Lottery.com board members resign over “dysfunctional environment” as mystery firm pledges $2.5m rescue loan
Just one member of Lottery.com’s board of directors remains after the business agreed a deal to receive a $2.5m convertible loan in exchange for the resignation of all other board members.
On 6 September, the ailing Lottery.com entered into a term sheet with Woodford Eurasia Assets Ltd, which provided for a $2.5m convertible loan to be funded within five working days, contingent upon the fulfilment of conditions including the resignation of four of the firm’s five directors.
The term sheet also required the appointment of two new board members – to be selected by Woodford – and of a new interim CEO.
The deal also “contemplates” a further $50m in expansion capital via an additional convertible loan or other investment instrument, subject to an agreement between the parties on terms and other customary conditions.
Under the new terms, only Richard Kivel – a venture capitalist and managing director of European venture fund GreyBella Capital – remains on the board, where he now presides as chairman.
Woodford will now appoint two new directors to the board, which will subsequently appoint a new interim CEO and chair of the audit committee.
As a result of the board’s overhaul, Lottery.com is not currently in compliance with Nasdaq listing rules which require a majority of the board to be composed of independent directors, and stipulate that its audit committee must consist of at least three independent directors.
The directors who have resigned from the board are Steven Cohen (former co-chair), Lisa Borders, William Thompson and former CEO Tony DiMatteo.
Former Lottery.com directors Lisa Borders & William Thompson: “My eﬀorts to perform as a fiduciary in evaluating opportunities for the company’s return to normal operation have been consistently obstructed by opaque and contrived processes, singular relationships, and a dysfunctional board environment.”
In addition to those resignations, chief legal and operating officer Kathryn Lever tendered her resignation on 5 September.
In letters of resignation submitted to the SEC, outgoing board members explained that after having received the financing proposal from Woodford, questions raised around lender suitability and source of funds were dismissed by the desperate business.
After requesting additional time to review and research the proposed lender, both Borders and Thompson were absent from a board meeting held on the matter, which they insisted was in contravention of the requirements of corporate by-laws.
At the meeting, adjustments to the original proposal put forward by Woodford were agreed and subsequently voted upon with a view to securing a favourable deal for the business.
As a result of Borders’ and Thompson’s absence in the meeting, however, Cohen said in his resignation letter that he abstained from the vote, meaning that only former CEO DiMatteo and current chairman Kivel could have voted in favour of the proposal.
The published resignation letters paint a bleak picture of the situation inside Lottery.com.
Both Thompson and Borders commented separately that: “My eﬀorts to perform as a fiduciary in evaluating opportunities for the company’s return to normal operation have been consistently obstructed by opaque and contrived processes, singular relationships, and a dysfunctional board environment.”
Former Lottery.com co-chair Steven Cohen: “This is only the most recent example of a breakdown in the ability of members of this board to function as a group and only the most recent example of certain directors’ being unwilling to deliberate and confer in an open and reasoned manner.”
In his resignation letter, Cohen referred to the previously mentioned meeting as “needlessly rancorous”, and expressed concern about “the acrimony surrounding efforts to hold a meaningful discussion.”
Damningly, he added: “This is only the most recent example of a breakdown in the ability of members of this board to function as a group and only the most recent example of certain directors’ being unwilling to deliberate and confer in an open and reasoned manner.
“Such a breakdown and such an unwillingness to seek consensus in a thoughtful manner does not serve the interests of the shareholders,” Cohen concluded.
Little is known about Woodford Eurasia Assets Ltd.
A company under that name is listed on Companies House in the UK, which describes its nature of business as “support activities for petroleum and natural gas extraction,” as well as involvement in the sale of fuels, ores and metals, activities of construction holding companies and activities of financial services holding companies.
The business is registered at 10 Foster Lane in London, where more than 100 separate businesses – many with net assets in the millions of pounds – have an address.
At present, Woodford lists just one director, Italian national Alex Smotlak, who has a total of 24 appointments listed with Companies House.
A list of former directors of the business includes Paul Mills, managing partner of banking and financial service provider BPA London, and Philip John Clancy, who is also listed as a director of APR Oilfield Services and Geoprep Limited.
Those directors resigned from Woodford in 2016 and 2017, respectively.
The only other former director listed for Woodford is Russian national Sergei Muravev, who resigned from the role on 31 March 2022. No other appointments are listed for Muravev on Companies House.