Company: LTRYW
Filing Date: 2025-10-15
Form Type: 10-Q/A
Source: 0001493152-25-018121
Chunk: 18

Company: Lottery.com Inc.
Filing Date: 2025-10-15
Form: 10-Q/A
Chunk 18
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 point of redemption. The Company also retains inventory
risk on all lottery game sales tickets as they would be responsible for any potential winnings related to lost or unredeemable tickets
at the time of redemption. Finally, while states have the authority to establish lottery game sales prices, the Company can add service
fees to ticket prices evidencing its ability to establish the ultimate price of the lottery tickets being sold.

| F-10 |

Other associated revenue

The Company’s performance obligations
in agreements with certain customers are to provide a license of intellectual property related to the use of the Company’s tradename
for marketing purposes by partners of the Company. Customers pay a license fee up front. The transaction price is deemed to be the license
issue fee stated in the contract. The license offered by the Company represents a symbolic license which provides the customer with the
right to use the Company’s intellectual property on an ongoing basis with continued support throughout the term of the contract
in the form of ongoing 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

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