What the changes say
- Financial distress is prominent: losses, negative cash flow, going-concern uncertainty and dependence on additional financing dominate the new risks.
- SEGG is shifting from lottery operations toward sports, entertainment, gaming, acquisitions and monetization of premium digital assets.
- New risks emphasize regulatory exposure, Nasdaq compliance, internal-control weaknesses, litigation and execution challenges, while several lottery-platform risks were dropped.
What changed since the prior 10-K
New
- NewRisks Relating to Prior Management, Our Internal Controls and Related Matters
We have incurred significant losses and require additional capital; substantial doubt exists regarding our ability to continue as a going concern
Ongoing losses and negative cash flow create substantial doubt about SEGG’s ability to continue without new capital and sustainable revenue.
- NewRisks Relating to Prior Management, Our Internal Controls and Related Matters
If we are unable to obtain adequate financing or generate sufficient cash flow, we may be required to delay, scale back or discontinue operations, restructure obligations, sell assets, or seek protection under applicable bankruptcy laws
Insufficient financing or cash flow could force SEGG to shrink operations, sell assets, restructure obligations or seek bankruptcy protection.
- NewBusiness, Market & Economic Risks
Our strategic repositioning from a lottery-focused business to a diversified sports, entertainment and gaming media platform involves substantial execution risk
The shift from a lottery-focused business to a diversified sports, entertainment and gaming platform may fail through weak execution.
- NewBusiness, Market & Economic Risks
Our acquisition strategy exposes us to integration, valuation and impairment risk
Acquisitions could be overvalued, difficult to integrate, dilutive or impaired if acquired businesses fail to meet expectations.
- NewBusiness, Market & Economic Risks
Our business depends significantly on premium domain assets and digital traffic, and our ability to monetize such assets is uncertain
Premium domains and digital brands may lose value if traffic, search rankings, consumer behavior or monetization do not develop as expected.
- NewBusiness, Market & Economic Risks
Our forecasts, projections and internal plans are subject to significant uncertainty and may differ materially from actual results
Forecasts may miss actual results, leaving SEGG with unsuccessful investments and exposure to intense competition across entertainment and gaming.
- NewBusiness, Market & Economic Risks
In addition, growth in the mobile and online gaming industry and the level of demand for and market acceptance of our product offerings is subject to a high degree of uncertainty. We cannot ensure that users will use our products or that the industry will achieve more widespread acceptance
Users may abandon mobile and online gaming offerings if required verification, location checks, terms or customer support worsen their experience.
- NewRegulatory and Compliance Risks
We operate in highly regulated industries, and changes in law or regulation could restrict our operations and increase compliance costs
Changing gaming, lottery, advertising, privacy and payment regulations could restrict operations, increase costs or require licenses and shutdowns.
- NewRegulatory and Compliance Risks
Adverse interpretations of federal statutes and related enforcement priorities could materially impair our business
Adverse interpretations or enforcement of federal gaming laws, including the Wire Act, could materially restrict SEGG’s operations.
- NewRegulatory and Compliance Risks
We are involved in, and may become involved in, litigation, investigations or other legacy matters that may be costly and could adversely affect our liquidity and operations
Litigation, investigations, licensing issues involving executives or employees, and legacy matters could impose costs, penalties, management distraction or personnel removals.
- NewLegal Proceedings Risks
We have identified material weaknesses in internal control over financial reporting; our remediation efforts may not be successful
Unremediated financial-reporting weaknesses could cause inaccurate filings, restatements, delayed reports, regulatory scrutiny and loss of investor confidence.
- NewLegal Proceedings Risks
The requirements of being a public company strain our limited resources, and our compliance costs may be higher than expected
Public-company reporting, Nasdaq, Sarbanes-Oxley and other compliance obligations strain resources and may become more costly after emerging-growth-company status ends.
- NewRisks Related to Our Common Stock and Warrants
Our securities may be subject to short squeezes and other market dislocations, which could result in extreme volatility and losses for investors
- NewRisks Related to Our Loan Agreements and Loan Agreement Warrants
Our ability to fund operations depends in part on third-party financing sources that may not be available when needed
- NewRisks Related to Our Loan Agreements and Loan Agreement Warrants
Our debt agreements contain covenants that may restrict operations and financing flexibility
- NewRisks Related to Our Loan Agreements and Loan Agreement Warrants
Our obligations may be secured by substantially all of our assets; enforcement could materially harm the Company
- NewRisks Related to Our Loan Agreements and Loan Agreement Warrants
Certain financing arrangements include conversion features and warrants that, if exercised or converted, would result in the issuance of a significant number of shares of our common stock. Such issuances would dilute existing stockholders and could depress the market price of our common stock
- NewRisks Related to Our Loan Agreements and Loan Agreement Warrants
We may not have sufficient funds to repay indebtedness, and our indebtedness increases financial risk
- NewRisks Related to Our Loan Agreements and Loan Agreement Warrants
We will likely require additional financing, which may be highly dilutive and may adversely affect our stock price
Dropped
- DroppedBusiness, Market & Economic Risks
Competition in the sports media market could impair our ability to generate revenue from Sports.com
- DroppedBusiness, Market & Economic Risks
Consumer trends in paying for streaming content may have an adverse impact on the Sports.com subscription service
- DroppedGeneral Operational Risks
Any failure to offer high-quality user support may harm our relationships with users and could adversely affect our reputation, brand, business, financial condition, and results of operations
- DroppedGeneral Operational Risks
Our business could be adversely impacted by changes in the Internet and mobile device accessibility of users
- DroppedGeneral Operational Risks
We operate in a rapidly evolving industry and if we fail to successfully develop, market, or sell new products or adopt new technology platforms, it could materially adversely affect our business, results of operations, and financial condition
- DroppedGeneral Operational Risks
We may not timely and effectively scale and adapt our technology and network infrastructure to ensure that our Platform is accessible, which would adversely affect our business, reputation, financial condition, and results of operations
- DroppedGeneral Operational Risks
Our Platform may be vulnerable to risks, both foreseen and unforeseen, arising from our application of distributed ledger technology
- DroppedRegulatory and Compliance Risks
If the Interstate Wagering Amendment is interpreted or applied to prohibit transmissions to foreign countries, it could have a negative impact on our business, financial condition, and results of operations
Competition from Apple, Netflix, Warner Bros. Discovery and Amazon for sports content and streaming rights.
- DroppedHuman Capital Risks
If we do not succeed in attracting, hiring, and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively and our business, financial condition and results of operations could be seriously harmed
Consumer streaming choices and cancellations could reduce demand for Sports.com subscriptions.
- DroppedHuman Capital Risks
Illegal, improper, or otherwise inappropriate activity of our couriers, whether or not occurring while performing their duties for us, could expose us to liability and adversely affect our business, reputation, brand, financial condition, and results of operations
- DroppedRisks Relating to our Dependence on Third Parties
We rely on third-party providers for validation services regarding our users, and if such providers fail to perform adequately, provide inaccurate information, or we do not maintain business relationships with them, our business, financial condition, and results of operations could be adversely affected
- DroppedRisks Relating to our Dependence on Third Parties
We rely on third-party payment processors to process payments and withdrawals made by our users, and if we cannot manage our relationships with such third parties and other payment-related risks, our business, financial condition, and results of operations could be adversely affected
- DroppedLegal Proceedings Risks
Public Company Operating Risks
- DroppedLegal Proceedings Risks
The requirements of being a public company may strain our resources and divert management’s attention, and the increases in legal, accounting and compliance expenses may be greater than we anticipate
- DroppedRisks Related to Our Common Stock and Warrants
Furthermore, the requirement that we maintain a majority of independent directors and at least three members on our audit committee are Nasdaq requirements that we currently meet but have not met from time to time
- DroppedRisks Related to Our Loan Agreements and Loan Agreement Warrants
Pursuant to the Woodford Amended and Restated Loan Agreement, Woodford agreed to fund up to $52.5 million, subject to certain conditions and requirements, of which, per our books and records, $798,351 was received by us through December 31, 2024
- DroppedRisks Related to Our Loan Agreements and Loan Agreement Warrants
We are subject to certain covenants while amounts are outstanding under the loan agreements which may restrict our ability to undertake future activities, including issuing additional shares of common stock
- DroppedRisks Related to Our Loan Agreements and Loan Agreement Warrants
Our obligations under the loan agreements are secured by a first priority security interest in substantially all of our assets and if we were to default, they could force us to curtail or abandon our business plans and operations
- DroppedRisks Related to Our Loan Agreements and Loan Agreement Warrants
The issuance and sale of common stock upon conversion of the amounts owed or upon exercise of the warrants issued to either Woodford or UCIL under each’s loan agreement may depress the market price of our common stock and cause substantial dilution
Inadequate customer support could damage user relationships, reputation and operating results.
- DroppedRisks Related to Our Loan Agreements and Loan Agreement Warrants
Additionally, the issuance of common stock upon conversion of the amounts owed under either loan agreement or the exercise of warrants will result in immediate and substantial dilution to the interests of other stockholders
- DroppedRisks Related to Our Loan Agreements and Loan Agreement Warrants
We currently owe a significant amount of money under our Loan Agreements which we may not be able to repay
Limited internet or mobile access and actions by powerful access providers could restrict users’ ability to reach offerings.
Reworded
- 100% rewrittenRisks Related to Our Common Stock and Warrants
Our common stock and warrants trade on The Nasdaq Global Market under the symbols “SEGG” and “LTRYW,” respectively. Our failure to remain in full compliance with these requirements may result in our securities being delisted from Nasdaq
The risk now focuses on the consequences of Nasdaq delisting—reduced trading liquidity, lower prices, impaired fundraising, contractual defaults and added blue-sky costs—rather than specific past bid-price and MVPHS deficiencies.
Was: Our common stock and warrants trade on The Nasdaq Global Market under the symbols “LTRY” and “LTRYW,” respectively. Our failure to remain in full compliance with these requirements may result in our securities being delisted from Nasdaq
- 99% rewrittenRisks Related to Our Common Stock and Warrants
The market price of our common stock and warrants could be highly volatile, and you may lose some or all of your investment
The discussion replaces a detailed list of volatility triggers with operating performance, liquidity, financing, regulation, litigation, acquisitions, micro-cap dynamics and potential securities class actions.
- 75% rewrittenRisks Relating to Prior Management, Our Internal Controls and Related Matters
We have been named as a defendant in a number of lawsuits filed by purchasers of our securities, including class action lawsuits that could have a material adverse impact on our business, financial condition, results of operation and cash flows, and our reputation
No substantive change; the risk continues to cover securities lawsuits, restatement-related litigation, investigations and potential claims against the company and officers.
- 71% rewrittenGeneral Operational Risks
Our results of operations may fluctuate due to seasonality and other factors and, therefore, our periodic operating results will not be guarantees of future performance
The risk now covers seasonality in sports and concerts as well as lottery games and adds potential negative effects on cash flow.
- 62% rewrittenBusiness, Market & Economic Risks
Our future growth will depend largely on our ability to attract players and retain users, and the loss of our users, failure to attract new users in a cost-effective manner, or failure to effectively manage our growth could adversely affect our business, financial condition, and results of operations
The wording changes “players” to “customers,” while retaining the risk that costly acquisition and retention efforts may not produce profitable growth.
- 26% rewrittenRisks Related to Our Loan Agreements and Loan Agreement Warrants
Our insurance coverage is not adequate to cover all possible losses that we could suffer, and our insurance costs may increase
The specific warning about lacking directors’ and officers’ liability insurance was removed; the broader risk of inadequate or expensive coverage remains.
- 21% rewrittenRisks Relating to Prior Management, Our Internal Controls and Related Matters
As a consequence, on May 10, 2023 and May 15, 2023 respectively, the Company filed with the SEC as amended reports the required restatements of its year-end report for December 31, 2021 and for the quarter ended March 31, 2022
No substantive change; the risk continues to cover legal proceedings, restatement costs, investigations and indemnification obligations.
All 60 risk factors
Headings as the filing states them, in filing order.
Risks Relating to Prior Management, Our Internal Controls and Related Matters
- 01The findings of the previously disclosed Internal Investigation and other matters have exposed us to a number of legal proceedings, investigations and inquiries, resulted in significant legal and other expenses, required significant time and attention from our senior management, among other adverse impacts
- 02As a consequence, on May 10, 2023 and May 15, 2023 respectively, the Company filed with the SEC as amended reports the required restatements of its year-end report for December 31, 2021 and for the quarter ended March 31, 202221% rewritten
- 03We cannot predict all impacts on the Company in connection with or arising from any of the foregoing. Any unknown or new risks might result in a material adverse effect on us
- 04We have been named as a defendant in a number of lawsuits filed by purchasers of our securities, including class action lawsuits that could have a material adverse impact on our business, financial condition, results of operation and cash flows, and our reputation75% rewritten
- 05We have incurred significant losses and require additional capital; substantial doubt exists regarding our ability to continue as a going concernNew
- 06If we are unable to obtain adequate financing or generate sufficient cash flow, we may be required to delay, scale back or discontinue operations, restructure obligations, sell assets, or seek protection under applicable bankruptcy lawsNew
- 07As a result of the material weaknesses, management has concluded that our internal control over financial reporting remained ineffective as of December 31, 2025
- 08The circumstances that led to the failure to file our annual report and quarterly reports on time, and our efforts to investigate, assess and remediate those matters have caused and may continue to cause substantial delays in our SEC filings
Business, Market & Economic Risks
- 09Our strategic repositioning from a lottery-focused business to a diversified sports, entertainment and gaming media platform involves substantial execution riskNew
- 10Our acquisition strategy exposes us to integration, valuation and impairment riskNew
- 11Our business depends significantly on premium domain assets and digital traffic, and our ability to monetize such assets is uncertainNew
- 12Our forecasts, projections and internal plans are subject to significant uncertainty and may differ materially from actual resultsNew
- 13Economic downturns, inflation, and political and market conditions beyond our control could adversely affect our business, financial condition, and results of operations
- 14Reductions in discretionary consumer spending could have an adverse effect on our business, financial condition, and results of operations
- 15Our future growth will depend largely on our ability to attract players and retain users, and the loss of our users, failure to attract new users in a cost-effective manner, or failure to effectively manage our growth could adversely affect our business, financial condition, and results of operations62% rewritten
- 16In addition, growth in the mobile and online gaming industry and the level of demand for and market acceptance of our product offerings is subject to a high degree of uncertainty. We cannot ensure that users will use our products or that the industry will achieve more widespread acceptanceNew
- 17We may be unable to continue to use the domain names that we use in our business or prevent third parties from acquiring and using domain names that infringe on, or are similar to, or otherwise decrease the value of our brand, trademarks, or service marks
- 18We are subject to risks related to corporate social responsibility, responsible gaming, reputation, and ethical conduct
General Operational Risks
- 19We have incurred net losses in the past with negative cash flows and suspended operations and may not be able to generate and sustain profitability
- 20Our results of operations may fluctuate due to seasonality and other factors and, therefore, our periodic operating results will not be guarantees of future performance71% rewritten
- 21We may not be able to capitalize on trends and changes in the gaming and lottery industries, including due to the operational costs involved, the laws and regulations governing these industries in various jurisdictions, and other factors
- 22Our business depends on a strong brand, and if we are not able to develop, maintain and enhance our brand and reputation, including as a result of negative publicity, our business and operating results may be harmed
- 23Our marketing efforts to help grow our business may not be effective
- 24Information Technology Risks
Regulatory and Compliance Risks
- 25We operate in highly regulated industries, and changes in law or regulation could restrict our operations and increase compliance costsNew
- 26Adverse interpretations of federal statutes and related enforcement priorities could materially impair our businessNew
- 27We are involved in, and may become involved in, litigation, investigations or other legacy matters that may be costly and could adversely affect our liquidity and operationsNew
- 28We cannot ensure that our activities will remain in compliance or that we will continue to receive all licenses for which we apply. The failure to receive a license, could have a material adverse effect on us or on our business, financial condition, or results of operations
- 29As a digital company operating within the U.S. and subject to the jurisdiction of various foreign governments and regulatory agencies, we are accordingly subject to domestic and foreign laws regarding anti-bribery, anti-corruption, economic and trade sanctions, anti-money laundering, and counter-terror financing
- 30We are subject to domestic and foreign laws relating to processing certain financial transactions, including payment card transactions, and failure to comply with those laws, even if inadvertent, could have a material adverse effect on our business, financial condition, and results of operations
Risks Relating to our Dependence on Third Parties
- 31Our technology contains third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to provide our offerings
- 32If we cannot license rights to use third-party technologies on reasonable terms, we may not be able to commercialize new products or services in the future
Risks Relating to Future Growth
- 33Our strategy anticipates substantial growth, and if we fail to adequately scale product offerings and manage our entry into new territories, our business and reputation may be harmed
- 34We may face difficulties as we expand our operations into new markets in which we have limited or no prior operating experience
International Operations Risks
- 35The international scope of our operations may expose us to increased legal and regulatory risks, and our international operations and corporate and financing structure may expose us to potentially adverse tax consequences
- 36Fluctuating foreign currency and exchange rates may negatively impact our business, results of operations, and financial position
- 37If we are unable to protect our intellectual property and proprietary rights or prevent its unauthorized use by third parties, our ability to compete in the market or our business, financial condition, and results of operations may be harmed
Legal Proceedings Risks
- 38We may not recover amounts owed to us from J. Streicher Financial, LLC
- 39We have identified material weaknesses in internal control over financial reporting; our remediation efforts may not be successfulNew
- 40The requirements of being a public company strain our limited resources, and our compliance costs may be higher than expectedNew
Risks Relating to Our Charter Documents and Delaware Law
- 41Our Charter includes certain redemption rights which may negatively affect the value our common stock and other securities or result in the redemption of shares of common stock or other securities held by certain holders
- 42A court may find that part or all of the provisions included in our Charter pertaining to the redemption right with respect to capital stock held by any stockholders who are deemed to be “disqualified” or “unsuitable” holders is not enforceable, either in general or as to a particular fact situation
- 43Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us
- 44The exclusive forum provision in our Charter may have the effect of discouraging lawsuits against our directors and officers
- 45Anti-takeover provisions contained in our Charter and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt
Risks Related to Our Common Stock and Warrants
- 46We are not currently in full compliance with the continued listing standards of Nasdaq and we may not be able to regain full compliance with Nasdaq’s continued listing standards in the future
- 47Our common stock and warrants trade on The Nasdaq Global Market under the symbols “SEGG” and “LTRYW,” respectively. Our failure to remain in full compliance with these requirements may result in our securities being delisted from Nasdaq100% rewritten
- 48An active trading market for our common stock and warrants may never develop or be sustained, which may make it difficult to sell the shares of common stock and warrants
- 49The market price of our common stock and warrants could be highly volatile, and you may lose some or all of your investment99% rewritten
- 50Our securities may be subject to short squeezes and other market dislocations, which could result in extreme volatility and losses for investorsNew
- 51If securities or industry analysts do not publish research or reports about the Company, or publish negative reports, the Company’s stock price and trading volume could decline
- 52Because the Company does not anticipate paying any cash dividends in the foreseeable future, capital appreciation, if any, would be your sole source of gain
Risks Related to Our Loan Agreements and Loan Agreement Warrants
- 53Our ability to fund operations depends in part on third-party financing sources that may not be available when neededNew
- 54Our debt agreements contain covenants that may restrict operations and financing flexibilityNew
- 55Our obligations may be secured by substantially all of our assets; enforcement could materially harm the CompanyNew
- 56Certain financing arrangements include conversion features and warrants that, if exercised or converted, would result in the issuance of a significant number of shares of our common stock. Such issuances would dilute existing stockholders and could depress the market price of our common stockNew
- 57We may not have sufficient funds to repay indebtedness, and our indebtedness increases financial riskNew
- 58We will likely require additional financing, which may be highly dilutive and may adversely affect our stock priceNew
- 59Our insurance coverage is not adequate to cover all possible losses that we could suffer, and our insurance costs may increase26% rewritten
- 60Our cash and cash equivalents may be exposed to failure of our banking institutions
Other Sports Entertainment Gaming Global 10-Ks
- FY2024 10-K risk factors62 risks
SEGG suspended U.S. operations following an internal investigation revealing compliance failures in ticket procurement, order fulfillment, and financial controls.
Filed Apr 21, 2025
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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.