Item 5. Market for Registrant’s Common Equity
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market
Information
Our
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.
On October
16, 2025, the Company achieved a material regulatory milestone by regaining full compliance with the listing requirements of Nasdaq Stock
Market LLC. Specifically, on October 16, 2025, Nasdaq confirmed the resolution of a previously disclosed shareholder-approval deficiency
under Listing Rule 5635(c) linked to equity grants made in 2023 and early 2024, and the matter is now formally closed.
Being removed
from Nasdaq’s non-compliant list provides the Company greater operational and financial flexibility to pursue its growth agenda
across sports, entertainment and gaming verticals (including its core brands Sports.com, Concerts.com and Lottery.com).
Furthermore,
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.
If
the Company’s securities are delisted from Nasdaq, it could be more difficult to buy and sell the Company’s common stock
and warrants or to obtain accurate quotations, and the price of the Company’s common stock and warrants could suffer a material
decline. Delisting could also impair the Company’s ability to raise capital or trigger defaults and penalties under its outstanding
agreements or securities. Further, there is no guarantee that we will be able to maintain our listing for any period of time.
Delisting
from Nasdaq could also result in negative publicity. Further, if we are delisted, we would also incur additional costs under state blue
sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock
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.
Legacy Matters
Business Combination
On October 29, 2021, we, as AutoLotto,
Inc. (“AutoLotto”), consummated the Business Combination with Trident Acquisitions Corp. (“TDAC” and after the
Business Combination described herein, the “Company”), pursuant to the terms of that certain Business Combination Agreement,
dated as of February 21, 2021 (the “Business Combination Agreement”), by and among TDAC, Trident Merger Sub II Corp., a wholly-owned
subsidiary of TDAC (“Merger Sub”) and AutoLotto. Pursuant to the terms of the Business Combination Agreement, Merger Sub merged
with and into AutoLotto with AutoLotto surviving the merger as a wholly owned subsidiary of TDAC, which was renamed “Lottery.com
Inc.” The aggregate value of the consideration paid by TDAC to the holders of AutoLotto common stock in the Business Combination
(excluding shares that might have been issued to former AutoLotto stockholders (the “Sellers”) as earnout consideration) was approximately
$440 million, consisting of approximately 2,000,000 shares of common stock valued at $220.00 per share. In addition, each Seller was eligible
to receive its pro rata portion of 150,000 Seller Earnout Shares and each Founder Holder was eligible to receive one-third of 100,000
Founder Holders Earnout Shares, subject to adjustments in the normal course of business. Conditions for earning the Seller Earnout Shares
and Founder Holders Earnout Shares were not met within the designated deadline and all potential earnout shares were forfeited.
AutoLotto
$30,000,000 Business Loan
On
January 4, 2022, AutoLotto entered into a Business Loan Agreement (the “Business Loan”) with bank prov, pursuant to
which the Company borrowed $30,000,000 from bank prov, which was evidenced by a $30,000,000 Promissory Note. The Promissory Note
accrued interest at the rate of 2.750% per annum (7.750% upon the occurrence of an event of default) and had a maturity date of
January 4, 2024. Monthly interest payments were due under the Promissory Note beginning February 4, 2022. The Promissory Note could
be repaid at any time without penalty. The Promissory Note included customary events of default for a debt obligation of the size of
the Promissory Note. The Business Loan included representations and warranties of AutoLotto and covenants (both positive and
negative) which were customary for a transaction of this nature and size, including rights to set off. Upon the occurrence of an
event of default, bank prov could declare the entire amount owed immediately due and payable. We were required to pay a 1%
commitment fee at the time of our entry into the Business Loan, and another 1% annual loan fee would have been due on the first
anniversary thereof.
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In
accordance with the terms of the Business Loan, upon entering into the agreement, $30,000,000 in a separate account with bank prov was
pledged as security for the amount outstanding under the loan (“Collateral Security”). The $30,000,000 Collateral Security
became restricted and remained restricted until October 12, 2022, when AutoLotto defaulted on its obligations under the Business Loan
and bank prov foreclosed on the $30,000,000 of Collateral Security. The Collateral Security, which was in the form of restricted cash,
was presented as a contingent liability on the Company’s balance sheet from March 31, 2022 until the obligation was satisfied in
October of 2022.
Current
Matters
Loan
Agreement with Woodford Eurasia Assets, Limited
On
December 7, 2022, the Company entered into a loan agreement with Woodford Eurasia Assets, Ltd. (“Woodford”), (the “Woodford
Loan Agreement”) pursuant to which Woodford agreed to provide the Company with up to $52.5 million, subject to certain conditions
and requirements, of which, per the Company’s books and records $798,351 was received by December 31, 2023 and is owed pursuant
to the terms of the Woodford Loan Agreement. Amounts borrowed accrue interest at the rate of 12% per annum (or 22% per annum upon the
occurrence of an event of default) and are due within 12 months of the date of each loan advance. Amounts borrowed can be repaid at any
time without penalty.
Amounts
borrowed pursuant to the Woodford Loan Agreement are convertible, at Woodford’s option, into shares of the Company’s common
stock, beginning 60 days after the first loan date at the rate of 80% of the lowest publicly available price per share of common stock
within 10 business days of the date of the Loan Agreement (which is currently equal to $56.00 per share), subject to a 4.99% beneficial ownership
limitation and a separate limitation preventing Woodford from holding more than 19.99% of the issued and outstanding common stock of
the Company, without the Company obtaining shareholder approval for such issuance.
Conditions
to the Loan Agreement included the resignation of four prior members of the Board (Lisa Borders, Steven M. Cohen, Lawrence Anthony DiMatteo
and William Thompson, all of whom resigned from the Board in September 2022), and the appointment of two new independent directors. Subsequent
loans under the Woodford Loan Agreement also required the Company to comply with all listing requirements, unless waived by Woodford.
The Woodford Loan Agreement also allows Woodford to nominate another director to the Board of Directors, in the event any independent
member of the Board of Directors resigns.
Proceeds
of the loans can only be used to restart the Company’s operations and for general corporate purposes agreed to by Woodford.
The
Woodford Loan Agreement includes confidentiality obligations, representations, warranties, covenants, and events of default, which are
customary for a transaction of this size and nature. Included in the Loan Agreement are covenants prohibiting us from (a) making any
loan in excess of $1 million or obtaining any loan in an amount exceeding $1 million without the consent of Woodford, which consent may
not be unreasonably withheld; (b) selling more than $1 million in assets; (c) maintaining less than enough assets to perform our obligations
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 which negatively affects
Woodford; and (h) repurchasing any shares.
The Company also agreed to grant
warrants to purchase shares of common stock to Woodford (the “Woodford Warrants”) in an amount equal to 15% of the Company’s
then issued and outstanding shares of common stock. Each Woodford Warrant has an exercise price equal to the average of the closing price
of the Company’s common stock for each of the ten days prior to the first amount being debited from the bank account of Woodford,
which equates to a current exercise price of $56.00 per share. In the event the Company fails to repay the amounts borrowed when due or
Woodford fails to convert the amount owed into shares, the exercise price of the warrants may be offset by amounts owed to Woodford, and
in such case, the exercise price of the warrants will be subject to a further 25% discount.
53
In
connection with our entry into the Woodford Loan Agreement, the Company also entered into a Loan Agreement Deed, Debenture Deed and Securitization,
with Woodford (the “Security Agreement”), which provides Woodford with a first floating charge security interest over all
present and future assets of the Company in order to secure the repayment of amounts owed under the Loan Agreement.
On
June 12, 2023, the Company entered into an amendment of the Woodford Loan Agreement (the “Woodford Loan Agreement Amendment”).
The Woodford 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 of 20%. The validity and application of the Woodford Loan Agreement Amendment is disputed by the Company.
Despite
requests from the Company, Woodford has repeatedly amongst other things: failed to prove the amounts borrowed by the Company or claimed
to have been advanced by Woodford to the Company; failed to indicate if it would accept accelerated payment of those verified amounts;
failed to provide an anti-money laundering acceptable account to which payment could be made by the Company and failed to explain failure
to respond to requests for other funding to be accepted in the context of the Woodford Loan Agreement; failed to respond to requests
for funding under the accordion facility of the Woodford Loan Agreement; and failed to respond to allegations of money laundering and
conspiracy to defraud the Company and others.
Information
regarding ongoing legal proceedings with Woodford can be found in the “Legal Proceedings” section of this form.
Reverse
Stock Split
On
August 28, 2025, the Company filed a Certificate of Amendment (the “Certificate of Amendment”)
with the Secretary of State of the State of Delaware to amend the Company’s Third Amended and Restated Certificate of Incorporation
to effect, effective as of 5:30 p.m. Eastern Time on August 28, 2025, a 1-for-10 reverse stock split (the “Reverse Stock Split”)
of its common stock, par value $0.001 per share (“Common Stock”). At the effective time of the Reverse Stock Split, every
ten(10) shares of Common Stock either issued and outstanding or held as treasury stock was automatically reclassified into one new share
of Common Stock. The total number of shares of Common Stock authorized for issuance did not change as a result of the Reverse Stock Split.
The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2024 annual meeting of its stockholders
held virtually on February 20, 2025 (the “Annual Meeting”) and approved by the board of directors of the Company (the “Board”)
on August 13, 2025.
In
addition, as a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of Common Stock underlying
the Company’s outstanding equity awards, the number of shares issuable upon the exercise of the Company’s outstanding warrants
and the number of shares issuable under the Company’s equity incentive plans and certain existing agreements, as well as the exercise,
grant and acquisition prices of such equity awards and warrants, as applicable.
An
adjustment was made to the Company’s warrants based on the 1-for-10 split ratio. The adjustment was made automatically. The number
of shares of common stock issued subject to stock options, warrants, or convertible securities was automatically decreased by the split
ratio and the exercise price or conversion ratio will automatically be proportionately increased by the same split ratio.
The
effects of the Reverse Stock Split were reflected in the Quarterly Report on Form 10-Q for the period ended September 30, 2025 and in
all subsequent reports for all periods presented.
54
Current
Operations
Despite
the 2022 Operational Cessation, the Company’s subsidiaries have continued to operate under the direction of the leadership teams
that were in place prior to the Company’s acquisition of such companies. While the operational activities of these subsidiaries
vary, from the 2022 Operational Cessation through the date of this Report, each of Aganar and JuegaLotto have decreased their expenses
and has had their revenues remain consistent or decrease slightly from pre-Operational Cessation levels. TinBu has decreased its expenses
and had their revenues remain consistent for a period of time but revenues continue to decrease from pre-Operational Cessation
levels.
Data
Services
In
2018, we acquired TinBu, LLC (“TinBu”), a digital publisher and provider of lottery data results, jackpots, and other
related data, as a wholly owned subsidiary. Through TinBu, our Data Service delivers daily results of over 800 domestic and
international lottery games from more than 40 countries, including the U.S., Canada, and the United Kingdom, to over 400 digital
publishers and media organizations. See “ Item 1A. Risk Factors – We are party to pending litigation and
investigations in various jurisdictions and with various plaintiffs and we may be subject to future litigation or investigations in
the operation of our business. An adverse outcome in one or more proceedings could adversely affect our business, financial
condition, and results of operations ” for more information about our relationship with Tinbu.
Our
technology pulls real time primary source data, and, in some instances, we acquire data from dedicated data feeds from the lottery authorities.
Our data is constantly monitored to ensure accuracy and timely delivery. We are not required to obtain licenses or approvals from the
lottery authorities to pull this primary source data or to acquire the data from such dedicated feeds. Commercial acquirers of our Data
Service pay a subscription for access to the Data Service and, for acquisition of certain large data sets, an additional per record fee.
We
additionally enter into multi-year contracts pursuant to which we sell proprietary, anonymized transaction data pursuant to
multi-year agreements and in accordance with our Terms of Service in consideration of a fee and in other instances provide the Data
Service within a bundle of provided services.
55
Aganar
and JuegaLotto
On
June 30, 2021, we acquired 100% of the equity of Global Gaming Enterprises, Inc., a Delaware corporation (“Global Gaming”),
which holds 80% of the equity of each of Medios Electronicos y de Comunicacion, S.A.P.I de C.V. (“Aganar”) and JuegaLotto,
S.A. de C.V. (“JuegaLotto”). JuegaLotto is federally licensed by the Mexican regulatory authorities with jurisdiction over
the ability to commercialize lottery games in Mexico through an authorized federal gaming portal and to commercialize games of chance
in other countries throughout Latin America. Aganar has been operating in the licensed Online Lottery market in Mexico since 2007 and
has certain rights to sell Mexican National Lottery draw games, instant win tickets, and other games of chance online with access to
a federally approved online casino and sportsbook gaming license and additionally issues a proprietary scratch lottery game in Mexico
under the brand name Capalli. See “ Item 1A. Risk Factors – We need additional capital to, among other things, support
and restart our operations, re-hire employees 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” for additional information.
Sports.com
In December 2021, we finalized
the acquisition of the domain name https://sports.com . On March 26, 2025, the Company registered Sports.com as a fictious name
in the state of Florida under AutoLotto, Inc. Content provided by Sports.com is currently available worldwide as a website and a mobile
application. The website was relaunched in August 2025.
In February 2025,
the Company entered into a multi-year global partnership with Soccerex, the world’s leading soccer business event organizer. The
Agreement makes Sports.com the title sponsor for six global events including Soccerex 2025 for MENA, Europe and USA which were held in
Cairo, Amsterdam and Miami, respectively. In April 2026, the Company renewed the sponsorship for an additional two years and participated
in the 30 th anniversary celebration of Soccerex which was held in Amsterdam in May 2026.
This collaboration provides the
Company with an influential platform to engage with key stakeholders in the football industry, further solidifying Sports.com’s
position at the intersection of sports, technology and entertainment. Working with the Soccerex team and its community presents an opportunity
to build brand awareness internationally for the Company’s gaming, content and entertainment brands.
In May 2025, the Company entered
into sponsorship agreements with Louis Foster and Calum Ilott, drivers in the NTT IndyCar Series, and Sebastain Murray, a driver in the
INDY NXT by Firestone series. The agreements provide the Company’s brands with exposure throughout the 2025 racing seasons with
vehicle and attire logo placement and social media postings by the drivers.
On June 17, 2025, the Company
appointed Tamer Hassan as president of Sports.com Studios, Ltd. In this role, Hassan will lead the division’s creative and strategic
efforts to develop, produce and distribute compelling sports-focused films, docuseries, and premium digital content. This new arm of the
business will serve as the cornerstone of Sports.com’s global expansion into entertainment media and immersive storytelling.
On June 24, 2025, the Company
appointed Tim Scoffham CEO of Sports.com Media Group, Ltd. In this role, Scoffham will oversee the strategic integration and international
expansion of Sports.com Media, a premium digital sports content and engagement platform. His leadership will focus on aligning commercial,
media, and technology platforms, bolstering regulatory partnerships, and unlocking scalable, revenue-generating opportunities in high-growth
markets.
On July 17,
2025, the Company entered into its first official football league partnership in the Indian
subcontinent through a five-year commercial agreement with the Super League Kerala (“SLK”), valued at more than $11.6
million based on estimated advertising and sponsorship revenue. The agreement establishes SEGG Media and Sports.com as the exclusive global commercial and broadcast partner for
SLK, encompassing: exclusive international streaming rights across all territories; integrated gaming and fan engagement products;
global sponsorship and brand activation rights; and distribution focus across the Indian subcontinent and MENA, especially targeting
the vast Keralite diaspora in the Middle East, North America, and Europe.
Sports.com Studios Ltd, entered
into a revenue-driven co-production partnership with GOATS Entertainment (Greatest Of All Time) on August 7, 2025. This alliance will
transform the legacies of the world’s greatest athletes into cash-generative content assets, combining premium docuseries, exclusive
merchandise, global fan activations, and immersive storytelling. The collaboration is designed to drive high-margin revenue streams across
OTT, e-commerce, experiential and licensing platforms.
On Sept. 10, 2025, Sports.com
Studios entered into a strategic global distribution partnership with the Døds Diving League (“DDL”), the official
global platform for the world’s fastest-growing extreme sport. The partnership will be managed by Sports.com Studios Ltd, the newly
launched sports content subsidiary of SEGG Media. The partnership will bring the thrill of Døds to millions of fans worldwide.
Under the agreement, Sports.com Studios became a global distribution partner for DDL events, ensuring competitions and original content
will be delivered through Sports.com platforms.
During 2025, Sports.com content surpassed 102 million views across all platforms. The growth was driven by surging interest in the Kerala Super League, and the Company’s accelerating global social-media presence.
Nook
Holdings, LTD
On
June 10, 2025, the company entered into an Amended Stock Purchase Agreement with the shareholders of Nook Holdings Limited
(“Nook”), a private limited company incorporated and registered in the Abu Dhabi Global Market, Abu Dhabi, United Arab
Emirates (“UAE”). The total purchase price for the acquisition of 90% of Nook is approximately $2.46 million. The
Company has paid $1,470,000 towards the acquisition and anticipates the transaction closing
at a time when the current unrest in the Middle East surrounding the US war with Iran has subsided. Nook is known for its innovative approach to co-working in Dubai and has procured 200 licenses
for individuals and companies in the sports, health and wellness sector seeking access to Dubai and the broader Middle Eastern
market. With its exclusive partnership with the Dubai Multi-Commodities Centre Free Zone (DMCC), Nook offers a wide range of
services, including business setup support, insurance, VAT registration, and networking opportunities for like-minded sports
entrepreneurs. As part of the acquisition, Nook will be rebranded under the Sports.com umbrella.
56
Notes
to Company Operations
As of the date of this filing,
the current estimated cash balance of the Company and its subsidiaries is approximately $111,961. The
Company believes that this cash on hand, along with future borrowings, will be sufficient for the Company to meet it current operational obligations.
As
of the date of this Report, our common stock and warrants are traded on The Nasdaq Stock Market LLC (“Nasdaq”) under the
ticker symbols “SEGG” and “LTRYW,” respectively. As of the date of this Report, we are not in compliance
with Nasdaq’s continued listing requirements (the “Listing Rules”). See, “ Risk Factors - Risks Related to
Our Common Stock and Warrants – We are not currently in full compliance with the continued listing standards of Nasdaq,
we may not be able to regain full compliance with Nasdaq’s continued listing standards in the future .”
Additionally, under its new management, the Company continues to work to improve its disclosure and reporting controls. Also, the
Company plans to continue to improve its systems of internal control over financial reporting and invest in additional legal,
accounting, and financial resources.
Even
when the Company has full operations in its sports, entertainment, and gaming verticals, there can be no assurance that the Company
will be able to remain in compliance with the applicable Nasdaq Listing Rules. If the Company’s securities are delisted from
Nasdaq, it could be more difficult to buy or sell the Company’s common stock and warrants or to obtain accurate quotations,
and the price of the Company’s common stock and warrants could suffer a material decline. Delisting could also impair the
Company’s ability to raise additional capital needed to fund its operations or trigger defaults and penalties under
outstanding agreements or securities of the Company.
There
can be no assurance that we will have sufficient capital to support our operations and pay expenses, repay our debt, or that additional
funds will be available on favorable terms, if at all. We may not be able to restart our operations or generate sufficient funding to
support such operations in the future. The Company’s ability to continue its current operations, prepare and refile deficient and
restated reports, and restart its prior operations, is dependent upon obtaining new financing. Future financing options available to
the Company include equity financings, debt financings or other capital sources, including collaborations with other companies or other
strategic transactions. Equity financings may include sales of common stock. Such financing may not be available on terms favorable to
the Company or at all. The terms of any financing may adversely affect the holdings or rights of the Company’s stockholders and
may cause significant dilution to existing stockholders. There can be no assurance that the Company will be successful in obtaining sufficient
funding on terms acceptable to the Company, if at all, which would have a material adverse effect on its business, financial condition
and results of operations, and it could ultimately be forced to discontinue its operations and liquidate. These matters, when considered
in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of
time, which is defined as within one year after the date that the financial statements are issued. The accompanying financial statements
do not contain any adjustments to reflect the possible future effects on the classification of assets or the amounts and classification
of liabilities that might result from the outcome of this uncertainty.
Item
6 Reserved
57