Company: LTRYW
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001641172-25-024882
Chunk: 105

Company: Lottery.com Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 8
Chunk 105
---
 the
allowance for uncollectible receivables was $33,000 whereas, before the project described above, it was $94,270 at December 31, 2023.
The Company did not change its allowance for uncollectible receivables as of June 30, 2025. At June 30, 2025 the allowance for uncollectible
receivables was $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. 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 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