Company: LTRYW
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001641172-25-024882
Chunk: 17

Company: Lottery.com Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 17
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 maintenance of the underlying intellectual property. There is no variable
consideration related to these performance obligations.

Arrangements
with multiple performance obligations

The
Company’s contracts with customers may include multiple performance obligations. For such arrangements, management allocates revenue
to each performance obligation based on its relative standalone selling price. Management generally determines standalone selling prices
based on the prices charged to customers.

Deferred
Revenue

The
Company records deferred revenue when cash payments are received or due in advance of any performance, including amounts which are refundable.

Payment
terms vary by the type and location of the customer and the products or services offered. The period between invoicing and when payment
is due is not significant. For certain products or services and customer types, management requires payment before the products or services
are delivered to the customer.

Contract
Assets

Given
the nature of the Company’s services and contracts, it has no contract assets.

Taxes

Taxes
assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions, that are collected
by us from a customer, are excluded from revenue.

Cost
of Revenue

Lottery Specific Operations. Cost of revenue
consists primarily of variable costs, comprising (i) the cost of procurement of lottery games, minus winnings to users, additional expenses
related to the sale of lottery games, including, commissions, affiliate fees and revenue shares; and (ii) payment processing fees on user
fees, including chargebacks imposed on the Company. Other non-variable costs included in cost of revenue include affiliate marketing credits
acquired on a per-contract basis.

From Non-Lottery
Operations. Cost of revenue consists of (i) fixed direct costs and/or variable costs incurred for content or services provided by third
parties in connection with generating revenue; and (ii) payment processing fees on user fees, including chargebacks imposed on the Company.
Other variable costs include underlying costs of tickets for events and sweepstakes prizes.

Stock-based
Compensation

Effective
October 1, 2019, the Company adopted ASU 2018-07, Compensation - “Stock Compensation (Topic 718): Improvements to Nonemployee
Share-based Payment Accounting” (“ASC 718”), which addresses aspects of the accounting for nonemployee share-based
payment transactions and accounts for share-based awards to employees in accordance with ASC 718, Stock Compensation. Under this
guidance, stock compensation expense is measured at the grant date, based on the fair value of