Company: LTRYW
Filing Date: 2025-11-20
Form Type: 10-Q
Source: 0001493152-25-024384
Chunk: 16

Company: Lottery.com Inc.
Filing Date: 2025-11-20
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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 business. The Company estimates its bad debt exposure
each period and records a bad debt provision for accounts receivable it believes it may not collect in full. In the fall of 2024, the
Company completed a project whereby certain older items in accounts receivable for the TinBu subsidiary were offset against the allowance
for uncollectible receivables, resulting in a reduction in the number of individual items in accounts receivable which were aged greater
than 90 days and the total amount for them. At the completion of this project, the balance in the allowance for uncollectible receivables
was $22,016. At the end of 2024 the Company increased the allowance for uncollectible receivables by $10,984. At December 31, 2024 the
allowance for uncollectible receivables was $33,000 whereas, before the project described above, it was $94,270 at December 31, 2023.
The Company did not change its allowance for uncollectible receivables as of September 30, 2025. At September 30, 2025 the allowance
for uncollectible receivables remained $33,000. The Company has not incurred bad debt expense historically.

Prepaid
Expenses for Advertising Credits

Prepaid
expenses consist of payments made on contractual obligations for services to be consumed in future periods. The Company entered into
an agreement with two third parties to provide advertising services and issued equity instruments as compensation for the advertising
services (“Prepaid advertising credits”). The Company expenses the service as it is performed by the third parties. The value
of the services provided were used to value these contracts, except for the year ended December 31, 2021 the Company reserved for potential
inability to realize $2,000,000 of prepaid advertising credits in future periods. Similarly, for the period ending December 31, 2024,
the Company determined that approximately an additional $4,745,000 of prepaid advertising credits purchased during 2017 and 2018 may
not be able to be fully utilized. As a result, the Company decreased prepaid expenses by $4,745,000 and increased its reserve for loss
of prepaid advertising credits by $4,745,000 on December 31, 2024. Prepaid expenses are included in current assets on the consolidated
balance sheets. The Company has remaining prepaid expenses of $14,419,893 and $14,449,333 on