Company: LTRYW
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001641172-25-024882
Chunk: 14

Company: Lottery.com Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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 for loss of prepaid advertising credits by $4,745,000. Prepaid expenses are included in current
assets on the consolidated balance sheets. The Company has remaining prepaid expenses of $14,458,252 and $14,451,896 on June
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 3three 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:

Schedule of Depreciation of Property and Equipment 

    Computers and equipment 
     3 years 
  
    Furniture and fixtures 
     5 years 
  
    Software 
     3 years 

Leases

Right-of-use
assets (“ROU assets”) represent the Company’s right to use an underlying asset for the lease term and lease
liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are
recognized at commencement date based on the present value of lease payments over the lease term. Variable lease payments are not
included in the calculation of the right-of-use asset and lease liability due to uncertainty of the payment amount and are recorded
as lease expense in the period incurred. As most of the leases do not provide an implicit rate, the Company would use its
incremental borrowing rate based on the information available at commencement date in determining the present value of lease
payments. Otherwise, the implicit rate would be used when readily determinable. The lease terms may include options to extend or
terminate the lease when it is reasonably certain that the Company will exercise