Quarterly Report for Quarter Ending September 30, 2025 (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/A for the year ended December 31, 2024 (our "Annual Report").

Overview

During FY 2024, the Company addressed legacy issues while successfully regaining full compliance with Nasdaq's continued listing rules and restarting operations on a limited basis in order to stage Lottery.com for growth in FY 2025. The cornerstone of the Company's operational progress for FY 2025 has been driven by technology, product and service/capability enhancements. This progress is driven primarily by the execution of the Company's "Buy-and-Build" strategy which identifies revenue-producing assets which have the capability to accelerate the Company's operations in the sports, entertainment, and gaming markets.

This Report is reflective of the Company's commitment to transparency, integrity, and responsible corporate governance. The investment commitments from United Capital Investments London Limited and Generating Alpha outlined in this report are evidence of investor belief in Management's capability to resume core lottery and gaming operations, launch additional international lottery operations, and expand operations in Mexico and offerings of sweepstakes, as well as successful monetization of Sports.com, entrance into the entertainment market, and expand the Company's brand across the globe.

Nasdaq Listing

On May 2, 2025, Lottery.com Inc. (the "Company" or "Lottery.com") received a letter from the Nasdaq Listings Qualifications Staff ("Nasdaq Staff") Indicating they had determined that the Company failed to comply with Nasdaq's shareholder approval requirements set forth in Listing Rule 5635(c) (the "Approval Rule").

The Company was notified that it was required to obtain shareholder approval under the Approval Rule prior to the establishment of a 2023 Employees' Directors' and Consultants Stock Issuance and Option Plan (the "2023 Plan") and the Ad Hoc Grants and the shares issued in connection therewith. The Company reported on a Form 8-K on July 3, 2025 that the only Incentive Award Plan for the Company is "The Lottery.com 2021 Incentive Award Plan" (the "2021 Plan") which was approved by the shareholders and registered by the Company on Form S-8 dated April 6, 2022, and that all Awards granted from October 2023 forward have been granted in accordance with the 2021 Plan.

As reported on form 8-K filed on May 9, 2025, the Company received written notice from Nasdaq indicating that its bid price for its common stock had closed at less than $1 per share over the previous 30 consecutive business days, and as a result, the Company did not comply with Nasdaq Listing Rule 8510 (c)(3)(A) (the "Bid Price Listing Rule"). However, under the Listing Rules, the Company was provided a 180-calendar day grace period to regain compliance

On June 20, 2025 Lottery.com received a letter from Nasdaq determining that as a result of the Company's common stock closing at a bid price at or above $1.00 for twenty consecutive business days, the Company had regained compliance with the Bid Price Listing Rule. Nasdaq has closed the matter.

On October 16, 2025 Lottery.com received a letter from Nasdaq determining that, as a result of the Company's retroactive action to abandon the 2023 Employees', Directors' and Consultants Stock Issuance and Option Plan and instead reflect that Ad Hoc grants were made pursuant to the 2021 Incentive Award Plan, the Company has regained compliance with Listing Rule 5635(c). Nasdaq has closed the matter.

If the Company's securities are delisted from Nasdaq due to non-compliance with listing rules, it could be more difficult to buy and sell the Company's common stock and warrants or to obtain accurate quotations, and the price of the Company's common stock and warrants could suffer a material decline. Delisting could also impair the Company's ability to raise capital and/or trigger defaults and penalties under its outstanding agreements or securities. Further, even if we lose but are able to regain compliance with Nasdaq listing requirements, there is no guarantee that we will be able to maintain our listing for any period of time.

Delisting from Nasdaq could also result in negative publicity. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and/or warrants and the ability of our stockholders to sell our common stock and/or warrants in the secondary market. If our common stock and/or warrants are delisted by Nasdaq, our common stock and/or warrants may be eligible to trade on an over-the-counter quotation system, such as the OTCQB Market, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our common stock and/or warrants. In the event our common stock and/or warrants are delisted from The Nasdaq Global Market, we may not be able to list our common stock and/or warrants on another national securities exchange or obtain quotation on an over-the counter quotation system.

Loan Agreement with Woodford

On December 7, 2022, the Company entered into a loan agreement with Woodford Eurasia Assets, Ltd. ("Woodford"), (the "Woodford Loan Agreement") pursuant to which Woodford agreed to provide the Company with up to $52.5 million, subject to certain conditions and requirements, of which, per the Company's books and records $798,351 was received by September 30, 2025 and is owed pursuant to the terms of the Woodford Loan Agreement. Amounts borrowed accrue interest at the rate of 12% per annum (or 22% per annum upon the occurrence of an event of default) and are due within 12 months of the date of each loan advance. Amounts borrowed can be repaid at any time without penalty.

Amounts borrowed pursuant to the Woodford Loan Agreement are convertible, at Woodford's option, into shares of the Company's common stock, beginning 60 days after the first loan date at the rate of 80% of the lowest publicly available price per share of common stock within 10 business days of the date of the Loan Agreement (which was equal to $56.00 per share), subject to a 4.99% beneficial ownership limitation and a separate limitation preventing Woodford from holding more than 19.99% of the issued and outstanding common stock of the Company, without the Company obtaining shareholder approval for such issuance.

Conditions to the Woodford Loan Agreement included the resignation of four prior members of the Board (Lisa Borders, Steven M. Cohen, Lawrence Anthony DiMatteo and William Thompson, all of whom resigned from the Board in September 2022), and the appointment of two new independent directors. Subsequent loans under the Woodford Loan Agreement also required the Company to comply with all listing requirements, unless waived by Woodford. The Woodford Loan Agreement also allowed Woodford to nominate another director to the Board of Directors, in the event any independent member of the Board of Directors resigned.

Proceeds of the loans could only be used by to restart the Company's operations and for general corporate purposes agreed to by Woodford.

The Woodford Loan Agreement included confidentiality obligations, representations, warranties, covenants, and events of default, which are customary for a transaction of this size and nature. Included in the Loan Agreement are covenants prohibiting us from (a) making any loan in excess of $1 million or obtaining any loan in an amount exceeding $1 million without the consent of Woodford, which consent may not be unreasonably withheld; (b) selling more than $1 million in assets; (c) maintaining less than enough assets to perform our obligations under the Loan Agreement; (d) encumbering any assets, except in the normal course of business, and not in an amount to exceed $1 million; (e) amending or restating our governing documents; (f) declaring or paying any dividend; (g) issuing any shares which negatively affects Woodford; and (h) repurchasing any shares.

The Company also agreed to grant warrants to purchase shares of common stock to Woodford (the "Woodford Warrants") in an amount equal to 15% of the Company's then issued and outstanding shares of common stock. Each Woodford Warrant has an exercise price equal to the average of the closing price of the Company's common stock for each of the ten days prior to the first amount being debited from the bank account of Woodford, which equates to an exercise price of $56.00 per share. In the event the Company fails to repay the amounts borrowed when due or Woodford fails to convert the amount owed into shares, the exercise price of the warrants may be offset by amounts owed to Woodford, and in such case, the exercise price of the warrants will be subject to a further 25% discount.

In connection with our entry into the Woodford Loan Agreement, the Company also entered into a Loan Agreement Deed, Debenture Deed and Securitization, with Woodford (the "Security Agreement"), which provides Woodford with a first floating charge security interest over all present and future assets of the Company in order to secure the repayment of amounts owed under the Loan Agreement.

On June 12, 2023, the Company entered into an amendment of the Woodford Loan Agreement (the "Woodford Loan Agreement Amendment"). The Woodford Loan Agreement Amendment provides that Woodford shall henceforth be able to convert, in whole or in part, the outstanding balance of its loan into the conversion shares at a conversion price that represents a further 25% discount to the original conversion price of 20%. The validity and application of the Woodford Loan Agreement Amendment is disputed by the Company.

Despite requests from the Company, Woodford has repeatedly amongst other things: failed to prove the amounts borrowed by the Company or claimed to have been advanced by Woodford to the Company; failed to indicate if it would accept accelerated payment of those verified amounts; failed to provide an anti-money laundering acceptable account to which payment could be made by the Company and failed to explain failure to respond to requests for other funding to be accepted in the context of the Woodford Loan Agreement; failed to respond to requests for funding under the accordion facility of the Woodford Loan Agreement; and failed to respond to allegations of money laundering and conspiracy to defraud the Company and the matter has been referred to the Company's legal counsel.

Information regarding ongoing legal proceedings with Woodford can be found in the "Legal Proceedings" section of this form.

Loan Agreement with United Capital Investments London Limited

The Company entered into a credit facility (the "UCIL Credit Facility"), which is represented by a loan agreement, which was initially entered into on July 26, 2023, and was amended and restated on August 8, 2023, and subsequently amended on August 18, 2023 and amended and restated on February 16, 2024, the "UCIL Loan Agreement"). The UCIL Loan Agreement is with United Capital Investments London Limited ("UCIL"), an entity in which each of Matthew McGahan, the Company's Chief Executive Officer and Chair of the Company's Board, and Barney Battles, a former member of the Board, have a direct or indirect interest. The decision by the Company to enter into the UCIL Loan Agreement followed an acknowledgment by the Company that it had not received the requisite funding that it expected from Woodford on a timely basis, despite the Company making several requests to Woodford for said funding under the Woodford Loan Agreement. Moreover, the Board of Directors determined that it was in the best interest of the Company and its stockholders to enter into the UCIL Loan Agreement with UCIL, as an alternative lender to Woodford, upon receiving an event of default notice on July 21, 2023 (the "Default Notice") and an event of default and crystallization notice on July 25, 2023 (the "Crystallization Notice") from Woodford under the Woodford Loan Agreement. Neither McGahan or Battles participated in the vote on the UCIL agreement to ensure proper independence and correct corporate governance. On July 24, 2023, the Company responded to the Default Notice disputing that an event of default had occurred given the Company's earlier announcement that UCIL had agreed to enter into a funding arrangement with the Company. On July 27, 2023, the Company replied to the Crystallization Notice denying that an event of default occurred or continued, and further asserted that Woodford's attempt for crystallization was inappropriate and unlawful under the Woodford Loan Agreement. Given the uncertainty of the continued financing under the Woodford Loan Agreement, the Board of Directors sought to secure and formalize the Company's alternative funding by entering into the UCIL Loan Agreement.

Placement Agent Agreement with Univest Securities, LLC

As reported on form 8-K filed with the SEC on February 6, 2024, on December 6, 2023, the Company entered into a placement agent agreement (the "Placement Agent Agreement") with Univest Securities, LLC (the "Placement Agent"), whereby the Placement Agent agreed to act as placement agent in connection with the Company's offering ("Offering") of convertible debt with warrant coverage at 50% up to $1,000,000; consisting of a convertible promissory note (each, a "Convertible Note" or collectively, the "Convertible Notes"), and a common stock purchase warrant (each, a "Warrant", or collectively, the "Warrants") to purchase shares of common stock of the Company, par value $0.001 per share (the "Common Stock") which include specific registration rights ("Registration Rights"), directly to one or more investors (each, an "Investor" and, collectively, the "Investors") through the Placement Agent.

On February 1, 2024, the parties agreed to increase the offering amount from $1,000,000 to $5,000,000. All other terms and conditions of the offering remained the same. The Securities shall be offered and sold pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act").

Business Combination

The Business Combination Agreement, executed on February 21, 2021, facilitated the merger of Trident Merger Sub II Corp. into AutoLotto, with AutoLotto surviving as a wholly owned subsidiary of Trident Acquisitions Corp., which was subsequently renamed Lottery.com Inc. The transaction involved an aggregate consideration of approximately $440 million, comprising 200,000 shares of common stock valued at $2,200.00 per share. Additionally, the agreement provided for potential earnout shares for both Sellers and Founder Holders, subject to specific conditions. However, these conditions were not met, resulting in the forfeiture of all potential earnout shares.

Board of Directors

On May 13, 2025, the Board of Directors of the Company appointed Mr. Marc Bircham as a member of its Board of Directors. Mr. Bircham also serves as Executive Director of Sports.com. He is a seasoned executive, entrepreneur, and former international footballer with a dynamic career that spans professional sports, business development, and strategic leadership. In his career, Marc has spearheaded international growth, led complex acquisition projects, and forged high-value partnerships across the sports and entertainment industries.

Mr. Bircham is eligible to participate in the Company's equity compensation plans commensurate with all other Directors.

Reverse Stock Splits

On August 28, 2025, the Company amended its Charter to implement, effective at 5:30 p.m., Eastern time, a 1-for-10 Reverse Stock Split. At the effective time of the Reverse Stock Split, every 10 shares of common stock either issued and outstanding or held as treasury stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. Stockholders who would have otherwise been entitled to fractional shares of common stock as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares. In addition, as a result of the Reverse Stock Split, proportionate adjustments will be made to the number of shares of common stock underlying the Company's outstanding equity awards, the number of shares issuable upon the exercise of the Company's outstanding warrants and the number of shares issuable under the Company's equity incentive plans and certain existing agreements, as well as the exercise, grant and acquisition prices of such equity awards and warrants, as applicable. The Reverse Stock Split was approved by the Company's stockholders at the Company's 2025 Annual Meeting of Stockholders on February 20, 2025 and was subsequently approved by the Board of Directors on August 13, 2025.

Previously, on August 9, 2023, the Company amended its Charter to implement, effective at 5:30 p.m., Eastern time, a 1-for-20 Reverse Stock Split. At the effective time of the Reverse Stock Split, every 20 shares of common stock either issued and outstanding or held as treasury stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. Stockholders who would have otherwise been entitled to fractional shares of common stock as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares. In addition, as a result of the Reverse Stock Split, proportionate adjustments will be made to the number of shares of common stock underlying the Company's outstanding equity awards, the number of shares issuable upon the exercise of the Company's outstanding warrants and the number of shares issuable under the Company's equity incentive plans and certain existing agreements, as well as the exercise, grant and acquisition prices of such equity awards and warrants, as applicable. The Reverse Stock Split was approved by the Company's stockholders at the Company's 2023 Annual Meeting of Stockholders on August 7, 2023, and was subsequently approved by the Board of Directors on August 7, 2023.

The effects of the Reverse Stock Split have been reflected in this Quarterly Report on Form 10Q for all periods presented.

International Expansion

In June 2021, we closed the acquisition of Global Gaming, which holds 80% of the equity of each of Aganar and JuegaLotto. Aganar operates in the licensed Online Lottery market in Mexico and is licensed to sell Mexican National Lottery draw games, instant win tickets, and other games of chance online with access to a federally approved online casino and sportsbook gaming license. JuegaLotto is licensed by Mexico authorities to commercialize international lottery games in Mexico through an authorized gaming portal and to commercialize games of chance in other countries throughout Latin America. As of the date of this Report, according to Statista, the estimated size of the Latin American lottery market is $.68 billion with a compound annual growth rate projected at 6.05% through 2028. Furthermore, it is projected that there will be 3,000,000 online lottery players in the South American lottery market alone by 2028. Based on these projections, we believe these acquisitions will provide opportunities for growth of our international operations throughout Mexico and Latin America as we expand our portfolio of products and expose our existing products to new markets.

The Company completed the acquisition of Spektrum Ltd from PlusEvo Ltd through a Share Purchase Agreement (SPA) executed on March 13, 2025. This acquisition, valued at $1.5 million in common stock at $30.00 per share, supports Lottery.com's strategic expansion and the development of Lottery.com International. The acquisition provides the Company with a compliant platform to support lottery, sweepstakes and social gaming operations in dozens of international jurisdictions.

Operations Prior to Operational Cessation

Prior to the Operational Cessation, the Company was a provider of domestic and international lottery products and services. As an independent third-party lottery game service, we offered a platform that we developed and operated to enable the remote purchase of legally sanctioned lottery games in the U.S. and abroad (the "Platform"). Our revenue generating activities included (i) offering the Platform via our Lottery.com app and our websites to users located in the U.S. and international jurisdictions where the sale of lottery games was legal and our services were enabled for the remote purchase of legally sanctioned lottery games (our "B2C Platform"); (ii) offering an internally developed, created and operated business-to-business application programming interface ("API") of the Platform, which enabled our commercial partners, in permitted U.S. and international jurisdictions, to purchase certain legally operated lottery games from us and to resell them to users located within their respective jurisdictions ("B2B API"); and (iii) delivering global lottery data, such as winning numbers and results, and subscriptions to data sets of our proprietary, anonymized transaction data pursuant to multi-year contracts to commercial digital subscribers ("Data Service").

Mobile Lottery Game Platform Services

Both our B2C Platform and our B2B API provided users with the ability to purchase legally sanctioned draw lottery games via a mobile device or computer, securely maintain their acquired lottery game, automatically redeem a winning lottery game, as applicable, and receive support, if required, for the claims and redemption process. Our registration and user interfaces were designed to be easy to use, provide for the creation of an account and purchase of a lottery game with minimum friction and without the creation of a mobile wallet or requirement to pre-load minimum funds and - importantly - to provide instant confirmation of the user's lottery game numbers, whether selected at random or picked by the user. Users of our B2C Platform services paid a service fee and, in certain non-U.S. jurisdictions, a mark-up on the purchase price. Prior to the Operational Cessation, we generated revenue from this service fee and mark-up. Our B2B API Platform resumed limited operations during the month of April 2023. As of the date of this Report, our B2C Platform is not currently available in the US.

The WinTogether Platform

Prior to the Operational Cessation, we operated and administered all sweepstakes offered by WinTogether, a registered 501(c)(3) charitable organization ("WinTogether"), which was formed in April 2020 to support charitable, educational, and scientific causes. In consideration of our operation of the WinTogether platform and administration of the sweepstakes, we received a percentage of the gross donations to a campaign, from which we paid certain dividends and all administration costs.

On April 1, 2024, Lottery.com resumed its sweepstakes offerings through its partnership with the WinTogether.org foundation. In April 2025, Sports.com sponsored a sweepstakes to support the Florida International University surrounding the Formula 1 Crypto.com Miami Grand Prix 2025.

Current Operations

Despite the Operational Cessation, the Company's subsidiaries have continued to operate. While the operational activities of these subsidiaries vary, from the Operational Cessation through the date of this Report, each of TinBu, Aganar and JuegaLotto has decreased its expenses and has had its revenue decrease from pre-Operational Cessation levels. Additionally, Sports.com Media Group Ltd is operational and generating revenue. Both Concerts.com and TicketStub.com remain operational while the Company invests in redesign the sites to better meet the demands of today's live entertainment consumers.

Data Services

In 2018, we acquired TinBu, LLC ("TinBu"), a digital publisher and provider of lottery data results, jackpot results, and other data, as a wholly-owned subsidiary. Through TinBu, our Data Service delivers daily results of over 800 domestic and international lottery games from more than 40 countries, including the U.S., Canada, and the United Kingdom, to over 400 digital publishers and media organizations.

Our technology pulls real time primary source data, and, in some instances, we acquire data from dedicated data feeds from the lottery authorities. Our data is constantly monitored to ensure accuracy and timely delivery. We are not required to obtain licenses or approvals from the lottery authorities to pull this primary source data or to acquire the data from such dedicated feeds. Commercial acquirers of our Data Service pay a subscription for access to the Data Service and, for acquisition of certain large data sets, an additional per record fee.

We additionally enter into multi-year contracts pursuant to which we sell proprietary, anonymized transaction data pursuant to multi-year agreements and in accordance with our Terms of Service in consideration of a fee and in other instances provide the Data Service within a bundle of provided services.

Lottery.com International

On June 24, 2025, The Company appointed Tim Scoffham CEO of Lottery.com International Limited. In this role, Scoffham will oversee, the Company's iGaming and international lottery division focused on delivering secure, compliant, and entertaining lottery experiences across key global markets. His leadership will focus on aligning commercial, media, and technology platforms, bolstering permitted partnerships, and unlocking scalable, revenue-generating opportunities in high-growth jurisdictions.

Aganar and JuegaLotto

On June 30, 2021, we acquired 100% of the equity of Global Gaming Enterprises, Inc., a Delaware corporation ("Global Gaming"), which holds 80% of the equity of each of Medios Electronicos y de Comunicacion, S.A.P.I de C.V. ("Aganar") and JuegaLotto, S.A. de C.V. ("JuegaLotto"). JuegaLotto is federally licensed by the Mexican regulatory authorities with jurisdiction over the ability to commercialize lottery games in Mexico through an authorized federal gaming portal and to commercialize games of chance in other countries throughout Latin America. Aganar has been operating in the licensed Online Lottery market in Mexico since 2007 and has certain rights to sell Mexican National Lottery draw games, instant win tickets, and other games of chance online.

Nook Holdings, Ltd

On September 28, 2023, the Company entered into 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 ("UAE"). The total purchase price is approximately $2.314 million. The Company made payments totaling $137,500 in the fourth quarter of 2023 and made additional deposits totaling $1,157,391 in the first nine months of 2025 for a cumulative total of $1,294,788 as of September 30, 2025 and anticipates the transaction closing in the fourth quarter of 2025 or as otherwise agreed by the parties. Nook is known for its innovative approach to co-working in Dubai and has procured 200 licenses for individuals and companies in the sports, health and wellness sector seeking access to Dubai and the broader Middle Eastern market. With its exclusive partnership with the Dubai Multi-Commodities Centre Free Zone (DMCC), Nook offers a wide range of services, including business setup support, insurance, VAT registration, and networking opportunities for like-minded sports entrepreneurs. As part of the acquisition, Nook will be rebranded under the Sports.com umbrella.

Sports.com

In December 2021, we finalized the acquisition of the domain name https://sports.com. On March 26, 2025, the Company registered Sports.com as a fictious name in the state of Florida under AutoLotto, Inc. Content provided by Sports.com is currently available worldwide as a website and a mobile application. The website was relaunched in August 2025.

In February 2025, the Company entered into a multi-year multi-year global partnership with Soccerex, the world's leading soccer business event organizer. The Agreement makes Sports.com the title sponsor for six global events including Soccerex 2025 for MENA, Europe and USA which were held in Cairo, Amsterdam and Miami, respectively.

This collaboration provides the Company with an influential platform to engage with key stakeholders in the football industry, further solidifying Sports.com's position at the intersection of sports, technology and entertainment. Working with the Soccerex team and its community presents an opportunity to build brand awareness internationally for the Company's gaming, content and entertainment brands.

In May 2025, the Company entered into sponsorship agreements with Louis Foster and Calum Ilott, drivers in the NTT IndyCar Series, and Sebastain Murray, a driver in the INDY NXT by Firestone series. The agreements provide the Company's brands with exposure throughout the 2025 racing seasons with vehicle and attire logo placement and social media postings by the drivers.

On June 17, 2025, the Company appointer Tamer Hassan as president of Sports.com Studios, Ltd. In this role, Hassan will lead the division's creative and strategic efforts to develop, produce and distribute compelling sports-focused films, docuseries, and premium digital content. This new arm of the business will serve as the cornerstone of Sports.com's global expansion into entertainment media and immersive storytelling.

On June 24, 2025, the Company appointed Tim Scoffham CEO of Sports.com Media Group, Ltd. In this role, Scoffham will oversee the strategic integration and international expansion of Sports.com Media, a premium digital sports content and engagement platform. His leadership will focus on aligning commercial, media, and technology platforms, bolstering regulatory partnerships, and unlocking scalable, revenue-generating opportunities in high-growth jurisdictions.

On July 17, 2025, the Company entered into its first official football league partnership in the Indian subcontinent through a five-year commercial agreement with the Super League Kerala ("SLK"), valued at more than $11.6 million. The agreement establishes SEGG Media and Sports.com as the exclusive global commercial and broadcast partner for SLK, encompassing: exclusive international streaming rights across all territories; integrated gaming and fan engagement products; global sponsorship and brand activation rights; and distribution focus across the Indian subcontinent and MENA, especially targeting the vast Keralite diaspora in the Middle East, North America, and Europe.

Sports.com Studios Ltd, entered into a revenue-driven co-production partnership with GOATS Entertainment (Greatest Of All Time) on August 7, 2025. This alliance will transform the legacies of the world's greatest athletes into cash-generative content assets, combining premium docuseries, exclusive merchandise, global fan activations, and immersive storytelling. The collaboration is designed to drive high-margin revenue streams across OTT, e-commerce, experiential and licensing platforms.

On Sept. 10, 2025, Sports.com Studios entered into a strategic global distribution partnership with the Døds Diving League ("DDL"), the official global platform for the world's fastest-growing extreme sport. The partnership will be managed by Sports.com Studios Ltd, the newly launched sports content subsidiary of SEGG Media. The partnership will bring the thrill of Døds to millions of fans worldwide. Under the agreement, Sports.com Studios became a global distribution partner for DDL events, ensuring competitions and original content will be delivered through Sports.com platforms.

Plans for Recommencement of Company Operations

As noted above, since the Operational Cessation, the Company has had minimal day-to-day operations and has primarily focused on restarting certain of its core businesses. The Company is executing on a multi-phase to recommence its gaming operations, which plan is outlined below The sequence is subject to change.

Phase 1 - Resume Sweepstakes Operations. The Company resumed its sweepstakes operations in April 2025 in conjunction with the WinTogether trust. The event was marketed under the DonateTo.Win brand. The launch was limited to Florida residents and awarded a prize for a VIP experience at the 2025 Formula 1 Crypto.com Miami Grand Prix 2025. The launch confirmed that the core sweepstakes platform is fully operational and ready to scale for nationwide events. The Company is planning additional events in the remainder of 2025 offering prizes related the Company's business' in the entertainment and sports markets.

Phase 2 - Resume B2C Platform Operations. The Company believes that it will be in a position to relaunch its B2C Platform by the end of 2025. As of the date of this Report, the Company expects that it will initially relaunch its B2C Platform to customers in international jurisdictions for a period of time before rolling it out to other jurisdictions. The Company plans to limit the rollout in order to give it additional time to properly vet and confirm compliance with local, state and federal rules related to ticket procurement and distribution. For more information, see "Item 1A. Risk Factors. The Company has also maintained various pre-paid media credits that it expects to use to launch and maintain promotional campaigns geared towards encouraging prior customers to return to the Platform and to acquire new customers.

Phase 3 - Master Affiliate Model for Lottery.com. The Company believes that the strength of the Lottery.com can be used to drive revenue through strategic affiliate relationships across the global lottery industry. The Company plans to offer an overarching Lottery.com loyalty and rewards program for all affiliates which allows the affiliate to concentrate on direct B2B sales while it delivers content and rewards which appeal to all lottery players. The program will be structured under a revenue-share model.

Phase 4 - Other Business Lines and Projects. The Company expects to continue to monetize the Sports.com brand, offer TicketStub.com services in international jurisdictions, and expand the Concerts.com platform beyond ticket reselling, and partnering with licensed providers in international jurisdictions to supply digital lottery games, and reviving other products and services that were under development when the Operational Cessation occurred.

As of the date of this Report, the current estimated cash balance of the Company and subsidiaries is approximately $320,000. The Company believes that this cash on hand, along with future borrowings, will be sufficient for the Company to resume its core operations.

Our common stock and warrants are traded on The Nasdaq Stock Market LLC ("Nasdaq") under the ticker symbols "SEGG" and "LTRYW," respectively. As of the date of this Report, we are in compliance with Nasdaq's continued listing requirements (the "Listing Rules"). Under its new management, the Company continues to work to improve its disclosure and reporting controls. Also, the Company plans to continue to strengthen and improve its systems of internal control over financial reporting and invest in additional legal, accounting, and financial resources.

If the Company's securities are delisted from Nasdaq, it could be more difficult to buy or sell the Company's common stock and warrants or to obtain accurate quotations, and the price of the Company's common stock and warrants could suffer a material decline. Delisting could also impair the Company's ability to raise additional capital needed to fund its operations and/or trigger defaults and penalties under outstanding agreements or securities of the Company.

There can be no assurance that we will have sufficient capital to support our operations and pay expenses, repay our debt, or that additional funds will be available on favorable terms, if at all. We may not be able to restart our operations or generate sufficient funding to support such operations in the future. The Company's ability to continue its current operations, prepare and refile required reports, and restart its prior operations, is dependent upon obtaining new financing. Future financing options available to the Company include equity financings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. Equity financings may include sales of common stock. Such financing may not be available on terms favorable to the Company or at all. The terms of any financing may adversely affect the holdings or rights of the Company's stockholders and may cause significant dilution to existing stockholders. There can be no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company, if at all, which would have a material adverse effect on its business, financial condition and results of operations, and it could ultimately be forced to discontinue its operations and liquidate. These matters, when considered in the aggregate, raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time, which is defined as within one year after the date that the financial statements are issued. The accompanying financial statements do not contain any adjustments to reflect the possible future effects on the classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Components of Our Results of Operations

Our Revenue

Revenue from B2C Platform [when operational]. Our revenue is the retail value of the acquired lottery game and the service fee charged to the user, which we impose on each lottery game purchased from our B2C Platform. The amount of the service fee is based upon several factors, including the retail value of the lottery game purchased by a user, the number of lottery games purchased by a user, and whether such user is located within the U.S. or internationally. Currently, in the U.S, the minimum service fee is $0.50 for the purchase of a $1 lottery game and $1 for the purchase of a $2 lottery game; the service fee for additional lottery games purchased in the same transaction is 6% of the face value of all lottery games purchased. For example, the service fee for the purchase of five $2 tickets is $1.60, comprised of the $1 base service fee, plus 6% of the aggregate value of the face value of all lottery games purchased. The Company has not operated its B2C platform in the US since July 2022. The Company does operate B2C business in Mexico through our wholly-owned subsidiary, Global Gaming.

Data Services. Commercial acquirers of our Data Service pay a subscription for access to the Data Service and, for acquisition of certain large data sets, an additional per record fee. The Company additionally enters into multi-year contracts pursuant to which it sells proprietary, anonymized transaction data pursuant to multi-year agreements and in accordance with our Terms of Service in consideration of a fee. Our Data Services operations were not impacted by the Operational Cessation.

Revenue-Share Arrangements Sports.com Media Group has entered into agreements with telcos which allow them to monetize Sports.com content to their users. Both parties share in the revenue.

Our 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 services, accountants and other professionals.

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 and other assets.

Key Trends and Factors Affecting Our Results

The following describes the trends associated with our business prior to the Operational Cessation that have impacted, and which we expect will continue to impact, our business and results of operations in a material way:

International operations. We face challenges related to expanding our footprint globally and the related process of obtaining the licenses and regulatory approvals necessary to provide services and products within new and emerging markets. The international jurisdictions where we operate and seek to expand have been subject to increasing foreign currency fluctuations against the U.S. dollar, inflationary pressures and political and economic instability. We expect these trends to continue during fiscal 2025 and believe they are likely to affect consumer spending, which could have a material impact on our revenues. As a result, it may take longer to achieve projected revenue gains or generate cash in any such regions affected or any new foreign jurisdiction into which we expand.

Introduction of a new gaming platform. We developed a proprietary, blockchain-enabled gaming platform, which we named Project Nexus. Project Nexus is designed to handle high levels of user traffic and transaction volume, while maintaining expediency, security, and reliability in (i) the processing of lottery game sales, (ii) fulfillment of retail requirements of the B2C Platform, (iii) the administrative and back-office functionality required by our B2B API, and (iv) the requirements of our claims and redemption process. We expect to utilize this platform to launch new products, including any proprietary products we may introduce. The introduction of new technology like Project Nexus is subject to risks including, among other things, implementation delays, issues successfully integrating the technology into our solutions, or the possibility that the technology does not produce the expected benefits.

Our growth plans and the competitive landscape. Our direct competitors operate in the global entertainment and gaming industries and, like us, seek to expand their product and service offerings with integrated products and solutions. Our short-to-medium term focus is on increasing our brand penetration in U.S. and international jurisdictions by increasing direct to consumer marketing campaigns, entering into affiliate partnerships in U.S. and select foreign jurisdictions and acquiring synergistic enterprises domestically and abroad.

Current Plan of Operations

As of the date of this Report, the Company's primary revenue drivers are its data business, lottery ticket sales in Mexico and sponsorship and licensing deals with Sports.com Media Group. It is anticipated that operational costs for the next 12 months through September 30, 2026 will be greater than revenues. It is anticipated that the liquidity gap will be satisfied by equity investment or debt incurred, of which there is no assurance.

Within the next 12 months, the Company plans to continue to reintroduce the Lottery.com brand to the domestic market and expand international operations in gaming, sports, and entertainment. Moreover, the Company plans to enhance its mobile application to include pool plays, ticket subscriptions, loyalty programs and various gamification modules.

The Company is moving forward with its previously announced plans to monetize the Sports.com brand. Those plans include introducing an advertising-supported subscription model; the creation and licensing of original content through Sports.com Studios; and completing the acquisition of Nook and marketing business licenses to companies in the sports, health and wellness markets seeking access to Dubai and the broader Middle Eastern market.

The acquisition of DotCom Ventures Inc. introduces additional revenue streams for us including concert and sporting events ticket sales, an entertainment focused marketplace of concert memorabilia, live streaming of concert events, and ticket sales in international jurisdictions.

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.

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and September 30, 2024, respectively.

		For the three months Ended
		September 30,
		2025				2024				$ Change				% Change
Revenue		$	137,769			$	200,653				(62,884	)			-31	%
Cost of revenue			204,868				86,315				118,553				137	%
Gross profit			(67,189	)			114,338				(181,527	)			-159	%
Operating expenses:
Personnel costs			360,135				679,346				(319,211	)			-47	%
Professional fees			1,613,268				1,205,900				407,368				34	%
General and administrative			1,498,490				681,345				817,145				120	%
Depreciation and amortization			1,180,132				1,207,913				(27,787	)			-2	%
Total operating expenses			4,652,025				3,774,504				877,521				23	%
Loss from operations			(4,719,214	)		$	(3,660,166	)			(1,059,048	)			29	%
Other expenses
Interest expense			67,845				126,753				(58,908	)			-46	%
Other (income) expense			(19,343	)			(20,431	)			(1,088	)			-5	%
Loss on impairment of intangibles & goodwill			-				4,298,002				(4,298,002	)			-100	%
Total other expenses, net			48,502				4,404,324				(4,355,822	)			-99	%
Net loss before income tax		$	(4,767,716	)		$	(8,064,490	)			(3,296,774	)			-41	%
Income tax expense (benefit)			4,365				12,814				(8,449	)			-66	%
Net loss			(4,772,081	)			(8,077,304	)			(3,355,223	)			-42	%

Revenue.

Revenue. Revenue for the three months ended September 30, 2025 was $138,000, a decrease of $63,000, or 31%, compared to revenue of $201,000 for the three months ended September 30, 2024. The decrease is the net effect of decreases of $38,000 for Global Gaming and $24,000 for TinBu in 2025 and 1,000 for S&MI vs 2024.

Cost of Revenue. Cost of revenue includes product costs, commission expense to affiliates and commercial partners, and merchant processing fees. Cost of revenue for the three months ended September 30, 2025 was $205,000 thousand, an increase of $119,000, or 137%, compared to cost of revenue of $86,000 for the three months ended September 30, 2024. For the three months ended September 30, 2025 there were increases of $63,000 in cost of revenue for the S&MI subsidiary and $59,000 for Global Gaming offset by minor decreases for the core Lottery business.

Gross Profit. Gross profit for the three months ended September 30, 2025 was a loss of $67,000 compared to profit of $114,000 for the three months ended September 30, 2024, a decrease of $182,000, or 159%. Gross profit for Global Gaming decreased by: $97,000, Tinbu by $23,000 and S&MI by $62,000 in the three months ended September 30, 2025.

Operating Costs and Expenses.

		For the three months Ended
		September 30,
		2025				2024				$ Change				% Change
Operating expenses:
Personnel costs			360,135				679,346				(319,211	)			-47	%
Professional fees			1,613,268				1,205,900				407,368				34	%
General and administrative			1,498,490				681,345				817,145				120	%
Depreciation and amortization			1,180,132				1,207,913				(27,787	)			-2	%
Total Operating Expenses			4,652,025				3,774,504				766,410				23	%
Loss from operations			(4,719,214	)			(3,660,166	)			(1,059,048	)			29	%

Operating expenses for the three months ended September 30, 2025 were $4.7 million, an increase of $766,000, or 23%, compared to $3.8 million for the three months ended September 30, 2024. The increase was primarily driven by increases of $817,000 in General and administrative costs and $407,000 in Professional fees offset by decreases in Personnel costs of $319,000 and Depreciation and amortization of $28,000. Reasons for these decreases are described below.

Personnel Costs. Personnel costs were $360,000 for the three months ended September 30, 2025, a decrease of $319,000 or (47%) from $679,000 for the three months ended September 30, 2024. The decrease is primarily due to changes in the composition of the teams for the parent company and TinBu subsidiary for the three months ended September 2025 as compared with the three months ended September 30, 2024.

Professional Fees. Professional fees increased by $407,000 or 34%, from $1.2 million for the three months ended September 30, 2024 to $1.6 million for the three months ended September 30, 2025. The increase was due to expenses incurred for outside attorneys in the three months ended September 30, 2025. Activity levels for outside attorneys were lower for the same period in 2024.

General and Administrative. General and administrative expenses were $1.5 million, for the three months ended September 30, 2025, an increase of $817,000 or 120% from $681,000 for the three months ended September 30, 2024. Primary drivers of the increase for the three months ended September 30, 2025 vs the three months ended September 30, 2024 were: $140,000 for the Advisory Board, $375,000 for Sponsorships, $189,000 for Public Relations, and $70,000 business insurance premiums.

Depreciation and Amortization. Depreciation and amortization decreased $28,000, or 2%, from $1.21 million for the three months ended September 30, 2024 to $1.18 million for the three months ended September 30, 2025. The decrease was primarily driven by write-offs to intangible assets related to Global Gaming in 2024 resulting in a decrease for the three months ended September 30, 2025, and because Tinbu intangibles became fully amortized in the summer of 2024.

Other (Income) Expense, Net.

		For the three months Ended
		September 30,
		2025				2024				$ Change				% Change
Other expenses
Interest expense			67,845				126,753				(58,908	)			-46	%
Other (income) expense			(19,343	)			(20,431	)			(1,088	)			-5	%
Loss on impairment of intangibles & goodwill			-				4,298,002				(4,298,002	)			-100	%
Total other expenses, net			48,502				4,404,324				(4,355,822	)			-99	%

Interest Expense. Interest expense for the three months ended September 30, 2025 was $68,000 vs interest expense of $127,000 for the three months ended September 30, 2024, a decrease of $59,000 or 46%. Interest expense relates to notes payable from the time of the business combination plus interest on more recent convertible notes from Woodford, UCIL, and Univest. Interest accrual for convertible debt was lower for the three months ended September 30, 2025 than for the three months ended September 30, 2024 due to lower balances for convertible debt as a result of conversions to equity.

Other (Income) Expense. Other (Income) was essentially flat for the three months ended September 30, 2025 compared with the three months ended September 30, 2024.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

The following table summarizes our results of operations for the nine months ended June 30, 2025 and June 30, 2024, respectively.

		For the nine months Ended
		September 30,
		2025				2024				$ Change				% Change
Revenue		$	553,290			$	716,970				(163,680	)			-23	%
Cost of revenue			530,069				215,672				314,397				146	%
Gross profit			23,221				501,298				(478,077	)			-95	%
Operating expenses:
Personnel costs			1,485,738				3,454,011				(1,968,273	)			-57	%
Professional fees			3,878,826				4,769,938				(891,112	)			-19	%
General and administrative			3,361,031				3,598,397				(237,366	)			-7	%
Depreciation and amortization			3,281,090				3,823,641				(542,551	)			-14	%
Total operating expenses			12,006,685				15,645,987				(3,639,302	)			-23	%
Loss from operations			(11,983,464	)		$	(15,144,689	)			(3,161,225	)			-21	%
Other expenses
Interest expense			7,726				350,784				(343,058	)			-98	%
Other expense			(107,948	)			(11,747	)			(96,201	)			819	%
Loss on impairment of intangibles & goodwill			-				4,298,002				(4,298,002	)			-100	%
Total other expenses, net			(100,222	)			4,637,039				(4,737,261	)			-102	%
Net loss before income tax		$	(11,883,242	)		$	(19,781,728	)			(7,898,486	)			-40	%
Income tax expense (benefit)			12,665				21,114				(8,449	)			-40	%
Net loss			(11,895,907	)			(19,802,842	)			(7,906,935	)			-40	%

Revenue. Revenue for the nine months ended September 30, 2025 was $553,000, a decrease of $164,000, or 23%, compared to revenue of $717,000 for the nine months ended September 30, 2024. The decrease in revenue is the net effect of decreases of $141,000 for Global Gaming and $108,000 for TinBu in 2025 vs 2024 offset by an increase of $87,000 in revenue for the S&MI subsidiary which is because S&MI was present for nine months in 2025 and only for one month in 2024.

Cost of Revenue. Cost of revenue includes product costs, commission expense to affiliates and commercial partners, and merchant processing fees. Cost of revenue of $530,000 for the nine months ended September 30, 2025 was an increase of $314,000 or 146% compared with $216,000 for the nine months ended September 30, 2024. The primary driver of the increase is because S&MI was present for nine months in 2025 and only for one month in 2024. Cost of revenue for TinBu was essentially flat and there was a small increase for Global Gaming.

Gross Profit. Gross profit for the nine months ended September 30, 2025 was $23,000 compared to $501,000 for the nine months ended September 30, 2024, a decrease of $478,000, or 95%. Gross profit decreased by: $156,000, for Global Gaming, Tinbu by $108,000, and S&MI by $214,000 in the three months ended September 30, 2025.

Operating Costs and Expenses.

		For the nine months Ended
		September 30,
		2025				2024				$ Change				% Change
Operating expenses:
Personnel costs			1,485,738				3,454,011				(1,968,273	)			-57	%
Professional fees			3,878,826				4,769,938				(891,112	)			-19	%
General and administrative			3,361,031				3,598,397				(237,366	)			-7	%
Depreciation and amortization			3,281,090				3,823,641				(542,551	)			-14	%
Total operating expenses			12,006,685				15,645,987				(3,639,302	)			-23	%
Loss from operations			(12,983,464	)		$	(15,144,689	)			(3,161,225	)			-21	%

Operating expenses for the nine months ended September 30, 2025 were $12.0 million, a decrease of $3.6 million, or 23%, compared to $15.6 million for the nine months ended September 30, 2024. The decrease was primarily driven by a decrease of $2.0 million in Personnel costs accompanied by decreases in: Professional fees of $891,000, General and administrative expenses of $237,000, Depreciation and amortization by $543,000. Reasons for these decreases are described below.

Personnel Costs. Personnel costs decreased by $2.0 million or 57% from $3.4 million for the nine months ended September 30, 2024, to $1.5 million for the nine months ended September 30, 2025. The decrease is because there were changes in the composition of the team for the parent company and Tinbu subsidiary in 2025 and also expenses recorded in the nine months ended September 30, 2024 for shares of common stock and related payroll taxes granted to officers for retention and their contributions to the turnaround did not reoccur during the nine months ended September 30, 2025.

Professional Fees. Professional fees decreased by $891,000, or 19%, from $4.8 million for the nine months ended September 30, 2024 to $3.9 million for the nine months ended September 30, 2025. Although there were increases in expenses for outside attorneys during the three months ended September 30, 2025, Legal fees for the first half of 2025 were lower than in the first half of 2024 and expenses for shares of common stock granted to consultants in the first half of 2024 for retention and compensation related to the turnaround did not reoccur in 2025.

General and Administrative. General and administrative expenses decreased $237,000, or 7%, from $3.6 million for the nine months ended September 30, 2024 to $3.4 million for the nine months ended September 30, 2025. Primary drivers of the decrease were: travel expenses lower by $72,000, consulting for technology development lower by $80,000, and software expenses lower by $60,000 in the nine months ended September 30, 2025 than the nine months ended September 30, 2024.

Depreciation and Amortization. Depreciation and amortization decreased $543,000 or 14%, from $3.8 million for the nine months ended September 30, 2024 to $3.3 million for the nine months ended September 30, 2025. The decrease was primarily driven by write-offs to intangible assets related to Global Gaming in 2024 and because Tinbu intangibles became fully amortized in the summer of 2024 and there has been no amortization on them in the nine months ending September 30, 2025.

Other (Income) Expense, Net.

		For the nine months Ended
		September 30,
		2025				2024				$ Change				% Change
Other expenses
Interest (Income) expense			7,726				350,784				(343,058	)			-98	%
Other (Income) expense			(107,948	)			(11,747	)			(96,201	)			819	%
Loss on impairment of intangibles & goodwill			-				4,298,002				(4,298,002	)			-100	%
Total other expenses, net			(100,222	)			4,637,039				(4,737,261	)			-102	%

Interest Expense (Income). Interest expense for the nine months ended September 30, 2025 was $8,000 vs interest expense of $351,000 for the nine months ended September 30, 2024, a decrease of $344,000 or 98%. Interest accrual for convertible debt was lower for the nine months ended September 30, 2025 due to lower balances for convertible debt as a result of conversions to equity. Additionally, accruals for $227,000 were recorded in the nine months ended September 30, 2025 for accrued interest income on a note receivable.

Other (Income) Expense. Other income was $108,000 for the nine months ended September 30, 2025 vs. $12,000 for the nine months ended September 30, 2024, an increase of $96,000 or 819%.

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.

Liquidity and Capital Resources

Prior to the Operational Cessation, our primary need for liquidity was to fund working capital requirements of our business, growth, capital expenditures and for general corporate purposes. Our primary source of liquidity had historically been funds generated by financing activities. Upon the Closing of the business combination on October 29, 2021, we received net proceeds of approximately $42.8 million in cash.

Following the Operational Cessation, our primary need for liquidity has been to fund the restart of our business operations, re-hire employees and pay our expenses. The most likely source of such future funding presently available to us is through additional borrowings under loan agreements or through the issuance of equity or debt securities. If lenders do not advance us amounts as agreed under loan agreements or we are otherwise not able to secure the necessary capital to restart our operations, hire new employees, and obtain funding sufficient to support and restart our operations, we may be forced to permanently cease our operations, sell off our assets and operations, and/or seek bankruptcy protection, which could cause the value of our securities to become worthless.

These conditions, along with our current lack of material revenue producing activities, and significant debt, raise substantial doubt about our ability to continue as a going concern for the next 12 months. For more information, see Note 2 - Significant Accounting Policies, Going Concern to the consolidated financial statements included herein.

Cash Flows

Net cash used in operating activities was $6.4 million for the nine months ended September 30, 2025, compared to net cash provided by operating activities of $953,000 for the nine months ended September 30, 2024 which was an increase of $7,4 million year over year.

Net cash used in investing activities during the nine months ended September 30, 2025 was $2.1 million vs net cash used by investing activities of $885,000 for the nine months ended September 30, 2024, an increase of $1.2 million year over year, For both years, cash used in investing activities was related to acquisitions of subsidiaries and related intangible assets.

Net cash provided by financing activities was $8.8 million for the nine months ended September 30, 2025, compared to net cash used in financing activities of $32,000 for the nine months ended September 30, 2024. The increase was the result of funding received under the stock purchase agreement and convertible notes.

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 and the related notes thereto included elsewhere in this Report are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The preparation of financial statements requires management to make estimates and assumptions that affect the reporting values of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The more significant estimates and assumptions are those used in determining the recoverability of long-lived assets. Accordingly, actual results could differ from those estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flow will be affected.

Our critical accounting policies are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations- Critical Accounting Policies and Estimates" in the Annual Report and the notes to the audited financial statements appearing elsewhere in the Annual Report. During the nine months ended September 30, 2025, there were no material changes to our critical accounting policies from those discussed in our Amended 2024 Annual Report.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." This guidance requires recognition of most lease liabilities on the balance sheet to give investors, lenders, and other financial statement users a more comprehensive view of a company's long-term financial obligations, as well as the assets it owns versus leases. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2021, and for interim periods within annual periods after December 15, 2022. In July 2018, the FASB issued ASU 2018-11 making transition requirements less burdensome. The standard provides an option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in the Company's financial statements. The adoption of this standard did not have a material impact on our financial statements.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments", as additional guidance on the measurement of credit losses on financial instruments. The new guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. In addition, the guidance amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The new guidance is effective for all public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual periods beginning after December 15, 2018. In October 2019, the FASB approved a proposal which grants smaller reporting companies additional time to implement FASB standards on current expected credit losses (CECL) to January 2023. As a smaller reporting company, we deferred adoption of ASU No. 2016-13 until January 2023.