Company: LTRYW
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001641172-25-024882
Chunk: 82

Company: Lottery.com Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 82
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 (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.

16

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 our internal control over financial reporting. The Company plans
to continue to assess its internal controls and procedures and intends to take further action as necessary or appropriate to address
any other matters it identifies or are brought to its attention. We will not be able to fully remediate these material weaknesses until
these steps have been completed and have been operating effectively for a sufficient period of time. The implementation of our remediation
will be ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained
period of financial reporting cycles. We may also conclude that additional measures may be required to remediate the material weaknesses
in our internal control over financial reporting.

We
cannot assure you that the measures we take will be sufficient to remediate the material weaknesses we identified or avoid the identification
of additional material weaknesses in the future. If the steps we take do not remediate the material weaknesses in a timely manner, there
could continue to be a reasonable possibility that this control deficiency or others could result in