Shares of embattled Lottery.com (NASDAQ:LTRY) closed higher today, but that doesn’t obfuscate a weekly decline of 15.50% — one that was hastened by news of four resignations by board members.
This week’s slump by the internet lottery company extends the stock’s year-to-date loss to 95% while raising further questions about the firm’s prospects for survival.
On September 2, 2022, Lisa M. Borders, Steven M. Cohen and William C. Thompson, Jr. each resigned as a member of the Board of the Company and any committees. On September 8, 2022, Lawrence Anthony DiMatteo III resigned as a member of the Board of the Company and any committees. All resignations were effective immediately,” according to a Form 8-K filing with the Securities and Exchange Commission (SEC).
That adds to Lottery.com’s mounting woes, which include the recent delay of its second-quarter 10-Q filing and warnings that it may not have the capital to survive.
Lottery.com on Brink of Losing Nasdaq Listing
AutoLotto, which does business as Lottery.com, debuted as a standalone public company last November. That’s following a merger with special purpose acquisition company (SPAC) Trident Acquisitions Corp.
Owing to the stock’s now lengthy run below $5, and more recently $1, it’s possible Nasdaq could warn the gaming company that delisting is a possibility if the share price doesn’t increase. As it is, Lottery.com is telling the exchange operator it’s in violation of other listing standards.
“On September 9, 2022, the Company notified The Nasdaq Stock Market LLC (“Nasdaq”) that, as a result of such Director Resignations, the Company was no longer in compliance with Nasdaq Listing Rule 5605(b)(1), which requires a majority of the Board to be comprised of Independent Directors as defined in Rule 5605(a)(2), and Nasdaq Listing Rule 5605(c)(2), which requires the Audit Committee of the Board to consist of at least three members, each of whom is an independent director under the Nasdaq Listing Rules and who meets heightened independence standards for Audit Committee members,” according to the 8-K.
With the four aforementioned departures, Lottery.com’s board dwindles to five members. The company said it’s making efforts to identify and appoint “new independent directors as soon as practicable.”
Lottery.com’s woes, which are in large part attributable to an accounting scandal and subsequent shareholder class-action lawsuit, place the company in a precarious financial position. Some of that pressure may be easy as the gaming firm reached a loan agreement with Woodford Eurasia Assets Ltd.
“The Term Sheet provides for a $2.5 million convertible loan to be funded no later than five business days following the fulfillment of its conditions, such as, the receipt of the Director Resignations and appointment of two new members of the Board and an interim chief executive officer of the Company,” according to the SEC filing.
Lottery.com won’t pay interest on the loan, but it is exchanging 15% of its equity at a 25% discount to the average closing price in the 10 days prior to Sept. 6.
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