Lottery.com Inc. (Nasdaq: LTRY, LTRYW) (“Lottery.com” or the
“Company”), a leading technology company that is transforming how,
where and when lottery is played, reported financial results for
the third quarter ended September 30, 2021. These results were
achieved prior to the closing of the Company’s business combination
with Trident Acquisitions Corp. on October 29, 2021. The Company’s
unaudited financial statements for the third quarter of 2021 and
other information have been filed in a Current Report on Form 8-K/A
today with the U.S. Securities and Exchange Commission (“SEC”).
Tony DiMatteo, Lottery.com Co-Founder and CEO,
commented, “We are proud of the strong revenue and profitability
growth we achieved in the third quarter. While we were working
toward the completion of our business combination, we acted
decisively to advance our plans for our global affiliate program
and monetize one of our assets by leveraging a B2B partner
relationship. The start of this program provided increased revenue
in the third quarter and is an essential building block of our
B2B2C strategy, which we expect will lead to an increased user base
and additional revenue from those end users going forward.
Additionally, the implementation of a dynamic pricing model and
improvements to our app, such as push notifications, contributed to
strong growth in gross profit per transaction compared to the prior
year period.”
Mr. DiMatteo continued, “Now that we have
successfully completed our business combination, we are focused on
utilizing the proceeds we realized from the transaction, along with
our third quarter profits, to accelerate our targeted user
marketing campaigns, enter new markets, expand our product
offerings, and execute strategic and synergistic acquisitions. With
our low customer acquisition costs, large addressable markets and
leading brands, we look forward to realizing the profitable growth
opportunities before us.”
Third Quarter 2021 Results
Q3 2021
Financial Highlights |
|
Three Months Ended |
|
|
|
|
September 30, |
|
|
|
|
|
|
2021 |
|
2020 |
|
Change |
|
(in millions, except percentages; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
32.2 |
|
|
$ |
1.6 |
|
|
$ |
30.6 |
|
Gross Profit |
|
$ |
20.3 |
|
|
$ |
0.9 |
|
|
$ |
19.4 |
|
Gross Margin |
|
|
63.0 |
% |
|
|
54.9 |
% |
|
|
8.1 |
% |
Net Income |
|
$ |
11.2 |
|
|
$ |
(1.2 |
) |
|
$ |
12.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2021
User Metrics (1) |
|
Three Months Ended |
|
|
|
|
September 30, |
|
|
|
|
|
|
2021 |
|
2020 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Transactions per user |
|
|
12.4 |
|
|
|
11.2 |
|
|
|
1.2 |
|
Tickets per transaction |
|
|
3.8 |
|
|
|
3.5 |
|
|
|
0.3 |
|
Revenue per transaction |
|
$ |
9.52 |
|
|
$ |
8.20 |
|
|
$ |
1.32 |
|
Gross profit per transaction |
|
$ |
1.69 |
|
|
$ |
0.93 |
|
|
$ |
0.76 |
|
Gross margin per transaction |
|
|
17.8 |
% |
|
|
11.3 |
% |
|
|
6.4 |
% |
|
|
|
|
|
|
|
(1) Excludes B2B
users who made purchases through an affiliate or API partner |
|
|
|
|
|
|
Third quarter 2021 revenue was $32.2 million, an
increase of $30.6 million from the third quarter of 2020. The
growth was driven by the global affiliate marketing program.
Third quarter 2021 gross profit was $20.3
million, an increase of $19.4 million from the third quarter of
2020. The increase was driven by the global affiliate marketing
program as well as improved user profitability.
Third quarter 2021 gross profit per transaction
was $1.69, or a $0.76 increase from the third quarter of 2020. The
increase was driven by the implementation of a dynamic pricing
model and improvements made to the Company’s platform, including
push notifications, which contributed to higher tickets sold per
transaction and higher revenue per transaction.
Third quarter 2021 net income was $11.2 million,
compared to a net loss of $1.2 million in the third quarter of
2020. The improvement was driven by the increase in gross profit
partially offset by expenses associated with the business
combination.
Outlook and Update Following Business
Combination
The Company expects to meet or exceed its
previous guidance of $71 million for full year 2021 revenue.
On October 29, 2021, the Company successfully
completed its business combination with Trident Acquisitions Corp.
As a result of the transaction, Lottery.com received $42.8 million
in net proceeds and converted $60 million of debt and accrued
interest into equity. Following the completion of the business
combination, the Company’s top strategic priorities include:
- Continuing
development of Project Nexus’ blockchain-based gaming platform and
launch of its first proprietary lottery game in 2022;
- Initiating new
targeted marketing campaigns to broaden its B2C user base;
- Entering new
markets in both the U.S. and internationally by the end of 2021 and
entering New York and New Jersey in 2022;
- Developing and
continually introducing new products to the Lottery.com platform,
including additional state-specific games and digital scratcher
games;
- Adding new
affiliates and API partners to the Company’s B2B segment; and
- Executing on
strategic and synergistic acquisitions, including those that will
drive the Sports.com platform.
About Lottery.com
Lottery.com is a leading technology company that
is transforming how, where and when lottery is played. Its engaging
mobile and online platforms enable players and commercial partners
located in the United States and internationally to remotely
purchase legally sanctioned lottery games. Fans and subscribers
look to Lottery.com for compelling, real-time results on more than
800 lottery games from more than 40 countries. Additionally,
through WinTogether.org, Lottery.com is fundamentally changing how
non-profit donors are incentivized to action by gamifying
charitable giving. In all that it does, Lottery.com’s mission
remains the same: an uncompromising passion to innovate, grow a new
demographic of enthusiasts, deliver responsible and trusted
solutions, and promote community and philanthropic initiatives. For
more information, visit http://www.lottery.com.
Important Notice Regarding
Forward-Looking Statements
This press release contains statements that
constitute “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). All statements, other
than statements of present or historical fact included in this
press release, regarding the company’s future financial
performance, as well as the company’s strategy, future operations,
revenue guidance, projected costs, prospects, plans and objectives
of management are forward-looking statements. When used in this
press release, the words “could,” “should,” “will,” “may,”
“believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,”
the negative of such terms and other similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on management’s current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. Except as otherwise required by applicable law,
Lottery.com disclaims any duty to update any forward-looking
statements, all of which are expressly qualified by the statements
in this section, to reflect events or circumstances after the date
of this press release. Lottery.com cautions you that these
forward-looking statements are subject to numerous risks and
uncertainties, most of which are difficult to predict and many of
which are beyond the control of Lottery.com. In addition,
Lottery.com cautions you that the forward-looking statements
contained in this press release are subject to the following
factors: (i) the outcome of any legal proceedings that may be
instituted against Lottery.com; (ii) Lottery.com’s ability to
maintain effective internal controls over financial reporting,
including the remediation of identified material weaknesses in
internal control over financial reporting relating to segregation
of duties with respect to, and access controls to, its financial
record keeping system, and Lottery.com’s accounting staffing
levels; (iii) the effects of competition on Lottery.com’s future
business; (iv) risks related to Lottery.com’s dependence on its
intellectual property and the risk that Lottery.com’s technology
could have undetected defects or errors; (v) changes in applicable
laws or regulations; (vi) risks related to the COVID-19 pandemic
and its effect directly on Lottery.com and the economy generally;
(vii) risks relating to privacy and data protection laws, privacy
or data breaches, or the loss of data; (viii) the possibility that
Lottery.com may be adversely affected by other economic, business,
and/or competitive factors; (ix) the ability of Lottery.com to
achieve its strategic and growth objectives as stated or at all;
and (x) those factors discussed in the proxy statement/prospectus
filed by Lottery.com with the SEC under the heading “Risk Factors”
and the other documents filed, or to be filed, by Lottery.com with
the SEC. Should one or more of the risks or uncertainties described
in this press release materialize or should underlying assumptions
prove incorrect, actual results and plans could differ materially
from those expressed in any forward-looking statements. Additional
information concerning these and other factors that may impact the
operations and projections discussed herein can be found in the
reports that Lottery.com has filed and will file from time to time
with the SEC. These SEC filings are available publicly on the SEC’s
website at www.sec.gov.
AutoLotto, Inc.Condensed Consolidated
Balance Sheets
|
|
As of September 30, |
|
|
As of December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Cash |
|
$ |
1,179,467 |
|
|
$ |
3,825,511 |
|
Restricted cash |
|
|
- |
|
|
|
6,950,000 |
|
Accounts receivable |
|
|
33,072,278 |
|
|
|
26,195 |
|
Prepaid expenses |
|
|
10,815,458 |
|
|
|
22,013,110 |
|
Other current assets |
|
|
238,627 |
|
|
|
788,033 |
|
Total current assets |
|
|
45,305,830 |
|
|
|
33,602,849 |
|
Investments |
|
|
250,000 |
|
|
|
250,000 |
|
Goodwill |
|
|
17,937,691 |
|
|
|
12,997,048 |
|
Intangible assets, net |
|
|
27,820,753 |
|
|
|
3,211,250 |
|
Property and equipment, net |
|
|
1,297,885 |
|
|
|
670,952 |
|
Total assets |
|
$ |
92,612,159 |
|
|
$ |
50,732,099 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Trade payables |
|
$ |
2,986,762 |
|
|
$ |
2,176,621 |
|
Deferred revenue |
|
|
598,214 |
|
|
|
7,763,593 |
|
Convertible debt, net - current |
|
|
8,912,163 |
|
|
|
8,882,665 |
|
Notes payable - current |
|
|
4,077,982 |
|
|
|
12,207,180 |
|
Accrued interest |
|
|
3,435,111 |
|
|
|
721,717 |
|
Accrued and other expenses |
|
|
4,992,522 |
|
|
|
2,335,350 |
|
Total current liabilities |
|
|
25,002,754 |
|
|
|
34,087,126 |
|
Convertible debt, net - non current |
|
|
31,569,218 |
|
|
|
10,000 |
|
Other long term liabilities |
|
|
1,600,000 |
|
|
|
- |
|
Total liabilities |
|
|
58,171,972 |
|
|
|
34,097,126 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Controlling Interest |
|
|
|
|
|
|
|
|
Common stock |
|
|
5,912 |
|
|
|
5,159 |
|
Par value $.001, 8,610,000 shares authorized, 5,910,980 and
5,158,607 issued and outstanding as of September 30, 2021 and
December 31, 2020 respectively |
|
|
|
|
|
|
|
|
Preferred stock - series seed |
|
|
63 |
|
|
|
63 |
|
Par value $.0001, 633,000 shares authorized, 633,000 issued and
outstanding as of September 30, 2021 and December 31, 2020
respectively |
|
|
|
|
|
|
|
|
Preferred stock - series A |
|
|
122 |
|
|
|
122 |
|
Par value $.0001, 1,220,000 shares authorized, 1,220,000 issued and
outstanding as of September 30, 2021 and December 31, 2020
respectively |
|
|
|
|
|
|
|
|
Preferred stock - series A1 |
|
|
22 |
|
|
|
22 |
|
Par value $.0001, 225,000 shares authorized, 223,749 issued and
outstanding as of September 30, 2021 and December 31, 2020
respectively |
|
|
|
|
|
|
|
|
Preferred stock - series A2 |
|
|
30 |
|
|
|
30 |
|
Par value $.0001, 305,000 shares authorized, 302,668 issued and
outstanding as of September 30, 2021 and December 31, 2020
respectively |
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
123,368,737 |
|
|
|
111,770,147 |
|
Accumulated deficit |
|
|
(91,577,868 |
) |
|
|
(95,140,570 |
) |
Total AutoLotto Inc. stockholder’s equity |
|
|
31,797,018 |
|
|
|
16,634,973 |
|
Noncontrolling Interest |
|
|
2,643,169 |
|
|
|
- |
|
Total Stockholders’
Equity |
|
|
34,440,187 |
|
|
|
16,634,973 |
|
Total Liabilities &
Stockholders’ Equity |
|
$ |
92,612,159 |
|
|
$ |
50,732,099 |
|
AutoLotto, Inc.Condensed Consolidated
Statements of OperationsThree Months Ended
September 30, 2021 and 2020 and Nine Months
EndedSeptember 30, 2021 and 2020
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue |
|
$ |
32,248,036 |
|
|
$ |
1,602,916 |
|
|
$ |
47,035,327 |
|
|
$ |
4,197,314 |
|
Cost of revenue |
|
|
11,920,721 |
|
|
|
722,363 |
|
|
|
15,925,072 |
|
|
|
1,770,885 |
|
Gross profit |
|
|
20,327,315 |
|
|
|
880,554 |
|
|
|
31,110,255 |
|
|
|
2,426,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs |
|
|
1,614,063 |
|
|
|
974,139 |
|
|
|
4,138,240 |
|
|
|
2,975,464 |
|
Professional fees |
|
|
976,679 |
|
|
|
182,502 |
|
|
|
5,174,378 |
|
|
|
638,878 |
|
General and administration |
|
|
1,085,431 |
|
|
|
163,691 |
|
|
|
4,355,760 |
|
|
|
593,380 |
|
Depreciation and amortization |
|
|
1,530,026 |
|
|
|
355,671 |
|
|
|
2,904,000 |
|
|
|
1,065,490 |
|
Total operating expenses |
|
|
5,206,199 |
|
|
|
1,676,004 |
|
|
|
16,572,378 |
|
|
|
5,273,211 |
|
Income (loss) from
operations |
|
|
15,121,116 |
|
|
|
(795,450 |
) |
|
|
14,537,877 |
|
|
|
(2,846,782 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
3,789,316 |
|
|
|
296,517 |
|
|
|
9,318,638 |
|
|
|
881,553 |
|
Other expense |
|
|
178,952 |
|
|
|
68,218 |
|
|
|
1,656,540 |
|
|
|
416,858 |
|
Total other expenses, net |
|
|
3,968,268 |
|
|
|
364,735 |
|
|
|
10,975,178 |
|
|
|
1,298,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
11,152,848 |
|
|
$ |
(1,160,185 |
) |
|
$ |
3,562,699 |
|
|
$ |
(4,145,193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.89 |
|
|
$ |
(0.22 |
) |
|
$ |
0.64 |
|
|
$ |
(0.80 |
) |
Diluted |
|
$ |
0.24 |
|
|
$ |
(0.22 |
) |
|
$ |
0.08 |
|
|
$ |
(0.80 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
5,900,980 |
|
|
|
5,158,607 |
|
|
|
5,534,794 |
|
|
|
5,158,607 |
|
Diluted |
|
|
45,956,427 |
|
|
|
5,158,607 |
|
|
|
45,590,241 |
|
|
|
5,158,607 |
|
AutoLotto, Inc.Condensed Consolidated
Statements of Cash Flows
|
|
Nine Months EndedSeptember
30, |
|
|
|
2021 |
|
|
2020 |
|
|
|
(unaudited) |
|
Cash flow from
operating activities |
|
|
|
|
|
|
Net income (loss) |
|
$ |
3,562,698 |
|
|
$ |
(4,145,193 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,904,000 |
|
|
|
1,065,490 |
|
Amortization of debt discount |
|
|
2,296,747 |
|
|
|
126,096 |
|
Amortization of beneficial conversion feature |
|
|
4,191,530 |
|
|
|
494,639 |
|
Stock based compensation expense |
|
|
6,479 |
|
|
|
13,872 |
|
Forgiveness of PPP Loan |
|
|
(493,225 |
) |
|
|
- |
|
Loss on extinguishment of debt |
|
|
71,174 |
|
|
|
- |
|
Issuance of debt to pay expenses |
|
|
1,003,983 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Changes in assets &
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(33,046,083 |
) |
|
|
1,625 |
|
Prepaid expenses |
|
|
11,202,143 |
|
|
|
103,253 |
|
Other current assets |
|
|
561,321 |
|
|
|
(23,975 |
) |
Trade payables |
|
|
808,670 |
|
|
|
(391,352 |
) |
Deferred revenue |
|
|
(7,165,379 |
) |
|
|
578,759 |
|
Accrued interest |
|
|
2,758,009 |
|
|
|
260,818 |
|
Accrued and other expenses |
|
|
3,979,552 |
|
|
|
399,445 |
|
Net cash used in operating
activities |
|
|
(7,358,379 |
) |
|
|
(1,516,522 |
) |
|
|
|
|
|
|
|
|
|
Cash flow from
investing activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(1,097,993 |
) |
|
|
(21,915 |
) |
Purchases of intangible assets |
|
|
(3,000,000 |
) |
|
|
- |
|
Cash paid for acquisitions, net of cash acquired |
|
|
(10,012,540 |
) |
|
|
- |
|
Net cash used in investing
activities |
|
|
(14,110,533 |
) |
|
|
(21,915 |
) |
|
|
|
|
|
|
|
|
|
Cash flow from
financing activities |
|
|
|
|
|
|
|
|
Issuance of digital securities |
|
|
108,332 |
|
|
|
487,494 |
|
Proceeds from exercise of options |
|
|
47,130 |
|
|
|
- |
|
Proceeds from issuance of convertible debt |
|
|
13,483,500 |
|
|
|
365,000 |
|
Proceeds from government loan |
|
|
- |
|
|
|
643,125 |
|
Proceeds from issuance of notes payable |
|
|
- |
|
|
|
27,699 |
|
Principal payments on notes payable |
|
|
(1,766,093 |
) |
|
|
(44,148 |
) |
Net cash provided by financing
activities |
|
|
11,872,869 |
|
|
|
1,479,170 |
|
Net change in net cash and
restricted cash |
|
|
(9,596,044 |
) |
|
|
(59,266 |
) |
Cash at beginning of
period |
|
|
10,775,511 |
|
|
|
158,492 |
|
Cash at end of period |
|
$ |
1,179,467 |
|
|
$ |
99,226 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES: |
|
|
|
|
|
|
|
|
Interest paid in cash |
|
$ |
40,916 |
|
|
$ |
- |
|
Non cash investing and
financing activities |
|
|
|
|
|
|
|
|
Conversion of convertible debt into common stock |
|
$ |
935,000 |
|
|
$ |
- |
|
Capitalization of interest from loan extinguishment |
|
$ |
44,614 |
|
|
|
- |
|
Purchase of intangible assets through the issuance of convertible
debt |
|
$ |
15,450,000 |
|
|
$ |
- |
|
Issuance of convertible debt in exchange for outstanding
liabilities |
|
$ |
2,108,983 |
|
|
$ |
- |
|
Issuance of convertible debt in exchange for notes payable |
|
$ |
4,531,250 |
|
|
|
|
|
Common stock issued as part of acquisition |
|
$ |
459,691 |
|
|
$ |
- |
|
Lottery.com Contact:
Matthew SchlarbVP, Investor Relations(512)
585-7789ir@lottery.com
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