Company: LTRYW
Filing Date: 2025-11-20
Form Type: 10-Q
Source: 0001493152-25-024384
Chunk: 105

Company: Lottery.com Inc.
Filing Date: 2025-11-20
Form: 10-Q
Item: Part I, Item 8
Chunk 105
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 was $94,270 at December 31, 2023.
The Company did not change its allowance for uncollectible receivables as of September 30, 2025. At September 30, 2025 the allowance
for uncollectible receivables remained $33,000. The Company has not incurred bad debt expense historically.

Prepaid
Expenses for Advertising Credits

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. Similarly, 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 on December 31, 2024. Prepaid expenses are included in current assets on the consolidated
balance sheets. The Company has remaining prepaid expenses of $14,419,893 and $14,449,333 on September 30, 2025 and 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 3
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