Company: LTRYW
Filing Date: 2025-04-21
Form Type: 10-K
Source: 0001641172-25-005487
Chunk: 123

Company: Lottery.com Inc.
Filing Date: 2025-04-21
Form: 10-K
Item: Item 8
Chunk 123
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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

Advertising
Costs

Advertising
costs are charged to operations when incurred. Advertising costs for the years ended December 31, 2024 and 2023 were approximately $104,000and $377,000

  F-14  

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 of the individual members to report the taxable income and tax credits, and to pay
any resulting income taxes. Therefore, the income and losses incurred by the limited liability companies have been consolidated in the
Company’s tax return and provision based upon its relative ownership.

Income
taxes are accounted for in accordance with ASC 740, “ Income Taxes

The
Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (i) the Company determines
whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position; and
(ii) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax
benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company’s
policy is to recognize interest and penalties related to the underpayment