Company: LTRYW
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001641172-25-024882
Chunk: 41

Company: Lottery.com Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 41
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 to file federal and state income tax returns in the United States. The preparation of these tax returns requires us to interpret
the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by us. In consultation
with our tax advisors, we base our tax returns on interpretations that are believed to be reasonable under the circumstances. The tax
returns, however, are subject to routine reviews by the various federal and state taxing authorities in the jurisdictions in which we
file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by us (“uncertain
tax positions”) and, therefore, may require us to pay additional taxes. As required under applicable accounting rules, we accrue
an amount for our estimate of additional income tax liability, including interest and penalties, which we could incur as a result of
the ultimate or effective resolution of the uncertain tax positions. We account for income taxes using the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary
to reduce deferred tax assets to amounts expected to be realized.

Note
13. Commitments and Contingencies

Indemnification
Agreements

The
Company enters into indemnification provisions under its agreements with other entities in its ordinary course of business, typically
with business partners, customers, landlords, lenders and lessors. Under these provisions, the Company generally indemnifies and holds
harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities
or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future
payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material
costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated
fair value of these agreements is minimal. Accordingly, the Company has