Item 3. Legal Proceedings
Item 3. Legal Proceedings.
The
Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.
In addition, the Company is a party to several material legal proceedings, which are described below. The outcome of litigation is inherently
uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s
expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
57
J.
Streicher
On
July 29, 2022, the Company filed its original Verified Complaint for Breach of Contract and Specific Performance (the “Streicher
Complaint”) against J. Streicher Financial, LLC (“Streicher”) in the Court of Chancery of the State of Delaware (the
“Chancery Court”), styled AutoLotto, Inc. dba Lottery.com v. J. Streicher Financial, LLC (Case No. 2022-0661-MTZ) .
In the Streicher Complaint, the Company alleged that Streicher breached the contract entered into by the parties on March 9, 2022 and
demanded that Streicher return $16,500,000 it owes to the Company. On September 26, 2022, the Chancery Court entered an order in favor
of the Company, Granting with Modifications Company’s Motion for Partial Summary Judgment in the amount of $16,500,000 (the
“Streicher Judgment”). On October 27, 2022, the Chancery Court further awarded the Company $397,037 in attorney’s fees
(the “Fee Order”). On November 15, 2022, the Company initiated efforts against Streicher to seek collections on the Judgment.
On December 8, 2022, the Company’s prior attorney Skadden, Arps, Slate, Meagher & Flom, LLP (“Skadden”) filed its
Combined Motion to Withdraw as Counsel and For a Charging Lien in amount of $3,024,201 for legal fees unpaid by Company (“Skadden’s
Motion”). On December 30, 2022, the Company filed its response to Skadden’s Motion, alleging that the Chancery Court should
deny Skadden’s Motion for a Charging Lien as a matter of law or, in the alternative, limit the charging lien to the amount
of the attorneys’ fees awarded by the Fee Order. As of the date of this Report, the Chancery Court has not set Skadden’s
Motion for an oral hearing, nor has it entered an order on the motion. On January 20, 2023, faced with post-judgment discovery and depositions,
Streicher remitted a partial payment towards the Judgment in the amount of $75,000. On February 13, 2023, Streicher made another payment
towards the Judgment in the amount of $50,000 and had agreed to make another payment in the amount of $75,000 on February 28, 2023, which
it failed to make. The Company intends to fully collect on the Judgment and shall pursue all legal and equitable means to enforce the
Judgment against Streicher until the Judgment is fully satisfied.
Preston
Million Class Action
On
August 19, 2022, Preston Million filed a Class Action Complaint (the “Class Action Complaint”) against the Company
and certain former officers and directors of the Company in the United States District Court for Southern District of New York (the “SDNY”),
styled Preston Million, Individually and on Behalf of All Others Similarly Situated vs. Lottery.com, Inc. f/k/a Trident Acquisitions
Corp., Anthony DiMatteo, Matthew Clemenson and Ryan Dickinson (Case No. 1:22-cv-07111-JLR) . The Class Action Complaint alleged violations
by all defendants of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) 15 U.S.C. §§
78j(b), 78t(a), as amended by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), U.S.C. § 78u-4 et seq .
(collectively “Federal Securities Laws”). On November 18, 2022, the SNDY ordered the appointment of RTD Bros, LLC, Todd Benn,
Tom Benn and Tomasz Rzedian (collectively “Lottery Investor Group”) as lead plaintiff and Glancy Prongay & Murray, LLP
as lead counsel for plaintiffs and for the class in the case. On December 5, 2022, the Court stipulated a Scheduling Order in
the case. On January 12, 2023, the Company’s legal counsel timely filed its Notice of Appearance . On January 31, 2022, plaintiffs
filed their Amended Complaint adding Kathryn Lever, Marat Rosenberg, Vadim Komissarov, Thomas Gallagher, Gennadii Butkevych, Ilya
Ponomarev as additional defendants in the case. The Amended Complaint alleges, among other things, that defendants made materially
false and misleading statements in violation of Section 10(b),14(a) and 20(a) of the Exchange Act and plaintiffs seek compensatory damages,
reasonable costs and expenses including counsel fees and expert fees. Pursuant to the Scheduling Order , the Company filed its
motion to dismiss the Amended Complaint on April 3, 2023, under the newly consolidated caption and its proposed order to dismiss the
matter. Plaintiffs were expected to file their opposition to the motion to dismiss no later than May 18, 2023, which would trigger the
Company’s deadline to file its reply brief in support of their motion to dismiss no later than June 20, 2023. On February 6, 2024,
the SDNY granted the Company’s Motion to Dismiss. On June 12, 2024, plaintiffs amended their complaint (the “Third Amended
Complaint”). On July 12, 2024, the Company filed its motion to dismiss the Third Amended Complaint (the “MTD Third Amended
Complaint”). On August 8, 2024, the plaintiffs filed their response in opposition to the MTD Third Amended Complaint. The Company
filed its reply on August 22, 2024 to plaintiffs response in opposition to the MTD Third Amended Complaint. On February 25, 2025, the Court granted in part and denied in part the MTD Third Amended Complaint (the “Order).
As set forth in the Order, the Class Plaintiffs’ Section 10(b) claim shall proceed against Defendant Dickinson and the Company based on
post−merger representations regarding Lottery’s financial performance and financial reporting. Class Plaintiffs’ and Hoffman’s Section
20(a) claim premised on Section 10(b) shall likewise proceed against Defendant Dickinson. Class Plaintiffs’ Section 14(a) claim shall
proceed against the Company and Defendants DiMatteo, Clemenson and Dickinson with respect to certain legal and regulatory compliance statements
in the Proxy. The remainder of Plaintiffs claims were dismissed, including all claims against Komissarov. The Court also ordered that
Plaintiffs shall have leave to amend within twenty−one (21) days of this opinion and order. On March 13, 2025, the Court granted
Plaintiff Hoffman’s motion for leave for additional time to amend his complaint. Accordingly, Hoffman’s’ Third Amended Complaint
shall be due April 24, 2025. Defendants’ motions to dismiss shall be due June 30, 2025; Plaintiff Hoffman’s opposition brief will be due
August 14, 2025; and Defendants’ reply briefs shall be due September 17, 2025.
TinBu
Complaint
On
March 13, 2023, John Brier, Bin Tu and JBBT, LLC (collectively, the “TinBu Plaintiffs”) filed its original complaint against
Lottery.com, Inc. f/k/a AutoLotto, Inc. and its wholly owned subsidiary TinBu, LLC (“TinBu”) in the Circuit Court of the
13 th Judicial District in and for Hillsborough County, Florida (the “TinBu Complaint”). The Complaint alleges
breach of contract(s) and misrepresentation with alleged damages in excess of $4.6 million. The parties agreed to extend the Company’s
and its subsidiary’s deadline to respond until May 1, 2023. On May 2, 2023, the Company and its subsidiary retained local counsel
who filed a Notice of Appearance on behalf of the Company and TinBu and filed a Motion for Enlargement requesting the Court to extend
its deadline to file its initial response to the Complaint by an additional 30 days (the “Motion for Enlargement”). As of
the date of this Report, the Motion for Enlargement has not been set for a hearing. On May 5, 2023, Plaintiffs filed their Motion for
Court Default (“Plaintiffs’ Motion for Default”), despite Company’s Motion for Enlargement. As of the date of
this Report, the Motion for Enlargement has not been set for a hearing. The Company intends to oppose Plaintiffs’ Motion for Default.
On May 9, 2023, Plaintiffs served Plaintiffs’ First Request for Admissions (the “RFA”) to the Company. On October 13,
2023, the Court granted the Defendants’ Motion to Stay Litigation and Discovery pending a ruling on its Motion to Compel Arbitration.
On November 16, 2023, the Court granted Defendants’ Motion to Compel Arbitration in Texas. The parties await a signed written order
from the Court to that effect. The TinBu Plaintiffs have appealed the Court’s Order to Compel Arbitration in Texas.
On
July 19, 2024, the Company received notice that the Tinbu Plaintiff’s requested a voluntary dismissal of their claims. The Tinbu
Complaints have been voluntarily dismissed without prejudice by the District Court of Appeal of the State of Florida Second District
and the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, indicating that no further action will
be pursued by the plaintiffs in Florida State Court at this time. The District Court of Appeals also denied the Tinbu Plaintiff’s
motion for attorney’s fees and costs.
58
Global
Gaming Data
On
November 21, 2023, the Company and its wholly owned subsidiary TinBu, LLC (“TinBu”) (Company and TinBu collectively, “Plaintiffs”)
filed their First Amended Verified Complaint in Federal Court for the Middle District of Florida (“MDF”) against John
J. Brier, Jr. (“Brier”), Bin Tu (“Tu”), and Global Gaming Data, LLC (“GGD”) (collectively, “Defendants”)
for violations of the Federal Defend Trade Secrets Act (“DTSA”), the Florida Uniform Trade Secrets Act (“FUTSA”)
and the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), and for breaches of contract and fiduciary duties, including
the duty of loyalty, styled Lottery.com, Inc. f/k/a AutoLotto, Inc. and TinBu, LLC v. John J. Brier, Jr., Bin Tu, and Global
Gaming Data, LLC (Case No.: 8:23-cv-2594-KKM-TGW) Defendants filed certain counterclaims against Plaintiffs. The Company’s
request for a Temporary Restraining Order was denied by the MDF in February 2024. On June 11, 2024 the MDF denied Plaintiffs’ motion
to dismiss. On June 25, 2024, Plaintiffs’ filed its answer to Defendants’ counterclaim(s). On July 10, 2024, the MDF entered
a case management and scheduling order with a trial setting for October 2025. On December 5, 2024, the parties participated in the court ordered mediation.
The outcome of the mediation was an impasse. On February 25, 2025, Plaintiffs’ claims were dismissed
without prejudice for failure to prosecute and the Defendants also moved for default judgment on their counterclaims. That portion of
the Defendants’ motion was referred to the Magistrate Judge for a Report and Recommendation. On March 14, 2025, the Court entered an order
denying without prejudice Defendants’ Motion for Judgment as a Matter of Law. On April 1, 2025, the Court denied as moot Defendants’
Motion for Partial Summary in the light of the Defendants’ Amended Motion for Entry of Final Judgment.
Woodford Eurasia Assets, Limited
Woodford
Eurasia Assets, Limited filed a complaint in the High Court of Justice in London chancery Division. October 16, 2023, The High Court of
Justice in London Chancery Division (“the Court”) dismissed an application for injunctive relief initiated by Woodford against
the Company. (Case: FL-2023-000023. Woodford Eurasia Assets Limited v Lottery.com Inc.) The Court characterized Woodford’s application
as “fundamentally misconceived” and ordered Woodford to pay the Company’s legal costs. Woodford subsequently, on the
Judges’ recommendation, withdrew the proceedings.
Woodford
filed an additional action in the United States District Court for the District of Delaware on November 16, 2023 in Case No. 23-1317-GBW
seeking a temporary restraining order, preliminary injunction and expedited discovery against Lottery.com and its directors. The Court
entered an order the next day denying the relief sought by Woodford. On February 14, 2024, Woodford filed a Notice of Voluntary Dismissal
Without Prejudice, which stated that Woodford provides notice of dismissal of all claims without prejudice against Defendants Lotttery.com
and its directors.
With
the dismissal of this lawsuit by Woodford, no further action is required by Lottery.com or its directors at this time. The Company is
determining its next course of action in resolving any further matters regarding Woodford.
The
validity and application of the Woodford Loan Agreement Amendment is disputed by the Company.
Despite
requests from the Company, Woodford has repeatedly amongst other things: failed to prove the amounts borrowed by the Company or claimed
to have been advanced by Woodford to the Company; failed to indicate if it would accept accelerated payment of those verified amounts;
failed to provide an anti-money laundering acceptable account to which payment could be made by the Company and failed to explain failure
to respond to requests for other funding to be accepted in the context of the Woodford Loan Agreement; failed to respond to requests
for funding under the accordion facility of the Woodford Loan Agreement; and failed to respond to allegations of money laundering and
conspiracy to defraud the Company and others.
McTurk
On
June 10, 2024, the Company and Matthew McGahan (“McGahan”) (Company and McGahan collectively, “Defendants”)
filed their Notice of Removal and No Answer Motion to Dismiss a state court complaint filed by Sharon A. McTurk
(“McTurk”), Rutherford Enterprises, LLC (“Rutherford”), SJB Solutions, LLC (“SJB”) and Astra
Supply Chain, LLC (“Astra”) McTurk, Rutherford, SJB and Astra (collectively, “Plaintiffs”) alleging
fraudulent and negligent misrepresentation, aiding and abetting, and conspiracy by Defendants. On July 2, 2024, McGahan filed his
Motion to Dismiss for Lack of Personal Jurisdiction and Defendants filed their Motion to Dismiss for Failure to State a Claim and
Supporting Memorandum of Law (“Motions to Dismiss”). On July 19, 2024, Plaintiffs filed their response to the Motions to
Dismiss. On October 29, 2024, the Court denied Defendants’ Motion to Stay Discovery Pending Resolution of Defendants’
Rule 12(b)(6) Motion to Dismiss. On February 25, 2025, the Court entered an Order granting Defendants’ Motion to Dismiss for
Failure to State a Claim (the “Order”). Accordingly, Plaintiffs’ complaint was dismissed with prejudice. All
pending deadlines and hearings were terminated, and any other pending motions were denied as moot. Plaintiffs filed a notice of
appeal as to the Order.
Honey
Tree
On
September 4, 2024, Honey Tree Trading, LLC (“Honey Tree” or “Plaintiff”) filed a verified original complaint
(the “Complaint”) against Lottery.com (“Lottery.com” or the “Company”) and directors Matthew
Howard McGahan (“McGahan”), Christopher Gooding (“Gooding”), Paul Jordan (“Jordan”), Tamer
Hassan (“Hassan”) and Warran Macal (“Macal” together with McGahan, Gooding, Jordan and Hassan, the
“Individual Defendants” and, collectively Lottery.com, the “Defendants”) in Delaware Chancery Court
alleging, amongst other things, breach of contract by the Company with respect to certain notes and warrants and breach of fiduciary
duties by the Individual Defendants. (CA. No. 2024-0921-NAC: styled Honey Tree Trading, LLC v. Lottery.com Inc., et al. ). On
October 10,2024, Honey Tree amended its Complaint by filing an amended verified complaint (the “Amended Complaint”) and
a motion to expedite proceedings (the “Motion”). On November 6, 2024, at a hearing on Plaintiff’s Motion (the
“Hearing”) and on the issue of breach of fiduciary duties against the Individual Defendants, Honey Tree’s counsel
informed the Court that, “[t]here is no question that Honey Tree is presently a shareholder and was a shareholder at the time
it presented its pleading.” On November 12, 2024, Plaintiff’s counsel informed the Court that “Honey Tree did own
shares prior to the filing of the Amended Complaint but sold them prior to that filing; and (ii) Honey Tree did not subsequently
purchase shares of Lottery.com until November 7, 2024, the day after the [H]earing,” (Plaintiff’s Admission”).
Following Plaintiff’s Admission on November 13, 2024, Plaintiff dismissed without prejudice its claims against Hassan and
Macal (the “Dismissal”). The Court ordered the Dismissal on November 15, 2024. On January 13, 2025, the Company and Individual Defendants timely filed
their Answer to the Second Amended Complaint, an Opposition to Motion to Expedite and a Partial Motion to Dismiss. On March 6, 2025, Plaintiff
notified the Court that it withdraws its Motion to Expedite.
PR Fire Limited
On April 22, 2024, the
Company, by and through its outside legal counsel, issued a cease and desist notice to PR Fire Limited, a U.K. based firm and Mr.
Samuel Allcock, its CEO, for unlawful attempts to manipulate the public markets by disseminating false and misleading statements
about the Company, its current officers and directors in certain articles caused to be published by PR Fire Limited. The
Company’s outside legal counsel reported the matter to the proper authorities.
On April 24, 2024, the Company, by and through its outside legal counsel,
issued a cease-and-desist notice to certain individuals and entities in participation with a common scheme and acting in concert to financial
harm to the Company by privately and publicly disseminating false and misleading statements about the Company, its current officers and
directors. The Company’s outside legal counsel reported the matter to the proper authorities.
Item
4. Mine Safety Disclosures.
Not
applicable.
59
PART
II