Third quarter 2021 revenue of $32.2 million and net income of $11.2 million

Strong growth in user transaction profitability

AUSTIN, Texas, Nov. 15, 2021 (GLOBE NEWSWIRE) -- 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 Operations
Three Months Ended September 30, 2021 and 2020 and Nine Months Ended
September 30, 2021 and 2020

  Three Months Ended
September 30,
  Nine Months Ended
September 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 Ended
September 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 Schlarb
VP, Investor Relations
(512) 585-7789
ir@lottery.com

 


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Source: Lottery.com

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