Note 3 - Restatement of Previously Issued Financial Statements

Background

Sports Entertainment Gaming Global Corporation (“SEGG” or the “Company”), formerly known as Lottery.com Inc. (“Lottery”), and prior to its business combination with the special purpose acquisition company Trident Acquisition Corp. (“Trident”) in October 2021, known as AutoLotto, Inc. (“AutoLotto”), has identified two related historical, connected transactions from 2020 and 2021 (the “Legacy Transactions”) that predate the Company’s business combination and the tenure of its current executive management team and Board of Directors, which resulted in material errors in the financial statements for 2020, 2021 and 2022. The Legacy Transactions were planned and executed by Vadim Komissarov, Trident’s former Chief Executive Officer (“Komissarov”), with the assistance of Lawrence Anthony DiMatteo, Lottery’s co-founder and former Chief Executive Officer, Matthew Clemenson, Lottery’s co-founder and former Chief Revenue Officer, and Ryan Dickinson, Lottery’s former President and Chief Financial Officer (collectively, the “Lottery Former Executives”). On June 24, 2026, Komissarov was sentenced to three years in prison for, among other things, his involvement in the Legacy Transactions. Clemenson and Dickinson pleaded guilty on May 22, 2025, for, among other things, their involvement in the Legacy Transactions, and currently await sentencing. The internal inquiry concluded that none of the Company’s current officers or directors had any involvement in the Legacy Transactions, and no individual who participated in the Legacy Transactions is currently employed by or engaged with the Company in any capacity.

Between July 15, 2026 and August 7, 2026, the Company obtained sworn testimony given in depositions of Dickinson and of Datassure’s former Chief Executive Officer, Jeffery Sparrow, taken in a matter unrelated to the Legacy Transactions (the “Depositions”). Based on the testimony given in the Depositions, together with additional information obtained through a subsequent inquiry conducted by the Company’s current Chief Financial Officer and Chief Operating Officer (collectively, the “New Information”), the Company’s current management determined that, in December 2020, Komissarov instructed the Lottery Former Executives to record a $9,000,000 transaction with Datassure as revenue and cash, notwithstanding that AutoLotto was unable to possess, access, or transfer those funds, which were instead held in a restricted escrow account at Boston Law Group P.C., a Massachusetts law firm. The New Information indicates that the restricted funds held in escrow belonged to an acquaintance of Komissarov and that, pursuant to a series of escrow reports provided by Boston Law Group, AutoLotto purportedly received $9,000,000 for selling customer data to Datassure and then used that $9,000,000, together with other consideration, to fund AutoLotto’s acquisition of Global Gaming Enterprises, Inc. (“Global Gaming”) from Pan European Associates, S.R.O., a Czech company created by Komissarov (“Pan Euro”), thereby returning the $9,000,000 to its original source, an acquaintance of Komissarov’s. At Komissarov’s direction and with his participation, the Lottery Former Executives recorded the revenue and cash transaction in December 2020, recorded related revenue transactions in the first and second quarters of 2021, and overstated the price paid for the June 30, 2021 acquisition of Global Gaming as $10,572,674, creating supporting books and records that caused both transactions to appear bona fide.

Consequences of the Errors

As a result of the Legacy Transactions, the Company has determined that its previously issued financial statements contain the following errors: (i) an overstatement of revenue, deferred revenue and cash in the fourth quarter of 2020 arising from the improper recognition of the $9,000,000 Datassure transaction, notwithstanding that the underlying funds were never available to the Company; (ii) an overstatement of revenue recognized in the first and second quarters of 2021 arising from related transactions; and (iii) an overstatement of the purchase price recorded for the Company’s June 30, 2021 acquisition of Global Gaming, with resulting overstatements of goodwill and identifiable intangible assets recognized in that acquisition and of the amortization and impairment expense recognized on those assets in subsequent periods.

Restatement Determination and Affected Periods

In consultation with management and the Company’s independent registered public accounting firm, on October 5, 2026, the Company’s Audit Committee determined that:

The Company intends to restate the Affected Reports by amendment. It also intends to amend its filings for the Correction Periods, so that every previously filed report affected by the Legacy Transactions is refiled to reflect the corrections.

Effect of the Restatement and Correction on the Company’s Financial Statements

The Company expects the restatement of the Affected Reports to: decrease previously reported revenue, deferred revenue, and cash at December 31, 2020; decrease revenue reported for the quarters ended March 31, 2021 and June 30, 2021; increase accumulated deficit reported at December 31, 2020 and 2021; decrease goodwill, intangible assets, and total assets at December 31, 2021 and in all subsequent reporting periods; and decrease amortization expense associated with the Global Gaming intangible assets for all reporting periods after December 31, 2021. The Company expects these corrections to increase previously reported net loss for the years ended December 31, 2020 and December 31, 2021, with the most significant effects on the Company’s balance sheet and results of operations occurring in those two years.

For the Correction Periods, the Company expects to remove impairment expense associated with Global Gaming that was previously recorded but is no longer required due to the lower carrying values of the Global Gaming assets resulting from the correction. This is expected to decrease previously reported operating losses and result in lower accumulated deficit for each of the years and interim periods after December 31, 2021 through and including December 31, 2025.

Based on the Company’s evaluation, the errors underlying the Legacy Transactions relate to historical, accounting entries and are not expected to affect the Company’s cash position or liquidity for any period presented in this Report.

Quantitative Impact

The following table presents the estimated effect of the restatement and correction on the Company’s previously reported consolidated balance sheets and statements of operations for the periods indicated. The Company believes these amounts are final but cautions that if additional information is discovered or received, either from third parties or during completion of the Company’s restatement work and the related audit and review procedures, amounts presented could potentially change:

Schedule of Error Corrections and Previously Issued Financial Statements

Internal Control Considerations

The Company alleges that the Legacy Transactions (and original financial reporting thereof) were directly caused by intentional and unlawful acts committed by Komissarov, and reflected either a continuation of the material weaknesses in internal control over financial reporting previously disclosed by the Company or represented evidence of additional material weakness specific to the pre-and early post-business-combination period. Management and the Audit Committee will evaluate the efficacy of the Company’s internal controls to determine if additional improvements are recommended in light of the Legacy Transactions. As of the date of this Report, the Company has not reached any conclusions beyond the material weaknesses previously disclosed. See Part I, Item 4, Controls and Procedures.

Completion of Inquiry and Other Matters

The Company has completed its internal inquiry into the matters described in this Note. The amounts and comparisons described above reflect the results of that inquiry but could potentially change as the Company finalizes its restatement work and completes the related audit and interim review procedures. The disclosures in this Note, together with the Company’s Current Report on Form 8-K regarding these matters, are intended to constitute the full extent of the Company’s public disclosure regarding the Legacy Transactions as of the date of this Report. Except as may otherwise be required by applicable law, it should not be inferred that the Company intends to release additional findings beyond what is described in this Note, the amended financial statements for the Correction Periods, or the restated financial statements for the Affected Reports.

Beginning with this Report on Form 10-Q for the fiscal quarter ended March 31, 2026, and for all Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K filed thereafter, the Company presents its financial statements and other financial information as if all amended and restated financial statements for the Correction Periods and the Affected Reports had already been filed, including by presenting corrected historical and comparative financial information for prior periods, rather than presenting such prior periods on an as-previously-reported (and since-superseded) basis and separately filing the corresponding amended reports for the Correction Periods and the Affected Reports at a later date. The Company has yet to file the amended Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q reflecting the restatement and correction described in this Note.