The potential downfall of a once booming American online gambling company continues to unfold before investors’ eyes. Some investors in Lottery.com don’t just passively watch the carnage, however.
On Tuesday, Lottery.com became the defendant in a potential class action which alleges that the company’s management misled investors and that their improper conduct resulted in financial losses for shareholders. More bad news for the company came almost simultaneously.
A dark day for the American online gaming company Lottery.com
Tuesday, the NASDAQ has informed Lottery.com, an online lottery ticket courier service, that it is improper with the compliance of the quarterly market report. NASDAQ requires all companies listed on its exchange to file reports for the second quarter of each calendar year by June 30.
Lottery.com says it has not yet submitted report because it “has not yet finalized its reviews of its financial statements or its assessment of the impact of the conclusions of the ongoing review of the Company’s internal accounting controls on its historical financial statements or on the financial statements of the quarter ended June 30, 2022.”
The Lottery.com statement does not provide any type of timeline for the completion of the report. NASDAQ has warned that other sanctions could arrive if Lottery.com does not file the report before August 31.
Currently, this is only one of the concerns of the company. He has another big problem that also surfaced on Tuesday.
Lottery.com Lawsuit Details
On August 19principal applicant Million Preston filed suit in federal court for Southern District of New York. Along with Lottery.com, it named Trident Acquisitions Corp., Matthew Clemenson, Anthony DiMatteo and Ryan Dickinson as defendants. On Tuesday, the court issued a summons for the defendants.
Lottery.com went public in October 2021. Trident is a blank check company (a company that has no real product or service and only exists to acquire or merge with another company) that merged with Lottery. com in December 2020.
DiMatteo is the CEO of Lottery.com. Clemenson and Dickinson are former executives of the company, both fired or resigning in July 2022. Million says he has purchased shares of the company and the class he is proposing will include any groups or individuals who have purchased shares on Lottery.com between November 15. , 2021, and July 29, 2022.
As Clemenson and Dickinson’s termination dates from the company suggest, July was a big month for Lottery.com. Significantly poor, that is.
Things started to go downhill for Lottery.com in July
On July 6, Lottery.com filed a Form K-8 with the United States Securities and Exchange Commission. This body regulates the stock markets and a Form K-8 is basically a form that publicly traded companies must file with the Commission whenever an event of interest to shareholders occurs.
While not all K-8 filings always mean bad news, because sometimes it’s as trivial as a promotion for a new executive, this filing didn’t spell good news for anyone. The document stated that a Audit of Lottery.com found “noncompliance with state and federal laws regarding…order fulfillment” and “issues with the company’s internal accounting controls.”
That’s when the Lottery.com board fired Dickinson and less than two weeks later Clemenson resigned. The same day Clemenson quit, another K-8 shared that Lottery.com had in fact $30 million less in cash on hand than he had previously reported and had a corresponding amount of “incorrectly recorded income”. But wait, there’s more.
On July 29, a third K-8 clearly stated that Lottery.com lacked “sufficient financial resources to fund its operations or pay for certain existing allegations.” Throughout this activity, LOTR prices fell from $1.22 per share on July 5 to just $0.29 per share on July 29.
Million’s lawsuit states that since Lottery.com went public, it has lied about its accounting and compliance practices, tricking investors into funding an incompetent company. The complaint alleges that the decline in the stock price is due not only to bad practices, but that the decline in the stock price represents a financial loss for investors.
Given that lawsuit and the NASDAQ advisory, Tuesday was just about the worst day any public company has ever had. There are more painful days ahead, however, as the Remain leaders try to navigate the issues.