Company: LTRYW
Filing Date: 2025-04-21
Form Type: 10-K
Source: 0001641172-25-005487
Chunk: 119

Company: Lottery.com Inc.
Filing Date: 2025-04-21
Form: 10-K
Item: Item 8
Chunk 119
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 with
the majority of cash held in one financial institution. Management believes all financial institutions holding its cash are of high credit
quality and does not believe the Company is subject to unusual credit risk beyond the normal credit risk associated with commercial banking
relationships.

The
Company had no marketable securities as of December 31, 2024 and December 31, 2023.

  F-11  

Accounts
Receivable

The
Company through its various merchant providers pre-authorizes forms of payment prior to the sale of digital representation of lottery
games to minimize exposure to losses related to uncollected payments and does not extend credit to the user of the B2C Platform or the
commercial partner of the B2B API, which are its customers, in the normal course of business. The Company estimates its bad debt exposure
each period and records a bad debt provision for accounts receivable it believes it may not collect in full. In the fall of 2024, the
Company completed a project whereby certain older items in accounts receivable for the TinBu subsidiary were offset against the allowance for
uncollectible receivables, resulting in a reduction in the number of individual items in accounts receivable which were aged greater
than 90 days and the total amount for them. At the completion of this project, the balance in the allowance for uncollectible receivables was
$22,016. At the end of 2024 the Company increased the allowance for uncollectible receivables by $10,984.
At December 31, 2024 the allowance for uncollectible receivables was $33,000whereas, before the project described above, it was $94,270
at December 31, 2023.

Prepaid
Expenses

Prepaid expenses consist of payments made on contractual obligations for
services to be consumed in future periods. The Company entered into an agreement with two third parties to provide advertising services
and issued equity instruments as compensation for the advertising services (“ Prepaid advertising credits”). The Company expenses
the service as it is performed by the third parties. The value of the services provided were used to value these contracts, except for
the year ended December 31, 2021 the Company reserved for potential inability to realize $2,000,000 of prepaid advertising credits in future periods. For the period ending December 31, 2024, the Company determined that approximately an
additional $4,745,000 of prepaid advertising credits purchased during