Cases
Lottery.com, Inc.
Securities Class Action
Overview
Overview
- Date:
- 10/18/2022
- Company Name:
- Lottery.com, Inc.
- Stock Symbol:
- LTRY, LTRYW
- Class Period:
- FROM 11/19/2020 TO 7/29/2022
- Status:
- Filed
- Filing Date:
- 8/19/2022
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Lottery.com, Inc. (“Lottery.com” or the “Company”) (NASDAQ: LTRY, LTRYW) 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 (the “Class Period”). 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.” Accordingly, “[t]he Company, in consultation with its outside advisors, is currently validating its preliminary conclusion, assessing any impact on previously issued financial reports, and has begun to institute appropriate remedial measures.”
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.
In reaction to this news, shares of Lottery.com lost 64% of their value in a single trading day, falling $0.52 per share, from a closing price of $0.81 per share on July 28, 2022 to a close of $0.29 per share on July 29, 2022.
According to the Complaint, the Company made false and misleading statements to the market. Lottery.com failed to maintain appropriate accounting controls. The Company also failed to maintain appropriate controls over financial reporting including revenue recognition and the reporting of cash. The Company was not in compliance with laws related to the sale of lottery tickets. Based on these facts, the Company’s public statements were false and materially misleading throughout the class period. When the market learned the truth about Lottery.com, investors suffered damages.
If you purchased or otherwise acquired Lottery.com shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
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.” Accordingly, “[t]he Company, in consultation with its outside advisors, is currently validating its preliminary conclusion, assessing any impact on previously issued financial reports, and has begun to institute appropriate remedial measures.”
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.
In reaction to this news, shares of Lottery.com lost 64% of their value in a single trading day, falling $0.52 per share, from a closing price of $0.81 per share on July 28, 2022 to a close of $0.29 per share on July 29, 2022.
According to the Complaint, the Company made false and misleading statements to the market. Lottery.com failed to maintain appropriate accounting controls. The Company also failed to maintain appropriate controls over financial reporting including revenue recognition and the reporting of cash. The Company was not in compliance with laws related to the sale of lottery tickets. Based on these facts, the Company’s public statements were false and materially misleading throughout the class period. When the market learned the truth about Lottery.com, investors suffered damages.
If you purchased or otherwise acquired Lottery.com shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
The individual or institution below (“Plaintiff”) has reviewed and agrees to the Bragar Eagel & Squire, P.C. (“BESPC”) retainer agreement and authorizes BESPC to prosecute an action on Plaintiff’s behalf under the federal securities laws or applicable state laws to recover damages on behalf of investors in Lottery.com. BESPC will prosecute the action on a full contingency basis and will forward all costs and expenses.
Case Updates
Retainer Agreement
This will confirm that you have retained Bragar Eagel & Squire, P.C. (“BESPC”) to represent you in connection with potential litigation against Lottery.com (the “Company”) and its directors and officers. BESPC has conducted an investigation and believes that there is a valid basis to assert claims against the Company and its directors and/or officers for violation of federal or state securities laws.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 11/19/2020 to 7/29/2022 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time.
Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 11/19/2020 to 7/29/2022 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders, i.e., the “Class,” and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
No Special Treatment
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.