Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes appearing elsewhere in this Report contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events may differ materially from those expressed or implied in such forward- looking statements as a result of various factors, including those set forth in the section entitled "Cautionary Note Regarding Forward-Looking Statements" included herein and the sections entitled "Risk Factors" included in this Report and in our Annual Report on Form 10-K for the year ended December 31, 2025 (our "Annual Report")

The Company's results of operations for the three months ended March 31, 2026 are not directly comparable to the corresponding prior-year period due to the acquisition of Veloce during the quarter and the matters described in the Explanatory Note, below under "Restatement of Previously Issued Financial Statements," and in Note 3 to the condensed consolidated financial statements included in this Report, which affect the comparability of prior-period amounts presented in this Report. Accordingly, the Company's consolidated results for the current period which include the operating results of Veloce from the acquisition date to the end of the quarter, which materially affected the composition of the Company's revenues, expenses, and results of operations are not directly comparable to the same period for the previous year.

Restatement of Previously Issued Financial Statements

As previously described in the Explanatory Note and in Note 3 to the condensed consolidated financial statements included in this Report, the Company's Audit Committee, in consultation with Company's management and its independent registered public accounting firm, has concluded that the Company's previously issued financial statements require certain corrections to address the Legacy Transactions. As such, the Annual Report on Form 10-K/A for the year ended December 31, 2021, its Annual Report on Form 10-K for the year ended December 31, 2022, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022 (collectively, the "Affected Reports") should no longer be relied upon and require restatement, and that its financial statements for the years ended December 31, 2023, December 31, 2024, and December 31, 2025, and the interim periods within those years (collectively, the "Correction Periods"), require correction but were not rendered unreliable despite the corrections needed. The Company's Audit Committee and management do not believe the error corrections to Correction Period financial statements would alter a reasonable investor's assessment of the Company's financial condition or results of operations for those periods. The Company has yet to file the amended Annual or Quarterly Reports reflecting the Legacy Transaction corrections. This Report presents the Company's financial statements for the period covered hereby, including comparative prior-period amounts on a corrected basis properly accounting for the Legacy Transactions in advance of filing amendments to the Company's previously issued financial statements.

Impact of Legacy Matters on Current Operations

Legacy Matters have had, and continue to have, a material impact on the Company's current operations, financial condition, and strategic execution. Legacy Matters include: the cessation of certain legacy lottery-based operations in 2022; previously identified material weaknesses in internal control over financial reporting; the Prior Restatement, in which the Company previously restated its financial statements to remove more than $60 million of revenue recognized in connection with improper transactions orchestrated and recorded by certain of the Company's former executives; and the restatement and correction described above under "Restatement of Previously Issued Financial Statements" and in Note 3, which the Company considers an additional Legacy Matter, separate from and in addition to the Prior Restatement. While the Company has transitioned from stabilization toward execution of its strategic growth phase, the effects of these matters, including prior operational disruption, control deficiencies, and capital constraints, remain relevant to, and in some respects distinct from, an understanding of current performance, and are discussed further in Part I, Item 4, Controls and Procedures, and Part II, Item 1A, Risk Factors. For the Affected Reports covering December 31, 2020 through December 31, 2022, the error corrections decrease previously reported revenue, deferred revenue, and cash as of December 31, 2020; decrease revenue reported in the first and second quarters of 2021; increase the accumulated deficit reported as of December 31, 2021; decrease goodwill, intangible assets, and total assets as of December 31, 2021 and December 31, 2022; and decrease amortization expense for Global Gaming intangible assets in all 2022 reporting periods. The restatement's most significant effects are on the balance sheets and results of operations for 2020 and 2021.

For the Correction Periods from January 1, 2023 through December 31, 2025, the error corrections reduce amortization expense and eliminate previously recorded impairment expense related to Global Gaming. These expenses are no longer required because the restated carrying values of the Global Gaming assets are lower on the dates the impairment analyses were performed. The resulting decreases in amortization and impairment expense reduce previously reported operating losses and accumulated deficits for each interim Correction Period.

Operational Restart and Execution Focus

Following the cessation of certain legacy operations in 2022, the Company has been engaged in a phased operational restart. Current operations reflect a transition from a legacy model primarily dependent on lottery-based revenue toward a more diversified platform across sports, entertainment, and gaming. As a result, period-over-period comparisons may not be indicative of underlying performance trends, as prior periods reflect a fundamentally different operating structure. For many components of the Company, current operating results are more closely aligned with early-stage platform development, integration of newly acquired or partnered assets, and the reestablishment of commercial activities. Veloce Media Group and its entities are early-stage growth companies with growing customer bases and revenue, operating a portfolio of digital media, esports, motorsports, and content brands that the Company estimates reach a combined global audience of approximately 500 million people across owned and partner digital and social media channels. Management believes this audience represents an opportunity to cross-promote and drive engagement across the Company's broader portfolio, including Sports.com, Concerts.com, and Lottery.com.

Revenue Profile and Business Mix

The Company's historical concentration in lottery-related revenue has been replaced by a broader, but still developing, revenue base. While this transition is expected to improve long-term scalability and diversification, prior to the Veloce acquisition it has resulted in near-term variability in revenue and limited comparability to historical results. Revenue generation in the current period is increasingly tied to digital media, content platforms, and strategic acquisitions, including the Company's investment in Veloce, which expands the Company's reach into global digital motorsports and gaming audiences. These platforms introduce different revenue recognition patterns, margin profiles, and monetization timelines compared to the Company's legacy operations. Separately, as described in Note 3, previously reported revenue for periods 2021 and 2022 has been corrected to remove amounts recorded in error; that correction does not affect revenue in the current period but is relevant to understanding the comparability of the Company's revenue trends over time.

Cost Structure and Investment Requirements

The Company's cost structure has been significantly impacted by its transition. Current operating expenses reflect:

	●	Ongoing investments in rebuilding operational capabilities;
	●	Costs associated with integration of acquisitions and strategic initiatives, including Veloce-related activities;
	●	Professional fees related to legal, accounting, and compliance matters stemming from Legacy Matters, including the Company's completed internal inquiry and the anticipated restatement, by amendment, of prior periodic reports as described in Note 3; and
	●	Continued investment in infrastructure necessary to support a scalable operating platform.

These costs are expected to remain elevated in the near term as the Company continues to execute its transformation strategy as part of the strategic growth phase, and as it completes the work described above relating to the restatement.

Liquidity and Capital Allocation

Legacy Matters have materially affected the Company's liquidity profile, necessitating continued reliance on external financing to fund operations and strategic initiatives. The errors described in Note 3 relate to historical periods and, based on the Company's evaluation to date did not affect the Company's cash position or liquidity for the periods presented in this Report; the Company does expect, however, to continue incurring costs associated with the completion of the restatement described in Note 3, which it does not currently expect to be significant to its liquidity.

On March 16, 2026, the Company entered into a Securities Purchase Agreement pursuant to which it agreed to issue unsecured convertible promissory notes in an aggregate principal amount of up to approximately $11.8 million, to be funded in multiple tranches. The initial tranche was funded upon execution, with subsequent tranches subject to customary conditions. This financing, along with other recent capital raises, has been vital in supporting the Company's operational restart, funding strategic initiatives, and addressing obligations arising from Legacy Matters. However, such financings have resulted in, and may continue to result in, dilution to existing stockholders.

The Company's delinquency in filing this and other periodic reports, addressed in this filing, has resulted in Nasdaq Listing Qualifications Staff deficiency letters under Listing Rule 5250(c)(1). The Company has submitted compliance plans to Nasdaq Staff and is working diligently to complete and file its delinquent periodic reports, including by completing the restatement of its prior periodic reports described in Note 3, as promptly as practicable.

Management has implemented a disciplined capital allocation framework focused on deploying capital into revenue-generating opportunities and initiatives that are expected to support near- to medium-term financial performance. The Company's ability to execute its strategy remains dependent on its ability to access additional capital on acceptable terms, including in light of continuing costs associated with the matters described in this section.

Internal Controls and Reporting Processes

The Company continues to implement remediation steps to address previously identified material weaknesses in internal control over financial reporting. In connection with the matters described in Note 3, the Company's completed internal inquiry identified errors originating in 2020 and 2021, predating the Company's business combination and its current management team, which the Company has concluded will require restatement of its previously issued financial statements. Management believes these errors reflect a continuation of the Company's previously disclosed material weaknesses or evidence of additional material weakness specific to the pre-business-combination period. In the abundance of caution, Management and the Audit Committee will consider whether the Company's existing remediation steps require enhancement in light of the discovery of those errors. See Part I, Item 4, Controls and Procedures, for the Company's formal conclusions regarding the effectiveness of its disclosure controls and procedures and internal control over financial reporting for the period covered by this Report. Management continues to invest in personnel, systems, and processes to strengthen the control environment and support scalable operations. The Company is working on a transition to a new accounting system and plans to add to the finance and accounting team in Q4.

Strategic Execution and Integration Risk

The Company's current strategy includes the acquisition and integration of complementary businesses and platforms. While these initiatives are expected to contribute to revenue growth and strategic positioning, they introduce execution risks, including integration complexity, alignment of operating models, and realization of anticipated synergies. Legacy Matters, including the restatement described in Note 3, have necessitated a more measured and disciplined approach to execution, with an emphasis on transactions that are expected to deliver tangible revenue contributions and align with the Company's capital constraints.

Transition from Remediation to Operations

Since 2022, much of management's time has gone to stabilizing the business, remediating legacy problems, and restructuring operations. That work is not finished, and the restatement described in Note 3 is part of it. Management is now able to spend more of its time on running the operating businesses and building revenue. Revenue for the quarter was $1.2 million, nearly all of it from Veloce since February 17, 2026, and the Company still depends on outside financing to fund its operations. The changes in how the Company operates include:

	●	Restarting certain operations that were stopped in 2022
	●	Acquisitions and partnerships, including Veloce
	●	Developing revenue beyond lottery-based activities, which is still small
	●	Tightening how capital is approved and spent

This operational progress reflects positive momentum but is separate from the Legacy Matters described in this section, including the restatement described in Note 3, which remain active and, in the case of the restatement, remain unresolved pending the amendment of the Company's previously filed Annual Reports on Form 10-K for the years ended December 31, 2021 through December 31, 2025 and Quarterly Reports on Form 10-Q for the quarters within that period. While risks remain, including liquidity constraints, execution risk associated with integrating new platforms, and the matters described above and in Part I, Item 4, and Part II, Item 1A, management believes the Company's current operations are better organized than they were in 2022,

Ongoing Impact and Path Forward

Legacy Matters continue to influence the Company's current operations and financial reporting, including through elevated operating costs, a transitional revenue profile, ongoing capital requirements, and the restatement described in Note 3. Management remains focused on regaining compliance with Nasdaq's continued listing requirements, completing the restatement as promptly as practicable, scaling revenue-generating operations, improving operating efficiency, strengthening the balance sheet, and continuing to enhance internal controls and compliance processes. The Company's future performance will depend on its ability to successfully execute this strategy, resolve the matters described above, and convert its repositioned platform into sustainable revenue growth and long-term stockholder value.

Our Current Revenue

During the three months ended March 31, 2026, the Company generated revenue from digital media and advertising services, data services, and gaming operations. The acquisition of Veloce during the quarter expanded the Company's operations to include digital media businesses whose operating results have been included in the Company's consolidated financial statements beginning on the acquisition date which was February 17, 2026.

	●	Digital Media and Advertising Services. Revenue from the Company's digital media operations is generated through the sale of digital advertising, sponsorships, branded content, media production services, content licensing, and other commercial partnerships across its portfolio of digital media properties and social media channels.
	●	Data Services. Commercial customers subscribe to the Company's data services for access to proprietary data products. Certain customers also purchase large data sets on a per-record basis. The Company additionally enters into multi-year commercial agreements for the delivery of anonymized transaction data in accordance with its Terms of Service.
	●	Gaming Operations. Revenue from the Company's gaming operations is generated primarily through its operations in Mexico and includes iLottery products and related gaming services. The company anticipates new revenue from the recently launched lottery afflilate program beginning in the fourth quarter.

Company Operating Costs and Expenses

Personnel Costs. Personnel costs include salaries, payroll taxes, health insurance, worker's compensation and other benefits for management and office personnel.

Professional Fees. Professional fees include fees paid for legal and financial advisors, accountants and other professionals related to the Business Combination subsequent acquisitions, and other transactions.

General and Administrative. General and administrative expenses include marketing and advertising expenses, office and facilities lease payments, travel expenses, bank fees, software dues and subscriptions, expensed research and development ("R&D") costs and other fees and expenses.

Depreciation and Amortization. Depreciation and amortization expenses include depreciation and amortization expenses on real property, intangible, and other assets.

Key Trends and Factors Affecting Our Results

Our results of operations and financial condition are affected by changes in advertising markets, consumer engagement with digital media, gaming activity, the timing and integration of acquired businesses, and general economic and capital market conditions.

Digital Media and Advertising

During the three months ended March 31, 2026, the acquisition of Veloce materially changed the Company's operations by adding digital media and advertising revenues beginning on the acquisition date. Revenue from these operations is affected by advertising demand, sponsorship activity, content production schedules, audience engagement across digital platforms, and the timing of commercial campaigns. Advertising revenue may also fluctuate due to seasonal spending patterns and broader economic conditions that affect marketing budgets.

Data Services

Revenue from data services is affected by customer demand for subscription-based data products, the renewal and expansion of commercial agreements, and the timing of deliveries under multi-year data licensing arrangements. Results may vary based on customer purchasing patterns and the timing of new contract awards.

Gaming Operations

Revenue from gaming operations is generated primarily through the Company's operations in Mexico. Results are affected by gaming activity, customer participation levels, regulatory requirements, and the continued operation and expansion of authorized gaming products within applicable jurisdictions.

Acquisition of Veloce

The acquisition of Veloce during the quarter materially affected the comparability of the Company's results of operations with prior periods. Accordingly, period-to-period comparisons should be considered in light of the inclusion of Veloce's operating results from the acquisition date of February 17, 2026 through the end of the quarter. Veloce continues to operate as a standalone business following the acquisition, and the Company does not currently intend to integrate Veloce's operations with its other business lines. The Company has established financial reporting, governance, and oversight processes to incorporate Veloce into the Company's consolidated financial statements and internal control environment, and expects costs associated with these processes to continue during 2026.

Capital Resources and Liquidity

The Company's operations and growth strategy require continued access to capital to fund working capital requirements, operating activities, strategic investments, and acquisition-related obligations. The Company's liquidity and results of operations are affected by its ability to obtain additional financing, the availability and cost of capital, and prevailing capital market conditions.

Subsequent to March 31, 2026, the Company became delinquent in filing certain periodic reports with the SEC. As a result, the Company experienced limitations on certain financing alternatives available to reporting companies in good standing and incurred additional costs associated with completing its financial reporting obligations and regaining compliance with applicable reporting requirements. Management continues to evaluate financing alternatives while prioritizing available capital toward operating activities of its high-growth potential businesses, integration of acquired businesses, and initiatives intended to support revenue generation.

Regulatory Environment

The Company's operations are subject to federal, state, and international laws and regulations, including securities laws applicable to public companies and licensing and regulatory requirements applicable to its gaming operations. Changes in applicable laws or regulations, the timing or cost of obtaining or maintaining required licenses, and compliance with ongoing reporting obligations may affect the Company's operating results and financial condition.

Financial Reporting and Governance

During the current reporting period and thereafter, the Company has continued to enhance its financial reporting processes, internal controls, and corporate governance practices. The Company also completed work necessary to determine amounts and prepare for restatement of previously issued financial statements as announced in an 8-K filed on October 8, 2026. These activities have required and are expected to continue requiring significant management attention and guidance from professional resources and have increased operating expenses during the first quarter of 2026. Expenses incurred to date and expected to be incurred in connection with amended and restated filings of financial statements have not been and are not expected to become material. The Company does anticipate additional expenses in the fourth quarter for implementation of enhancements to processes and tools and completing the restatement described in Note 3.

Industry Trends

The Company operates in industries that continue to evolve as consumer engagement increasingly shifts toward digital media, sports and entertainment content, and interactive gaming experiences. Demand for digital advertising, sponsorship opportunities, media production services, and gaming products may be affected by changes in consumer behavior, advertising markets, technological developments, and general economic conditions, any of which may influence the Company's operating results.

Current Plan of Operations

As a result of the acquisition of Veloce during the three months ended March 31, 2026, the Company's operating plan is increasingly focused on supporting the growth of its digital media and advertising businesses while continuing to operate and expand its gaming and data services businesses.

A significant component of management's operating plan is supporting the continued operation and growth of Veloce as a standalone business while establishing appropriate financial reporting, governance, and oversight processes within the Company's consolidated operating structure. Management expects to continue enhancing these processes throughout 2026.

Veloce's business includes a portfolio of digital media, esports, motorsports, and content businesses, including Quadrant, which supports audience engagement, branded content, sponsorship, and commercial partnership activities. While Veloce and Quadrant will continue to operate as a standalone business, management intends to leverage their content creation capabilities, digital media expertise, commercial relationships, and audience reach to support the continued development and commercialization of other brands within the Company's portfolio, including Sports.com, Concerts.com, and Lottery.com, where appropriate.

The Company continues to evaluate previously announced acquisition opportunities as part of its overall capital allocation and strategic planning process, including its previously announced agreement to acquire a majority interest in Nook Holdings Limited, described further below. Management regularly evaluates proposed transactions based on available capital, market conditions, strategic priorities, and expected financial returns. As a result, the Company may proceed with, modify, delay, or terminate proposed transactions based on its assessment of these considerations and the satisfaction of potential applicable closing conditions.

The Company's operations are currently focused on expanding revenue generated from its digital media, advertising, data services, and gaming businesses. Management intends to continue developing its portfolio of digital media properties, including Sports.com, Concerts.com, and other owned intellectual property, while evaluating additional opportunities to expand advertising, sponsorship, branded content, media production, content licensing, commercial partnerships, and related digital media activities consistent with available capital resources and market conditions.

Nook Holdings Limited

On June 10, 2025, the Company entered into an Amended Stock Purchase Agreement with the shareholders of Nook Holdings Limited ("Nook"), a private limited company incorporated and registered in the Abu Dhabi Global Market, Abu Dhabi, United Arab Emirates, pursuant to which the Company agreed to acquire a 90% interest in Nook for a total purchase price of approximately $2.46 million. As of the date of this Report, the Company has paid $1,520,000 of the purchase price. The transaction has not yet closed. The Company anticipates closing when it determines the timing is right for the Company, though it can provide no assurance as to the timing of closing, or that the transaction will be completed on the terms described above, or at all. The payment is reported in "Other current assets" on the Company's balance sheet. If the transaction does not close, the deposits would be refunded.

Nook operates a co-working business in Dubai serving individuals and companies in the sports, health, and wellness sectors seeking access to the Dubai and broader Middle Eastern market and has procured approximately 200 licenses through its arrangement with the Dubai Multi-Commodities Centre Free Zone ("DMCC"), which includes access to business setup support, insurance, and value-added-tax registration services. Consistent with the Company's strategy of developing its portfolio of digital media and sports-focused properties, the Company intends to rebrand Nook under the Sports.com brand upon closing. This transaction remains subject to the satisfaction of closing conditions, and the Company may modify, delay, or terminate it consistent with its evaluation of proposed transactions described above.

Sports.com Predict

Subsequent to the period covered by this Report, on April 28, 2026, the Company entered into a technology partnership with Polymarket to power Sports.com Predict, the Company's sports prediction market platform, ahead of the 2026 FIFA World Cup. Under the arrangement, the Company and Polymarket participate in a transaction-based revenue share on trades executed through the platform.

Also subsequent to the period covered by this Report, following a phased, waitlist-based rollout, Sports.com Predict moved to full public access, in jurisdictions where such access is currently permitted, on July 22, 2026, at which time the platform's catalog expanded to 1,195 prediction markets across 18 additional sports categories. Sports.com Predict generates revenue from transaction fees associated with user activity on the platform. Management believes this transaction-based structure has the potential to become a recurring, scalable revenue stream that grows with platform usage, and the Company intends to continue expanding market and category coverage over time, subject to user demand, platform performance, and applicable regulatory requirements in each jurisdiction, which vary and may change. There can be no assurance that the Company will obtain and maintain the necessary regulatory approvals for Sports.com Predict, that user engagement will result in the anticipated transaction volume, or that this offering will achieve its intended commercial benefits.

Lottery.com Affiliate Model

Subsequent to the period covered by this Report, on July 26, 2026, the Company's Board of Directors approved the transition of Lottery.com exclusively to an affiliate-based operating model, under which Lottery.com is positioned as the Company's master global affiliate platform, connecting users to licensed third-party lottery operators rather than directly engaging in activities related to lottery gaming. The initial rollout under this model is expected to prioritize licensed lottery operators in North and Latin America, consistent with the Company's previously announced strategy of prioritizing investment in international gaming operations beginning with Mexico.

Also subsequent to the period covered by this Report, on July 20, 2026, the Company announced its first partner under this affiliate model, International Gaming Alliance ("IGA"), pursuant to which IGA is expected to fund market entry, licensing, marketing, and customer acquisition costs for an initial group of markets across Latin America and Canada, while the Company retains brand and strategic oversight and deploys its proprietary technology platforms, including Spektrum, which the Company created in 2025 after acquiring the underlying assets from PlusEVO Ltd. In connection with this transition, the Company also plans to relaunch the Lottery.com website as an information and affiliate hub rather than a platform through which the Company offers gaming directly. As of the date of this report, IGA has funded development costs for the Lottery.com affiliate website and initiated processes to obtain licenses to operate in multiple juristctions.

Management believes this affiliate-based approach may allow the Company to expand Lottery.com's presence in new regulated markets with reduced capital intensity relative to direct lottery operations, while preserving the Company's ability to operate directly in select markets where doing so aligns with its long-term strategy. There can be no assurance that the Company will successfully recruit additional affiliate partners, that IGA or future partners will fund and execute planned market expansion as anticipated, or that this model will achieve its intended commercial benefits.

Management continues to evaluate existing operations and capital allocation priorities and may defer, modify, or discontinue initiatives that do not meet operational, financial, or strategic objectives. The Company intends to prioritize investments that support current operations, revenue generation, and the continued growth and operational support of its operating businesses.

The Company also continues to evaluate opportunities to expand certain international operations, including its gaming business in Mexico and the initial rollout of the Lottery.com affiliate model described above, its pending acquisition of Nook Holdings Limited in the United Arab Emirates described above, and other markets where management believes expansion opportunities may exist, subject to available capital, regulatory requirements, and market conditions.

Management is continuing to strengthen the Company's financial reporting and operational infrastructure. Current initiatives include enhancing financial reporting systems and processes, improving internal controls, incorporating newly acquired businesses into the Company's financial reporting and internal control environment, completing implementation of a new accounting system, and expanding accounting, finance, and administrative resources and capabilities necessary to support a growing multi-entity organization.

The Company's operating plan remains dependent on maintaining sufficient liquidity to fund operations, satisfy acquisition-related obligations, and support working capital requirements. Management expects to continue evaluating available financing alternatives, strategic partnerships, and other capital sources as necessary to support its operations and business objectives.

Over the next twelve months, management expects its principal uses of capital to include:

	●	Funding working capital requirements and ongoing operations;
	●	Supporting existing operating businesses and related corporate initiatives;
	●	Satisfying acquisition-related obligations, including the remaining amount payable in connection with the Nook transaction described above;
	●	Investing in technology, operational infrastructure, and platform development; and
	●	Supporting sales, marketing, and other commercial activities intended to expand revenue.

Management expects its operating activities during the remainder of 2026 to remain focused on supporting the continued growth of its operating businesses, expanding existing revenue-generating operations, strengthening financial reporting and operational processes, and managing liquidity and capital resources.

Results of Operations

Our consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities and issuance of debt or convertible debt.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following table summarizes our results of operations for the three months ended March 31, 2026 and March 31, 2025, respectively.

For the three months Ended March 31, 2026 and 2025

		March 31,
		2026				2025				$ Change				% Change
Revenue		$	1,200,983			$	223,849				977,134				437	%
Cost of revenue			869,464				162,468				706,996				435	%
Gross profit			331,519				61,381				270,138				440	%
Operating expenses:
Personnel costs			1,023,032				686,637				336,395				49	%
Professional fees			2,316,572				1,089,208				1,227,364				113	%
General and administrative			1,061,652				738,693				322,959				44	%
Depreciation and amortization			1,102,936				895,337				207,599				23	%
Total operating expenses			5,504,192				3,409,875				2,094,317				61	%
Income/ (Loss) from operations			(5,172,673	)		$	(3,348,494	)			1,824,179				54	%
Interest expense			396,819				71,807				325,012				453	%
Interest income							(196,347	)			(196,347	)			-100	%
Other expenses			1,012,484				-				1,012,484				N/A
Other income			(3,042,309	)			(64,572	)			2,977,737				4,611	%
Total other expenses, net			(1,633,006	)			(189,112	)			1,443,894				764	%
Net loss before income tax		$	(3,539,667	)		$	(3,159,382	)			380,285				12	%
Income tax expense (benefit)			-				4,150				(4,150	)			-100	%
Net loss			(3,539,667	)			(3,163,532	)			376,135				12	%

Revenue

Revenue. Revenue for the three months ended March 31, 2026 was $1.201 million, an increase of $977,000 or 437%, compared to revenue of $224,000 for the three months ended March 31, 2025. Revenue from the TinBu, Global Gaming, and Sports Media subsidiaries was lower by $45,000, $36,000, and $39,000 respectively, for the three months ended March 31, 2026 than for the three months ended March 31, 2025. Accordingly, the increase is due to revenue for Veloce from the acquisition date of February 17, 2026 through March 31, 2026, which was not present in the first quarter of 2025.

Cost of Revenue. Cost of revenue consists primarily of the direct costs incurred in generating the Company's digital media, advertising, and data services revenue, together with the direct costs associated with its interactive gaming operations. These costs include content creation and media production expenses, talent and rights-related costs, advertising fulfilment costs, revenue-sharing arrangements, data acquisition costs, platform hosting and technology expenses, payment processing fees, affiliate commissions, and payments to gaming partners and lottery providers, as applicable. Cost of revenue for the three months ended March 31, 2026 was $869,000, an increase of $707,000, or 435%, compared to cost of revenue of $162,000 for the three months ended March 31, 2025. Cost of revenue for the TinBu and Sports Media subsidiaries was essentially the same, legacy core operations was lower by $21,000, and Global Gaming and Dotcom Ventures were each higher by $5,000 for the three months ended March 31, 2026 than for the three months ended March 31, 2025. The primary reason for the increase is due to cost of revenue for Veloce from the acquisition date of February 17, 2026 through March 31, 2026 which was not present in the first quarter of 2025.

Gross Profit. Gross profit for the three months ended March 31, 2026 was $332,000 compared to $61,000 for the three months ended March 31, 2025, an increase of $270,000 or 440%. Gross profit for the TinBu, Global Gaming, and Sports Media subsidiaries was lower by $44,000, $42,000, and $41,000, respectively. Accordingly, the increase in gross margin is related to the inclusion of Veloce from the acquisition date of February 17, 2026 through March 31, 2026, which was not present in the first quarter of 2025.

Operating Costs and Expenses.

		For the three months Ended
		March 31,
		2026				2025				$ Change				% Change
Operating expenses:
Personnel costs			1,023,032				686,637				336,395				49	%
Professional fees			2,316,572				1,089,208				1,227,364				113	%
General and administrative			1,061,652				738,693				322,959				44	%
Depreciation and amortization			1,102,936				895,337				207,599				23	%
Total operating expenses			5,504,192				3,409,875				2,094,317				61	%
Loss from operations			(5,172,673	)		$	(3,348,494	)			1,824,179				54	%

Operating expenses for the three months ended March 31, 2026 were $5.5 million, an increase of $2.1 million or 61%, compared to $3.4 million for the three months ended March 31, 2025. The increase was primarily driven by increases of $337,000 in personnel costs, $1.2 million in professional fees and $323,000 in general and administrative expenses accompanied with an increase of $208,000 in depreciation and amortization. Reasons for these decreases are described below.

Personnel Costs. Personnel costs were $1.0 million for the three months ended March 31, 2026, an increase of $336,000 or 49% from $687,000 for the three months ended March 31, 2025. Personnel costs for: TinBu were lower by $50,000, core operations lower by $165,000, Dotcom Ventures higher by $82,000. Decreases for TinBu and core operations were partially offset by the increase for Dotcom Ventures which was due to hiring in February of 2026. The increase is due to the inclusion of Dotcom Ventures (February 1 through March 31) and Veloce from the acquisition date of February 17 through March 31, neither of which was present in the first quarter of 2025.

Professional Fees. Professional fees increased by $1.2 million or 113%, from $1.1 million for the three months ended March 31, 2025 to $2.3 million for the three months ended March 31, 2026. Professional fees for Sports Media were $123,000 higher and for core operations $971,000 higher. The increase for Sports Media was due to an increase in consulting fees and for core operations was due to higher expenses for investor relations and outside legal services. In addition, professional fees of $135,000 incurred by Veloce from the acquisition date of February 17 through March 31, were not present in the first quarter of 2025.

General and Administrative. General and administrative expenses were $1.1 million for the three months ended March 31, 2026, an increase of $323,000 or 44% from $739,000 for the three months ended March 31, 2025. General and administrative expenses for Global Gaming were higher by $60,000 whereas increases and decreases for existing core operations and other subsidiaries essentially offset for the three months ended March 31, 2026 as compared with the three months ended March 31, 2025. The remaining increase was due to inclusion of Veloce from the acquisition date of February 17 through March 31 which was not present in the first quarter of 2025.

Depreciation and Amortization. Depreciation and amortization increased $208,000, or 23%, from $895,000 for the three months ended March 31, 2025 to $1.1 million for the three months ended March 31, 2026. Amortization expense related to intangible assets of Global Gaming was approximately $138,000 lower due to the error correction and restatement described in Note 3. Amortization of intangible assets for Dotcom Ventures during the three months ended March 31, 2026 of $111,000 was not present in the three months ended March 31, 2025. In addition, amortization and depreciation expenses of $262,000 for Veloce from the acquisition date of February 17 through March 31 were not present in the first quarter of 2025.

Other (Income) Expense, Net.

		For the three months Ended
		March 31,
		2026				2025				$ Change				% Change
Interest expense			396,819				71,807				325,012				453	%
Interest income			-				(196,347	)			(196,347	)			-100	%
Other expense			1,012,484				-				1,012,484				N/A
Other income			(3,042,309	)			(64,572	)			2,977,737				4,611	%
Total other expenses, net			(1,633,006	)			(189,112	)			1,443,894				764	%

Interest Expense. During the three months ended March 31, 2026, the Company recorded interest expense of $397,000, an increase of 325,000, or 453%, over March 31, 2025. Convertible debt balances were higher for the three months ended March 31, 2026 resulting in higher interest expense. In addition, interest expense of $$29,000 for DVI and $74,000 for Veloce was not present for the three months ended March 31, 2025.

Interest income. During the three months ended March 31, 2026, the Company recorded interest income of $0, a decrease of 196,000 over the 196,000 reported for March 31, 2025. Interest income recorded in the three months ended March 31, 2025 was primarily a catch-up for accrued interest on notes receivable.

Other Expense. Other expense for the three months ended March 31, 2026 was $1.0 million, an increase of $1 million or 2,063% from 0 for the three months ended March 31, 2025. the increase for the three months ended March 31, 2026 is related to waiver and consent fees, forbearance fees paid to lenders for extensions of maturity dates, and miscellaneous other expenses for core operations. In addition, Veloce incurred $37,000 of Other expense between the acquisition date and March 31, 2026.

Other Income. Other income for the three months ended March 31, 2026 was $3.0 million, an increase of $3.0 million or 4,611%, from $65,000 for the three months ended March 31, 2025. The increase is primarily due to write-offs of accounts payable and accrued liabilities that had been included in the Company's accounting records longer than the statute of limitations for them. Because the statute of limitations has expired, those debts are now time-barred, and the creditors can no longer use the legal system to enforce or compel payment. During the three months ended March 31, 2026, the Company recorded accounting entries to reduce accounts payable and accrued liabilities with the other side of those entries recorded as other income.

Liquidity and Capital Resources

The Company's primary liquidity requirements consist of funding working capital, operating activities, strategic investments, acquisition-related obligations, and general corporate purposes. Management continues to prioritize the allocation of available capital toward initiatives intended to support revenue generation [with a focus on the highest revenue growth components of the consolidated organization], operational development, and the continued growth of the Company's operating businesses.

Since beginning its restructuring in 2022, the Company has repositioned its business strategy through strategic acquisitions and investments in revenue-generating businesses. As of March 31, 2026, the Company's liquidity strategy remains focused on maintaining sufficient capital to support ongoing operations, satisfy existing obligations, pursue selected strategic opportunities, and strengthen its operating businesses and supporting infrastructure. The Company's liquidity requirements increased during the period as a result of the acquisition of Veloce, continued investments in operating businesses, and ongoing expenditures associated with financial reporting, corporate governance, and public company compliance.

In March 2026, the Company entered into a Securities Purchase Agreement providing for the issuance of unsecured convertible promissory notes. And subsequent to the end of this reporting period, the Company entered an additional funding Agreement. These financing arrangements are intended to provide working capital, support the Company's liquidity, and fund operating activities, acquisition-related obligations, strategic initiatives, and other general corporate purposes. The Company's future liquidity will continue to depend on cash flows generated by its operating businesses, the availability of external financing, and prudent management of operating expenditures and capital resources.

Management continues to evaluate a variety of financing alternatives, including debt financings, equity financings, strategic partnerships, and other capital sources. The timing, availability, and terms of any future financing will depend on several factors, including market conditions, the Company's operating performance, capital requirements, and the status of its periodic reporting obligations under the Securities Exchange Act of 1934.

Execution of the Company's operating plan remains dependent upon disciplined capital allocation, cash flows generated by its operating businesses, and the availability of external sources of capital.

As discussed elsewhere in this Report, delays in the Company's periodic reporting affected the availability of certain financing alternatives during the period following March 31, 2026. Management is working to restore compliance with its periodic reporting obligations and regain timely reporting status, which management expects will expand the financing alternatives available to the Company. There can be no assurance that additional financing will be available when needed or, if available, on terms acceptable to the Company, or at all.

Capital Deployment Framework

The Company's capital deployment framework is intended to allocate available capital in a manner that supports ongoing operations, strategic investments, and long-term value creation while preserving financial flexibility. Management evaluates capital allocation decisions based on a number of factors, including (i) the expected contribution of a proposed investment or transaction to revenue growth and cash flow generation, (ii) its strategic alignment with the Company's businesses in sports, entertainment, media, and gaming, (iii) the anticipated operational and commercial benefits of the investment, (iv) the expected impact on the Company's capital structure and existing shareholders, including potential dilution, and (v) the Company's available liquidity and capital requirements.

Management generally prioritizes investments and strategic transactions that it believes can be supported by available capital resources or committed financing and that are expected to contribute to the Company's operating objectives. Capital allocation decisions are continually evaluated in light of market conditions, available liquidity, strategic priorities, anticipated financial returns, and the Company's overall operating and financial objectives.

The Company's operating strategy remains dependent upon continued access to capital. During the three months ended March 31, 2026, the Company continued to execute its strategy through strategic acquisitions, investments in revenue-generating businesses, and capital raising activities. Management expects that additional capital resources may be required to support future operating activities, strategic investments, acquisition-related obligations, and other corporate initiatives.

There can be no assurance that additional financing will be available on acceptable terms, or at all. If the Company is unable to obtain sufficient capital, it may be required to delay, modify, or discontinue certain strategic initiatives, acquisitions, capital expenditures, or other planned investments. Management intends to continue prioritizing the allocation of available capital toward initiatives that support current operations, revenue generation, financial discipline, and the long-term development of the Company's operating businesses.

These conditions, together with the Company's recurring operating losses, negative cash flows from operations, working capital deficit, significant indebtedness, and continued dependence on external financing to meet its operating cash requirements, raise substantial doubt about the Company's ability to continue as a going concern for one year from the date these financial statements are issued. For additional information, see Note 2 - Significant Accounting Policies - Going Concern to the consolidated financial statements included in this Report, as well as the related risk factors included in the Company's Annual Report on Form 10-K.

Historical Convertible Debt Financing

Prior to the Closing of the Business Combination, the Company funded its operations through the issuance of convertible promissory notes.

From August to October 2017, the Company entered into seven Convertible Promissory Note Agreements with unaffiliated investors for an aggregate amount of $821,500. The notes bore interest at 10% per year, were unsecured, and were due and payable on June 30, 2019. The maturity of the notes was subsequently extended to December 2021. One of these notes was repaid in 2021 and the balance has remained $771,500 since December 31, 2021

From November 2018 through 2021, the Company issued convertible promissory notes with unaffiliated investors in an aggregate principal amount of approximately $47.7 million. The notes bore interest at 8% per year, were unsecured, and were due and payable on dates ranging from December 2020 to December 2022. For notes maturing on or before December 31, 2020, the maturity was extended to December 2021, and the related amendments allowed for automatic conversion to equity in connection with the Business Combination. Nearly all of the notes described above automatically converted into shares of Common Stock, or were terminated pursuant to their terms, in connection with the Closing. Those that remain outstanding did not have conversion terms that were triggered by or remained outstanding following the Closing and subsequently have been reflected as Notes Payable and no longer as Convertible Debt.

Immediately prior to the Closing, approximately $60.0 million of convertible debt was converted into equity of AutoLotto.

The Company's currently outstanding notes payable and convertible debt, including instruments entered into after the Business Combination, are described in Note 10, Notes Payable and Convertible Debt.

Cash Flows

Net cash used in operating activities was $8.3 million for the three months ended March 31, 2026, compared to net cash used in operating activities of $575,000 for the three months ended March 31, 2025. Primary reasons for the increase for the three months ended March 31, 2026 were a decrease to accrued liabilities by $3.3 million related to common stock granted in lieu of cash to settle accrued liabilities and the $2.7 million write-off of time barred accounts payable and accrued liabilities, both of which represent reductions to liabilities and are treated as a use of cash.

Net cash used in investing activities during the three months ended March 31, 2026 was $8,400, compared to cash provided by investing activities $250,000 for the prior year. Cash used in the first three months of 2026 was for purchases of property and equipment whereas cash provided by investing activities was from the collection of a note receivable at maturity.

Net cash provided by financing activities was $7.3 million for the three months ended March 31, 2026, compared to net cash provided of $697,000 for the three months ended March 31, 2025 for an increase of $6.6 million. For the three months ended March 31, 2026 there was an increase of $2.1 million from issuance of convertible debt, along with increases of : $1.6 million from shares of common stock sold under the stock purchase agreement, $1.7 million from a direct placement, and $1.2 million for sales of shares of common stock to public investors, as compared with the same period for the prior year.

Emerging Growth Company Accounting Election

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an "emerging growth company" as defined in Section 2(a) of the Securities Act of 1933, as amended, and have elected to take advantage of the benefits of this extended transition period. We expect to remain an emerging growth company through the end of the 2026 fiscal year and we expect to continue to take advantage of the benefits of the extended transition period. This may make it difficult or impossible to compare the financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions for emerging growth companies because of the potential differences in accounting standards used.

Critical Accounting Policies and Estimates

Our financial statements are prepared in conformity with U.S. GAAP. Certain of our accounting policies require that management apply significant judgments and estimates in defining the appropriate assumptions integral to financial estimates. Judgments are based on historical experience and other factors that we believe to be reasonable under the circumstances, such as terms of contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and therefore actual results could differ from our estimates. We have applied significant estimates and assumptions related to the following:

Revenue and Cost Recognition

Revenue

The Company recognizes revenue in accordance with ASC 606. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenues are generally recognized upon the transfer of control of promised products provided to our users, customers, and subscribers, reflecting the amount of consideration we expect to receive for those products. We enter into contracts that can include various products, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from users, commercial partners and subscribers, which are subsequently remitted to governmental authorities. The revenue recognition policy is consistent for sales generated directly with users, and sales generated indirectly through affiliates, other solution partners, and our commercial partners.

Revenues are recognized upon the application of the following steps:

	1.	Identification of a contract or contracts with a user, customer or subscriber;
	2.	Identification of performance obligation(s) in the contract;
	3.	Determination of the transaction price;
	4.	Allocation of the transaction price to the performance obligations in the contract; and
	5.	Recognition of revenue when, or as, the performance obligation is satisfied.

Contracts with users and customers for lottery game sales are at the point of sale and may include transfer of multiple products to a user or a customer and generally do not require future obligations. In these situations, the Company generally considers each transferred product as a separate performance obligation. The Company evaluates whether it acts as a principal or agent in these arrangements. Where the Company acts as an agent, revenue is recognized on a net basis representing the commission or fee retained.

The Company also has contracts with subscribers for the continued delivery of lottery data over a defined period of time. In accounting for these contracts, the Company generally considers each set of data as a separate performance obligation and recognizes revenue on their delivery reliability over the service period of the agreement. The Company's products are sold without a right of return or refund; the Company's terms of service and contracts generally include specific language that disclaims any warranties.

Cost of Revenue

Cost of revenue consists primarily of the direct costs incurred in generating the Company's digital media, advertising, and data services revenue, together with the direct costs associated with its interactive gaming operations. These costs include content creation and media production expenses, talent and rights-related costs, advertising fulfilment costs, revenue-sharing arrangements, data acquisition costs, platform hosting and technology expenses, payment processing fees, affiliate commissions, and payments to gaming partners and lottery providers, as applicable. Cost of revenue is recognized in the period in which the related revenue is recognized or expected to be recognized, which may result in recording Deferred Costs in order to match them with recognition of related revenue. Certain variable costs, including revenue-sharing arrangements, commissions, and other direct costs, are recognized concurrently with the associated revenue.

Income Taxes

For both financial accounting and tax reporting purposes, the Company reports income and expenses based on the accrual method of accounting.

For federal and state income tax purposes, the Company reports income or loss from their investments in limited liability companies on the consolidated income tax returns. As such, all taxable income and available tax credits are passed from the limited liability companies to the individual members. It is the responsibility of the individual members to report the taxable income and tax credits, and to pay any resulting income taxes. Therefore, in relation to the income and losses incurred by the limited liability companies, they have been consolidated in the Company's tax return and provision based upon its relative ownership.

Income taxes are accounted for in accordance with ASC 740, "Income Taxes" ("ASC 740"), using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefit will not be realized.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position; and (ii) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company's policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Generally, the taxing authorities can audit the previous three years of tax returns and in certain situations audit additional years. For federal tax purposes, the Company's 2021 through 2025 tax years generally remain open for examination by the tax authorities under the normal three-year statute of limitations (based on the filing dates of the returns). For state tax purposes, the Company's 2021 through 2025 tax years remain open for examination by the tax authorities under the normal four-year statute of limitations (based on the filing dates of the returns).

Income taxes for the three months ended March 31, 2026 or the year ended December 31, 2025 were not a significant component of the Company's results of operations. The Company has incurred cumulative losses and maintains a full valuation allowance against its deferred tax assets. As a result, no material income tax expense or benefit has been recognized.

The Company's accounting for income taxes reflects management's current assessment of available information and is subject to refinement as additional analysis is completed. Any such adjustments are not expected to be material.

Business combination

In a business combination, substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the date of acquisition at their respective fair values. One of the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities, including the fair value of contingent consideration, if applicable. If any intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent external valuation expert may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. These valuations are linked closely to the assumptions made by our management regarding the future performance of the assets concerned and any changes in the discount rate applied.

Fair value of financial assets and financial liabilities

Fair value of financial assets and financial liabilities recorded in the consolidated statements of financial position, which cannot be derived from active markets, is determined using a variety of techniques including the use of valuation models. The inputs to these models are derived from observable market data where possible, but where observable market data is not available, judgment is required to establish fair values. Judgment includes, but is not limited to, consideration of model inputs such as volatility, estimated life and discount rates.

Fair value of stock options and warrants

We use the customary Black-Scholes option-pricing model to calculate the fair value of stock options and warrants. Use of this method requires management to make assumptions and estimates about the expected life of options and warrants, anticipated forfeitures, the risk-free rate, and the volatility of our share price. In making these assumptions and estimates, management relies on historical market data.

Estimated useful lives, depreciation of property, plant and equipment, and amortization of intangible assets

Depreciation of property, plant and equipment and amortization of intangible assets is dependent upon estimates of useful lives based on management's judgment. The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

Goodwill and intangible assets

Goodwill and indefinite life intangible asset impairment testing require us to make estimates in the impairment testing model. On an annual basis, we test whether goodwill and indefinite life intangible assets are impaired. Impairment is influenced by judgment in defining a cash-generating unit ("CGU") and determining the indicators of impairment, and estimates used to measure impairment losses. The recoverable amount is the greater of value in use and fair value less costs to sell. The recoverable value of goodwill, indefinite and definite long-lived assets is determined using discounted future cash flow models, which incorporate assumptions regarding projected future cash flows and capital investment, growth rates and discount rates.

Deferred Tax Asset and Valuation Allowance

Accounting for deferred tax assets, including those arising from tax loss carry-forwards, requires management to assess the likelihood that we will generate sufficient taxable earnings in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management's estimates of future cash flows. In addition, future changes in tax laws could limit our ability to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.