Company: LTRYW
Filing Date: 2025-11-20
Form Type: 10-Q
Source: 0001493152-25-024384
Chunk: 307

Company: Lottery.com Inc.
Filing Date: 2025-11-20
Form: 10-Q
Item: Part I, Item 2
Chunk 307
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 and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosures.

 16 

Material
Weakness in Internal Control Over Financial Reporting

In
connection with the audit of our condensed consolidated financial statements included in this Report, our management identified material
weaknesses in our internal control over financial reporting as of December 31, 2024 and 2023 relating to deficiencies in the design and
operation of the procedures relating to the closing of our financial statements. These include: (i) our lack of a sufficient number of
personnel with an appropriate level of knowledge and experience in accounting for complex or non-routine transactions, (ii) the fact
that our policies and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions were
either not designed and in place or not operating effectively; (iii) our inability to complete the timely closing of financial books
at the quarter and fiscal year end, and (iv) incomplete segregation of duties in certain types of transactions and processes.

Specifically,
management did not design and maintain sufficient procedures and controls related to revenue recognition including those related to ensuring
accuracy of revenue recognized from non-routine transactions such as the sales of LotteryLink Credits. As a result, we determined that
there was an overstatement of revenue in the consolidated statement of operations of approximately $52.1 million during the year ended
December 31, 2021, which required a restatement of the previously issued financial statements for the year ended December 31, 2021 contained
in the Amended 2021 Annual Report.

We
have begun implementing remediation steps to improve our internal control over financial reporting and to remediate the identified material
weaknesses, including (i) adding personnel with sufficient accounting knowledge; (ii) adopting a more rigorous period-end review process
for financial reporting; (iii) adopting improved period close processes and accounting processes, and (iv) clearly defining and documenting
the segregation of duties for certain transactions and processes. Management has expanded and will continue to enhance our system of
identifying transactions and evaluating and implementing the accounting standards that apply to our financial statements, including through
enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. We intend
to continue take steps to remediate the material weaknesses described above and further continue re-assessing the design of controls,
the testing of controls and modifying processes designed to improve