Item 3. Legal Proceedings
Item
3. Legal Proceedings.
The
Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.
In addition, the Company is a party to several material legal proceedings, which are described below. The outcome of litigation is inherently
uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s
expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
52
J.
Streicher
On
July 29, 2022, the Company filed its original Verified Complaint for Breach of Contract and Specific Performance (the “Streicher
Complaint”) against J. Streicher Financial, LLC (“Streicher”) in the Court of Chancery of the State of Delaware (the
“Chancery Court”), styled AutoLotto, Inc. dba Lottery.com v. J. Streicher Financial, LLC (Case No. 2022-0661-MTZ) .
In the Streicher Complaint, the Company alleged that Streicher breached the contract entered into by the parties on March 9, 2022 and
demanded that Streicher return $16,500,000 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 “Streicher Judgment”). On October 27, 2022, the Chancery Court further awarded the Company $397,037 in attorney’s
fees (the “Fee Order”). On November 15, 2022, the Company initiated efforts against Streicher to seek collections on the
Judgment. On December 8, 2022, the Company’s prior attorney Skadden, Arps, Slate, Meagher & Flom, LLP (“Skadden”)
filed its Combined Motion to Withdraw as Counsel and For a Charging Lien in amount of $3,024,201 for legal fees unpaid by Company
(“Skadden’s Motion”). On December 30, 2022, the Company filed its response to Skadden’s Motion, alleging that
the Chancery Court should deny Skadden’s Motion for a Charging Lien as a matter of law or, in the alternative, limit the
charging lien to the amount of the attorneys’ fees awarded by the Fee Order. As of the date of this Amended Report, the Chancery Court
has not set Skadden’s Motion for an oral hearing, nor has it entered an order on the motion. On January 20, 2023, faced with post-judgment
discovery and depositions, Streicher remitted a partial payment towards the Judgment in the amount of $75,000. On February 13, 2023,
Streicher made another payment towards the Judgment in the amount of $50,000 and had agreed to make another payment in the amount
of $75,000 on February 28, 2023, which it failed to make. The Company intends to fully collect on the Judgment and shall pursue all
legal and equitable means to enforce the Judgment against Streicher until the Judgment is fully satisfied. See “ Item 1A. Risk
Factors - Legal Proceedings Risks - We may not recover amounts owed to us from J. Streicher Financial, LLC ” for further information.
Preston
Million Class Action
On
August 19, 2022, Preston Million filed a Class Action Complaint (the “Class Action Complaint”) against the Company
and certain former officers and directors of the Company in the United States District Court for Southern District of New York (the “SDNY”),
styled Preston Million, Individually and on Behalf of All Others Similarly Situated vs. Lottery.com, Inc. f/k/a Trident Acquisitions
Corp., Anthony DiMatteo, Matthew Clemenson and Ryan Dickinson (Case No. 1:22-cv-07111-JLR) . The Class Action Complaint alleged violations
by all defendants of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) 15 U.S.C. §§
78j(b), 78t(a), as amended by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), U.S.C. § 78u-4 et seq .
(collectively “Federal Securities Laws”). On November 18, 2022, the SNDY ordered the appointment of RTD Bros, LLC, Todd Benn,
Tom Benn and Tomasz Rzedian (collectively “Lottery Investor Group”) as lead plaintiff and Glancy Prongay & Murray, LLP
as lead counsel for plaintiffs and for the class in the case. On December 5, 2022, the Court stipulated a Scheduling Order in
the case. On January 12, 2023, the Company’s legal counsel timely filed its Notice of Appearance . On January 31, 2022, plaintiffs
filed their Amended Complaint adding Kathryn Lever, Marat Rosenberg, Vadim Komissarov, Thomas Gallagher, Gennadii Butkevych, Ilya
Ponomarev as additional defendants in the case. The Amended Complaint alleges, among other things, that defendants made materially
false and misleading statements in violation of Section 10(b),14(a) and 20(a) of the Exchange Act and plaintiffs seek compensatory damages,
reasonable costs and expenses including counsel fees and expert fees. Pursuant to the Scheduling Order , the Company filed its motion
to dismiss the Amended Complaint on April 3, 2023, under the newly consolidated caption and its proposed order to dismiss the matter.
Plaintiffs were expected to file their opposition to the motion to dismiss no later than May 18, 2023, which would trigger the Company’s
deadline to file its reply brief in support of their motion to dismiss no later than June 20, 2023. On February 6, 2024, the SDNY granted the Company’s Motion to Dismiss. The Class Action Plaintiffs amended their complaint within
the twenty-one day period provided by the judge.
TinBu
Complaint
On
March 13, 2023, John Brier, Bin Tu and JBBT, LLC (collectively, the “TinBu Plaintiffs”) filed its original complaint against
Lottery.com, Inc. f/k/a AutoLotto, Inc. and its wholly-owned subsidiary TinBu, LLC (“TinBu”) in the Circuit Court of the
13 th Judicial District in and for Hillsborough County, Florida (the “TinBu Complaint”). The Complaint alleges
breach of contract(s) and misrepresentation with alleged damages in excess of $4.6 million. The parties agreed to extend the Company’s
and its subsidiary’s deadline to respond until May 1, 2023. On May 2, 2023, the Company and its subsidiary retained local counsel
who filed a Notice of Appearance on behalf of the Company and TinBu and filed a Motion for Enlargement requesting the Court to extend
its deadline to file its initial response to the Complaint by an additional 30 days (the “Motion for Enlargement”). As of
the date of this Amended Report, the Motion for Enlargement has not been set for a hearing. On May 5, 2023, Plaintiffs filed their Motion for
Court Default (“Plaintiffs’ Motion for Default”), despite Company’s Motion for Enlargement. As of the date of this Amended Report, the Motion for Enlargement has not been set for a hearing. The Company intends to oppose Plaintiffs’
Motion for Default. On May 9, 2023, Plaintiffs served Plaintiffs’ First Request for Admissions (the “RFA”) to the Company.
On October 13, 2023, the Court granted the Defendants’ Motion to Stay Litigation and Discovery pending a ruling on its Motion to
Compel Arbitration. On November 16, 2023, the Court granted Defendants’ Motion to Compel Arbitration in Texas. The parties await
a signed written order from the Court to that effect. The TinBu Plaintiffs have appealed the Court’s Order to Compel Arbitration in Texas.
Global
Gaming Data
On
November 21, 2023, the Company and its wholly owned subsidiary TinBu, LLC (“TinBu”) (Company and TinBu collectively,
“Plaintiffs”) filed their First Amended Verified Complaint in Federal Court for the Middle District of Florida
(“MDF”) against John J. Brier, Jr. (“Brier”), Bin Tu (“Tu”), and Global Gaming Data, LLC (“GGD”)
(collectively, “Defendants”) for violations of the Federal Defend Trade Secrets Act (“DTSA”), the Florida Uniform
Trade Secrets Act (“FUTSA”) and the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), and for breaches
of contract and fiduciary duties, including the duty of loyalty, styled Lottery.com, Inc. f/k/a AutoLotto, Inc. and TinBu, LLC v. John
J. Brier, Jr., Bin Tu, and Global Gaming Data, LLC (Case No.: 8:23-cv-2594-KKM-TGW) Defendants filed certain counterclaims against
Plaintiffs. The Company’s request for a Temporary Restraining Order was denied by the MDF in February 2024.
Woodford
Eurasia
Woodford
Eurasia filed a complaint in the High Court of Justice in London chancery Division. October 16, 2023, The High Court of Justice in London
Chancery Division (“the Court”) dismissed an application for injunctive relief initiated by Woodford against the Company.
(Case: FL-2023-000023. Woodford Eurasia Assets Limited v Lottery.com Inc.) The Court characterized Woodford’s application as “fundamentally
misconceived” and ordered Woodford to pay the Company’s legal costs. Woodford subsequently, on the Judges’ recommendation,
withdrew the proceedings.
Woodford
filed an additional action in the United States District Court for the
District of Delaware on November 16, 2023 in Case No. 23-1317-GBW seeking a temporary restraining order, preliminary injunction and expedited
discovery against Lottery.com and its directors. The Court entered an order the next day denying the relief sought by Woodford. On February
14, 2024, Woodford filed a Notice of Voluntary Dismissal Without Prejudice, which stated that Woodford provides notice of dismissal of
all claims without prejudice against Defendants Lotttery.com and its directors.
With
the dismissal of this lawsuit by Woodford, no further action is required by Lottery.com or its directors at this time. The Company is
determining its next course of action in resolving any further matters regarding Woodford.
The validity and application
of the Woodford Loan Agreement Amendment is disputed by the Company.
Despite requests
from the Company, Woodford has repeatedly amongst other things: failed to prove the amounts borrowed by the Company or claimed to have
been advanced by Woodford to the Company; failed to indicate if it would accept accelerated payment of those verified amounts; failed
to provide an anti-money laundering acceptable account to which payment could be made by the Company and failed to explain failure to
respond to requests for other funding to be accepted in the context of the Woodford Loan Agreement; failed to respond to requests for
funding under the accordion facility of the Woodford Loan Agreement; and failed to respond to allegations of money laundering and conspiracy
to defraud the Company and others.
Item
4. Mine Safety Disclosures .
Not
applicable.
53
PART
II