Lottery.com faces investor law suit over accounting non-compliance
Eagel & Squire nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Lottery.com, Inc.
In the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased or otherwise acquired Lottery.com securities between November 15, 2021 and July 29, 2022, both dates inclusive.
Investors have until October 18, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
On July 6, 2022, Lottery.com disclosed that an internal investigation, conducted by independent counsel, had uncovered “instances of non-compliance with state and federal laws concerning the state in which tickets are procured as well as order fulfillment.” In addition, the investigation revealed “issues pertaining to the Company’s internal accounting controls.” Accordingly, on June 30, 2022, the Board terminated the Company’s President, Treasurer, and Chief Financial Officer Ryan Dickinson.
On this news, Lottery.com’s stock price fell $0.15 per share, or more than 12%, to close at $1.07 per share on July 6, 2022.
Then, on July 15, 2022, Lottery.com announced that Chief Revenue Officer Matthew Clemenson had resigned on July 11, 2022, effective immediately. The Company also provided an update on the independent investigation previously disclosed on July 6, 2022, reporting that it had “overstated its available unrestricted cash balance by approximately $30 million and that, relatedly, in the prior fiscal year, it improperly recognized revenue in the same amount.”
On this news, Lottery.com’s stock price fell $0.14 per share, or more than 14.5%, to close at $0.82 per share on July 16, 2022.
The company made a series of additional adverse disclosures before finally, on July 29, 2022, in SEC filing, informing the market that it did not have “sufficient financial resources to fund its operations or pay certain existing obligations,” and that it is therefore intended to furlough certain employees effective July 29, 2022.
Moreover, because Lottery.com’s resources were not sufficient to fund its operations for a twelve-month period, “there is substantial doubt about the company’s ability to continue as a going concern,” and the Company may be forced to wind down its operations or pursue liquidation of the company’s assets.