be subject to significant civil fines, penalties, inquiries, audits, investigations, enforcement actions,

and criminal and civil liability.

failure on our part to implement, maintain or follow the necessary processes and policies to comply with these regulations and requirements,

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misappropriation caused by systems failures, unauthorized access or misuse.

However, to the extent we retain our user’s data, we

could be subject to liability claims by users for the misuse of that information, which could negatively impact our ability to utilize

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Recruitment and retention of these individuals is vital to growing

our business and our business plans.

our business and our executing our business plans.

The loss of any of our key executives or other key employees could harm our business.

currently have nine employees who manage and operate our business, including our Chief Executive Officer, Mark Gustavson.

While we have

experienced significant turnout of our executive officers in the past year, we expect that the leadership of our current key executives

and employees will be a critical element of our success in the future.

The departure, death or disability of any one of our executive

officers or employees or other extended or permanent loss of any of their services, or any negative market or industry perception with

respect to any of them or their loss, could have a material adverse effect on our business.

addition, our failure to re-hire employees in the future will limit our ability to restart our business operations and earn revenue.

Certain employees have made significant contributions to our growth and success.

We believe our success and our ability to compete and

grow following the Operational Cessation will depend in large part on the efforts and talents of our future employees and on our ability

to retain highly skilled personnel.

The competition for these types of personnel is intense and we compete with other potential employers

for the services of our employees.

As a result, we may not succeed in hiring and retaining the executives and other key employees that

Employees, particularly developers and engineers, are in high demand, and we will need to devote significant resources to identifying,

hiring, training, successfully integrating and retaining these employees, including significant financial resources, which we may not

currently have ten non-furloughed employees who manage and operate our business, including our Chief Executive Officer, Chief

Financial Officer and Chief Operating Officer.

and key outside contractors.

While we have experienced significant turnover of our

executive officers in past years, we expect that the leadership of our current key executives and employees will be a critical

element of our success in the future.

The departure, death or disability of any one of our executive officers or employees or other

extended or permanent loss of any of their services, or any negative market or industry perception with respect to any of them or

their loss, could have a material adverse effect on our business.

addition, our failure to re-hire, or hire new, employees in the future may limit our ability to restart our business operations and earn

We believe our success and our ability to compete and grow following the Operational Cessation will depend in large part on

the efforts and talents of our current and future employees and on our ability to retain highly skilled personnel.

The competition for

these types of personnel is intense and we compete with other potential employers for the services of appropriately skilled employees.

As a result, we may not succeed in hiring and retaining the executives and other key employees that we need.

Employees, particularly

highly skilled developers and engineers, are in high demand, and we will need to devote significant resources to identifying, hiring,

training, successfully integrating and retaining such employees, including significant financial resources, which we may not have when

We cannot provide assurance that we will be able to attract or retain such highly qualified personnel in the future.

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be unable to grow effectively and our business, financial condition and results of operations could be seriously harmed.

improper, or otherwise inappropriate activity of our couriers, whether or not occurring while performing their employment duties, could

expose us to liability and adversely affect our business, reputation, brand, financial condition, and results of operations.

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.

improper, or otherwise inappropriate activities by our couriers, including the activities of individuals who may have previously engaged

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Relating to our Dependence on Third Parties

business model depends upon the compatibility between our B2C Platform and the major mobile 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.

operational, our users access our B2C Platform product offerings on mobile devices and web applications, and accordingly, our business

model depends upon the compatibility between our application and the major mobile operating systems.

Third parties with whom we do not

have any formal relationships control the design of mobile devices and operating systems.

These parties frequently introduce new devices,

and from time to time they may introduce new operating systems or modify existing ones.

Network carriers may also impact the ability

to download applications or access specified content on mobile devices.

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.

operational, our users access our B2C Platform product offerings on mobile devices and various web applications, and accordingly, our

business model depends upon the compatibility between our application and all major mobile and web operating systems.

Third parties with

whom we do not have any formal relationships control the design of such devices and operating systems.

These parties frequently introduce

new devices, and from time to time they may introduce new operating systems or modify existing ones.

Network carriers may also impact

the ability to download applications or access specified content on mobile devices.

addition, when operational, we rely upon third-party platforms for distribution of our product offerings.

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App Store are global application distribution platforms and have been the main distribution channels for our application.

promotion, distribution and operation of our application are subject to the respective distribution platforms’ standard terms and

policies for application developers, which are very broad and subject to frequent changes and interpretation.

promotion, distribution and operation of our application are subject to the respective distribution platforms’

standard terms and

policies for application developers which are very broad and subject to frequent changes and interpretations.

Furthermore, the distribution

platforms may not enforce their standard terms and policies for application developers consistently and uniformly across all applications

and with all publishers.

and with such publishers.

is no guarantee that popular mobile devices will support or feature our product offerings when operational, or that mobile device users

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We are dependent on the interoperability of our technology

with popular mobile operating systems, technologies, networks and standards that we do not control, such as the Android and iOS operating

systems, and any changes, bugs, technical or regulatory issues in such systems, our relationships with mobile manufacturers and carriers,

or in their terms of service or policies that degrade our offerings’ functionality, reduce or eliminate our ability to distribute

our offerings, give preferential treatment to competitive products, limit our ability to deliver high quality offerings, or impose fees

or other charges related to delivering our offerings, could adversely affect our product usage and monetization on mobile devices.

with popular mobile and web operating systems, technologies, networks and standards that we do not control, such as the Android and iOS

operating systems, and any changes, bugs, technical or regulatory issues in such systems, our relationships with mobile manufacturers

and carriers, or in their terms of service or policies that degrade our offerings’

functionality, reduce or eliminate our ability

to distribute our offerings, give preferential treatment to competitive products, limit our ability to deliver high quality offerings,

or impose fees or other charges related to delivering our offerings, could adversely affect our product usage and monetization on mobile

we may not successfully cultivate relationships with key industry participants or develop product offerings that operate effectively

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if any of the third-party platforms used for distribution of our product offerings were to limit or disable advertising on their platforms,

either because of technological constraints or because the owner of these distribution platforms wished to impair our ability to serve

either because of technological constraints or because the managers of these distribution platforms wished to impair our ability to serve

ads on them, our ability to generate revenue could be harmed.

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regulations enforced by multiple authorities and governing bodies in the U.S.

and numerous state and local agencies who may define money

transmitter differently.

Certain states may have a more expansive view of who qualifies as a money transmitter.

Additionally, outside

of the U.S., we could be subject to additional laws, rules and regulations related to the provision of payments and financial services,

and if we expand into new jurisdictions, the foreign regulations and regulators governing our business that we are subject to will expand

If we are found to be a money transmitter under any applicable regulation and we are not in compliance with such regulations,

we may be subject to fines or other penalties in one or more jurisdictions levied by federal, state or local regulators, including state

Attorneys General, as well as those levied by foreign regulators.

In addition to fines, penalties for failing to comply with applicable

rules and regulations could include criminal and civil proceedings, forfeiture of significant assets or other enforcement actions.

could also be required to make changes to our business practices or compliance programs as a result of regulatory scrutiny.

including numerous state and local agencies who may define

money transmitter differently.

Certain states in the U.S.

may have a more expansive view of who qualifies as a money transmitter.

Additionally,

outside of the U.S., we could be subject to additional laws, rules and regulations related to the provision of payments and financial

services, and if we expand into new jurisdictions, the foreign regulations and regulators governing our business that we are subject

to will expand as well.

If we are found to be a money transmitter under any applicable regulation and we are not in compliance with such

regulations, we may be subject to fines or other penalties in one or more jurisdictions levied by federal, state or local regulators,

including state Attorneys General, as well as those levied by foreign regulators.

In addition to fines, penalties for failing to comply

with applicable rules and regulations could include criminal and civil proceedings, forfeiture of significant assets or other enforcement

We could also be required to make changes to our business practices or compliance programs as a result of regulatory scrutiny.

Additionally,

our payment processors require us to comply with payment card network operating rules, which are set and interpreted by the payment card

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licenses could restrict our ability to provide our offerings.

technology contains software modules licensed to us by third-party authors under “open source” licenses, including the distributed

technology contains software modules licensed to us by third-party authors under “open source”

licenses, including the distributed

ledger technology, which we currently use and intend to continue to use in our Platform.

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In return for the use

of a third-party’s technology, we may agree to pay the licensor royalties based on sales of our products or services.

are a component of cost of revenue and affect the margins on our products.

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additional management information systems;

develop our operating, administrative, legal, compliance, financial and accounting systems and controls;

develop our operating, administrative, legal, compliance, financial and accounting system and controls;

additional qualified personnel and develop human capital;

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Congress, the U.K.

Government, the Organization for Economic Co-operation and Development (the “OECD”),

and other government agencies have had an extended focus on issues related to the taxation of multinational corporations.

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foreign currency and exchange rates may negatively impact our business, results of operations, and financial position.

to our international operations, a portion of our business is denominated in foreign currencies.

As a result, fluctuations in foreign

currency and exchange rates may have an impact on our business, results of operations and financial position.

Foreign currency exchange

rates have fluctuated and may continue to fluctuate.

Significant foreign currency exchange rate fluctuations may negatively impact our

international revenue, which in turn would affect our consolidated revenue.

Currencies may be affected by internal factors, general economic

conditions and external developments in other countries, all of which can have an adverse impact on a country’s currency.

we are not party to any hedging transactions intended to reduce our exposure to exchange rate fluctuations.

We may seek to enter into

hedging transactions in the future, but we may be unable to enter into these transactions successfully, on acceptable terms or at all.

We cannot predict whether we will incur foreign exchange losses in the future.

Further, significant foreign exchange fluctuations resulting

in a decline in the respective local currency may decrease the value of our foreign assets, as well as decrease our revenues and earnings

to our foreign operations, a portion of our business is denominated in foreign currencies.

As a result, fluctuations in foreign currency

and exchange rates may have an impact on our business, results of operations and financial position.

Foreign currency exchange rates

have fluctuated and may continue to fluctuate.

Significant foreign currency exchange rate fluctuations may negatively impact our international

revenue, which in turn would affect our consolidated revenue.

Currencies may be affected by internal factors, general economic conditions

and external developments in other countries, all of which can have an adverse impact on a country’s currency.

Currently, we are

not party to any hedging transactions intended to reduce our exposure to exchange rate fluctuations.

We may seek to enter into hedging

transactions in the future, but we may be unable to enter into these transactions successfully, on acceptable terms or at all.

predict whether we will incur foreign exchange losses in the future.

Further, significant foreign exchange fluctuations resulting in

a decline in the respective local currency may decrease the value of our foreign assets, as well as decrease our revenues and earnings

from our foreign subsidiaries, which would reduce our profitability and adversely affect our financial position.

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proprietary products or technology, or gaining access to our proprietary information and technology, and are costly and time consuming.

of December 31, 2022, we had one trademark registered with the U.S.

Patent and Trademark Office and the registration of six other

word marks and one logo was pending with the U.S.

success may depend, in part, on our ability to obtain trademark protection for the names or symbols under which we market our products

and to obtain copyright protection, which may not always be successful.

Also, we are continually evaluating opportunities to file patents.

Any future patent applications we hold or have rights to may not result in an issued patent, and if patents are issued, they may not

necessarily provide meaningful protection against competitors and competitive technologies or adequately protect our then-current technologies.

Additionally, even if granted, we may not be able to build and maintain goodwill in our trademarks or obtain trademark or patent protection,

and there can be no assurance that any trademark, copyright, or issued patent will provide competitive advantages for us or that our

intellectual property will not be successfully challenged or circumvented by competitors.

of December 31, 2023, we had one trademark, “Lottery.com”, registered with the U.S.

Patent and Trademark Office.

Our success may depend, in part, on our ability to obtain

trademark protection for the names or symbols under which we market our products and to obtain copyright protection, which may not always

be successful.

We are continually evaluating opportunities to file patents.

Any future patent applications we hold or have rights to

may not result in an issued patent, and if patents are issued, they may not necessarily provide meaningful protection against competitors

and competitive technologies or adequately protect our then-current technologies.

Additionally, even if granted, we may not be able to

build and maintain goodwill in our trademarks or obtain trademark or patent protection, and there can be no assurance that any trademark,

copyright, or issued patent will provide competitive advantages for us or that our intellectual property will not be successfully challenged

or circumvented by competitors.

December 31, 2022, the registration of our LOTTERY.COM, AUTOLOTTO and SPORTS.COM word marks and SPORTS.COM logo were pending with the

Patent and Trademark Office.

In March 2023, the U.S.

Patent and Trademark Office denied the registration of the SPORTS.COM word

mark and the appeal period has expired.

The registration of the SPORTS.COM logo has also been denied and the Company is currently considering

whether to appeal such denial.

We are also using and/or have common-law trademark rights in the trademarks AUTOLOTTO, SPORTS.COM, and

“TAP, TAP, TICKET.”

may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets.

For example, there can be

no assurance that consultants, vendors, partners, former employees, or current employees will not breach their obligations regarding

non-disclosure and restrictions on use.

Anyone could seek to challenge, invalidate, circumvent, or render unenforceable any patent that

we seek protection over in the future.

We may not be able to detect the unauthorized use of our intellectual property, prevent breaches

of our cybersecurity efforts, or take appropriate steps to enforce our proprietary or intellectual property rights effectively.

certain contractual provisions, including restrictions on use, copying, transfer, and disclosure of software, may be unenforceable under

the laws of certain jurisdictions.

no assurance that consultants, vendors, partners, former employees, or current employees and contractors will not breach their obligations

regarding non-disclosure and restrictions on use.

Anyone could seek to challenge, invalidate, circumvent, or render unenforceable any

trademark or patent that we seek protection over in the future.

We may not be able to detect the unauthorized use of our intellectual

property, prevent breaches of our cybersecurity efforts, or take appropriate steps to enforce our proprietary or intellectual property

rights effectively.

In addition, certain contractual provisions, including restrictions on use, copying, transfer, and disclosure of

software, may be unenforceable under the laws of certain jurisdictions.

intend to enforce our intellectual property rights, and from time to time may initiate claims against third parties that we believe are

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For example, as described in more detail in Item 3.

Legal Proceedings, the TinBu Plaintiffs (as defined below) filed

a claim against the Company for breach of contract and misrepresentation.

If the lawsuit results in an unfavorable judgment against the

Company, our Data Services business could be negatively impacted and we may lose some of TinBu’s well-known clients.

defending against these claims will require the Company to expend substantial time and money, which could divert management attention

from restarting operations.

Legal Proceedings, the TinBu Plaintiffs (as defined below) filed a claim

against the Company for breach of contract and misrepresentation.

If the lawsuit results in an unfavorable judgment against the Company,

our Data Services business could be negatively impacted and we may lose some of TinBu’s well-known clients.

In addition, defending

against these claims will require the Company to expend substantial time and money, which could divert management attention from restarting

litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or in payments

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Streicher Financial, LLC.

July 29, 2022, the Company filed an original Verified Complaint for Breach of Contract and Specific Performance (the “ Complaint ”)

Streicher Financial, LLC (“ Streicher ”) in the Court of Chancery of the State of Delaware (the “ Chancery

July 29, 2022, the Company filed an original Verified Complaint for Breach of Contract and Specific Performance (the “

Complaint ”)

Streicher Financial, LLC (“

Streicher ”) in the Court of Chancery of the State of Delaware (the “

Court ”).

In its Complaint, the Company alleged that Streicher breached a contract entered into by the parties on March 9, 2022,

and demanded that Streicher return $16,500,000 it owed to the Company.

and demanded that Streicher return $16,500,000 it owes 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

(the “ Judgment ”).

On October 27, 2022, the Chancery Court further awarded the Company $397,036.94 in attorney’s

fees (the “ Fee Order ”).

favor of the Company, Granting with Modifications Company’s Motion for Partial Summary Judgment in the amount of $16,500,000

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

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to negotiate a settlement and forbearance agreement with the Company.

Streicher’s original deadline to produce documents and respond

to the post-judgment discovery was January 16, 2023, and the Deposition was scheduled to take place on January 19, 2023.

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Streicher failed to remit the payment on February 28, 2023, and as a result, the

Company is proceeding with the post-judgment discovery and depositions, which was scheduled for March 16, 2023, provided that Streicher

did not appear at such hearing.

Company is proceeding with the post-judgment discovery and depositions, which was scheduled for March 16, 2023, however Streicher did

not appear at such hearing.

The Company intends to fully collect on the Judgment and intends to pursue all legal and equitable means

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may differ materially from our expectations.

regulated gaming and lottery industry is subject to rapid change, significant competition, and regulatory oversight and our projections

gaming and lottery industry is subject to rapid change, significant competition, and multiple regulatory oversight and our projections

are subject to the risks and assumptions made by management with respect to our industries.

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significant commercial success, whether because of implementation, competition or otherwise, we may not recover the often substantial

“up front” costs of developing and marketing those products and distribution channels or recover the opportunity cost of

“up front”

costs of developing and marketing those products and distribution channels or recover the opportunity cost of

diverting management and financial resources away from other services, products or distribution channels.

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If actual results differ from our estimates, analysts may react negatively, and our stock price could be materially impacted.

requirements of being a public company may strain our resources and divert management’s attention, and the increases in legal,

accounting and compliance expenses may be greater than we anticipate.

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Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the rules and regulations subsequently

implemented by the SEC and the listing standards of The Nasdaq Stock Market LLC (“Nasdaq”), including changes in corporate

governance practices and the establishment and maintenance of effective disclosure and financial controls.

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In particular, we have incurred

and expect to continue to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements

of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an “emerging growth company.” We have

and will continue to hire additional accounting and financial staff, and engage outside consultants, all with appropriate public company

experience and technical accounting knowledge and maintain an internal audit function, which will increase our operating expenses.

we could incur additional compensation costs in the event that we decide to pay cash compensation closer to that of other public companies,

which would increase our general and administrative expenses and could materially and adversely affect our profitability.

We cannot predict

or estimate the amount of additional costs we may incur or the timing of such costs.

and expect to continue to incur significant expenses and devote substantial management effort toward ensuring compliance with all these

requirements, including Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an “emerging growth company.”

To meet these various requirements, we have and will continue to need to hire additional legal, accounting and financial staff and/or

contractors, all with appropriate public company experience.

Internally, we must continue to increase our technical accounting knowledge

as well as maintain an internal audit function, which will increase our operating expenses.

Moreover, we could incur additional compensation

costs in the event that we decide to pay cash compensation closer to that of other public companies, which would increase our general

and administrative expenses and could materially and adversely affect our profitability.

We cannot predict or estimate the amount of

additional costs we may incur or the timing of such costs.

Relating to Our Charter Documents and Delaware Law

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in the redemption of shares of common stock or other securities held by certain holders.

Second Amended and Restated Certificate of Incorporation (our “Charter”) provides that any shares of capital stock, bonds,

notes, convertible debentures, options, warrants or other instruments that represent a share of equity of the Company, a debt owed by

the Company or the right to acquire any of the foregoing (for purposes of this section, the “Redeemable Securities”), owned

or controlled by a record or beneficial holder of the Company’s Redeemable Securities or an affiliate thereof who or that (i) fails

the Company or the right to acquire any of the foregoing (for purposes of this section, the “Redeemable Securities”), owned

or controlled by a record or beneficial holder of the Company’s Redeemable Securities or an affiliate thereof who or that (i) fails

or refuses to participate in good faith in an investigative process of, or submit documents, give notices or make filings requested or

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causes the Company or any of its affiliates to lose or to be threatened with the loss of any Regulatory Approval, or (v) is deemed likely

by the Board, based on advice of counsel or verifiable information received from any Regulatory Authority, by virtue of such holder’s

ownership or control of Redeemable Securities or association or affiliation with the Company or its affiliates, to jeopardize, impede,

impair or adversely affect the ability of the Company’s or any of its affiliates to obtain, maintain, hold, use or retain any Regulatory

Approval or to cause or result in the suspension, disapproval, termination, non-renewal or loss of any Regulatory Approval (each of such

holders or an affiliate of such holder, a “Disqualified Holder”) shall be subject to redemption by the Company (as described

in the Charter) as and to the extent required by a Regulatory Authority or deemed necessary or advisable by the Company’s Board.

holders or an affiliate of such holder, a “Disqualified Holder”) shall be subject to redemption by the Company (as described

in the Charter) as and to the extent required by a Regulatory Authority or deemed necessary or advisable by the Company’s Board.

a Regulatory Authority requires the Company, or the Board deems it necessary or advisable, to cause any such Redeemable Securities be

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redemption of Redeemable Securities shall be effectuated pursuant to the Charter without the receipt of the regulatory approvals required.

From and after the redemption date, the Redeemable Securities shall no longer be deemed outstanding, such Disqualified Holder

shall cease to be a stockholder with respect to such Redeemable Securities and all rights of such Disqualified Holder (other than the

right to receive the redemption price) shall cease.

From and after the redemption date, the Redeemable Securities shall no longer be deemed outstanding, such Disqualified Holder shall cease

to be a stockholder with respect to such Redeemable Securities and all rights of such Disqualified Holder (other than the right to receive

the redemption price) shall cease.

existence of the redemption rights set forth in our Charter may result in the value of the Redeemable Securities being less than they

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court may find that part or all of the provisions included in our Charter pertaining to the redemption right with respect to capital

stock held by any stockholders who are deemed to be “disqualified” or “unsuitable” holders is not enforceable,

stock held by any stockholders who are deemed to be “disqualified”

or “unsuitable”

holders is not enforceable,

either in general or as to a particular fact situation.

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cannot assure you that the provision pertaining to the redemption right with respect to capital stock held by any stockholders who are

deemed to be “disqualified” or “unsuitable” holders is enforceable under all circumstances, particularly against

deemed to be “disqualified”

or “unsuitable”

holders is enforceable under all circumstances, particularly against

stockholders who did not vote in favor of the proposed provision, who do not have notice of the ownership limitations at the time they

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and may reduce the amount of money available to us.

Charter and our amended and restated bylaws (the “Bylaws”) provide that we will indemnify our directors and officers, in

each case to the fullest extent permitted by Delaware law.

In addition, as permitted by Section 145 of the Delaware General Corporation

Law (the “DGCL”), our Charter, Bylaws and our indemnification agreements that we have entered into with our directors and

officers provide that:

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in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and,

with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law

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(iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to

any provision of the Delaware General Corporation Law (the “DGCL”), our Charter or our Amended and Restated Bylaws (our “Bylaws”);

or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine under

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outstanding capital stock (the DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled

to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of incorporation, unless

the certificate of incorporation requires a greater percentage);

providing for a staggered board of directors and detailing that the number of directors may be fixed and modified only by our Board;

providing for a board of directors with staggered terms and detailing that the number of directors may be fixed and modified only

by our Board;

notice for nominations of directors by stockholders and for stockholders to include matters to be considered at annual meetings,

which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate

of directors or otherwise attempting to obtain control of Lottery.com;

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These anti-takeover provisions could substantially impede

your ability to benefit from a change in control or change our management and Board and, as a result, may adversely affect the market

price of common stock and your ability to realize any potential change of control premium.

any stockholder’s ability to benefit from a change in control or change our management and Board and, as a result, may adversely

affect the market price of common stock and the ability for any stockholder to realize any potential change of control premium.

Related to Our Common Stock and Warrants

are not currently in compliance with the continued listing standards of Nasdaq and may not be able to regain compliance with Nasdaq’s

continued listing standards in the future.

common stock and warrants trade on The Nasdaq Global Market under the symbols “LTRY” and “LTRYW,” respectively.

We are not currently in compliance with Nasdaq’s continued listing standards and our failure to continue to meet these requirements

may result in our securities being delisted from Nasdaq.

August 17, 2022, the Company received a notice from Nasdaq indicating that, as a result of not having timely filed the Company’s

are not currently in full compliance with the continued listing standards of Nasdaq and may not be able to regain full compliance with

Nasdaq’s continued listing standards in the future.

common stock and warrants trade on The Nasdaq Global Market under the symbols “LTRY”

and “LTRYW,”

respectively.

We are not currently in compliance with Nasdaq’s continued listing standard for meeting

their requirement for the total market value of our publicly-held shares.

Our failure to regain full compliance with these

requirements may result in our securities being delisted from Nasdaq.

August 17, 2022, the Company received a notice from Nasdaq indicating that, as a result of not having timely filed the Company’s

Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 with the SEC, the Company was not in compliance with Nasdaq Listing

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received an additional notice, dated November 16, 2022, from Nasdaq indicating that, as a result of an additional delinquency in the

timely filing of the Company’s Form 10-Q for the quarter ended September 30, 2022, the Company remained out of compliance with

Nasdaq Listing Rule 5250(c)(1)

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previous 30 consecutive business days, and, as a result, did not comply with Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq

Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days, or until February 20, 2023, to regain compliance with such rule.

On February 23, 2023, the Company received a determination letter from Nasdaq advising it that Nasdaq had determined that the Company

had not regained compliance with such rule and that the Company was not eligible for a second 180 day period as the Company had not yet

filed its periodic reports with the SEC and Nasdaq noted above.

Nasdaq also confirmed to the Company in its February 23, 2023 letter

that the failure to timely file those periodic reports each serve as separate and an individual basis for delisting.

Company had until March 2, 2023 to request an appeal of this determination, which appeal was timely requested.

If the appeal is not granted,

then, the Company’s common stock and warrants will be delisted from Nasdaq, trading of the Company’s securities will be suspended,

and a Form 25-NSE will be filed with the SEC which will remove the Company’s securities from listing and registration on Nasdaq.

Subsequently,

on April 4, 2023, the Company received an additional notice from Nasdaq that the Company’s failure to timely file its Annual Report

on Form 10-K for the year ended December 31, 2022, serves as an additional basis for delisting the Company’s securities from Nasdaq.

April 24, 2023, the Company presented a plan to regain compliance with the Nasdaq Listing Rules and to file the Company’s deficient

quarterly reports for the quarters ended June 30, 2022 and September 30, 2022, as well as its annual report for the year ended December

31, 2022, and to cure the bid price deficiency.

On May 8, 2023, the Company received notice that the Company’s plan to regain compliance

was conditionally accepted by the hearings panel and the Company provided Nasdaq with certain requested information.

On May 24, 2023,

the Company received a letter from the hearings panel (the “May 24th Decision”), stating that as a result of its review of

the requested information, the hearings panel had determined to delist the Company’s common stock and warrants from Nasdaq on May

26, 2023, and the Company’s common stock and warrants were suspended from trading on Nasdaq on that date.

The Company responded

to the May 24 th Decision and requested that the hearings panel reconsider the historic facts underlying its decision and the

Company’s future prospects and the consequences of such delisting on the Company’s stockholders and its ability to continue

to relaunch its business.

Therefore, in accordance

with Nasdaq Listing Rule 5810(c)(3) (A), the Company was provided 180 calendar days, or until February 20, 2023, to regain compliance

with such rule.

On February 23, 2023, the Company received a determination letter from Nasdaq advising it that Nasdaq had determined

that the Company had not regained compliance with such rule and that the Company was not eligible for a second 180 day period as the

Company had not yet filed its periodic reports with the SEC.

Nasdaq also confirmed to the Company in its February 23, 2023 letter that

the failure to timely file those periodic reports each serve as separate and an individual basis for delisting.

Company had until March 2, 2023 to request an appeal of Nasdaq’s determination, which appeal was timely requested.

appeal were not granted, then, the Company’s common stock and warrants would be delisted from Nasdaq, trading of the

Company’s securities would be suspended, and a Form 25-NSE would need to be filed with the SEC which would remove the

Company’s securities from listing and registration on Nasdaq.

April 4, 2023, the Company received an additional notice from Nasdaq that the Company’s failure to timely file its Annual Report

on Form 10-K for the year ended December 31, 2022, serves as an additional basis for delisting the Company’s securities from Nasdaq.

April 24, 2023, the Company presented a plan to a Nasdaq hearing panel (the “Panel”) to regain compliance with the Nasdaq

Listing Rules and to file the Company’s deficient quarterly reports for the quarters ended June 30, 2022 and September 30, 2022,

as well as its annual report for the year ended December 31, 2022, and to cure the bid price deficiency.

On May 8, 2023, the Company

received notice that the Company’s plan to regain compliance was conditionally accepted by the Panel and the Company provided Nasdaq

with certain requested information.

On May 24, 2023, the Company received a letter from the Panel (the “May 24th Decision”),

stating that as a result of its review of the requested information, it had determined to delist the Company’s common stock and

warrants from Nasdaq on May 26, 2023, and consequently the Company’s common stock and warrants were suspended from trading on Nasdaq

on that date.

The Company responded to the May 24 th Decision and requested that the Panel reconsider the historic facts underlying

its decision, the Company’s future prospects, the consequences of such delisting on the Company’s stockholders and the Company’s

ability to continue to relaunch its business.

May 31, 2023, the Panel requested additional information from the Company in order to conduct its reconsideration of the matter.

Specifically,

the Panel requested the Company’s projected cash flow for the next 12 months, the amount of anticipated drawdowns from the Company’s

Loan Agreement with Woodford, and a breakdown of the Company’s revenue earned since it recommenced lottery ticket sales in April

On June 2, 2023, the Company submitted a written response to the Panel’s May 31st request.

the Panel requested the Company’s projected cash flow for the next 12 months, the amount of anticipated drawdowns from the Company’s

Loan Agreement with Woodford, and a breakdown of the Company’s revenue earned since it recommenced lottery ticket sales in April

On June 2, 2023, the Company submitted a written response to the Panel’s May 31st request.

consideration of the record and the additional documentation provided by the Company, on June 8, 2023, the Company received a letter

(the “June 8 th Decision”) from the hearings panel stating that it had determined to reverse its initial delisting

decision and grant the Company’s request for an exception to the continued listing rules until August 17, 2023, subject to the

satisfaction of certain conditions.

can be no assurance that the Company will be able to regain compliance with the applicable Nasdaq listing requirements, or that a hearings

panel will continue to stay the delisting of the Company’s securities.

If the Company’s securities are delisted from Nasdaq,

it could be more difficult to buy and sell the Company’s common stock and warrants or to obtain accurate quotations, and the price

of the Company’s common stock and warrants could suffer a material decline.

Delisting could also impair the Company’s ability

to raise capital and/or trigger defaults and penalties under its outstanding agreements or securities.

Further, even if we regain compliance

with Nasdaq listing requirements, there is no guarantee that we will be able to maintain our listing for any period of time.

addition to the above, other conditions required for continued listing on The Nasdaq Global Market include requiring that we maintain

at least $10 million in stockholders’ equity, $50 million of market value of listed securities (which requirement is not currently

met), or $50 million in total assets and total revenue over the prior two years or two of the prior three years (which requirement is

not currently met), and having a majority of independent directors.

Our stockholders’ equity may not remain above Nasdaq’s

$50 million minimum, our market value of listed securities is not, and may in the future not be above $50 million, we may not generate

over $50 million of yearly net income (which we currently do not) and maintain over $50 million of assets.

Furthermore, we are required

to maintain a majority of independent directors and at least three members on our audit committee, which requirements we have not met

from time to time, provided that as of the date of this Report which requirements are met.

(the June 8 th Decision”) from the hearings panel stating that it had determined to reverse its initial delisting decision

and grant the Company’s request for an exception to the continued listing rules until August 17, 2023, subject to the satisfaction

of certain conditions, which the Company met in a timely manner

In addition to the above, there are other requirements to be met in order to maintain a continued listing on The Nasdaq Global Market.

These requirements include requiring that the Company maintain at least $10 million in stockholders’

equity, $5 million of Market

Value of Publicly Held Shares (MVPHS) listed securities, or $50 million in total assets and total revenue over the prior two years or

two of the prior three years and having a majority of independent directors.

reported on form 8-K filed on December 7, 2023, on November 29, 2023, the Company received a letter from Nasdaq stating that based

upon its review of the Company’s Market Value of Publicly Held Shares (“MVPHS”) for the last 30 consecutive

business days, the Company no longer met the minimum requirement of $5,000,000 in MVPHS set forth in Nasdaq Listing Rule

5450(b)(1)(C).

However, under the Listing Rules, the Company was provided a 180-calendar day grace period to regain compliance,

through May 28, 2024.

at any time during the compliance period the Company’s MVPHS closes at $5,000,000 or more for a minimum of ten consecutive business

days, Nasdaq will provide written confirmation of compliance and the matter will be closed.

The Company has met this requirement and is in the process of notifying

In the event the Company does not regain

compliance with the rule prior to the expiration of the compliance period, the Company will receive written notification that its securities

are subject to delisting.

of the date of this Report, there can be no assurance that the Company will be able to meet the MVPHS requirements for a minimum period

of ten consecutive business days through May 28, 2024, or be able to remain in full compliance with all applicable Nasdaq listing requirements.

the requirement that we maintain a majority of independent directors and at least three members on our audit committee are Nasdaq requirements

that we currently meet but have not met from time to time.

the Company’s securities are delisted from Nasdaq, it could be more difficult to buy and sell the Company’s common stock

and warrants or to obtain accurate quotations, and the price of the Company’s common stock and warrants could suffer a material

Delisting could also impair the Company’s ability to raise capital and/or trigger defaults and penalties under its outstanding

agreements or securities.

Further, even if we regain compliance with Nasdaq listing requirements, there is no guarantee that we will

be able to maintain our listing for any period of time.

from Nasdaq could also result in negative publicity.

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by us or our competitors of new products, features, or services;

public’s reaction to our press releases, other public announcements, and filings with the SEC, including but not limited to,

those relating to the Internal Investigation and related events, our financial restatements and the Operational Cessation;

public’s reaction to our press releases, other public announcements, and filings with the SEC;

and market speculation involving us or other companies in our industry;

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in the financial projections we may provide to the public or our failure to meet these projections;

or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;

or anticipated developments in our business, our competitors’

businesses or the competitive landscape generally;

or perceived privacy or data security incidents;

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technical trading factors.

addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market

prices of equity securities of many companies.

These fluctuations have often been unrelated or disproportionate to the operating performance

of those companies.

Broad market and industry factors, as well as general economic, political, regulatory and market conditions, may

negatively affect the market price of our common stock and warrants, regardless of the Company’s actual operating performance.

addition, the stock markets historically have experienced extreme price and volume fluctuations that have affected the market prices

of equity securities of many publicly-held companies.

These fluctuations have often been unrelated or disproportionate to the operating

performance of those companies.

Broad market and industry factors, as well as general economic, political, regulatory and market conditions,

may negatively affect the market price of our common stock and warrants, regardless of a company’s actual operating performance.

In addition, in the past, securities class action litigation has often been brought against a company following a decline in the market

price of its securities.

If the Company faces such litigation, it could result in substantial costs and a diversion of management’s

attention and resources, which could harm its business, results of operations, cash flow, or financial condition.

securities or industry analysts do not publish research or reports about the Company, or publish negative reports, the Company’s

stock price and trading volume could decline.

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The Company does not have any control over these analysts.

If the Company’s financial performance fails

to meet analyst estimates or one or more of the analysts who cover the Company downgrade its common stock or change their opinion, the

Company’s stock price would likely decline.

If one or more of these analysts cease coverage of the Company or fail to regularly

publish reports on the Company, it could lose visibility in the financial markets, which could cause the Company’s stock price

or trading volume to decline.

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source of gain.

Company currently anticipates that it will retain future earnings for the development, operation and expansion of its business and do

Company currently anticipates that it will retain future earnings for the development, operation and expansion of its business and does

not anticipate declaring or paying any cash dividends for the foreseeable future.

a result, capital appreciation, if any, of the Company’s shares of common stock would be your sole source of gain on an investment

in such shares for the foreseeable future.

Related to Our Loan Agreement and Loan Agreement Warrants

may not loan us the amounts they agreed to under the Loan Agreement.

If Woodford fails to provide us with necessary funding, we may be

Related to Our Loan Agreements and Loan Agreement Warrants

Eurasia Assets Ltd., (“Woodford”), and United Capital Investments London Limited, (“UCIL”) may not loan us the

amounts they agreed to under each of their amended and restated loan agreements.

If either fails to provide us with funding, we may be

forced to curtail or even abandon our plan to recommence our operations and we may need to permanently cease our operations.

previously noted, we need to raise capital to, among other things, support and restart our operations, re-hire employees and pay our

The Loan Agreement with Woodford is one potential source of this needed additional capital that is presently available to us.

Pursuant to the Loan Agreement, Woodford agreed to fund up to $52.5 million, subject to certain conditions and requirements, of which

$300 thousand was received by December 31, 2022.

In the event Woodford does not fund us the remaining amount of funds due, or alleges

that we have breached the terms of the Loan Agreement, and therefore claims no additional funds are due, we may not receive any further

funding under the Loan Agreement.

Further, if Woodford does not advance us amounts owed under the Loan Agreement and/or we are unable

to raise additional funds, we may not be able to raise enough capital to recommence our operations and run 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.

are subject to certain covenants while amounts are outstanding under the Loan Agreement which may restrict our ability to undertake future

activities, including issuing additional shares of common stock.

The amended and restated loan agreements with Woodford and UCIL are potential sources of this needed additional capital that

is presently available to us.

to the Woodford Amended and Restated Loan Agreement, Woodford agreed to fund up to $52.5 million, subject to certain conditions and requirements,

of which, per our books and records, $951,298 was received by us through December 31, 2023.

reported on form 8-K on August 1, 2023, the Company reported that it had not received the requisite funding on a timely basis that it

expected from Woodford, despite making several requests to Woodford for said funding under the Woodford Amended and Restated Loan Agreement.

Moreover, the Board of Directors determined that it was in the best interest of the Company and its stockholders to enter into a new

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 Amended and Restated Loan Agreement.

On July 24, 2023, the Company responded to the Default Notice disputing that

an event of default had occurred.

Further, 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 its loan agreement.

The matter currently is in litigation.

the uncertainty of the continued financing under the Woodford Loan Agreement, on July 26, 2023, the Company secured and formalized

alternative funding by entering into a Loan Agreement with UCIL which was further amended and restated on August 18,

The UCIL agreement was approved by the shareholders on or about November 17, 2023 and attached to this 10-K as an exhibit.

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;

and (b) an additional credit facility, at the Company’s written request

and at UCIL’s sole discretion for an amount up to a total of $49,000,000 in additional financing (the “Accordion”)

in subsequent funding tranches.

The interest rate on the Initial Loan and the Accordion is 10% per annum.

The Credit Facility provides

that UCIL may elect, in its sole discretion, to convert an amount of the Initial Loan and the Accordion, together with accrued interest,

into shares of common stock at a conversion price calculated in accordance with the terms of the Loan Agreement.

In addition, the Credit

Facility includes certain customary representations, warranties and events of default subject to customary notice and cure rights.

neither Woodford nor UCIL is able or willing over time to advance us amounts owed under either of their amended and restated loan agreements

and/or we are unable to raise additional funds from other third parties, we may not be able to raise enough capital to recommence our

operations and run 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.

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.

loan agreement includes confidentiality obligations, representations, warranties, covenants, and events of default, which are customary

for a transaction of this size and nature.

Included in the Loan Agreement are covenants prohibiting us from (a) making any loan in excess

of $1 million or obtaining any loan in amount exceeding $1 million without the consent of Woodford, which may not be unreasonably withheld;

For example, included in the Woodford Loan Agreement are covenants prohibiting us from (a)

making any loan in excess of $1 million or obtaining any loan in amount exceeding $1 million without the consent of Woodford, which may

not be unreasonably withheld;

(b) selling more than $1 million in assets;

under the Loan Agreement;

(d) encumbering any assets, except in the normal course of business, and not in an amount to exceed $1 million;

(e) amending or restating

our governing documents;

(e) amending or restating our governing documents;

(f) declaring or paying any dividend;

(g) issuing any shares of common stock which negatively affects Woodford;

(g) issuing any shares of common stock which

negatively affects UCIL;

and (h) repurchasing any shares of common stock.

The above covenants may restrict our ability to raise capital, pay consultants, officers

and directors, and may ultimately result in material adverse effects to the Company.

The result of that may be a decrease in the value

of our securities or our need to seek bankruptcy protection.

obligations under the Loan Agreement are secured by a first priority security interest in substantially all of our assets and if we were

to default, they could force us to curtail or abandon our business plans and operations.

amounts borrowed pursuant to the terms of the Loan Agreement are secured by substantially all of the present and after-acquired assets

of the Company and its subsidiaries.

As a result, Woodford as our creditor, in the event of the occurrence of a default under the Loan

Agreement, may enforce its security interests over our assets and/or our subsidiaries which secure such obligations, take control of

such assets and operations, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and

If that were to happen, any investment in the Company (including, but not limited to any investment in our common stock)

could become worthless.

issuance and sale of common stock upon conversion of the amounts owed or upon exercise of the warrants issued to Woodford under the Loan

Agreement may depress the market price of our common stock and cause substantial dilution.

of December 31, 2022, we have borrowed $300 thousand under the Loan Agreement to Woodford.

Amounts borrowed accrue interest at the rate

of 12% per annum (22% per annum upon the occurrence of an event of default) and are due within 12 months of the date of each loan.

borrowed can be repaid at any time without penalty.

Amounts borrowed pursuant to the Loan Agreement may, at Woodford’s option,

be converted into shares of common stock, beginning 60 days after the first loan date at the rate of 80% of the lowest publicly available

price per share of Company common stock within 10 business days of the date of the Loan Agreement (which was equal to $0.28 per share),

subject to a 4.99% beneficial ownership limitation and a separate limitation preventing the holder from holding more than 19.99% of the

issued and outstanding common stock of the Company, without the Company obtaining stockholder approval for such issuance.

addition, in connection with the Loan Agreement we agreed to grant warrants to Woodford to purchase 15% of the 7,619,207 shares of common

stock that were then issued and outstanding, each with an exercise price equal to the average of the closing price for each of the ten

days prior to the first amount being debited from the bank account of Woodford, which equates to an exercise price of $0.28 per share.

In the event we fail to repay the amounts borrowed when due or Woodford fails to convert the amount owed into shares of common stock,

the exercise price of the warrants may be offset by amounts owed to Woodford, and in such case, the exercise price of the warrants will

be subject to a further 25% discount (i.e., will equal $0.21 per share).

sequential conversions of amounts owed under the Loan Agreement or warrants are exercised, and sales of such resulting shares of common

stock take place, the price of our common stock may decline, and as a result, Woodford will be entitled to receive an increasing number

Such covenants in either loan agreement may restrict our

ability to raise capital, pay consultants, officers and directors, and may ultimately result in material adverse effects to the Company.

The result of that may be a decrease in the value of our securities or our need to seek bankruptcy protection.

obligations under the loan agreements are secured by a first priority security interest in substantially all of our assets and if we

were to default, they could force us to curtail or abandon our business plans and operations.

amounts borrowed pursuant to the terms of the Woodford Loan Agreement are secured by substantially all of the present and after-acquired

assets of the Company and its subsidiaries.

As a result, Woodford as our creditor, in the event of the occurrence of a default may enforce

its security interests over our assets and/or our subsidiaries which secure such obligations, take control of such assets and operations,

force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations.

If that were to

happen, any investment in the Company (including, but not limited to, any investment in our common stock) could become worthless.

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.

of December 31, 2023, per the Company’s books and records, we had borrowed $951,298 under the Loan Agreement to Woodford and $711,610

Amounts borrowed can be repaid at any time without penalty and accrue interest per the terms and conditions of each loan agreement.

Amounts borrowed may, at each lender’s option, be converted into shares of common stock, beginning 60 days after the first loan

date at the rate of 80% of the lowest publicly available price per share of Company common stock.

addition, in connection with the loan agreement we agreed to grant warrants to each of Woodford and UCIL to purchase up to 15% of the

shares of common stock that are then issued and outstanding, each with an exercise price equal to the average of the closing price for

each of the ten days prior to the drawing of the first tranche.

In the event we fail to repay the amounts borrowed when due or either

lender fails to convert the amount owed into shares of common stock, the exercise price of the warrants may be offset by amounts owed

, and in such case, the exercise price of the warrants will be subject to a further discount.

sequential conversions of amounts owed under either loan agreement or warrants are exercised, and sales of such resulting shares of common

stock take place, the price of our common stock may decline, and as a result, the lender will be entitled to receive an increasing number

of shares of common stock, which shares could then be sold in the market, triggering further price declines and conversions or exercises

for even larger numbers of shares, to the detriment of our investors.

The shares of common stock issued to Woodford may, under certain

conditions, be sold without restriction pursuant to Rule 144.

As a result, the sale of these shares may adversely affect the market price,

if any, of our common stock.

The shares of common stock issued may, under certain conditions,

be sold without restriction pursuant to Rule 144.

As a result, the sale of these shares may adversely affect the market price, if any,

of our common stock.

Additionally,

the issuance of common stock upon conversion of the amounts owed under the Loan Agreement or the exercise of warrants will result in

immediate and substantial dilution to the interests of other stockholders.

June 12, 2023, the Company entered into an amendment of its Loan Agreement with Woodford (the “Loan Agreement Amendment”).

the issuance of common stock upon conversion of the amounts owed under either loan agreement or the exercise of warrants will result

in immediate and substantial dilution to the interests of other stockholders.

June 12, 2023, the Company entered into an amendment of its Loan Agreement with Woodford (the “Loan Agreement Amendment”).

The Loan Agreement Amendment provides that Woodford shall henceforth be able to convert, in whole or in part, the outstanding balance

1 unchanged sentence

All other terms and conditions of securitization remain in full force and effect.

currently owe a significant amount of money under our Loan Agreement, which we may not be able to repay.

of the date of this Report we owe approximately $300 thousand under the Loan Agreement.

We do not have sufficient funds to repay such

A high level of indebtedness increases the risk that we may default on our debt obligations.

If the amounts owed under the Loan

Agreement are not converted into common stock pursuant to the terms of the Loan Agreement, we may not be able to generate sufficient

cash flows to pay the principal or interest on the loan, and future working capital, borrowings or equity financing may not be available

to pay or refinance such debt.

If we do not have sufficient funds and are otherwise unable to arrange financing or raise additional funds,

we may have to sell significant assets or have a portion of our assets foreclosed upon which could have a material adverse effect on

our business, financial condition and results of operations and could cause any investment in the Company to decline in value or become

currently owe a significant amount of money under our Woodford Loan Agreement, which we may not be able to repay.

of the date of this Report per our books and records, we owe approximately $991,258 under our Amended and Restated Woodford Loan Agreement.

Currently, we do not have sufficient funds to repay such amount.

A high level of indebtedness increases the risk that we may default

on our debt obligations.

If the amounts owed under the Amended and Restated Woodford Loan Agreement are not converted into common stock

pursuant to its terms and conditions, we may not be able to generate sufficient cash flows to pay the principal or interest on the loan,

and future working capital, borrowings or equity financing may not be available to pay or refinance such debt.

If we do not have sufficient

funds and are otherwise unable to arrange financing or raise additional funds, we may have to sell significant assets or have a portion

of our assets foreclosed upon which could have a material adverse effect on our business, financial condition and results of operations

and could cause any investment in the Company to decline in value or become worthless.

insurance coverage is not adequate to cover all possible losses that we could suffer, and our insurance costs may increase.

currently do not have an effective director and officer liability insurance, 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.

However, we have other insurance

policies with coverage features and insured limits that we believe are customary in their breadth and scope.

Nevertheless, in the event

of a substantial loss, the insurance coverage we carry may not be sufficient to pay the full market value or replacement cost of our

lost investment or could result in certain losses being totally uninsured.

Market forces beyond our control may limit the scope of the

insurance coverage we can obtain in the future or our ability to obtain coverage at reasonable rates.

Certain catastrophic losses may

be uninsurable or too expensive to justify obtaining insurance.

As a result, if we suffer such a catastrophic loss, we may not be successful

in obtaining future insurance without increases in cost or decreases in coverage levels.

currently do not have effective director and officer liability insurance and may not have the financial resources or otherwise be able

to obtain director and officer liability insurance at reasonable cost or terms in the future.

However, we have other insurance policies

with coverage features and insured limits that we believe are customary in their breadth and scope.

Nevertheless, in the event of a substantial

loss, the insurance coverage we carry may not be sufficient to pay the full market value or replacement cost of our lost investment or

could result in certain losses being totally uninsured.

Market forces beyond our control may limit the scope of the insurance coverage

we can obtain in the future or our ability to obtain coverage at reasonable rates.

Certain catastrophic losses may be uninsurable or

too expensive to justify obtaining insurance.

As a result, if we suffer such a catastrophic loss, we may not be successful in obtaining

future insurance without increases in cost or decreases in coverage levels.

cash and cash equivalents may be exposed to failure of our banking institutions.

we seek to minimize our exposure to third-party losses of our cash and cash equivalents, we hold our balances in a number of large financial

institutions.

Notwithstanding, such allocation, we are subject to the risk of bank failure.

For example, on March 10, 2023, Silicon Valley

Bank (“SVB”) was unable to continue its operations and the Federal Deposit Insurance Corporation was appointed as receiver

for SVB and created the National Bank of Santa Clara to hold the deposits of SVB.

None of our cash and cash equivalents were held at

SVB and we do not expect further developments with SVB to have a material impact on our cash and cash equivalents balance, expected results

of operations, or financial performance for the foreseeable future.

However, if the banks where we hold deposits were to experience a

similar failure, we could experience additional risk.

Any such loss or limitation on our cash and cash equivalents would adversely affect

our business.

we seek to minimize our exposure to third-party losses of our cash and cash equivalents, we hold our cash balances in more than one financial

Notwithstanding such allocation, we are subject to the risk of bank failure and the consequent loss of our funds, in whole

If any bank at which we hold deposits were to experience a failure, we could experience the risk of loss, or limitation on

access to, our cash and cash equivalents which would adversely affect our business.

Unresolved Staff Comments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors