Company: LTRYW
Filing Date: 2025-04-22
Form Type: 10-K/A
Source: 0001641172-25-005663
Chunk: 140

Company: Lottery.com Inc.
Filing Date: 2025-04-22
Form: 10-K/A
Chunk 140
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 audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. Communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not, by communicating the critical audit matters, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

| F-2 |

Accounting for Material Prepaid Advertising Credit

The Company recorded a material prepaid asset related to advertising credits received from third-party vendors in exchange for the Company’s issuance of shares approximately seven years ago. As of December 31, 2024, the prepaid asset remains substantially unutilized, with only 30% amortized through the income statement to date. The remaining balance continues to be carried as a prepaid asset.

Auditing this balance was especially challenging due to the nature of the transaction (a non-cash exchange), the long duration of inactivity, and the lack of direct confirmation from the third-party vendors. While the Company provided internal documentations, including historical agreements, email correspondences, and written representations from management, the audit team exercised significant judgment in evaluating the recoverability of the asset and whether sufficient appropriate audit evidence existed to support its continued recognition.

Our procedures included, among others:

We obtained and reviewed the original transactions documentation and correspondence between the parties,

| ■ | We                                                                                 
 evaluated the consistency of management’s position, reviewed legal representations 
 and opinions regarding enforceability.                                             |

| ■ | We                                                                                  
 considered whether the asset remained probable of being realized in future periods. |

| ■ | We                                                   
 proposed an allowance of 25% to the income statement |

| ■ | We                                                                                        
 reviewed the journal entry posting, recalculated the prepayment amortization schedule and 
 credit balance on the advertising agreements                                              |

| ■ | We                                                                                       
 also evaluated the adequacy of the Company’s disclosures related to this prepaid balance 
 in note 2                                                                                |

Intangible assets

As discussed in Note 3 to the financial statements, the company recognized Goodwill, Trade Name, Customers Relationship and Developed Technology assets related to the acquisition of a subsidiary S&MI Ltd, through a share purchase agreement, and became a wholly owned subsidiary of Lottery.com Inc. Determination of the cost of the intangible assets and goodwill, the method as well as the rate of the amortization requires the use of significant judgement and estimates. An independent third-party valuation firm was utilized and worked with management