Business Context and Reporting Period
This Form 8-K was filed by Lottery.com Inc. (trading symbol: LTRY) on September 27, 2022. The registrant is an emerging growth company incorporated in Delaware. The filing addresses a critical governance event: the resignation of its independent registered public accounting firm, Armanino LLP, effective immediately.
Key Financial Metrics
This filing does not contain specific financial performance data such as revenue, profit, cash flow, or margins. However, it discloses a material accounting irregularity affecting prior financial statements:
- Unrecorded Liability: A subsidiary entered into a line of credit in January 2022 that was not disclosed in the footnotes to the December 31, 2021 financial statements and was not recorded in the March 31, 2022 financial statements.
- Reliability of Prior Reports: Armanino LLP advised that the audited financial statements for the year ended December 31, 2021, and the unaudited statements for the quarter ended March 31, 2022, should no longer be relied upon.
Material Changes and Events
The primary material change reported is the resignation of Armanino LLP. The resignation was triggered by two key factors:
- Accounting Errors: The failure to disclose and record a subsidiary's line of credit.
- Management Representations: Armanino stated it is unable to rely on the representations of management following recent disclosures regarding the resignations of certain officers and directors.
As of the filing date, the company has not retained a successor independent registered public accounting firm.
Outlook, Risks, and Contingencies
Management has identified significant risks and uncertainties that could materially impact the company's future operations and financial health:
- Going Concern: Risks regarding the company's ability to continue as a going concern.
- Capital Resources: Uncertainty regarding the ability to secure additional capital.
- Regulatory Compliance: Risks related to regaining compliance with Nasdaq Listing Rules, specifically the Bid Price Requirement, and responding to Nasdaq inquiries.
- SEC Reporting: Challenges in becoming current with SEC reports.
- Internal Controls: Ongoing reviews of internal accounting controls may yield additional findings.
Investor Verification Checklist
- Verify the status of the search for a new independent registered public accounting firm.
- Confirm the extent of the unrecorded line of credit and its impact on the company's liquidity and debt obligations.
- Monitor the company's progress in regaining compliance with Nasdaq Listing Rules and the Bid Price Requirement.
- Review any subsequent filings regarding the resignations of officers and directors mentioned by the former auditor.
- Assess the timeline for restating the 2021 audited and Q1 2022 unaudited financial statements.