What changed in this filing

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Item 1A. Risk Factors

2026-07-10 compared with 2025-04-21 · 401 added, 1023 removed, 1311 unchanged (52% of the section changed)

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that we file with the SEC.

Risks Relating to the Restatements of our

Consolidated Financial Statements, Our Ability to Continue as a Going Concern, Our Internal Controls and Related Matters

Relating to Prior Management, Our Internal Controls

and Related Matters

findings of the previously disclosed Internal Investigation and other matters have exposed us to a number of legal proceedings, investigations

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among other adverse impacts.

As disclosed in the Company’s

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 an

Internal Investigation that revealed past 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.

disclosed in the Company’s 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 an Internal Investigation that revealed past 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

of these issues contributed to the Company’s auditors’ determination that the Company’s audited financial statements

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

The 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 its internal investigations, including

legal expenses and costs associated with the restatement and adjustments to its 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, or the Company’s 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, 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.

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 its

internal investigations, including legal expenses and costs associated with the restatement and adjustments to its 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, or the Company’s 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.

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.

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

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

Department of Justice (the “DOJ”).

of Justice (the “DOJ”).

The Company is cooperating fully with such investigations and inquiries.

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.

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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in these or similar actions.

moreover, we do not currently have an effective director and officer liability insurance policy in place

for our current officers and directors.

We are not currently able to estimate the possible cost to us from these matters, as we cannot

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It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages.

adverse to our interests in these actions could result in damages, fines, penalties, consent orders or other sanctions against the Company or our officers, or in changes to our business practices, among others, any of which could have a material adverse effect on our

cash flow, results of operations and financial position.

adverse to our interests in these actions could result in damages, fines, penalties, consent orders or other sanctions against the Company

or our officers, or in changes to our business practices, among others, any of which could have a material adverse effect on our cash

flow, results of operations and financial position.

publicity surrounding any such proceeding, investigation or inquiry or any enforcement action as a result thereof, even if ultimately

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if any, under potentially applicable insurance policies, which is limited.

Following disclosure of the results of our Internal Investigation,

we have had difficulties in obtaining desirable insurance coverage, or any insurance coverage, regarding legal proceedings, investigations

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 financial filing restatements, the investigations and regulatory inquiries, including adverse publicity

connected to these matters as well as other concerns, coupled with 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 condition.

relating to or arising from the restatements of financial filings, the investigations and regulatory inquiries,

including adverse publicity connected to these matters as well as other concerns, coupled with 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

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

In July 2022, the Company

furloughed the majority of its U.S.

employees and suspended U.S.

lottery game sales operations after determining that it did not have

sufficient financial resources to fund these operations or pay certain existing obligations, including U.S.

payroll and related obligations.

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

In 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, 2024, the Company owed

approximately $3.94 million in outstanding U.S.

payroll obligations, which amount remains unpaid.

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.

In order for the Company to fully

restart its U.

operations, it must raise sufficient capital to re-hire or hire additional employees.

Qualified employees may not be

available for hire, 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, 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 during the next 12 months.

The accompanying financial statements have been prepared in accordance

with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization

of assets and the satisfaction of liabilities in the normal course of business.

Accordingly, the financial statements do not include

any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable

to continue as a going concern.

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

We need additional capital

to, among other things, support and restart our U.S.

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.

We need to raise capital to,

among other things, support and restart our U.S.

operations, re-hire or hire employees, engage contractors and pay our expenses.

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 the UCIL 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.

additional financing involves certain risks, including:

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 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, 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 have incurred significant

losses and require additional capital;

substantial doubt exists regarding our ability to continue as a going concern.

We have a history of operating losses and negative cash flows and have

previously reduced operations due to liquidity constraints.

We expect to continue to incur expenses as we rebuild infrastructure, personnel,

compliance systems and operations and pursue growth initiatives, including acquisitions and commercialization of digital assets.

Our financial

statements include a going concern explanatory paragraph.

Our ability to continue as a going concern depends on our ability to raise additional

capital, execute our strategy and generate sustainable revenues.

There can be no assurance that we will be successful in doing so.

If we are unable to obtain adequate financing or generate sufficient

cash flow, we may be required to delay, scale back or discontinue operations, restructure obligations, sell assets, or seek protection

under applicable bankruptcy laws.

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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warrants may be 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

Such material weaknesses have not been fully remediated as of December 31, 2024.

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.

Past material weaknesses identified

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 fully remediated as of December 31, 2025 but many have been addressed .

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

material weaknesses identified include:

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

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segregation of duties in certain types of transactions and processes.

As a result of the material weaknesses,

management has concluded that our internal control over financial reporting remained ineffective as December 31, 2024.

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

as of December 31, 2025.

intend to implement measures to remediate the identified material weaknesses.

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Controls and Procedures-Material Weaknesses in Internal Control Over Financial

Further, there can be no guarantee

that the Company’s internal investigations and subsequent inquiries revealed all instances of inaccurate disclosure or other deficiencies,

or that other existing or past inaccuracies or deficiencies will not be revealed in the future.

Our failure to correct these deficiencies

or our failure to discover and address any other deficiencies could result in inaccuracies in our financial statements and could also

impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.

our business, financial condition, results of operations and prospects, as well as the trading price of our shares of common stock and

warrants, may be materially adversely affected.

there can be no guarantee that the Company’s internal investigations and subsequent inquiries revealed all instances of inaccurate

disclosure or other deficiencies, or that other existing or past inaccuracies or deficiencies will not be revealed in the future.

failure to correct these deficiencies or our failure to discover and address any other deficiencies could result in inaccuracies in our

financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory

filings on a timely basis.

As a result, our business, financial condition, results of operations and prospects, as well as the trading

price of our shares of common stock and warrants, may be materially adversely affected.

addition, these deficiencies could cause investors to lose confidence in our reported financial information, limiting our access to capital

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us to further litigation or regulatory investigations and civil or criminal sanctions.

We could also be required to further restate

our historical financial statements.

We could also be required to further restate our

historical financial statements.

a public company, we are subject to the Sarbanes-Oxley Act of 2002.

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and remediate those matters have caused and may continue to cause substantial delays in our SEC filings.

ability to resume a timely filing schedule with respect to our SEC reporting is subject to a number of contingencies, including whether

and how quickly we are able to effectively remediate the identified material weaknesses in our internal control over financial reporting.

Our filing of our quarterly reports and annual reports has been delayed and we cannot assure you we will be able to timely make our future

ability to maintain a timely filing schedule with respect to our SEC reporting is subject to a number of contingencies, including

whether and how quickly we are able to effectively remediate the identified material weaknesses in our internal control over

financial reporting.

Our filing of our quarterly reports and annual reports has been delayed and we cannot assure you we will be

able to timely make our future filings.

cases where we delay our filings, investors will need to evaluate certain decisions with respect to our shares of common stock and warrants

in light of our lack of current financial information.

Accordingly, any investment in our shares or warrants may involve a greater

degree of risk than other companies who are current on their public filings.

Our lack of current public information may have an adverse

impact on investor confidence, which could lead to a reduction in our stock price or restrictions on our abilities to obtain financing

in the public market, among others.

Accordingly, any investment in our shares or warrants may involve a greater degree

of risk than other companies who are current on their public filings.

Our lack of current public information may have an adverse impact

on investor confidence, which could lead to a reduction in our stock price or restrictions on our abilities to obtain financing in the

public market, among others.

Market & Economic Risks

Our strategic repositioning from a lottery-focused

business to a diversified sports, entertainment and gaming media platform involves substantial execution risk.

We are repositioning SEGG Media Corporation as

a diversified sports, entertainment and gaming platform, including through the development and monetization of premium digital assets

and the acquisition of media and gaming-adjacent businesses.

This transformation requires successful execution across multiple disciplines,

including traffic acquisition, product development, content operations, advertising and sponsorship monetization, technology infrastructure

and regulatory compliance.

We have limited operating history in certain of these verticals.

If we fail to execute this strategy, our growth

prospects, financial performance and valuation may be materially adversely affected.

Our acquisition strategy exposes us to integration,

valuation and impairment risk.

We may pursue acquisitions as a core component

of our growth strategy.

Acquisitions involve significant risks, including overpayment, inaccurate valuation assumptions, integration challenges,

diversion of management attention, loss of key personnel, undisclosed liabilities, regulatory approval risks, and failure to achieve anticipated

Acquisitions may require significant cash, debt or equity financing and may be dilutive.

If acquired businesses or assets fail

to perform as expected, we may be required to record impairment charges relating to goodwill or intangible assets, which could materially

adversely affect our results of operations and financial condition.

Our business depends significantly on premium

domain assets and digital traffic, and our ability to monetize such assets is uncertain.

Our strategy includes commercialization of premium

digital assets, including domain names and related brands.

The value of such assets depends on traffic, consumer behavior, search engine

rankings, brand recognition, intellectual property protection and successful monetization (including advertising, sponsorship, subscriptions,

licensing or commerce).

Search engine algorithm changes, increased competition, changes in platform policies, reputational issues, or

failure to convert traffic into revenue could materially reduce the value of these assets and could require impairment charges.

Our forecasts, projections and internal plans

are subject to significant uncertainty and may differ materially from actual results.

Any forecasts, targets or projections we provide

(including in investor presentations or otherwise) are subject to significant risks, assumptions, estimates and uncertainties, including

assumptions regarding future legislation, regulatory developments, market adoption, consumer demand and competitive conditions.

revenues, expenses, market share and profitability may differ materially from any projections.

We may invest in the development or marketing

of products, services or distribution channels that do not achieve commercial success, in which case we may not recover those investments

and our operating results could be adversely affected.

within the global entertainment and gaming industries is intense and if we fail to compete effectively, our users may be attracted to

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and results of operations.

Our financial performance is

subject to U.S.

and global economic conditions and their impact on levels of spending by potential users and customers of our Platform

and acquirers of our Data Service.

Economic recessions, or other economic conditions such as rising inflation and interest rates, have

had, and may continue to have, far reaching adverse consequences across many industries, including the global entertainment, lottery,

sweepstakes and promotions, and gaming industries, which may adversely affect our business, financial condition, and results of operations.

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

in interest rates and inflation, and acts or threats of acts of war, 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.

financial performance is subject to U.S.

and global economic conditions and their impact on levels of spending by potential users and

customers of our Platform and acquirers of our Data Service.

Economic recessions, or other economic conditions such as rising inflation

and interest rates, have had, and may continue to have, far reaching adverse consequences across many industries, including the global

entertainment, lottery, sweepstakes and promotions, and gaming industries, which may adversely affect our business, financial condition,

and results of operations.

There may be an increasing risk of a recession or inflationary economic impacts due to international trade

and monetary policy, variations in interest rates and inflation, and acts or threats of acts of war, along with other economic challenges.

If the national and international economic growth 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

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

in the sports media market could impair our ability to generate revenue from Sports.com

landscape of the sports content industry is changing as traditional media companies are putting on a focus on developing original sports

In recent years, Apple, Netflix, Warner Brothers Discovery, and Amazon have produced original sports content and entered into

agreements to broadcast live sporting events.

Their entry into the market could limit our ability to acquire streaming rights for live

sports events.

Costs to produce original content may increase to the point where we cannot compete in the sector.

trends in paying for streaming content may have an adverse impact on the Sports.com subscription service.

global video streaming market is expected to experience a compound annual growth rate of 17.8% over the next eight years, reaching a

value of $2.4 trillion by 2032.

With more than 200 global streaming services, consumers are presented with a wide array of choices

where to spend their discretionary entertainment dollars.

Since 2022, 25% of streaming subscribers have cancelled three or more

Additionally, 21% of subscribers indicated they intended to cancel at least one additional service in 2024.

This trend may

negatively impact our ability to attract new customers or may increase the costs of both customer acquisition and

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

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lottery games through remote channels.

Several factors relating to this economic downturn, including reductions in discretionary income

Our business may be impacted by several factors, including reductions in discretionary income

due to changes in employment conditions, as well as customer preferences regarding discretionary spending habits, have caused and will

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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,

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

retain existing users of our offerings, and reactivate users in a cost-effective manner.

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

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

via a third-party application.

Growth in the mobile and online lottery industry and the level of demand for and market acceptance of

addition, growth in the mobile and online gaming industry and the level of demand for and market acceptance of

our product offerings is subject to a high degree of uncertainty.

We cannot ensure that players will use our products or that the industry

We cannot ensure that users will use our products or that the industry

will achieve more widespread acceptance.

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

Prior to the U.S.

Operational Cessation, Internet search engines drove traffic to our U.S.

B2C Platform and our user growth could decline and our business,

financial condition, and results of operations would be adversely affected if we fail to appear prominently in search results when we

recommence U.S.

success depends in part on our ability to attract users through unpaid Internet search results on search engines like Google and Yahoo!.

The number of users we attract to our B2C Platform from search engines is due, in large part, to how and where our website ranks in unpaid

search results.

These rankings can be affected by a number of factors, many of which are not under our direct control and may change

For example, a search engine may change its ranking algorithms, methodologies, or design layouts.

As a result, links to our

web-based properties may not be prominent enough to drive traffic, and we may not know how or otherwise be in a position to influence

In some instances, search engine companies may change these rankings in a way that promotes their own competing products

or services or the products or services of one or more of our competitors.

Search engines may also adopt a more aggressive auction-pricing

system for keywords that would cause us to incur higher advertising costs or reduce our market visibility to prospective players.

websites have experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future.

reduction in the number of users directed to our B2C Platform could adversely affect our business, financial condition and results of

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

may be unable to continue to use the domain names that we use in our business or prevent third parties from acquiring and using domain

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

may be unable to continue to use the domain names that we use in our business or prevent third parties from acquiring and using

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

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

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

We have a history of incurring

net losses and have suspended significantly our U.S.

operations since July 2022, the Operational Cessation.

We may not be able to achieve

or maintain a needed level of profitability in the future.

On a fully consolidated basis we experienced net losses of approximately $23.9

million for the year ended December 31, 2024, and approximately $60.0 million and $25.6 million for the years ended December 31, 2023

and December 31, 2022, respectively.

As of December 31, 2024, we had an accumulated deficit of approximately $258.9 million.

have received some limited revenue since the U.S.

2022 Operational Cessation, we cannot predict when or whether we will be able to fully

restart our operations 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

our results of operations if our total revenue does not increase.

We cannot ensure that these investments will result in substantial

increases in our total revenue or improvements in our results of operations.

In addition to the anticipated costs to grow our business,

we also expect to incur significant additional legal, accounting, and other expenses as a public company.

Once we fully restart our operations,

any failure to increase our revenue or to manage our costs could prevent us from achieving or maintaining profitability or positive cash

have a history of incurring net losses and have suspended significantly our U.S.

operations since July 2022, the Operational

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

On a fully consolidated basis we

experienced net losses of approximately $20.3 million for the year ended December 31, 2025, and approximately $28.2 million and $25.6

million for the years ended December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2025, we had an accumulated

deficit of approximately $284 million.

While we have received some limited revenue since the U.S.

2022 Operational Cessation, we

cannot predict when or whether we will be able to fully restart our operations 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 our results of operations if our total revenue does not increase.

We cannot ensure that these investments will result in

substantial increases in our total revenue or improvements in our results of operations.

In addition to the anticipated costs to

grow our business, we also expect to incur significant additional legal, accounting, and other expenses as a public company.

fully restart our U.S.

operations, any failure to increase our revenue or to manage our costs could prevent us from achieving or

maintaining profitability or positive cash flow.

business may be materially adversely affected if our products, technology, services, and solutions do not achieve and maintain broad

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of future performance.

lottery games are offered on a year-round basis, there is seasonality in lottery game purchasing that may impact our operations and operations

of our customers.

The broad geographical mix of our user and customer base also impacts the effect of seasonality, as users and customers

in different territories typically place differing importance on different lottery games and those games often have different calendars.

For example, some multi-state games can have occasional increasingly high jackpot opportunities, which increase user attention and ticket

purchases, which further increases the jackpot.

Such events may cause increases in our revenues.

By contrast, low jackpot lottery games

or periods in which there is little promotional activity connected to lottery games in general may negatively impact the purchase of

lottery games.

Such fluctuations and uncertainties may negatively impact our cash flows.

sports, concerts and lottery games are offered on a year-round basis, there is seasonality in purchasing that may impact our

operations and activities of our customers.

The broad geographical mix of our user and customer base also impacts the

effect of seasonality, as users and customers in different territories typically place differing importance on different events and

those events often have different calendars Such fluctuations and uncertainties may negatively impact our cash flows.

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

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our future results of operations, cash flows, and financial condition are difficult to predict and may not grow at the rates we expect.

To the extent that we enter

into any business that is determined to be internet gaming, any jurisdiction in which our existing business 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

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.

the extent that we enter into any business that is determined to be internet gaming, any jurisdiction in which our existing business

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 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

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anticipate, or at all, and any increase in revenue may not offset the expenses we incur in building and maintaining our brand.

Additionally,

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

levels or may be permanently reduced as a result of previous events.

our employees, our affiliates, and others with whom we have contractual relationships also use social media to communicate externally.

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and financial condition.

operate in a public-facing industry where negative publicity, whether justified, can spread rapidly through, among other things,

social media.

To the extent that we are unable to respond timely and appropriately to negative publicity, our reputation and brand could

Moreover, even if we are able to respond in a timely and appropriate manner, we cannot be certain that it will be timely or

sufficient to not cause us to suffer reputational and brand damage, which could affect our revenue, business, results of operations,

and financial condition.

operate in a public-facing industry where negative publicity, whether justified, can spread rapidly through, among other things, social

To the extent that we are unable to respond timely and appropriately to negative publicity, our reputation and brand could be

Moreover, even if we are able to respond in a timely and appropriate manner, we cannot be certain that it will be timely or sufficient

to not cause us to suffer reputational and brand damage, which could affect our revenue, business, results of operations, and financial

marketing efforts to help grow our business may not be effective.

Promoting awareness of our Platform

is important to our ability to grow our business and to attract new users and customers in the future, which can be costly.

that much of the growth in the number of users of our U.S.-based B2C Platform prior to the 2022 Operational Cessation was attributable

to our paid marketing initiatives.

Our future marketing efforts may include a combination of bonus offerings, affiliate marketing programs,

social media engagement, radio, video, podcasts, search engine optimization, and keyword search campaigns.

Our marketing initiatives may

become increasingly expensive and generating a meaningful return on these initiatives may become difficult.

Even if we successfully increase

revenue as a result of these marketing efforts, it may not offset the additional marketing expenses we incur.

If our marketing efforts

intended to help grow our business are not effective, we expect that our business, financial condition, and results of operations would

be adversely affected.

awareness of our brands is important to our ability to grow our business and to attract new users and customers in the future, which

can be costly.

Our marketing initiatives may become increasingly expensive and generating a meaningful return on these initiatives may become difficult.

Even if we successfully increase revenue as a result of these marketing efforts, it may not offset the additional marketing expenses

If our marketing efforts intended to help grow our business are not effective, we expect that our business, financial condition,

and results of operations would be adversely affected.

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

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and our revenue, business, financial condition, and results of operations may decline.

industry in which we operate is subject to rapid and frequent changes in standards, technologies, products, and service offerings, as

industries in which we operate are subject to rapid and frequent changes in standards, technologies, products, and service offerings, as

well as in consumer demands and expectations and regulations.

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to decline or become worthless.

failure to offer high-quality user support may harm our relationships with users and could adversely affect our reputation, brand, business,

financial condition, and results of operations.

ability to attract and retain qualified support personnel is dependent in part on the ease and reliability of our offerings, including

our ability to provide high-quality support.

Users on our Platform have and will continue to depend on our support organization to resolve

any issues relating to our offerings, such as technical questions around how to use our app and web-based properties or information regarding

our Data Services.

Our ability to provide effective and timely support when operations resume will be largely dependent on our ability

to attract and retain service providers who are qualified to support users and sufficiently knowledgeable regarding our offerings.

we restart our business and reintroduce and improve our offerings, we will face challenges related to providing quality support services

As users in new domestic and international jurisdictions acquire our services, our support organization will face additional

challenges, including those associated with delivering support in languages other than English.

The complex employment market and low

unemployment rates may impact the availability of service providers and as a result, our ability to provide effective and timely support

and an increase in response time.

Any failure to provide efficient user support, or a market perception that we do not maintain high-quality

support, could adversely affect our reputation, brand, business, financial condition, and results of operations and could cause the value

of our securities to decline or become worthless.

Technology Risks

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adverse effect on our results of operations, business, or financial condition.

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.

We may operate in

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

that we and our users rely on in any particular geographic area may be unable to support the demands placed upon it and could interfere

with the speed and availability of our offerings.

Any such failure in Internet or mobile device or computer accessibility, even for a

short period of time, could adversely affect our results of business, financial condition, and results of operations and could cause

the value of our securities to decline or become worthless.

operate in a rapidly evolving industry and if we fail to successfully develop, market, or sell new products or adopt new technology platforms,

it could materially adversely affect our business, results of operations, and financial condition.

Platform and other software products are in a market characterized by rapid technological advances, evolving standards in software and

hardware technology, and frequent new product introductions and enhancements that may render existing products, services, and systems

Competitors are continuously upgrading their product offerings with new features, functions, and content.

In addition, we may

be required to refine our software and technology platform to address regulatory changes in the markets in which we operate or plan to

In order to become competitive, we may need to periodically modify and enhance our technology platform and service offerings.

cannot assure you that we will be able to respond to rapid technological or regulatory changes in our industry.

In addition, the introduction

of new products or updated versions of existing products and the underlying technology that supports such products has inherent risks,

including, but not limited to, risks concerning:

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 number 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

for our offerings, may decline.

may not timely and effectively scale and adapt our technology and network infrastructure to ensure that our Platform is accessible, which

would adversely affect our business, reputation, financial condition, and results of operations.

we fully resume operations, we expect to make significant investments to improve the availability of our Platform and to enable rapid

releases of new features and services, funding permitting.

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 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 capacity constraints due to an overwhelming number of users or customers accessing our Platform simultaneously,

users or customers may seek other offerings and may not return to our Platform as often in the future, or at all.

This would adversely

affect our ability to attract users and customers and decrease the frequency with which they use our Platform.

To the extent that we

do not effectively address capacity constraints, upgrade our systems as needed, or develop our technology and network architecture to

accommodate actual and anticipated 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 our application of distributed ledger technology.

Prior to the U.S.

2022 Operational

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

ticket identification, and game numbers into an immutable ledger.

The distributed ledger was append-only and kept a complete record of

all changes to the provided data that could not be deleted, modified, or overwritten.

Distributed ledger technology 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

jurisdiction may enact, amend, or reinterpret laws and regulations governing our operations in ways that impair our revenues, cause us

to incur additional legal and compliance costs and other operating expenses, or are otherwise not favorable to our existing operations

or planned growth, all of which may have a material adverse effect on us or our results of operations, cash flow, or financial condition.

and federal laws in the U.S.

govern and, in some cases, limit our business practices.

For example, the Interstate Wagering Amendment

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

authorities in the respective states allow the sales.

Therefore, for our users located within the U.S., we only purchase lottery games

for users geolocated to be physically situated within the U.S.

state or jurisdiction where the lottery game they are purchasing is being

conducted, unless an exception were to be authorized by the applicable lottery authorities.

addition, our business is subject to extensive regulation by multiple domestic and foreign governmental authorities and the laws and

regulations governing companies conducting sweepstakes and lottery related operations on the Internet and over mobile networks and purchasing

of lottery tickets on behalf of others.

Such laws and regulations within U.S.

and international jurisdictions are subject to change and

the effect of such changes on our ongoing and potential operations cannot be predicted with certainty.

Governmental authorities continually

evaluate a wide range of issues that impact the mobile and online lottery and gaming industries.

As a result, a jurisdiction may enact,

amend, or reinterpret laws and regulations governing our operations in ways that impair our revenues, cause us to incur additional legal

and compliance costs and other operating expenses, or are otherwise not favorable to our existing operations or planned growth, all of

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

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 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.

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”) have 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

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.

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.

Our activities or the activities of those third parties with whom we do business may become the subject of

further inquiries, investigations or enforcement proceedings by such authorities or entities.

Any such proceeding by regulatory or law

enforcement or associations or entities may have a material adverse effect on us or our results of operations, cash flow, or financial

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.

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

states if such transactions crossed state lines.

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”).

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

to in-state customers, and several other states allowed subscription sales of draw games via the Internet.

Notably, in 2017, the Commonwealth

of Pennsylvania authorized the Pennsylvania Lottery to distribute lottery products, including scratch ticket games, through numerous

channels that included web applications, mobile applications, and social media.

January 2019, the OLC issued the 2019 Opinion, which concluded that the restrictions in the Wire Act on the transmission in interstate

or foreign commerce of bets and wagers was not limited to sports gambling but applied to all bets and wagers, including those involving

state lotteries.

Multiple lawsuits were filed challenging the validity of the 2019 Opinion.

June 3, 2019, the federal district court in New Hampshire determined that the Wire Act applies exclusively to sports gambling and set

aside the 2019 Opinion.

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

wire communications related to sporting events or contests.

Finding that the declaratory judgment was an adequate remedy at law, the

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.”

Notwithstanding

the above, currently, there is no definitive ruling from the U.S.

Supreme Court on the issue, and the courts in other U.S.

Circuits might

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

2019 Opinion on our business.

If courts outside the First Circuit, Fifth Circuit or the U.S.

Supreme Court take a different position

on the applicability of the Wire Act to our operations, the Wire Act may have a material adverse effect on our business, financial conditions,

and results of operations.

Should it ultimately be 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.

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

authorities may determine that the manner in which we operate our technology is deemed to be interstate or foreign commerce and accordingly

a violation of such interpretation of the Wire Act.

Either event could have a material adverse effect on us or our results of operations,

cash flow, or financial condition, could force us to cease our operations (if any), seek bankruptcy protection, and could further subject

us to litigation, fines and penalties.

the Interstate Wagering Amendment is interpreted or applied to prohibit transmissions to foreign countries, it could have a negative

impact on our business, financial condition, and results of operations.

federal laws prohibit the transportation of lottery tickets, advertisements, and paraphernalia in interstate or foreign commerce or through

the mail, except under certain circumstances.

Generally, such laws do not apply to state or charitable lotteries conducted in accordance

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

Interstate Wagering Amendment specifically provides:

being engaged in the business of procuring for a person in

1 State such a ticket, chance, share or interest in a lottery, gift, [sic] enterprise or similar scheme conducted by another State (unless

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.

covered by one of the exceptions, therefore, we are prohibited from transporting lottery tickets across state lines or transmitting information

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

tickets for persons in foreign countries.

the Interstate Wagering Amendment is interpreted or applied to prohibit transmissions to foreign countries, however, it could have a

negative impact on our business, financial condition, and results of operations and could cause the value of our securities to decline

or become worthless.

Additionally, reinterpretation of the Wire Act to prohibit transmissions of information to foreign countries for

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

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.

business model and the conduct of our operations may have to vary in each U.S.

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

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

laws vary among U.S.

jurisdictions.

This means that our business model and the conduct of our operations may have to vary in each jurisdiction

where we do business to ensure we remain in compliance with applicable laws.

For example, some jurisdictions prohibit lottery ticket

courier services, while some jurisdictions in the U.S.

prohibit charging certain fees to the user, and further still, some jurisdictions

require us to be licensed or registered, which will require us to incur certain costs in connection with the licensing or registration

jurisdiction, we may be required to structure our business model and conduct our operations differently to address

the unique features of applicable law.

jurisdictions in which we have historically done business or anticipate doing business in the future require that lottery

game tickets be sold only by licensed retailers and prohibit sale or resale of lottery tickets at prices in excess of the purchase price

designated by the applicable regulatory authority.

Because lottery tickets are typically considered bearer instruments, we can purchase

tickets on behalf of our users and customers and charge certain service fees within the limits of the applicable laws in each U.S.

jurisdiction.

In most cases, with Virginia being a notable exception, the laws do not specifically prohibit users from engaging our services to purchase

lottery tickets on their behalf.

However, certain types of fees are prohibited in certain jurisdictions.

For example, Pennsylvania prohibits

“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.

In those states and other states with similar prohibitions,

we need to structure our business model to comply with the relevant laws while still endeavoring to operate profitably.

jurisdiction prohibits our services, imposes onerous licensing or regulatory requirements, or imposes restrictions on the fees

we charge, either by enacting new statutes or regulations or by reinterpreting existing statutes and regulations, such restrictions and

requirements could have a material adverse effect on our results of operations, cash flow, or financial condition, force us to change

our operations in that state, or cease operations in that state altogether.

We operate in highly regulated industries,

and changes in law or regulation could restrict our operations and increase compliance costs.

Our operations are subject to federal, state and

foreign laws and regulations governing, among other things, lottery and gaming activities, promotional programs, digital advertising,

consumer protection, data privacy and payment processing.

These regulatory regimes are complex and evolving.

Changes in laws, regulations,

interpretations or enforcement priorities could restrict or prohibit aspects of our business model, require additional approvals or licensure,

increase compliance costs, result in fines or penalties, or require cessation of operations in certain jurisdictions.

Adverse interpretations of federal statutes

and related enforcement priorities could materially impair our business.

Federal statutes affecting gaming and related activities,

including interpretations of the Wire Act and other federal laws, have been subject to evolving interpretations and enforcement priorities.

Although certain appellate decisions have limited the scope of the Wire Act to sports wagering, no definitive ruling from the U.S.

Court exists.

An adverse reinterpretation, enforcement action, or related regulatory development could materially restrict aspects of

our operations and negatively affect our business and financial condition.

We are involved in, and may become involved in,

litigation, investigations or other legacy matters that may be costly and could adversely affect our liquidity and operations.

We have been subject to, and may continue to be

subject to, litigation, regulatory inquiries, investigations and other proceedings, including matters relating to historical events, financial

reporting, financing arrangements and related disputes.

These matters are inherently uncertain and may result in substantial defense costs,

settlements, judgments, penalties, injunctive relief, management distraction and reputational harm.

Any adverse outcomes could materially

adversely affect our business, financial condition and results of operations.

some jurisdictions our key executives, certain employees, or other individuals related to our business may be subject to licensing or

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

may determine or be required to secure licenses from regulatory authorities with jurisdiction over lottery operations

in new markets in which we contemplate expansion.

Such licensure may impose additional obligations on us and our operations, which may

include continuous disclosure to and an investigation by the applicable regulatory authority into the financial stability, integrity

and business experience of the Company, its affiliates, and their respective significant stockholders, directors, officers, and key employees.

In markets in which we have not previously operated or in newly regulated markets, licensing regimes may impose licensing requirements

or conditions with which we have not previously been required to comply, which may include locating technical infrastructure within the

relevant territory, establishing real-time data interfaces with the regulatory authority, implementing consumer protection, responsible

gaming and privacy measures, or additional approvals or certifications of our technology, all of which may present operational challenges

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.

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 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;

(b) allow them to exercise, directly or indirectly, any voting right conferred through the

shares they hold;

may determine or be required to secure licenses from regulatory authorities with jurisdiction over lottery operations in new markets

in which we contemplate expansion.

Such licensure may impose additional obligations on us and our operations, which may include continuous

disclosure to and an investigation by the applicable regulatory authority into the financial stability, integrity and business experience

of the Company, its affiliates, and their respective significant stockholders, directors, officers, and key employees.

In markets in

which we have not previously operated or in newly regulated markets, licensing regimes may impose licensing requirements or conditions

with which we have not previously been required to comply, which may include locating technical infrastructure within the relevant territory,

establishing real-time data interfaces with the regulatory authority, implementing consumer protection, responsible gaming and privacy

measures, or additional approvals or certifications of our technology, all of which may present operational challenges 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 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:

dividend or interest upon our shares;

(b) allow them to exercise, directly or indirectly, any voting right conferred through the shares

or (d) if required, fail to pursue all lawful

efforts to terminate their association with the Company or require them to relinquish their shares.

or (d) if required, fail to pursue all lawful efforts

to terminate their association with the Company or require them to relinquish their shares.

jurisdictions, certain stockholders may also be required to file applications or submit to background checks.

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in the future.

cannot ensure that our activities will remain in compliance or that we will continue to receive all licenses for

which we apply.

The failure to receive a license, could have a material adverse effect on

us or on our business, financial condition, or results of operations.

cannot ensure that our activities will remain in compliance or that we will continue to receive all licenses for which we apply.

failure to receive a license, could have a material adverse effect on us or on our business, financial condition, or results of operations.

and lottery authorities may revoke or suspend licenses, levy fines against us, or seize certain of our assets if we violate gaming regulations.

We cannot ensure that we will be able to obtain the necessary licenses or approvals or that the licensing process will not

result in delays or adversely affect our operations.

Disciplinary action against a license holder in one jurisdiction could lead regulators

in other jurisdictions to pursue similar action.

We cannot ensure that we will be able to obtain the necessary licenses or approvals or that the licensing process will not result in

delays or adversely affect our operations.

Disciplinary action against a license holder in one jurisdiction could lead regulators in

other jurisdictions to pursue similar action.

cannot ensure that regulatory or governmental authorities will not seek to restrict our business in their jurisdictions or institute

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As a result, we or our directors, management, employees, agents, partners, customers, affiliates, or other related

or third parties could be subject to investigations, criminal and civil penalties, sanctions or other enforcement measures that in

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

or third parties could be subject to investigations, criminal and civil penalties, sanctions or other enforcement measures that in turn

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

take our corporate responsibility to our users, customers, and the requirements of the regulatory authorities in the jurisdictions in

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by our ongoing compliance objectives and policies.

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

jurisdictions and most of the foreign jurisdictions in which we operate prohibit online gambling by persons under

18 years of age.

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using our services.

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

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

Nevertheless, if

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

Except for those

employed in our foreign subsidiaries (e.g.

Aganar and JuegaLotto), we currently have nine employees who manage and operate our

business, including our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, other employees as well as

thirteen 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.

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.

In addition, our failure to re-hire,

or hire new employees in the future may limit our ability to restart our business operations and generate revenue.

We believe our success

and our ability to compete and grow following the U.S.

2022 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 needed.

We cannot provide assurance

that we will be able to attract or retain such highly qualified personnel in the future.

In addition, the loss of future employees or

the inability to hire skilled employees as necessary could result in significant disruptions to our business, and the integration of replacement

personnel could be time-consuming and expensive and cause additional disruptions to our business.

for those employed in our foreign subsidiaries (e.g.

Veloce Esports Ltd.

(“Veloce”), Aganar and JuegaLotto), we

currently have nine employees who manage and operate our business, including our Interim Chief Executive Officer, Chief Financial

Officer and Chief Operating Officer, other employees as well as 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 retain current, or hire new employees in the future may limit our ability to restart our business operations and generate

We believe our success and our ability to compete and grow 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.

the loss of future employees or the inability to hire skilled employees as necessary could result in significant disruptions to our business,

and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business.

we do not succeed in attracting, hiring, and integrating excellent personnel, or retaining and motivating existing personnel, we may

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 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

with, but are not then receiving or providing services offered through, our Platform or individuals who are intentionally impersonating

users or couriers or the activities of couriers while purchasing lottery game tickets, may occur, which could adversely affect our reputation,

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

These activities may include attempted theft, unauthorized use of payment card or financial account information, user identity theft,

theft of lottery games, and other misconduct.

Such activities may result in injuries or damage for users and third parties, or business

interruptions, reputational and brand damage, or other significant liabilities for us.

we have implemented various measures intended to anticipate, identify, and address the risk of these types of activities, these measures

may not adequately address or prevent all illegal, improper, or otherwise inappropriate activity by these parties from occurring and

such conduct could expose us to liability, including through litigation, or adversely affect our brand or reputation.

At the same time,

if the measures we have taken to guard against these illegal, improper, or otherwise inappropriate activities, such as our requirement

that all couriers undergo a background check, are too restrictive and inadvertently prevent couriers and users otherwise in good standing

from using our Platform, or if we are unable to implement and communicate these measures fairly and transparently or are perceived to

have failed to do so, the growth and engagement of the number of couriers and users on our Platform and their use of our Platform could

be adversely affected.

Any of the foregoing risks could adversely affect our business, financial condition, and results of operations

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

Relating to our Dependence on Third Parties

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.

The Google Play store and Apple

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 interpretations.

Furthermore, the distribution

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

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

will continue to use our product offerings rather than competing products.

We are dependent on the interoperability of our technology

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

with these technologies, systems, networks, regulations, or standards.

If it is difficult for our users to access and use our offerings

on their mobile devices, if our users choose not to access or use our offerings on their mobile devices, or if our users choose to use

mobile products that do not offer access to our offerings, our user growth, retention, and engagement could be seriously harmed.

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 managers of these distribution platforms wished to impair our ability to serve

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

Also, technologies may be developed that can block the display of our ads.

These changes could materially impact the way we do business, and if we or our advertising partners are unable to quickly and effectively

adjust to those changes, there could be an adverse effect on our business, financial condition, and results of operations and could cause

the value of our securities to decline or become worthless.

rely on third-party providers for validation services regarding our users, and if such providers fail to perform adequately, provide

inaccurate information, or we do not maintain business relationships with them, our business, financial condition, and results of operations

could be adversely affected.

have relied and expect to rely in the future on third-party providers to assist in some or all of the required validation of the identity,

verification of the age, or geo-location of our prospective users, however, there is no guarantee that such third-party systems will

perform adequately, or at all, or be effective.

To the extent that we rely on third parties for our identity, age, or geolocation systems

to ensure that we are in compliance with certain laws and regulations, any service disruption to those systems would prohibit us from

operating our offerings and would adversely affect our business.

Additionally, incorrect or misleading geolocation, age, and identity

verification data with respect to current or potential users received from third-party service providers may result in us inadvertently

allowing access to our offerings to individuals who should not be permitted to access them, or otherwise inadvertently deny access to

individuals who should be able to access our offerings, in each case based on inaccurate identity or geographic location determination.

When operational, our third-party geolocation services provider relies on its ability to obtain information necessary to determine geolocation

from mobile devices, operating systems, and other sources.

When operational, changes, disruptions, or temporary or permanent failure

to access such sources by our third-party services providers may result in their inability to accurately determine the location of our

Moreover, our inability to maintain our contracts with third-party services providers, or to replace them with equivalent third

parties, may result in our inability to access geolocation, age and identity verification data necessary for our day-to-day operations.

If any of these risks materializes, we may be subject to disciplinary action, fines, lawsuits, and our business, financial condition,

and results of operations could be adversely affected.

rely on third-party payment processors to process payments and withdrawals made by our users, and if we cannot manage our relationships

with such third parties and other payment-related risks, our business, financial condition, and results of operations could be adversely

operational, we rely on a limited number of third-party payment processors to process payments and withdrawals made by our users.

any of our third-party payment processors terminates its relationship with us or refuses to renew their agreements with us on commercially

reasonable terms, we would need to find an alternate payment processor and may not be able to secure similar terms or replace such payment

processors in an acceptable time frame.

Further, the software and services provided by our third-party payment processors may not meet

our expectations, contain errors or vulnerabilities, be compromised or experience outages.

Any of these risks could cause us to lose

our ability to accept payments or other payment transactions or make timely payments to our users, any of which could make our technology

less trustworthy and convenient and adversely affect our ability to attract and retain our users.

all of our payments have been made by credit card, debit card, automated clearing house transactions, or through other third-party payment

services, which subjects us to certain regulations and to the risk of fraud.

We may in the future offer new payment options to users

that may be subject to additional regulations and risks.

We are also subject to a number of other laws and regulations relating to the

payments we accept from our users and customers, including with respect to money laundering, money transfers, privacy, and information

If we fail to comply with applicable rules and regulations, we may be subject to civil or criminal penalties, fines or

higher transaction fees and may lose our ability to accept online payments or other payment card transactions, which could make our offerings

less convenient and attractive to our users and customers.

If any of these events were to occur, our business, financial condition, and

results of operations could be adversely affected.

example, if we are deemed to be a money transmitter as defined by applicable regulation, we could be subject to certain laws, rules and

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

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

The payment card networks could adopt new operating rules or interpret or reinterpret existing rules in ways that might restrict

or prohibit us from using certain payment methods in providing certain offerings to some users, be costly to implement or difficult to

We have agreed to reimburse our payment processors for fines they are assessed by payment card networks if we or our users

violate these rules.

Any of the foregoing risks could adversely affect our business, financial condition and results of operations.

technology contains third-party open-source software components, and failure to comply with the terms of the underlying open-source software

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condition, and results of operations could be adversely affected.

International Operations Risks

International

Operations Risks

international scope of our operations may expose us to increased legal and regulatory risks, and our international operations and corporate

and financing structure may expose us to potentially adverse tax consequences.

have international operations, including in Mexico as a result of the closing of our acquisition in June 2021 of Global Gaming Enterprises,

Inc., which is a majority stockholder of Electronicos y de Comunicacion, S.A.P.I de C.V.

have international operations, including in Mexico as a result of the closing of our acquisition in June 2021 of Global Gaming

Enterprises, Inc., which is a majority stockholder of Electronicos y de Comunicacion, S.A.P.I de C.V.

and JuegaLotto, S.A.

The Company has recently launched additional international operations Sports.com Media Group Ltd.

and Lottery.com

The Company has launched additional international operations Sports.com Media Group Ltd., Sports.com Studios Ltd., Lottery.com

International Ltd.

Accordingly, our

business is subject to risks resulting from differing legal and regulatory requirements, political, social and economic conditions, and

and completed the acquisition of a majority interest in Veloce Esports Limited.

Accordingly, our business is

subject to risks resulting from differing legal and regulatory requirements, political, social and economic conditions, and

unforeseeable developments in a variety of jurisdictions.

Our international operations are subject to the following risks, among others:

Our international operations are subject to the following risks, among

international

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economic cycles and adverse economic conditions;

changes in regulatory environments and government interference in the economy, including lottery and gaming, data privacy and advertising

changes in regulatory environments including lottery and gaming, data privacy and advertising

laws and regulations;

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may increase our tax burden or may cause us to incur additional costs and expenses in compliance with such changes.

the tax authorities in any applicable jurisdiction may disagree with the positions we have taken or intend to take regarding the tax

treatment or characterization of any of our transactions, including the tax treatment or characterization of our indebtedness.

applicable tax authorities were to successfully challenge the tax treatment or characterization of any of our transactions, it could

result in the disallowance of deductions, the imposition of withholding taxes, the reallocation of income or other consequences that

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

In addition, the

tax authorities in any applicable jurisdiction may disagree with the positions we have taken or intend to take regarding the tax treatment

or characterization of any of our transactions, including the tax treatment or characterization of our indebtedness.

If any applicable

tax authorities were to successfully challenge the tax treatment or characterization of any of our transactions, it could result in the

disallowance of deductions, the imposition of withholding taxes, the reallocation of income or other consequences that could have a material

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

addition, the U.S.

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introduction of a digital services tax, such as the U.K.

digital services tax introduced with effect from April 1, 2020, may increase

digital services tax, may increase

our tax burden, which could adversely affect our business, financial condition and results of operations.

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Patent and Trademark Office.

As of December

31, 2024, the registrations of our LOTTERY.COM word marks was pending with the U.S.

December 31, 2025, the registrations of our LOTTERY.COM word marks was pending with the U.S.

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.

We are also using

or have common-law trademark rights in the trademarks AUTOLOTTO, SPORTS.COM, and “TAP, TAP, TICKET.”

also using or have common-law trademark rights in the trademarks AUTOLOTTO, SPORTS.COM, CONCERTS.COM, TICKETSTUB, and “TAP,

TAP, TICKET.”

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

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Oral Examination in Aid of Judgment and seeking post-judgment discovery, including interrogatories and requests for production.

an effort to avoid post-judgment discovery, Streicher indicated a willingness to pay the judgment over time with interest and is attempting

an effort to avoid post-judgment discovery, Streicher indicated a willingness to pay the judgment over time with interest and attempted

to negotiate a settlement and forbearance agreement with the Company.

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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, however Streicher did

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

not appear at such hearing.

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Company Operating Risks

projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation

and changes in regulations, both inside and outside of the U.S.

As a result, our projected revenues, market share, expenses and profitability

may differ materially from our expectations.

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.

Operating results are difficult to forecast

because they generally depend on our assessment of the timing of adoption of future legislation and regulations by different states,

which are uncertain.

Furthermore, if we invest in the development of new products, services or distribution channels that do not achieve

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

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

Additionally,

our business may be affected by reductions in consumer spending from time to time as a result of a number of factors which may be difficult

This may result in decreased revenue levels, and we may be unable to adopt measures in a timely manner to compensate for

any unexpected shortfall in income.

This inability could cause our operating results in a given quarter to be higher or lower than expected.

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.

a result of being a public company we incur significant legal, accounting and other expenses that we did not incur as a private company.

We are subject to the reporting requirements of the Exchange Act, and are required to comply with the applicable requirements of the

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.

Compliance with these rules

and regulations can be burdensome.

Moreover, these rules and regulations have increased our legal and financial compliance costs and

have made some activities more time-consuming and costly as compared to when we were a private company.

In particular, we have incurred

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 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.

We have identified material weaknesses in

internal control over financial reporting;

our remediation efforts may not be successful.

We have disclosed material weaknesses in our internal

control over financial reporting.

Although we have implemented and will continue implementing additional remediation measures, we may be unable to remediate these weaknesses in

a timely manner or at all.

Failure to remediate could result in inaccurate financial reporting, additional restatements, inability to

timely file required reports, increased audit and compliance costs, regulatory scrutiny, loss of investor confidence and a decline in

our stock price.

The requirements of being a public company

strain our limited resources, and our compliance costs may be higher than expected.

As a public company, we incur significant legal,

accounting, compliance and other costs and are subject to reporting, internal controls and corporate governance requirements under the

Exchange Act, Sarbanes-Oxley, Dodd-Frank, SEC rules and Nasdaq listing standards.

Compliance can be costly and time-consuming and may

divert management attention.

Our costs may increase further as we cease to qualify as an “emerging growth company,” including

with respect to internal control requirements, audit fees and financial reporting complexity.

If we fail to meet these obligations, we

could face regulatory action, investor litigation, loss of investor confidence and declines in the trading price of our securities.

Relating to Our Charter Documents and Delaware Law

Charter includes certain redemption rights which may negatively affect the value our common stock and other securities or result

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

Charter includes certain redemption rights which may negatively affect the value our common stock and other securities or result 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,

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able to redeem the shares of a stockholder deemed an unsuitable person by applicable regulatory authorities.

Claims for indemnification

by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount

of money available to us.

for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us

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

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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;

of directors or otherwise attempting to obtain control of SEGG Media;

ability of our Board to issue one or more series of preferred stock.

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Related to Our Common Stock and Warrants

we are currently in full compliance with the continued listing standards of Nasdaq, we may not be able to remain in full compliance with

Nasdaq’s continued listing standards in the future.

Our common stock and warrants

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

Our failure to remain in

full compliance with these requirements may result in our securities being delisted from Nasdaq.

On September 11, 2024, the Staff

notified the Company that the bid price of its common stock had closed at less than $1 per share over the previous 30 consecutive business

days, and, as a result, did not comply with Nasdaq Listing Rule 5550(a)(1).

Therefore, in accordance with e Listing Rule 5810(c)(3)(A),

the Company was provided 180 calendar days to regain compliance with such rule.

reported on form 8-K filed on November 1, 2024, on October 28, 2024, 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.

at any time during the compliance period the Company’s MVPHS closed at $5,000,000 or more for a minimum of ten consecutive business

days, Nasdaq would provide written confirmation of compliance and the matter would be closed.

The Company met this requirement, notified

Nasdaq and on March 6, 2025 received written notification from Nasdaq confirming that the Company has regained compliance with Nasdaq

Listing Rule 5450(b)(1)(C) and the matter is now closed.

The notification also stated that the Company had regained compliance with Nasdaq

Listing Rule 5550(a)(1) and that matter was also closed.

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.

are not currently in full compliance with the continued listing standards of Nasdaq and we 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 “SEGG” and “LTRYW,” respectively.

Our failure to remain in full compliance with these requirements may result in our securities being delisted from Nasdaq.

the Company’s securities are delisted from Nasdaq, it could be more difficult to buy and sell the Company’s common stock

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or warrants and the ability of our stockholders to sell our common stock or warrants in the secondary market.

If our common stock

or warrants are delisted by Nasdaq, our common stock or warrants may be eligible to trade on an over-the-counter quotation system,

such as the OTCQB Market, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market

value of our common stock or warrants.

In the event our common stock or warrants are delisted from The Nasdaq Global Market,

we may not be able to list our common stock or warrants on another national securities exchange or obtain quotation on an over-the

counter quotation system.

If our common stock or

warrants are delisted by Nasdaq, our common stock or warrants may be eligible to trade on an over-the-counter quotation system, such

as the OTCQB Market, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value

of our common stock or warrants.

In the event our common stock or warrants are delisted from The Nasdaq Global Market, we may not be

able to list our common stock or warrants on another national securities exchange or obtain quotation on an over-the counter quotation

active trading market for our common stock and warrants may never develop or be sustained, which may make it difficult to sell the shares

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market price of our common stock and warrants could be highly volatile, and you may lose some or all of your investment.

market price of our common stock and warrants could be highly volatile and may be subject to wide fluctuations in response to a variety

of factors, including the following:

announcements by us or

our competitors of new products, features, or services;

the public’s reaction

to our press releases, other public announcements, and filings with the SEC;

rumors and market speculation

involving us or other companies in our industry;

actual or anticipated changes

in our results of operations or fluctuations in our results of operations;

changes in the financial

projections we may provide to the public or our failure to meet these projections;

actual or anticipated developments

in our business, our competitors’ businesses or the competitive landscape generally;

actual or perceived privacy

or data security incidents;

risks related to the organic

and inorganic growth of our business and the timing of expected business milestones, including those related to announced or completed

acquisitions of businesses, products, services, or technologies by us or our competitors;

actual or anticipated changes

in applicable laws or regulations;

changes in accounting standards,

policies, guidelines, interpretations, or principles;

our ability to forecast

or report accurate financial results;

technical factors in the

public trading market for our common stock and warrants that may produce price movements that may or may not comport with macro,

industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be

expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to

margin debt, trading in options and other derivatives on our common stock and warrants and any related hedging and other technical

trading factors.

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.

The trading price of our securities may be highly

volatile due to many factors, including our operating performance, liquidity, financing activity, regulatory developments, litigation,

acquisitions and integration results, macroeconomic conditions and market dynamics affecting micro-cap issuers.

Broad market and industry

factors may negatively affect the trading price of our securities regardless of our actual performance.

In addition, securities class

action litigation is often brought against companies following periods of stock price volatility or decline, which could result in substantial

costs and diversion of management attention.

Our securities may be subject to short squeezes

and other market dislocations, which could result in extreme volatility and losses for investors.

Our securities may experience periods of extreme

volatility due to short interest and the potential for short squeezes, as well as speculative trading activity, options and derivatives

activity, margin availability and social-media-driven market dynamics.

A short squeeze can occur when investors with short positions are

forced to purchase shares to cover their positions, which may cause the stock price to rise rapidly.

Such price increases may be temporary

and may be followed by rapid declines.

Investors who purchase securities during such periods may incur substantial losses.

We do not control

these market dynamics and may be unable to respond effectively to mitigate volatility.

securities or industry analysts do not publish research or reports about the Company, or publish negative reports, the Company’s

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Related to Our Loan Agreements and Loan Agreement Warrants

Capital Investments London Limited, (“UCIL”) may not loan us the amounts they agreed to under their amended and restated

loan agreements, and Univest Securities, LLC (“Univest” or our “Placement Agent”) may not be successful in whole

or in part in placing our Offering.

If UCIL fails to provide us with funding, and the Placement Agent is less than fully successful,

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 amended and restated loan agreements with Woodford and UCIL are potential sources of this needed additional capital that

is presently available to us.

Univest funding was available on Dec 31 also.

Pursuant 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, $798,351 was received by us through December 31, 2024.

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 validity and application of the Woodford Loan Agreement Amendment is disputed by the Company.

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.

the uncertainty of 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, 2023.

The UCIL agreement was

approved by the shareholders on or about November 17, 2023 and attached to this 10-K/A 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.

As reported on form 8-K filed with the SEC on February 22, 2024, on February 16, 2024, the Company and UCIL entered into an “Amendment

and Restatement Agreement No.

2” to the UCIL Loan Agreement to increase the amount of the UCIL Credit Facility from $49,000,0000

to $149,000,000 (the “UCIL Amendment”).

Univest placement agent agreement pertains to the Company’s offering (“Offering”) of units (“Units”) up

to $5,000,000 to be offered to their investors;

each Unit consisting of a convertible promissory note (each, a “Convertible Note”

or collectively, the “Convertible Notes”), and a common stock purchase warrant (each, a “Warrant”, or collectively,

the “Warrants”) to purchase shares of common stock of the Company, par value $0.001 per share (the “Common Stock”)

which include specific registration rights (“Registration Rights”), for their investors.

neither Woodford nor UCIL, nor any other potential lenders or investors (including those placed through Univest) are able or willing

over time to advance us amounts owed under either of their amended and restated loan agreements 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 transactions of this size and nature.

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;

(f) declaring or paying any dividend;

(g) issuing any shares of common stock which

negatively affects the lender and (h) repurchasing any shares of common stock.

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.

The validity and application

of the Woodford Loan Agreement Amendment is disputed by the Company.

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.

the amounts borrowed pursuant to the terms of the Woodford Loan Agreement are secured by substantially all of the present and subsequently

acquired assets of the Company and its subsidiaries, the validity and application of the Woodford Loan Agreement Amendment is disputed

by the Company.

Under the Agreement, Woodford as a creditor, in the event of the occurrence of a default might have been able to enforce

security interests over our assets or our subsidiaries which secure 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.

and application of the Woodford Loan Agreement Amendment is disputed by the Company.

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.

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.

As of December 31, 2024,

per the Company’s books and records, we had borrowed $798,351 under the Loan Agreement to Woodford and $14,783 from UCIL [after

conversion of $682,859 from convertible debt to equity by UCIL in August of 2024].

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 agreements we agreed to grant warrants to each of Woodford and UCIL to purchase up to 15% of the

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 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 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 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

of its loan into the conversion shares at a conversion price that represents a further 25% discount to the original conversion price

The validity and application of the Woodford Loan Agreement Amendment is disputed by the Company.

currently owe a significant amount of money under our Loan Agreements which we may not be able to repay.

As of the date of this Report

per our books and records, we owe approximately:

$798,351 under the Amended and Restated Woodford Loan Agreement;

$697,642 under

the UCIL Amendment;

and $1,210,000 under the Univest Placement Agent Agreement.

Currently, we do not have sufficient

funds to repay such amounts.

A high level of indebtedness increases the risk that we may default on our debt obligations.

If the amounts

owed under any undisputed loan agreements are not converted into common stock pursuant to the terms and conditions, we may not be able

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.

Our ability to fund operations depends in

part on third-party financing sources that may not be available when needed.

We may rely on third-party financing arrangements

as a source of liquidity.

Certain lenders may have discretion regarding future advances and may not provide funding when requested or

If we are unable to obtain funding under existing arrangements or from other sources on acceptable terms, we may be required to

delay or abandon initiatives to restart or expand operations and could be forced to materially curtail operations.

Our debt agreements contain covenants that

may restrict operations and financing flexibility.

Our financing arrangements include covenants, representations,

warranties and events of default that may restrict our ability to incur additional indebtedness, sell assets, grant liens, amend organizational

documents, declare or pay dividends, repurchase shares, or issue securities in certain circumstances.

These restrictions could limit our

operational flexibility, impair our ability to raise additional capital and increase the risk of default.

If an event of default occurs

and is not cured, lenders may have remedies that could include accelerating amounts due and enforcing security interests, which could

materially adversely affect our business and could render an investment in our securities worthless.

Our obligations may be secured by substantially

all of our assets;

enforcement could materially harm the Company.

Certain obligations may be secured by a first-priority

security interest in substantially all of our assets.

If we default, secured parties may be able to foreclose on collateral, restrict

cash flows and force sales of assets, any of which could materially impair our ability to operate.

Conversions and warrant exercises could cause

substantial dilution and depress our stock price.

Certain financing arrangements include conversion

features and warrants that, if exercised or converted, would result in the issuance of a significant number of shares of our common stock.

Such issuances would dilute existing stockholders and could depress the market price of our common stock.

If conversion prices are based on discounts to

market prices and holders sell shares into the market, the trading price may decline, which could result in additional shares being issuable

upon further conversions, potentially creating a downward-spiral effect.

These dynamics could materially impair the market price of our

common stock and increase volatility.

Any resale of shares issued upon conversion or exercise, including by selling stockholders, could

further increase selling pressure and adversely affect the trading price.

We may not have sufficient funds to repay

indebtedness, and our indebtedness increases financial risk.

We have indebtedness and other obligations that

we may not have sufficient funds to repay when due.

Indebtedness increases the risk of default, limits financial flexibility and may require

us to devote cash to debt service rather than operations and growth.

If we are unable to repay or refinance amounts due, we may be required

to raise capital on unfavorable terms, sell assets, restructure obligations, or curtail operations.

will likely require additional financing, which may be highly dilutive and may adversely affect our stock price.

expect to seek additional capital through equity, equity-linked securities or debt financings.

Such financings may be unavailable on

acceptable terms, may be senior to existing equity, may include warrants or conversion features, and may result in substantial dilution

to existing stockholders.

Financing terms common for micro-cap issuers may include discounts to market price, variable pricing, resets

or other features that can increase the number of shares issuable as the trading price declines and can exert downward pressure on our

conditions, including interest rates, investor risk appetite and micro-cap volatility, may increase the cost of capital and reduce financing

alternatives.

Investors in this offering may experience significant dilution, and we may be required to raise capital at prices materially

below the offering price.

insurance coverage is not adequate to cover all possible losses that we could suffer, and our insurance costs may increase.

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.

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.

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

7 unchanged sentences

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