Company: LTRYW
Filing Date: 2025-05-21
Form Type: 10-Q
Source: 0001641172-25-011865
Chunk: 10

Company: Lottery.com Inc.
Filing Date: 2025-05-21
Form: 10-Q
Item: Part I, Item 1
Chunk 10
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 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 basis.

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” Stock Compensation

  F-11  

Income
Taxes

For
both financial accounting and tax reporting purposes, the Company reports income and expenses based on the accrual method of accounting.

For
federal and state income tax purposes, the Company reports income or loss from their investments in limited liability companies on the
consolidated income tax returns. As such, all taxable income and available tax credits are passed from the limited liability companies
to the individual members. It is the responsibility