Company: LTRYW
Filing Date: 2025-04-09
Form Type: 10-K/A
Source: 0001641172-25-003412
Chunk: 137

Company: Lottery.com Inc.
Filing Date: 2025-04-09
Form: 10-K/A
Chunk 137
---
the Company recognizes revenue from the sale of product, which consist primarily of sales of lottery tickets and delivery of lottery games
to the users of the B2C platforms or the commercial partners of the B2B. At contract inception, the Company assesses the goods and services
promised in the contract with customers and identifies a performance obligation for each contract with customers, in accordance with ASC
606, Revenue from Contracts with Customers.

To determine the performance obligation, the Company
considers all products promised in the contract. Revenue is recognized at the point of delivery of the lottery ticket(s) to customers.

The primary procedures we performed to address this critical audit matter included:

| ● | We reviewed the underlying agreements and contracts and assessed the terms to determine if the performance obligation was met and for the correct amount. |
| ● | We recalculated the mathematical accuracy of the revenue.                                                                                                 |
| ● | We tested the contract costs to ensure they are being properly recorded.                                                                                  |
| ● | We recalculated the margins on contracts to ensure they are consistent over the entire term of the contract and its related performance obligation.       |

Going Concern Uncertainty

As described in Note 2 to
the financial statements, the Company has stockholder’s deficit, net losses, and negative working capital. These factors raise substantial
doubt about the Company’s ability to continue as a going concern. The Company has experienced recurring net losses and negative
cash flows from operations and has an accumulated deficit of approximately $235 million and working capital of approximately negative
$7.4 million at December 31, 2023.

For the year ending December
31, 2023, the Company sustained a net loss of $25.5 million. The Company sustained a loss from operations of $25.1 million and $55.1 million
for the years ending December 31, 2023 and 2022, respectively. These conditions raise substantial doubt about the Company’s ability
to continue as a going concern

The Company has historically funded its activities
almost exclusively from income generated from sales and debt and equity financing. Management’s plans to meet its operating cash
flow requirements include financing activities such as private placements of its common stock, preferred stock offerings, and issuances
of debt and convertible debt.

Although Management believes that it will be able
to continue to raise funds by sale of its securities to provide the additional cash needed to meet the Company’s obligations.

The Company’s ability to continue as a going
concern for the next