According to the lawsuit, throughout the Class Period, Defendants made materially false or misleading statements and/or failed to disclose material information. A series of disclosures beginning on July 6, 2022 revealed that Lottery.com and its senior management failed to disclosure that, inter alia: (i) the Company lacked adequate internal accounting controls; (ii) the Company lacked adequate internal controls over financial reporting, including but not limited to those pertaining to revenue recognition and the reporting of cash; (iii) the Company was not in compliance with state and federal laws governing the sale of lottery tickets; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times.

Finally, on July 29, 2022, in a Form 8-K filed with the SEC, Defendants informed the market that it did not have “sufficient financial resources to fund its operations or pay certain existing obligations,” and that it therefore intended to furlough certain employees effective July 29, 2022. Moreover, because Lottery.com’s resources were not sufficient to fund its operations for a twelve-month period, “there is substantial doubt about the Company’s ability to continue as a going concern,” and the Company may be forced to wind down its operations or pursue liquidation of the Company’s assets.

In reaction to this news, shares of Lottery.com lost 64% of their value in a single trading day, falling $0.52 per share, from a closing price of $0.81 per share on July 28, 2022 to a close of $0.29 per share on July 29, 2022.