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Item 8. Financial Statements and Supplementary Data

2024-04-03 compared with 2023-06-15 · 498 added, 563 removed, 669 unchanged (61% of the section changed)

Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL

Report of Yusufali & Associates, LLC, Independent Registered Public Accounting Firm (PCAOB ID:3313)

TO CONSOLIDATED FINANCIAL STATEMENTS

of Yusufali & Associates, LLC, Independent Registered Public Accounting Firm (PCAOB ID:3313)

Consolidated Balance Sheets as of December 31, 2023 and 2022 (as restated)

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Notes to Consolidated Financial Statements (as restated)

& Associates, LLC ( 3313 )

Headquarters Address:

Yusufali & Associates, LLC

Certified Public Accountants & IT Consultants

AICPA, HITRUST, PCAOB, PCIDSS, & ISC2 Registered

55 Addison Drive, Short Hills, NJ 07078

of Independent Registered Public Accounting Firm

the Board of Directors and Stockholders of

on the Consolidated Financial Statements

have audited the accompanying restated consolidated balance sheets of Lottery.com Inc.

(the “Company”) as of December 31,

2023, and 2022, and the related consolidated statements of operations and comprehensive loss, equity, and cash flows for each of the

years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, except for the effects of the Company having not filed its 2023 and 2022 United States federal and state corporate income

tax returns as described in note 11 of the financial statements, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for the years

then ended in conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

3 to the financial statements, the Company has stockholder’s deficit, net losses, and negative working capital.

These factors raise

substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters

are also described in Note 3.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Company’s management is responsible for these consolidated financial statements.

Our responsibility is to express an opinion on

the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to

error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters :

The management listed the critical audit matters in the notes on accounts as they relate to the current period audit

of the financial statements, specifically to (1) Note 3 revenue recognition as the core basis for the restatement of the Financial Statements

(2) relate to accounts or disclosures that are material to the financial statements and (3) involved our especially challenging, subjective,

or complex judgments.

These critical audit matters do not alter in any way our opinion on the financial statements, taken as a whole,

and we are not, by referring the critical audit matters, providing separate opinions on the critical audit matters or on the accounts

or disclosures to which they relate.

Managing Partner

& Associates, LLC

registration # 3313

have served as the company’s auditor since 2022

BALANCE SHEETS

Current assets:

Restricted cash

Accounts receivable

Prepaid expenses

Other current assets

Total current assets

current assets

Notes receivable

Intangible assets, net

Property and equipment, net

Other long term assets

$ 104,534,006

LIABILITIES AND STOCKHOLDERS’ EQUITY

and equipment, net

long term assets

AND STOCKHOLDERS’

Current liabilities:

Trade payables

Deferred revenue

Notes payable - current

Accrued interest

Accrued and other expenses

Other liabilities

Total current liabilities

payable - current

and other expenses

current liabilities

debt, net - non current

long term liabilities

Convertible debt, net - non current

Other long term liabilities

Total long-term liabilities

Commitments and contingencies (Note 13)

Total liabilities

Controlling Interest

Preferred Stock, par value $ 0.001 , 1,000,000 shares authorized, none issued and outstanding

Common stock, par value $ 0.001 , 500,000,000 shares authorized, 50,540,906 and 50,256,317 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

( 208,187,210 )

long-term liabilities

and contingencies (Note 13)

Stock, par value $0.001, 1,000,000 shares authorized, none issued and outstanding

Common stock,

par value $0.001, 500,000,000 shares authorized, 2,877 and 2,527

issued and outstanding as of

December 31, 2023 and December 31, 2022, respectively

Common stock, par value $0.001, 500,000,000 shares authorized, 2,877 and 2,527 issued and outstanding as of

December 31, 2023 and December 31, 2022, respectively

paid-in capital

other comprehensive loss

(233,759,640 )

Total Lottery.com Inc.

stockholders’ equity

Noncontrolling interest

Total liabilities and stockholders’ equity

(208,187,210 )

Total Lottery.com

stockholders’

Noncontrolling

liabilities and stockholders’

accompanying notes are an integral part of these consolidated financial statements.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Years Ended December 31,

Cost of revenue

Ended December 31,

and administrative

and amortization

operating expenses

Personnel costs

Professional fees

General and administrative

Depreciation and amortization

Total operating expenses

Loss from operations

(24,182,724 )

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Other expenses

Interest expense

Reserve loss of prepaid advertising credits

Other expense

Total other expenses, net

Net loss before income tax

( 60,278,909 )

loss of prepaid advertising credits

other expenses, net

before income tax

(24,702,722 )

Income tax expense (benefit)

(60,278,909 )

tax expense (benefit)

(24,702,722 )

(60,383,265 )

Other comprehensive loss

Foreign currency translation adjustment, net

Comprehensive loss

Other comprehensive

currency translation adjustment, net

Comprehensive

(24,736,978 )

(60,378,988 )

Net income attributable to noncontrolling interest

Net loss attributable to Lottery.com Inc.

income attributable to noncontrolling interest

loss attributable to Lottery.com Inc.

$ (24,664,751 )

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Net loss per common share

Basic and diluted

Weighted average common shares outstanding

Basic and diluted

Weighted average common shares

accompanying notes are an integral part of these consolidated financial statements.

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AutoLotto Inc.

Stockholders’

Noncontrolling

Total Stockholder’s

Balance as of December 31, 2020

Stockholder’s

as of December 31, 2021

(148,188,138 )

of common stock upon stock option exercise

of common stock for legal settlement

based compensation

comprehensive loss

Comprehensive

(59,999,072 )

Issuance of common stock upon stock option exercise

Issuance of common stock upon warrant exercise

Effect of reverse capitalization, net

Conversion of convertible debt

Issuance of common stock in business acquisition

Beneficial conversion feature on notes payable

Issuance of digital securities

Stock-based compensation

Minority interest in business acquisition

Other comprehensive loss

(59,999,072 )

(60,378,988 )

as of December 31, 2022

$ 267,597,370

Balance as of December 31, 2021

$ (208,187,210 )

Beginning Balance

$ 267,597,370

Issuance of common stock upon stock option exercise

Issuance of common stock for legal settlement

Stock based compensation

Other comprehensive loss

$ (208,187,210 )

based compensation

comprehensive loss

Comprehensive

(24,736,978 )

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(24,664,751 )

Balance as of December 31, 2022

as of December 31, 2023

$ 269,690,568

$ (2323,924,185 )

Ending Balance

$ 269,690,568

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STATEMENTS OF CASH FLOWS

Years Ended December 31,

Cash flow from operating activities

Net loss attributable to Lottery.com Inc.

$ ( 59,999,072 )

$ ( 53,048,225 )

Adjustments to reconcile net loss to net cash used in operating activities:

Net income attributable to noncontrolling interest

Depreciation and amortization

Non-cash interest expense

Stock-based compensation expense

Forgiveness of PPP Loan

Loss on impairment of intangibles

Loss on extinguishment of debt

Issuance of common stock for legal settlement

Issuance of debt to pay expenses

Income tax valuation allowance

( 1,653,067 )

Other non-cash items, net

Changes in assets & liabilities:

Accounts receivable

Prepaid expenses

Notes Receivable

( 2,000,000 )

Other current assets

Trade payables

( 1,557,570 )

Deferred revenue

( 6,735,965 )

Accrued interest

Accrued and other expenses

Other liabilities

Other long term assets

( 13,009,686 )

Other long term liabilities

Net cash provided by operating activities

( 31,272,729 )

( 23,186,100 )

Cash flow from investing activities

Purchases of property and equipment

Purchases of intangible assets

( 1,124,823 )

Investment in subsidiary, net

( 13,399,408 )

Net cash used in investing activities

Ended December 31,

flow from operating activities

loss attributable to Lottery.com Inc.

$ (24,664,751 )

$ (59,999,072 )

Cash flow from financing activities

Issuance of digital securities

Proceeds from exercise of options and warrants

Proceeds from issuance of convertible debt

Proceeds from issuance of notes payable

Proceeds from reverse recapitalization

Payment of debt issuance costs

to reconcile net loss to net cash used in operating activities:

income attributable to noncontrolling interest

and amortization

interest expense

compensation expense

on impairment of intangibles

on extinguishment of debt

of common stock for legal settlement

assets & liabilities:

current assets

and other expenses

long term assets

(13,009,686 )

Payments on notes payable - related parties

Principal payments on debt

long term liabilities

cash provided by operating activities

(31,272,729 )

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net change in net cash and restricted cash

flow from investing activities

of property and equipment

of intangible assets

in subsidiary, net

cash used in investing activities

flow from financing activities

from issuance of notes payable

on notes payable - related parties

payments on debt

provided by financing activities

exchange rate changes on cash

in net cash and restricted cash

(32,536,204 )

Cash and restricted cash at beginning of period

Cash and restricted cash at end of period

Supplemental Disclosure of Cash Flow Information:

Interest paid in cash

Taxes paid in cash

Non cash investing and financing activities

Conversion of convertible debt into common stock

Capitalization of interest from loan extinguishment

Purchase of intangible assets through the issuance of convertible debt

Issuance of convertible debt in exchange for outstanding liabilities

Issuance of convertible debt in exchange for notes payable

Common stock issued as part of acquisition

Beneficial conversion feature on notes payable

and restricted cash at beginning of period

and restricted cash at end of period

Disclosure of Cash Flow Information:

accompanying notes are an integral part of these consolidated financial statements.

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Nature of Operations

(formerly Trident Acquisitions Corp) (“TDAC”, “Lottery.com” or “the Company”), was formed as

(formerly Trident Acquisitions Corp) (“TDAC”, “Lottery.com”

or “the Company”), was formed as

a Delaware corporation on March 17, 2016.

On October 29, 2021, we consummated a business combination (the “Business Combination”)

with AutoLotto, Inc.

(“AutoLotto”).

Following the closing of the Business Combination (the “Closing”) we changed

our name from “Trident Acquisitions Corp.” to “Lottery.com Inc.” and the business of AutoLotto became our business.

(“AutoLotto”).

Following the closing of the Business Combination (the “Closing”) we changed

our name from “Trident Acquisitions Corp.”

to “Lottery.com Inc.”

and the business of AutoLotto became our business.

In connection with the Business Combination the Company moved its headquarters from New York, New York to Spicewood, Texas.

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service, the Company offers a platform that it developed and operates to enable the remote purchase of legally sanctioned lottery games

and abroad (the “Platform”).

The Company’s revenue generating activities are focused on (i) offering the

and abroad (the “Platform”).

The Company’s revenue generating activities are focused on (i) offering the

Platform via the Lottery.com app and our websites to users located in the U.S.

and international jurisdictions where the sale of lottery

games is legal and our services are enabled for the remote purchase of legally sanctioned lottery games (our “B2C Platform ” );

(ii) offering an internally developed, created and operated business-to-business application programming interface (“API”)

games is legal and our services are enabled for the remote purchase of legally sanctioned lottery games (our “B2C Platform ”

(ii) offering an internally developed, created and operated business-to-business application programming interface (“API”)

of the Platform to enable commercial partners in permitted U.S.

and international jurisdictions to purchase certain legally operated

lottery games from the Company and resell them to users located within their respective jurisdictions (“B2B API”);

delivering global lottery data, such as winning numbers and results, and sports data, such as scores and statistics, to commercial digital

subscribers and provide access to other proprietary, anonymized transaction data pursuant to multi-year contracts (“Data Service”).

a provider of lottery products and services, the Company is required to comply, and its business is subject to, regulation in each jurisdiction

in which the Company offers the B2C Platform, or a commercial partner offers users access to lottery games through the B2B API.

it must also comply with the requirements of federal and other domestic and foreign regulatory bodies and governmental authorities in

jurisdictions in which the Company operates or with authority over its business.

The Company’s business is additionally subject

to multiple other domestic and international laws, including those relating to the transmission of information, privacy, security, data

retention, and other consumer focused laws, and, as such, may be impacted by changes in the interpretation of such laws.

subscribers and provide access to other proprietary, anonymized transaction data pursuant to multi-year contracts (“Data Service”).

a provider of lottery products and services, the Company is required to comply with, and its business is subject to, regulation in each

jurisdiction in which the Company offers the B2C Platform, or a commercial partner offers users access to lottery games through the B2B

In addition, it must also comply with the requirements of federal and other domestic and foreign regulatory bodies and governmental

authorities in jurisdictions in which the Company operates or with authority over its business.

The Company’s business is additionally

subject to multiple other domestic and international laws, including those relating to the transmission of information, privacy, security,

data retention, and other consumer focused laws, and, as such, may be impacted by changes in the interpretation of such laws.

June 30, 2021, the Company acquired an interest in Medios Electronicos y de Comunicacion, S.A.P.I de C.V.

(“Aganar”) and

JuegaLotto, S.A.

(“JuegaLotto”).

Aganar has been operating in the licensed iLottery market in Mexico since 2007

as an online retailer of Mexican National Lottery draw games, instant digital scratch-off games and other games of chance.

JuegaLotto is licensed by the Mexican federal regulatory authorities to sell international lottery games in Mexico.

(“JuegaLotto”).

Aganar has been operating in the licensed iLottery market in Mexico since 2007 as

an online retailer of Mexican National Lottery draw games, instant digital scratch-off games and other games of chance.

JuegaLotto is

licensed by the Mexican federal regulatory authorities to sell international lottery games in Mexico.

July 28, 2022, the Board determined that the Company did not currently have sufficient financial resources to fund its operations or

pay certain existing obligations, including its payroll and related obligations and effectively ceased its operations furloughing certain

employees effective July 29, 2022 (the “Operational Cessation”).

Subsequently, the Company has had minimal day-to-day operations

and has primarily focused its operations on restarting certain aspects of its core businesses (the “Plans for Recommencement of

Company Operations”).

April 25, 2023, as part of the Plans for Recommencement of Company Operations, the Company resumed its ticket sales operations to support

its affiliate partners through its Texas retail network.

and has primarily focused its operations on restarting certain aspects of its core businesses (the “Plans for Recommencement of

Company Operations”).

April 25, 2023, as part of the Plans for Recommencement of Company Operations, the Company resumed its ticket sales operations on a limited

basis to support its affiliate partners through its Texas retail network.

Significant Accounting Policies

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accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the

United States of America (“ GAAP ”) and include the accounts of the Company and its wholly owned operating subsidiaries.

United States of America (“

GAAP ”) and include the accounts of the Company and its wholly owned operating subsidiaries.

Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting

principles as found in the Accounting Standards Codification (“ ASC ”) and Accounting Standards Update (“ ASU ”)

of the Financial Accounting Standards Board (“ FASB ”).

principles as found in the Accounting Standards Codification (“

ASC ”) and Accounting Standards Update (“

of the Financial Accounting Standards Board (“

FASB ”).

All intercompany accounts and transactions have been eliminated

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amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern.

to the requirements of the Financial Accounting Standards Board’s ASC Topic 205-40,

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are

conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going

concern for one year from the date these financial statements are issued.

This evaluation does not take into consideration the potential

mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the

date the financial statements are issued.

When substantial doubt exists under this methodology, management evaluates whether the mitigating

effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern.

The mitigating

effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented

within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will

mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern

within one year after the date that the financial statements are issued.

to the Company’s Operational Cessation, the Company has experienced recurring net losses and negative cash

flows from operations and has an accumulated deficit of approximately $ 208 million and working capital of approximately

$ 2.9 million at December 31, 2022.

to the requirements of the Financial Accounting Standards Board’s ASC Topic 205-40, Disclosure of Uncertainties about an Entity’s

Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate,

that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial

statements are issued.

This evaluation does not take into consideration the potential mitigating effect of management’s plans that

have not been fully implemented or are not within control of the Company as of the date the financial statements are issued.

When substantial

doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial

doubt about the Company’s ability to continue as a going concern.

The mitigating effect of management’s plans, however, is

only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial

statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that

raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial

statements are issued.

connection with the Company’s Operational Cessation, the Company has experienced recurring net losses and negative cash flows from

operations and has an accumulated deficit of approximately $234 million and working capital of approximately negative $7.7 million at

December 31, 2023.

For the year ending December 31, 2023, the Company sustained a net loss of $24.7 million.

sustained a loss from operations of $ 55.8 million and $ 29.9 million for the years ending December 31, 2022 and 2021, respectively.

The Company sustained a

loss from operations of $60.0 million and $53.0 million for the years ending December 31, 2022 and 2021, respectively.

Subsequently,

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These conditions

raise substantial doubt about the Company’s ability to continue as a going concern.

Company has historically funded its activities almost exclusively from debt and equity financing.

Management’s plans in

order to meet its operating cash flow requirements include financing activities such as private placements of its common stock, preferred

stock offerings, and issuances of debt and convertible debt.

Although Management believes that it will be able to continue to raise funds

by sale of its securities to provide the additional cash needed to meet the Company’s obligations as they become due beginning

with a loan agreement the Company entered into with Woodford Eurasia Assets, Ltd.

(“Woodford”) on December 7, 2022 (see Subsequent

Management’s plans in order to

meet its operating cash flow requirements include financing activities such as private placements of its common stock, preferred stock

offerings, and issuances of debt and convertible debt.

Although Management believes that it will be able to continue to raise funds by

sale of its securities to provide the additional cash needed to meet the Company’s obligations as they become due beginning with

a loan agreement the Company entered into with United Capital Investments Ltd.

(“UCIL”) on July 21, 2023 (see Subsequent

Events), the Plans for Recommencement of Company Operations to require substantial funds to implement and there is no assurance that

the Company will be able to continue raising the required capital.

Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements depends

on its ability to execute its business plan, increase revenue, and reduce expenditures.

Such conditions raise substantial doubt about

the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements

depends on its ability to execute the business plan for the relaunch of its core business, the successful monetization of Sports.com,

and keep expenditures in line with available operating capital.

Such conditions raise substantial doubt about the Company’s ability

to continue as a going concern.

of Trident Acquisition Corp.

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acquirer and Trident Acquisition Corp.

(“TDAC”) as the accounting acquiree.

This determination was primarily based on:

AutoLotto stockholders having the largest voting interest in Lottery.com Inc.

(“Lottery.com”);

board of directors of Lottery.com having 7 members, and AutoLotto’s former stockholders

having the ability to nominate the majority of the members of the board of directors;

management continuing to hold executive management roles for the post-combination company

and being responsible for the day-to-day operations;

(“Lottery.com”);

board of directors of Lottery.com having 7 members, and AutoLotto’s former stockholders having the ability to nominate the

majority of the members of the board of directors;

management continuing to hold executive management roles for the post-combination company and being responsible for the day-to-day

post-combination company assuming the Lottery.com name;

● Lottery.com

maintaining the pre-existing AutoLotto headquarters;

and the intended strategy of Lottery.com

being a continuation of AutoLotto’s strategy.

and the intended strategy of Lottery.com being a continuation of AutoLotto’s

the Business Combination was treated as the equivalent of AutoLotto issuing stock for the net assets of TDAC, accompanied by a recapitalization.

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(iii) the assets and liabilities of AutoLotto at their historical cost;

and (iv) the Company’s

equity structure for all periods presented.

connection with the Business Combination transaction, we have converted the equity structure for the periods prior to the Business Combination

to reflect the number of shares of the Company’s common stock issued to AutoLotto’s stockholders in connection with the recapitalization

As such, the shares, corresponding capital amounts and earnings per share, as applicable, related to AutoLotto convertible

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interests represent the proportionate ownership of Aganar and JuegaLotto, held by minority members and reflect their capital investments

as well as their proportionate interest in subsidiary losses and other changes in members’ equity, including translation adjustments.

as well as their proportionate interest in subsidiary losses and other changes in members’

equity, including translation adjustments.

segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly

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instruments that are potentially subject to concentrations of credit risk are primarily cash.

Cash holdings deposits are placed with

major financial institutions deemed to be of high-credit-quality in order to limit credit exposure.

The Company maintains deposits and

certificates of deposit with banks which may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit and

money market accounts which are not FDIC insured.

In addition, deposits aggregating approximately $ 19,790 at April 30, 2023 are held

in foreign banks.

Management believes the risk of loss in connection with these accounts is minimal.

Cash holdings are placed with major financial

institutions deemed to be of high-credit-quality in order to limit credit exposure.

The Company maintains deposits and certificates of

deposit with banks which may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit and money market accounts

which are not FDIC insured.

In addition, deposits aggregating approximately $19,790 at March xx, 2024 are held in foreign banks.

believes the risk of loss in connection with these accounts is minimal.

preparation of the financial statements requires management to make estimates and assumptions to determine the reported amounts of assets,

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balances have been reclassified in the accompanying consolidated financial statements to conform to the current year presentation.

reclassifications had no effect on the balances of current or total assets and prior year’s net loss or accumulated deficit.

currency translation

5 unchanged sentences

and Restricted Cash

of December 31, 2021 and 2020, cash was comprised of cash deposits, and deposits with some banks exceeded federally insured limits

with the majority of cash held in one financial institution.

Management believes all financial institutions holding its cash are of

high credit quality and does not believe the Company is subject to unusual credit risk beyond the normal credit risk associated with

commercial banking relationships.

of December 31, 2023 and 2022, cash was comprised of cash deposits, and deposits with some banks exceeded federally insured limits with

the majority of cash held in one financial institution.

Management believes all financial institutions holding its cash are of high credit

quality and does not believe the Company is subject to unusual credit risk beyond the normal credit risk associated with commercial banking

relationships.

Company had no marketable securities as of December 31, 2023 and December 31, 2022.

The Company had no marketable securities as of December 31, 2022 and December 31, 2021 As of December 31, 2022, the

restricted cash balance was $0 as the bank took the collateral in the restricted account during October of 2022 in order to satisfy the

amount owed under the Line of Credit.

(See Subsequent Events - In January of 2022, the Company pledged $30,000,000 for a line of credit

which was subsequently claimed for settlement of such line of credit).

Company had no marketable securities as of December 31, 2023 and December 31, 2022 As of December 31, 2022, the restricted cash balance

was $0 as the bank took the collateral in the restricted account during October of 2022 in order to satisfy the amount owed under the

Line of Credit.

(See Subsequent Events - In January of 2022, the Company pledged $30,000,000 for a line of credit which was subsequently

claimed for settlement of such line of credit).

Company through its various merchant providers pre-authorizes forms of payment prior to the sale of digital representation of lottery

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an agreement with a third party 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 party.

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in current assets on the consolidated balance sheets.

The Company has remaining prepaid expenses of $ 19,409,323

and $ 22,896,638

for the years ended December 31, 2022 and 2021,

respectively.

The Company has remaining prepaid expenses of $19,020,159 and $19,409,323 for the

years ended December 31, 2023 and 2022, respectively.

August 2, 2018, AutoLotto purchased 186,666 shares of Class A-1 common stock of a third party business development partner representing

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Furniture and fixtures

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.

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Intangible assets

represent the fair value of separately recognizable intangible assets acquired in connection with the Company’s business combinations.

The Company evaluates its goodwill and other intangibles for impairment on an annual basis or whenever events or circumstances indicate

that an impairment may have occurred in accordance with the provisions of ASC 350, “ Goodwill and Other Intangible Assets ”.

The Company reviewed for impairment and determined that no impairment indicators exist as of December 31, 2022 and 2021.

6 for further discussion.

the new standard, Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”,

that an impairment may have occurred in accordance with the provisions of ASC 350, “

Goodwill and Other Intangible Assets ”.

The Company reviewed for impairment and determined it was necessary to write down goodwill related to its TinBu subsidiary

by $5,650,000 and goodwill and intangible assets for its Global Gaming subsidiary by $1,060,200 and $799,800 at the end of the year ended

December 31, 2023.

the new standard, Accounting Standards Update (“ASU”) 2014-09, “

Revenue from Contracts with Customers (Topic 606) ”,

the Company recognizes revenues when the following criteria are met:

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that fall under this revenue classification include:

Company’s performance obligations of delivering lottery games are satisfied at the time in which the digital representation of

the lottery game is delivered to the user of the B2C Platform or the commercial partner of the B2B API, therefore, are recognized at

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selling price, there is no allocation of consideration necessary.

accordance with Accounting Standards Codification (“ASC”) 606, the Company evaluates the presentation of revenue on a gross

versus net basis dependent on if the Company is a principal or agent.

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discretion in establishing the price.

For all of the Company’s transactions, management concluded that gross presentation is appropriate,

as the Company is primarily responsible for providing the performance obligation directly to the customers and assumes fulfillment risk

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associated revenue

Company’s performance obligations in agreements with certain customers are to provide a license of intellectual property related

to the use of the Company’s tradename for marketing purposes by partners of the Company.

Company’s performance obligations in agreements with certain customers are to provide a license of intellectual property related

to the use of the Company’s tradename for marketing purposes by partners of the Company.

Customers pay a license fee up front.

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The license offered by the Company represents a symbolic

license which provides the customer with the right to use the Company’s intellectual property on an ongoing basis with continued

support throughout the term of the contract in the form of ongoing maintenance of the underlying intellectual property.

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with multiple performance obligations

Company’s contracts with customers may include multiple performance obligations.

For such arrangements, management allocates revenue

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are delivered to the customer.

the nature of the Company’s services and contracts, it has no contract assets.

assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions, that are collected

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marketing credits acquired on a per-contract basis.

October 1, 2019, the Company adopted ASU 2018-07, Compensation - “Stock Compensation (Topic 718):

Improvements to Nonemployee

Share-based Payment Accounting” (“ASC 718”), which addresses aspects of the accounting for nonemployee share-based

Share-based Payment Accounting”

(“ASC 718”), which addresses aspects of the accounting for nonemployee share-based

payment transactions and accounts for share-based awards to employees in accordance with ASC 718, Stock Compensation .

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any resulting income taxes.

Therefore, the income and losses incurred by the limited liability companies have been

consolidated in the Company’s tax return and provision based upon its relative ownership.

taxes are accounted for in accordance with ASC 740, “ Income Taxes ” (“ASC 740”), using the asset and liability

Therefore, the income and losses incurred by the limited liability companies have been consolidated in the

Company’s tax return and provision based upon its relative ownership.

taxes are accounted for in accordance with ASC 740, “

Income Taxes ”

(“ASC 740”), using the asset and liability

Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to

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benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company’s

policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit.

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the taxing authorities can audit the previous three years of tax returns and in certain situations audit additional years.

tax purposes, the Company’s 2018 through 2022 tax years generally remain open for examination by the tax authorities under the

normal three-year statute of limitations.

For state tax purposes, the Company’s 2017 through 2022 tax years remain open for examination

by the tax authorities under the normal four-year statute of limitations.

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Company determines the fair value of its financial instruments in accordance with the provisions of ASC 820, Fair Value Measurements

and Disclosures (“ASC 820”) , which establishes a fair value hierarchy that prioritizes the inputs to valuation

techniques used to measure fair value.

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of the fair value hierarchy under ASC 820 are described below:

1 - Unadjusted quoted prices in active markets that are accessible at the measurement date

for identical, unrestricted assets or liabilities

2 - Quoted prices in markets that are not active, or inputs that are observable, either directly

or indirectly, for substantially the full term of the asset or liability

3 - Valuation is generated from model-based techniques that use significant assumptions not

observable in the market.

These unobservable assumptions reflect our own estimates of assumptions

that market participants would use in pricing the asset or liability.

1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or

2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially

the full term of the asset or liability

3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market.

These unobservable

assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability.

Determination

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to make assumptions and estimates about the expected life of options and warrants, anticipated forfeitures, the risk-free rate, and the

volatility of the Company’s share price.

In making these assumptions and estimates, management relies on historical market data.

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January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and other (Topic 350) (“ASU 2017-04”).

simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test.

Goodwill impairment will now be

the amount by which a reporting unit’s carrying value exceeds its fair value limited to the total amount of goodwill allocated

to that reporting unit.

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Measurement of Credit Losses

on Financial Instruments (“ASU 2016-13”).

ASU 2016-13 requires the measurement of all expected credit losses for financial

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The Company is currently evaluating

this new standard and currently does not expect it to have a significant impact on the Company’s consolidated financial statements.

December 2019, the FASB issued ASU No 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes ( “ASU2019-12” ) .

Simplifying the Accounting for Income Taxes ( “ASU2019-12”

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles.

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The Company is currently

evaluating this new standard and currently does not expect it to have a significant impact on the Company’s consolidated financial

In October 2020, the FASB issued ASU No.

2020-09, Debt (Topic 470) (“ASU

ASU 2020-09 amendments to SEC paragraphs pursuant to SEC release NO.

33-10762 amends terms related to Debt Guarantors

and Issuers of Guaranteed Securities Registered or to be Registered with the SEC.

The Company is currently evaluating the timing of adoption

and impact of the updated guidance on its financial statements.

evaluating this new standard and currently does not expect it to have a significant impact on the Company’s consolidated financial

October 2020, the FASB issued ASU No.

2020-09, Debt (Topic 470) (“ASU 2020-09”).

ASU 2020-09 amendments to SEC paragraphs

pursuant to SEC release NO.

33-10762 amends terms related to Debt Guarantors and Issuers of Guaranteed Securities Registered or to be

Registered with the SEC.

The Company is currently evaluating the timing of adoption and impact of the updated guidance on its financial

Business Combination

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(other than excluded shares as contemplated by the Merger Agreement) was cancelled and converted into the right to receive approximately

3.0058 shares (the “Exchange Ratio”) of Lottery.com.

common stock.

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of AutoLotto that were then converted into 9,764,511 shares of Lottery.com common stock using the Exchange Ratio.

the Closing, each option to purchase AutoLotto’s common stock, whether vested or unvested, was assumed and converted into an option

to purchase a number of shares of Lottery.com common stock in the manner set forth in the Merger Agreement.

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do not include the historical results of TDAC prior to the consummation of Business Combination.

the closing of the transaction, AutoLotto received total gross proceeds of approximately $ 42,794,000 , from TDAC’s trust and operating

the closing of the transaction, AutoLotto received total gross proceeds of approximately $42,794,000, from TDAC’s trust and operating

Total transaction costs were approximately $9,460,000, which principally consisted of advisory, legal and other professional

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to the terms of the Business Combination Agreement, the holders of issued and outstanding shares of AutoLotto immediately prior to the

Closing (the “Sellers”) were entitled to receive up to 6,000,000 additional shares of Common Stock (the “Seller Earnout

Shares”) and Vadim Komissarov, Ilya Ponomarev and Marat Rosenberg (collectively the “TDAC Founders”) were also entitled

to receive up to 4,000,000 additional shares of Common Stock (the “TDAC Founder Earnout Shares” and, together with the Seller

Earnout Shares, the “Earnout Shares”).

Closing (the “Sellers”) were entitled to receive up to 6,000,000 additional shares of Common Stock (the “Seller Earnout

Shares”) and Vadim Komissarov, Ilya Ponomarev and Marat Rosenberg (collectively the “TDAC Founders”) were also entitled

to receive up to 4,000,000 additional shares of Common Stock (the “TDAC Founder Earnout Shares”

and, together with the Seller

Earnout Shares, the “Earnout Shares”).

One of the earnout criteria had not been met by the December 31, 2021 deadline thus

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June 30, 2021, the Company completed its acquisition of 100 percent of equity of Global Gaming Enterprises, Inc., a Delaware corporation

(“Global Gaming”), which holds 80 % of the equity of each of Medios Electronicos y de Comunicacion, S.A.P.I de C.V.

(“Global Gaming”), which holds 80% of the equity of each of Medios Electronicos y de Comunicacion, S.A.P.I de C.V.

(“Aganar”)

and JuegaLotto, S.A.

(“JuegaLotto”).

JuegaLotto is federally licensed by the Mexico regulatory authorities with jurisdiction

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of chance in other countries throughout Latin America.

Aganar has been operating in the licensed iLottery market in Mexico since 2007

Aganar has been operating in the licensed Lottery market in Mexico since 2007

and is licensed to sell Mexican National Lottery draw games, instant win tickets, and other games of chance online with access to a federally

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The opening balance of the acquirees have been included in our consolidated balance sheet since the date of the acquisition.

Since the acquirees’ financial statements were denominated in Mexican pesos, the exchange rate of 22.0848 pesos per dollar was

Since the acquirees’

financial statements were denominated in Mexican pesos, the exchange rate of 22.0848 pesos per dollar was

used to translate the balances.

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$13,215,843 to reflect the 20% minority interest in the acquirees.

The purchase price was allocated to the identified tangible and

intangible assets acquired based on their estimated fair values at the acquisition date as follows:

The purchase price was allocated to the identified tangible and intangible

assets acquired based on their estimated fair values at the acquisition date as follows:

of Tangible and Intangible Asset Acquisition

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Accounts payable and other liabilities

$ ( 387,484 )

Customer deposits

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Total liabilities

$ ( 939,208 )

Total net assets of Acquirees

recognized in connection with the acquisition - is primarily attributed to an anticipated growing lottery market in Mexico that are

expected to be achieved from the integration of these Mexican entities.

None of the goodwill is expected to be deductible for income

tax purposes.

recognized in connection with the acquisition - is primarily attributed to an anticipated growing lottery market in Mexico that is expected

to be achieved from the integration of these Mexican entities.

None of the goodwill is expected to be deductible for income tax purposes.

are details of the purchase price allocated to the intangible assets acquired.

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Accumulated depreciation

( 2,059,219 )

( 1,898,753 )

Property and equipment, net

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Intangible assets, net

carrying values and accumulated amortization of intangible assets:

Gross carrying values and accumulated amortization of intangible assets:

of Finite Lived Intangible Assets Amortization Expenses

December 31, 2022

December 31, 2021

Gross Carrying Amount

Accumulated Amortization

Gross Carrying Amount

Accumulated Amortization

Carrying Amount

Amortizing intangible assets

Customer relationships

$ ( 781,385 )

$ ( 556,387 )

( 1,437,778 )

Software agreements

( 5,968,611 )

( 3,145,277 )

Gaming license

( 1,005,000 )

Internally developed software

( 1,091,750 )

$ ( 11,276,978 )

$ ( 5,836,070 )

expense with respect to intangible assets for the year ended December 31, 2023 and 2022 totaled $5,440,908 and $5,440,908, respectively,

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The Company determined that there was an impairment

of long-lived assets of $ 412,450 during the year ended December 31, 2022, as it relates to a project no longer being pursued by the Company.

of long-lived assets of $412,450 during the year ended December 31, 2022, which relates to a project no longer being pursued by the Company.

amortization expense for years of useful life remaining is as follows:

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Company had software development costs of $1,336,020 and $1,336,020 related to projects not placed in service as of December 31, 2023

and December 31, 2021, respectively, which is included in intangible assets in the Company’s consolidated balance sheets.

and December 31, 2022, respectively, which is included in intangible assets in the Company’s consolidated balance sheets.

will be calculated using the straight-line method over the appropriate estimated useful life when the assets are put into service.

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Convertible Note

connection with the Lottery.com domain purchase, the Company issued a secured convertible promissory note (“Secured Convertible

Note”) with a fair value of $ 935,000 that matured in March 2021.

connection with the Lottery.com domain purchase, the Company issued a secured convertible promissory note (“Secured Convertible

Note”) with a fair value of $935,000 that matured in March 2021.

The Company used the fair value of the Secured Convertible Note

to value the debt instrument issued.

In March 2021, the Secured Convertible Note was fully converted into 1,398,221 shares of the Company’s

common stock (see Note 8).

August to October 2017, the Company entered into seven Convertible Promissory Note Agreements with unaffiliated investors for an

aggregate amount of $ 821,500 .

The notes bear interest at 10 %

per year, are unsecured, and were due and payable on June 30, 2019.

The parties have verbally agreed to extend the maturity of the

notes to December

As of December 31, 2022 and December 31, 2021, the balance due on these notes was $ 771,500

and $ 821,500 ,

respectively.

In March 2021, the Secured Convertible Note was fully converted into 1,398,221 pre-reverse stock

split shares (of the reverse stock split of 20:1 of August 9, 2023) of the Company’s common stock (see Note 8).

August to October 2017, the Company entered into seven Convertible Promissory Note Agreements with unaffiliated investors for an aggregate

amount of $821,500.

The notes bear interest at 10% per year, are unsecured, and were due and payable on June 30, 2019.

The parties verbally

agreed to extend the maturity of the notes to December 31, 2021.

As of both December 31, 2023 and December 31, 2022, the balance due

on these notes was $771,500.

The Company cannot prepay the loan without consent from the noteholders.

As of December 31, 2021, there were no

Qualified Financing events, that trigger conversion, this included the TDAC combination.

As of December 31, 2021, there

were no Qualified Financing events, that trigger conversion, this included the TDAC combination.

As of December 31, 2022, the remaining

outstanding balance of $ 771,500

relates to notes that are no longer convertible and have been reclassified to Notes Payable as per the agreement.

Accrued interest

on the Series A notes payable was $ 138,822

at December 31, 2022.

outstanding balance of $771,500 relates to notes that are no longer convertible which have been reclassified to Notes Payable as per

the agreement.

Accrued interest on the Series A notes payable was $318,909 at December 31, 2023.

November 2018 to December 2020, the Company entered into multiple Convertible Promissory Note agreements with unaffiliated investors

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February 2021 to extend the maturity of the notes to December 21, 2021.

The Company cannot prepay the loans without consent from the noteholders.

The Company cannot prepay the loans without consent from the

the year ended December 31, 2021, the Company entered into multiple Convertible Promissory Note agreements with unaffiliated investors

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The Company recorded

loss on extinguishment of $ 71,812 as a result of the amendment which is mapped in “Other expenses” on the consolidated statements

loss on extinguishment of $71,812 as a result of the amendment which is mapped in “Other expenses”

on the consolidated statements

of operations and comprehensive loss.

of October 29, 2021, all except $ 185,095 of the series B convertible notes were converted into 9,764,511 shares of Lottery.com common

As of December 31, 2022, the remaining notes comprising the outstanding balance of $ 185,095 are no longer convertible and have

been reclassified to notes payable.

See Note 4 Accrued interest on this note payable as of December 31, 2022 and 2021 was $ 49,992 and

$ 35,184 , respectively.

May 1, 2020, the Company entered into a Promissory Note with Cross River Bank, which provides for a loan in the aggregate amount of $493,225,

pursuant to the Paycheck Protection Program, (“PPP”).

of October 29, 2021, all except $185,095 of the series B convertible notes were converted into 9,764,511 pre-reverse stock split shares

of Lottery.com common stock (of the reverse stock split of 20:1 of August 9, 2023).

As of December 31, 2023, the remaining notes comprising

the outstanding balance of $185,095 are no longer convertible and have been reclassified to notes payable.

See Note 4 Accrued interest

on this note payable as of December 31, 2023 and 2022 was $64,999 and $49,992, respectively.

May 1, 2020, the Company entered into a Promissory Note with Cross River Bank, which provided for a loan in the aggregate amount of $493,225,

pursuant to the Paycheck Protection Program, (“PPP”).

The PPP, established under Division A, Title I of the Coronavirus Aid,

Relief and Economic Security Act (“CARES Act”) enacted on March 27, 2020, provides for loans to qualifying businesses for

Relief and Economic Security Act (“CARES Act”) enacted on March 27, 2020, provided for loans to qualifying businesses for

amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business.

The loans and accrued interest are forgivable

after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities

(“Qualified Expenses”), and maintains its payroll levels.

The loans and accrued interest were forgivable

after eight weeks as long as the borrower utilized the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities

(“Qualified Expenses”), and maintained its payroll levels.

On August 24, 2021, the PPP loan and accrued interest was forgiven

Small Business Administration (“SBA”) in full.

The Company recorded the full amount related to the forgiveness

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June 29, 2020, the Company entered into a Promissory Note with the U.S.

Small Business Administration (“SBA”) for $ 150,000 .

Small Business Administration (“SBA”) for $150,000.

The loan has a thirty-year term and bears interest at a rate of 3.75% per annum.

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financing event.

As of December 30, 2022 and 2021, the balance of the loans totaled $ 13,000 ,

respectively.

As of December 30, 2023 and 2022, the balance of the loans totaled $13,000, respectively.

August 28, 2018, in connection with the purchase of the entire membership interest of TinBu, the Company entered into several notes payable

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of December 30, 2023 and December 31, 2022, the balance of the notes was $2,601,370 and $2,601,370, respectively.

Stockholders’ Equity

to the Company’s charter, the Company is authorized to issue 1,000,000 shares of preferred stock, par value $ 0.001 per share.

Stockholders’

to the Company’s charter, the Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.001 per share.

board of directors has the authority without action by the stockholders, to designate and issue shares of preferred stock in one or more

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of our common stock in an uncertificated form.

Holders of our Common Stock are entitled to one vote for each share held of record on all

matters submitted to a vote of stockholders.

The holders of Common Stock do not have cumulative voting rights in the election of directors.

Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the

holders of preferred stock having liquidation preferences, if any, the holders of our Common Stock will be entitled to receive pro rata

our remaining assets available for distribution.

of December 31, 2022 and December 31, 2021, 50,540,906 shares and 50,256,317 shares, respectively, were outstanding.

During the year

ended December 31, 2022, the Company issued the following shares of common stock.

Holders of our Common Stock are entitled to one vote for each share held of record on

all matters submitted to a vote of stockholders.

The holders of Common Stock do not have cumulative voting rights in the election of

Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors

and to the holders of preferred stock having liquidation preferences, if any, the holders of our Common Stock will be entitled to receive

pro rata our remaining assets available for distribution.

of December 31, 2023 and December 31, 2022, 2,895,770 and 2,512,816 post reverse stock split, respectively, were outstanding.

During the year ended December 31, 2022, the Company issued the following shares of common stock.

No similar issuances occurred in 2023.

of Common Stock

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a price of $0.01 per warrant;

a minimum of 30 days’ prior written notice of redemption;

and only if, the last sale price of the Company’s common stock equals or exceeds $ 16.00 per share for any 20 trading days within

a minimum of 30 days’

prior written notice of redemption;

and only if, the last sale price of the Company’s common stock equals or exceeds $16.00 per share for any 20 trading days within

a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to

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the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the

Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

Public Warrants to do so on a “cashless basis,”

as described in the warrant agreement.

These warrants cannot be net cash

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of common stock.

The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires

The unit purchase option, which was exercisable for cash or on a cashless basis, at the holder’s option, expired

on May 29, 2023.

The Units issuable upon exercise of this option are identical to those offered by Lottery.com.

The Units issuable upon exercise of this option were identical to those offered by Lottery.com.

The Company accounted

for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Business Combination resulting in a

charge directly to stockholders’ equity.

As of December 31, 2022 all of the 1,750,000 Units are vested, exercisable and outstanding.

charge directly to stockholders’

As of December 31, 2023 all of the 1,750,000 Units have been forfeit.

Stock Warrants

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Forfeited/cancelled

Outstanding at December 31, 2022

Exercisable at December 31, 2022

Outstanding at December 31, 2023 and 2022

Exercisable at December 31, 2023 and 2022

Conversion Feature - Convertible Debt

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until December 31, 2022.

Stock-based Compensation Expense

Stock Option Plan

Conditions for the earnout were not met and the potential earnout shares were forfeit at December 31, 2022.

Stock-based Compensation

Expense 2015 Stock Option Plan

to the closing of the Business Combination, AutoLotto had the AutoLotto, Inc.

2015 Stock Option/Stock Issuance Plan (the “2015

Plan”) in place.

2015 Stock Option/Stock Issuance Plan (the “2015

Plan”) in place.

Under the 2015 Plan, incentive stock options may be granted at a price not less than fair market value of the

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Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully

and immediately vested upon issuance or may vest in one or more instalments over the Participant’s period of Service or upon attainment

of specified performance objectives.

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connection with the Business Combination, our board of directors adopted, and our stockholders approved, the Lottery.com 2021 Incentive

Award Plan (the “2021 Plan”) under which 13,130,368 shares of Class A common stock were initially reserved for issuance.

The 2021 Plan allows for the issuance of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted

stock units and other stock or cash based awards.

The number of shares of the Company’s Class A common stock available for issuance

under the 2021 Plan increases annually on the first day of each calendar year, beginning on and including January 1, 2022 and ending

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Forfeited/cancelled (uncancelled)

Outstanding at December 31, 2022

Exercisable at December 31, 2022

compensation expense related to the employee options was $ 0 and $ 10,077 for the year ended December 31, 2022, and 2021 respectively.

Outstanding at December 31, 2023 and 2022

Exercisable at December 31, 2023 and 2022

compensation expense related to the employee options was $0 for the year ended December 31, 2023, and 2022.

Company awarded restricted stock to employees on October 28, 2021, which were granted with various vesting terms including immediate

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of Basic and Diluted Net Income Loss Per Share

Year ended December 31, 2022

Comprehensive net loss attributable to stockholders

ended December 31, 2022

Comprehensive

net loss attributable to stockholders

$ (24,664,751 )

$ (59,999,072 )

Weighted average common shares outstanding

Basic and diluted

Weighted average common shares

Net loss per common share

Basic and diluted

of December 31, 2023, the Company excluded 209,114 stock options, 468,335 of restricted awards, 488,296 of warrants, 5,000,000 of earn

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loss per share with the effect being anti-dilutive.

Company’s pre-tax income (loss) by jurisdiction was as follows for the years ending December 31, 2022 and December 31, 2021;

of Pre-tax Income (Loss) by Jurisdiction

December 31, 2022

December 31, 2021

$ ( 58,379,329 )

$ ( 55,259,603 )

$ ( 1,899,580 )

$ ( 60,278,909 )

$ ( 54,574,981 )

provision for income taxes for continuing operations for the year ended December 31, 2022 and 2021 consist of the following:

Schedule of Income Tax for

Continuing Operations

December 31, 2022

December 31, 2021

Current income taxes

Total current income taxes

Deferred income taxes

( 1,757,535 )

Total deferred income taxes

( 1,653,067 )

Valuation allowance

Total income tax expense (benefit)

( 1,664,335 )

reconciliation between the amount of reported income tax expense (benefit) and the amount computed by multiplying income from continuing

operations before income taxes by the statutory federal income tax rate is shown below.

Income tax expense for the year ended December

31, 2022 includes state minimum taxes, permanent differences, and deferred tax assets for which a full valuation allowance has been placed.

A corresponding tax expense is included for the year ended December 31, 2022 to reflect the increase in the valuation allowance.

of Increase in the Valuation Allowance

December 31, 2022

December 31, 2021

Tax Expense at statutory federal rate of 21 %

$ ( 12,680,485 )

$ ( 11,460,747 )

State income taxes, net of federal income tax benefit

Foreign rate differential

Permanent differences

Other – Miscellaneous

Change in valuation allowance

Income tax expense (benefit)

$ ( 1,664,335 )

income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting

purposes and the amount used for income tax purposes.

The following table discloses those significant components of our deferred tax

assets and liabilities, including any valuation allowance:

Schedule of Deferred Tax Assets

and Liabilities

Long-term deferred tax assets:

Federal net operating loss carryforwards

Foreign net operating loss carryforwards

Stock compensation

Intangible assets

Total deferred tax assets before valuation allowance

Deferred tax liabilities:

Intangible assets

Total deferred tax liabilities

Valuation allowance

( 34,188,149 )

( 21,362,480 )

Net deferred tax assets and liabilities

to the Global Gaming acquisition and the recording of related deferred tax liabilities, the Company released approximately $ 1,600,000

of valuation allowance since the additional deferred tax liabilities represent a future source of taxable income.

For the year ended

December 31, 2022, the valuation allowance increased by approximately $ 12,825,669 .

the Company believes a full valuation allowance against

the net deferred tax asset is appropriate at this time.

The Company will continue to evaluate the realizability of its deferred tax assets

in future years.

December 31, 2021, our carryforwards available to offset future taxable income consisted of federal net operating loss (“NOL”)

carryforwards of approximately $ 116,408,640 , $ 21,739,564 of which expires between 2036 and 2037 and $ 94,564,720 of which has no expiration

account for uncertain tax positions in accordance with ASC 740-10-25, which prescribes a comprehensive model for the financial statement

recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.

We have not recorded any unrecognized tax benefits as of December 31, 2022.

practice is to recognize interest and penalties related to income tax matters in income tax expense in our consolidated statements of

We did not have any interest or penalties on unrecognized tax benefits accrued at December 31, 2022.

Company files U.S.

federal and state returns.

The Company’s foreign subsidiary also files a local tax return in their local jurisdiction.

federal, state and Mexican perspective the years that remain open to examination are consistent with each jurisdiction’s

statute of limitations.

The Company has not filed its 2021 and 2022 U.S.

federal and state corporate income tax returns.

The Company’s

foreign subsidiary in Mexico is current with the filing of its tax returns through 2022.

The Company expects to file these documents

as soon as possible.

While the Company is in a net loss position and expects no income tax amounts to be due except for minimum state

and local income taxes, the Company is at risk for failure to file.

As of the date of this Report, the Company has not been informed

that such penalties have been assessed, therefore no accrual for such has been recorded in the Company’s financial statements.

The Company’s federal income tax returns for the years 2017-2022 remain subject to examination by the Internal Revenue Service.

We are required to file federal and state

income tax returns in the United States.

The preparation of these tax returns requires us to interpret the applicable tax laws and regulations

in effect in such jurisdictions, which could affect the amount of tax paid by us.

In consultation with our tax advisors, we base our tax

returns on interpretations that are believed to be reasonable under the circumstances.

The tax returns, however, are subject to routine

reviews by the various federal and state taxing authorities in the jurisdictions in which we file tax returns.

As part of these reviews,

a taxing authority may disagree with respect to the income tax positions taken by us (“uncertain tax positions”) and, therefore,

may require us to pay additional taxes.

As required under applicable accounting rules, we accrue an amount for our estimate of additional

income tax liability, including interest and penalties, which we could incur as a result of the ultimate or effective resolution of the

uncertain tax positions.

We account for income taxes using the asset and liability method.

Under the asset and liability method, deferred

tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying

amounts of existing assets and liabilities and their respective tax basis.

Deferred tax assets and liabilities are measured using enacted

tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be

recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period

that includes the enactment date.

A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected

to be realized.

Commitments and Contingencies

Indemnification

Indemnification Agreements

Company enters into indemnification provisions under its agreements with other entities in its ordinary course of business, typically

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Under these provisions, the Company generally indemnifies and holds

harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities

or, in some cases, as a result of the indemnified party’s activities under the agreement.

harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities

or, in some cases, as a result of the indemnified party’s activities under the agreement.

The maximum potential amount of future

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2023 and 2022.

2018, the Company commenced a sale offering and issuance (the “LDC Offering”) of 285

million revenue participation interests (the

“Digital Securities”) of the net raffle revenue of LDC Crypto Universal Public Company Limited (“LDC”).

Securities do not have any voting rights, redemption rights, or liquidation rights, nor are they tied in any way to other equity securities

of LDC or the Company nor do they otherwise hold any rights that a holder of equity securities of LDC or the Company may have or that

a holder of traditional equity securities or capital stock may have.

Rather, each of the holders of the Digital Securities has a pro

rata right to receive 7 %

of the net raffle revenue.

If the net raffle revenue is zero

for a given period, holders of the Digital Securities are not eligible to receive any cash distributions from any raffle sweepstakes

of LDC for such period.

For the year ended December 31, 2022, the company did not incur any obligations to the holders of the outstanding

2018, the Company commenced a sale offering and issuance (the “LDC Offering”) of 285 million revenue participation interests

(the “Digital Securities”) of the net raffle revenue of LDC Crypto Universal Public Company Limited (“LDC”).

The Digital Securities do not have any voting rights, redemption rights, or liquidation rights, nor are they tied in any way to other

equity securities of LDC or the Company nor do they otherwise hold any rights that a holder of equity securities of LDC or the Company

may have or that a holder of traditional equity securities or capital stock may have.

Rather, each of the holders of the Digital Securities

has a pro rata right to receive 7% of the net raffle revenue.

If the net raffle revenue is zero for a given period, holders of the Digital

Securities are not eligible to receive any cash distributions from any raffle sweepstakes of LDC for such period.

For the year ended

December 31, 2023, the company did not incur any obligations to the holders of the outstanding Digital Securities.

For the year ended

December 31, 2021, the Company incurred an obligation to pay an aggregate amount of approximately $5,632 to holders of the outstanding

Digital Securities.

For the year ended December 31, 2021, the Company incurred an obligation to pay an aggregate amount of approximately

holders of the outstanding Digital Securities.

The Company did not satisfy any of those obligations during the years ended December 31,

2021 or 2022.

Company leases office space in Spicewood, Texas which expires January 21, 2024.

For the year ended December 31, 2022 and 2021, the Company’s

The Company did not satisfy any of those obligations during the years ended December 31, 2021, 2022, or 2023.

Company leased office space in Spicewood, Texas which expired January 21, 2024.

For the year ended December 31, 2023 and 2022, the Company’s

total rent expense was approximately $173,837 and $173,837, respectively.

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The Company regularly reviews these transactions;

however, the Company’s

results of operations may have been different if these transactions were conducted with nonrelated parties.

the year ended December 31, 2020, the Company entered into borrowing arrangements with the individual founders to provide operating

cash flow for the Company.

The Company paid $ 4,700

during 2021 and the outstanding balance was $ 13,000 at December 31, 2022 and December 31, 2021.

the years ended December 31, 2021 and 2020, the Company entered into a services agreement with Master Goblin Games, LLC (“Master

Goblin Games”), an entity owned by Ryan Dickinson, a former officer of the Company, to facilitate the establishment of receipt

the year ended December 31, 2020, the Company entered into borrowing arrangements with the individual founders to provide operating cash

flow for the Company.

The Company paid $4,700 during 2021 and the outstanding balance was $13,000 at December 31, 2023 and December 31,

the years ended December 31, 2021 and 2020, the Company entered into a services agreement with Master Goblin Games, LLC (“Master

Goblin Games”), an entity owned by Ryan Dickinson, a former officer of the Company, to facilitate the establishment of receipt

of retail lottery licenses in certain jurisdictions.

As of December 31, 2023, the Company had no outstanding related party payables.

to the Service Agreement, Master Goblin is authorized and approved by the Company to incur up to $ 100,000 in initial expenses per location

to the Service Agreement, Master Goblin was authorized and approved by the Company to incur up to $100,000 in initial expenses per location

for the commencement of operations at each location, including, without limitation, tenant improvements, furniture, inventory, fixtures

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Similarly, pursuant to the Service Agreement, during each

month of operation, Master Goblin is authorized to submit to the Company for reimbursement on-going expenses of up to $ 5,000 per location

month of operation, Master Goblin was authorized to submit to the Company for reimbursement on-going expenses of up to $5,000 per location

for actually incurred lease expenses.

The initial expenses are submitted by Master Goblin to the Company upon Master Goblin securing

a lease and leases are only secured by Master Goblin in any location upon request of the Company.

Such initial expenses are recorded

The initial expenses were submitted by Master Goblin to the Company upon Master Goblin securing

a lease and leases were only secured by Master Goblin in any location upon request of the Company.

Such initial expenses were recorded

by the Company as lease obligations.

On-going expenses are submitted by Master Goblin to the Company on a monthly basis, subject to offset,

and are recorded by the Company as an expense.

To the extent Master Goblin has a positive net income in any month, exclusive of the sale

of lottery games, such net income reduces or eliminates such reimbursable expenses for that month.

On-going expenses were submitted by Master Goblin to the Company on a monthly basis, subject to

offset, and were recorded by the Company as an expense.

To the extent Master Goblin had a positive net income in any month, exclusive

of the sale of lottery games, such net income reduced or eliminated such reimbursable expenses for that month.

January 2023, Woodford Eurasia Assets, Ltd.

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documentation for this transaction has been signed.

Revenue Disaggregation

disaggregation consists of the following:

of Revenue Disaggregation

Subsequent Events

January 30, 2023, Mr.

Moffly resigned as Interim Chief Financial Officer of the Company.

February 1, 2023, the Board of Directors of the Company appointed Mr.

Mark Gustavson as Chief Executive Officer and principal executive

officer of the Company.

Gustavson will also serve as principal financial/accounting officer of the Company until a replacement is

Mark Gustavson, as CEO, replaced Mr.

Quraeshi, who is no longer serving as Chief Executive Officer or as a principal

executive officer of the Company, effective February 1, 2023, as a result of the change in Chief Executive Officer of the Company approved

by the Board of Directors.

March 13, 2023, John Brier, Bin Tu and JBBT, LLC (collectively, the “TinBu Plaintiffs”) filed its original complaint against

Lottery.com, Inc.

f/k/a AutoLotto, Inc.

and its wholly-owned subsidiary TinBu, LLC (“TinBu”) in the Circuit Court of the

13 th Judicial District in and for Hillsborough County, Florida (the “TinBu Complaint”).

The Complaint alleges

breach of contract(s) and misrepresentation with alleged damages in excess of $ 4.6 million.

The parties agreed to extend the Company

and its subsidiary’s deadline to respond until May 1, 2023.

On May 2, 2023, the Company and its subsidiary retained local counsel

who filed a Notice of Appearance on behalf of the Company and TinBu and filed its Motion for Enlargement requesting the Court to extend

its deadline to file its initial response to the Complaint by an additional 30 days (the “TinBu Motion”).

As of the date

of this Report, the TinBu Motion has not been set for a hearing.

March 29, 2023, the WinTogether Foundation Board of Directors voted to suspend its relationship with the Company.

On April 22, 2023, the Company signed an exclusive affiliate agreement

with International Gaming Alliance (IGA), to supply official Texas lottery tickets in the Dominican Republic.

April 25, 2023, the Company recommenced its ticket sales operations through its Texas retail network.

reported on form 8-K filed with the SEC on February 9, 2024, on February 5, 2024, the Company entered into a Memorandum of Understanding

(the “MOU”) with WA Technology Group Limited (“WATG”), whereby the Company has agreed to pay WATG a total of

$500,000 US dollars in restricted common stock at a price of $3.00 per share.

A second payment by Lottery.com to WATG shall be due in

five years and 2 months from the date of the definitive agreement to be signed by the parties at a later date.

The total consideration

for the second payment is the equivalent of $500,000 US dollars in restricted common stock at market value on the date the second payment

In addition, the Company will nominate an individual (at a later date) from WATG to act as a dedicated consultant to the Company

for the purpose of expanding its brand, ticket sales and global operations.

In exchange, the Company shall own a non-exclusive perpetual

single use license for WATG’s Lottery Player & Account Management Software (“PAM”) and WATG shall provide its full

spectrum of iGaming solutions to the Company to manage its global growth strategy.

The parties shall co-operate and collaborate with

one another’s businesses and shall enter a more definitive agreement at a later date.

reported on form 8-K filed with the SEC on February 21, 2024, on February 15, 2024, the

Company entered into a Memorandum of Understanding (the “MOU”) with S&MI Ltd.

(“SportLocker.com”), whereby

it agreed to pay the shareholders of S&MI Ltd.

a total of $1,000,000 USD in restricted common stock at a valuation of $3.00 per share.

The first payment of $150,000 USD in restricted common stock (50,000 shares) of the Company is due and payable not later than June 15,

The remaining payments in restricted common stock to the shareholders of S&MI Ltd.

by the Company will be made as follows:

(i) a second payment of $212,500 USD (70,833 shares) due on or before August 14, 2024;

(ii) a third payment, of $212,500 USD (70,833

shares) due on or before November 12, 2024;

(iii) a fourth payment of $212,500 USD (70,833 shares) due on or before February 10, 2025;

and (vi) a final and fifth payment of $212,500 USD (70,834 shares) due on or before May 16, 2025.

The terms and conditions set forth

in the MOU shall be incorporated into a definitive agreement to be entered into by the parties with a Closing Date on or before April

addition, the Company has agreed to make available to the business of SportLocker.com, cash, media credits or combination thereof over

the twelve months following the Closing Date as additional capital investment into the business plan, to facilitate brand awareness,

user acquisition and general performance marketing and promotion, influencer and subscription campaigns and branding activities of S&MI’s

streaming and social engagement, subject to the Company successfully raising a minimum of new capital.

March 7, 2024, Sports.com, a wholly-owned subsidiary of the Company, announced by press release that it has launched the “Sports.com

The App (which is available for download for free from all major app stores) connects sports content with audiences worldwide.

By uniting a diverse community of sports enthusiasts across various genres, demographics, and countries, Sports.com plans to eliminate

multiple cultural barriers and foster a global sports community.

March 28, 2024, Sports.com, a wholly-owned subsidiary of the Company, announced by press release that it has obtained the rights to live

stream the March 31, 2024 heavyweight title fight between Frazier Clarke and Fabio Wardley.

The live stream will be available to view

for free for millions of sports fans in Africa, via the Sports.com website.

live streaming event is the result of a partnership between Sports.com, BOXXER, the fast-growing UK boxing promotional company, and Sky

Sports in the UK and Ireland.

Sports.com had entered into an agreement with BOXXER to provide live coverage through the Sports.com platform

in Africa, via local telecoms partners such as Vodacom, which will provide free access to millions of viewers.

partnership underscores Sports.com’s commitment to bringing inclusivity, innovation, and entertainment to sports.

To view the live

streaming event on Sports.com, African-based sports fans can sign up via local mobile operators to watch the fight on the Sports.com

Sports.com’s strategic intent is to provide more such content to sports fans in underserved markets including those in

the Middle East and Africa.

April 1, 2024, Lottery.com resumed its sweepstakes offerings through its partnership with the WinTogether.org foundation (DBA:

DonateTo.Win).

The initial sweepstakes will be active until at least April 30,2024.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data