Company: LTRYW
Filing Date: 2025-05-21
Form Type: 10-Q
Source: 0001641172-25-011865
Chunk: 7

Company: Lottery.com Inc.
Filing Date: 2025-05-21
Form: 10-Q
Item: Part I, Item 1
Chunk 7
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 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 2017 and 2018 may not be able
to be fully utilized. As a result, the Company decreased prepaid expenses by $4,745,000 and increased its reserve for loss of prepaid
advertising credits by $4,745,000. Prepaid expenses are included in current assets on the consolidated balance sheets. The Company had
total remaining prepaid expenses of $14,356,591 for the three months ended March 31, 2025 and $14,449,333 for the year ended December
31, 2024, respectively.

Investments

On
August 2, 2018, AutoLotto purchased 186,666 shares of Class A-1 common stock of a third-party business development partner representing
4% of the total outstanding shares of the company. As this investment resulted in less than 20% ownership, it was accounted for using
the cost basis method.

Property
and equipment, net

Property
and equipment are stated at cost. Depreciation and amortization are generally computed using the straight-line method over estimated
useful lives ranging from three to five years. Leasehold improvements are amortized over the shorter of the lease term or the estimated
useful life of the asset. Routine maintenance and repair costs are expensed as incurred. The costs of major additions, replacements and
improvements are capitalized. Gains and losses realized on the sale or disposal of property and equipment are recognized or charged to
other expense in the consolidated statement of operations.

Depreciation
of property and equipment is computed using the straight-line method over the following estimated useful lives:

  Computers          3      
  Furniture          5      
  Software           3      

Leases

Right-of-use
assets (“ ROU assets”) represent the Company’s right to use an underlying asset for the lease