Company: LTRYW
Filing Date: 2025-04-21
Form Type: 10-K
Source: 0001641172-25-005487
Chunk: 124

Company: Lottery.com Inc.
Filing Date: 2025-04-21
Form: 10-K
Item: Item 8
Chunk 124
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 of income taxes as a component of income tax expense or benefit.
To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Generally,
the taxing authorities can audit the previous three years of tax returns and in certain situations audit additional years. For federal
tax purposes, the Company’s 2020 through 2023 tax years generally remain open for examination by the tax authorities under the
normal three-year statute of limitations. For state tax purposes, the Company’s 2019 through 2023 tax years remain open for examination
by the tax authorities under the normal four-year statute of limitations.

Fair
Value of Financial Instruments

The
Company determines the fair value of its financial instruments in accordance with the provisions of ASC 820, Fair Value Measurements
and Disclosures,

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Determination
of fair value and the resulting hierarchy requires the use of observable market data whenever available.

  F-15  

The
classification of an asset or liability in the hierarchy is based upon the lowest level of input that is significant to the measurement
of fair value.

Fair
value of stock options and warrants

Management
uses the Black-Scholes option-pricing model to calculate the fair value of stock options and warrants. Use of this method requires management
to make assumptions and estimates about the expected life of options and warrants, anticipated forfeitures, the risk-free rate, and the
volatility of the Company’s share price. In making these assumptions and estimates, management relies on historical market data.

Recent
Accounting Pronouncements

In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires
disclosures of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among
other disclosure requirements. ASU 2023-09 is effective for the fiscal year beginning after December 15, 2024. Early adoption is permitted.
The Company is currently evaluating the impact of the new standard.

In
November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures,” to enhance disclosures for significant segment expenses for all public entities required to report segment
information in accordance with ASC 280. The standard did not change the definition of a