What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-04-21 compared with 2024-04-03 · 878 added, 546 removed, 621 unchanged (70% of the section changed)

1 unchanged sentence

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)

Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2023 and 2022 (as restated)

Consolidated Statements of Equity for the Years ended December 31, 2022 and 2021 (as restated)

Consolidated Statements of Cash Flows for the Years ended December 31, 2023and 2022 (as restated)

Notes to Consolidated Financial Statements (as restated)

Yusufali & Associates, LLC

Certified Public Accountants & IT Consultants

AICPA, HITRUST, PCAOB, PCIDSS, & ISC2 Registered

55 Addison Drive, Short Hills, NJ 07078

Report of Boladale Lawal & Co, Chartered Accountants (PCAOB ID:6993)

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2024 and 2023

Consolidated Statements of Equity for the Years ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the Years ended December 31, 2024 and 2023

Notes to Consolidated Financial Statements

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.

Board of Directors and Stockholders of

on the Financial Statements

have audited the accompanying consolidated balance sheets of Lottery.Com Inc (the ‘Company’) as of December 31, 2024 and

2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’

equity/ (deficit)

and cash flows for each of the two years in the period ended December 31, 2024 and 2023, and the related notes (collectively referred

to as the “financial statements”).

our opinion, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and

its cash flows for each of the two years in the period ended December 31, 2024 and 2023, in conformity with accounting principles generally

accepted in the United States of America.

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

in Note 3, the Company suffered an accumulated deficit of $(263,694,287), net loss of $(28,709,075) and a negative working capital of

$(14,845,076).

The Company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities

to execute its plans and continue operations.

These conditions raise substantial doubt about the Company’s ability to continue

as a going concern.

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

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

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.

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.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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

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.

audits included performing procedures to assess the risks of material misstatement of the 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 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 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

audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

Communication of critical audit matters does not alter in

any way our opinion on the financial statements taken as a whole and we are not, by communicating the critical audit matters, providing

separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

for Material Prepaid Advertising Credit

Company recorded a material prepaid asset related to advertising credits received from third-party vendors in exchange for the Company’s

issuance of shares approximately seven years ago.

As of December 31, 2024, the prepaid asset remains substantially unutilized, with only

30% amortized through the income statement to date.

The remaining balance continues to be carried as a prepaid asset.

this balance was especially challenging due to the nature of the transaction (a non-cash exchange), the long duration of inactivity,

and the lack of direct confirmation from the third-party vendors.

While the Company provided internal documentations, including historical

agreements, email correspondences, and written representations from management, the audit team exercised significant judgment in evaluating

the recoverability of the asset and whether sufficient appropriate audit evidence existed to support its continued recognition.

procedures included, among others:

obtained and reviewed the original transactions documentation and correspondence between the parties,

evaluated the consistency of management’s position, reviewed legal representations

and opinions regarding enforceability.

considered whether the asset remained probable of being realized in future periods.

proposed an allowance of 25% to the income statement

reviewed the journal entry posting, recalculated the prepayment amortization schedule and

credit balance on the advertising agreements

also evaluated the adequacy of the Company’s disclosures related to this prepaid balance

discussed in Note 4 to the financial statements, the company recognized Goodwill, Trade Name, Customers Relationship and Developed Technology

assets related to the acquisition of a subsidiary S&MI Ltd, through a share purchase agreement, and became a wholly owned subsidiary

of Lottery.com Inc.

Determination of the cost of the intangible assets and goodwill, the method as well as the rate of the amortization

requires the use of significant judgement and estimates.

An independent third-party valuation firm was utilized and worked with management

to evaluate key components and significant data inputs which were utilized in performing the analysis.

The valuation firm also provided

guidance to Management about best practices with respect to useful lives of various types of intangible assets.

primary procedures we performed to address this critical audit matter included:

reviewed and challenged the reasonableness of key management assumptions used for the estimate.

reviewed the report of the independent valuation firm that perform the valuation of the intangible

assessed the suitability of the method used by the expert in valuation of the assets.

evaluated the reasonableness of the valuation methodology and discount rate

performed data integrity check including accuracy of sample journal entries by checking them

to approved supporting documents.

Boladale Lawal

have served as the Company’s auditor since 2024.

BALANCE SHEETS

Current assets:

current assets

CONSOLIDATED BALANCE SHEETS

Current assets:

Restricted cash

Accounts receivable

Prepaid expenses

Other current assets

Total current assets

Notes receivable

and equipment, net

long term assets

AND STOCKHOLDERS’

Current liabilities:

payable - current

and other expenses

Intangible assets, net

Property and equipment, net

Other long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

debt, net - non current

long term liabilities

Trade payables

Deferred revenue

Notes payable - current

Accrued interest

Accrued and other expenses

Other liabilities

Total current liabilities

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

Convertible debt, net - noncurrent

Other long-term liabilities

Total long-term liabilities

Commitments and contingencies (Note 13)

Total liabilities

Controlling Interest

Equity Controlling

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, 18,326,855 and 2,877,045 issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

(263,694,287 )

(235,132,590 )

Total Lottery.com

stockholders’

Noncontrolling

liabilities and stockholders’

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

Total Lottery.com Inc.

stockholders’ equity

Noncontrolling interest

Total liabilities and stockholders’ equity

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

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Ended December 31,

and administrative

and amortization

Years Ended December 31,

(As Restated)

Cost of revenue

Operating expenses:

(24,182,724 )

Personnel costs

Professional fees

General and administrative

Depreciation and amortization

Total operating expenses

Loss from operations

(17,650,843 )

Other expenses

loss of prepaid advertising credits

other expenses, net

before income tax

(24,702,722 )

(60,278,909 )

tax expense (benefit)

Interest expense

Other expense

Reserve for loss of prepaid advertising

Loss on impairment of intangibles & goodwill

Total other expenses, net

Net loss before income tax

(25,706,039 )

Income tax expense (benefit) check 2022 may need reclass 23,364

(25,766,039 )

Other comprehensive

currency translation adjustment, net

Comprehensive

Other comprehensive loss

Foreign currency translation adjustment, net

Comprehensive loss

(28,391,651 )

(25,836,312 )

income attributable to noncontrolling interest

loss attributable to Lottery.com Inc.

Net income (loss) attributable to noncontrolling interest

Net loss attributable to Lottery.com Inc.

$ (28,561,697 )

1 unchanged sentence

Net loss per common share

Weighted average common shares

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

Basic and diluted

Weighted average common shares outstanding

Basic and diluted recheck WA shares

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

STATEMENTS OF EQUITY

THE YEAR ENDING DECEMBER 31, 2024 and 2023

Other Comprehensive

AutoLotto Inc.

Stockholders’

Noncontrolling

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 )

(60,378,988 )

as of December 31, 2022

Stockholders’

Noncontrolling

Stockholders’

Balance as of December 31, 2022

(208,187,210 )

Stock based compensation

Prior period adjustments to Accumulated Deficit

Other comprehensive loss

(25,563,699 )

1 unchanged sentence

(25,836,311 )

based compensation

comprehensive loss

Comprehensive

Balance as of December 31, 2023

(235,132,590 )

Stock based compensation

Stock issued for acquisition of subsidiary

Stock issued for conversion of debt to equity

Exercise of Stock Options

Warrants issued to retire debt

Stock issued for Commitment fee, Stock Purchase Agreement

Stock issued in lieu of cash payments

Other comprehensive loss

(28,561,697 )

as of December 31, 2023

(28,561,697 )

(28,731,743 )

Balance as of December 31, 2024

(263,694,287 )

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

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

STATEMENTS OF CASH FLOWS

Ended December 31,

flow from operating activities

loss attributable to Lottery.com Inc.

$ (24,664,751 )

$ (59,999,072 )

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 )

long term liabilities

cash provided by operating activities

Years Ended December 31,

Cash flow from operating activities

Net loss attributable to Lottery.com Inc.

$ (28,561,697 )

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

$ (25,563,499 )

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.

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

Net income (loss) attributable to noncontrolling interest

Depreciation and amortization

Stock based compensation expense

Stock issued in lieu of cash payments

Stock issued for commit fee, stock purchase agreement

Warrants issued to retire debt

Loss on impairment of goodwill and intangibles

Changes in assets & liabilities:

Accounts receivable

Prepaid expenses

Notes Receivable

Other current assets

Other long term assets

Trade payables

Deferred revenue

Accrued interest

Accrued and other expenses

Other liabilities

Liability for acquisition of subsidiary

Other long-term liabilities

Prior period adjustments to Accumulated Deficit

Net cash used by operating activities

Cash flow from investing activities

Purchases of property and equipment

Investment in goodwill and intangibles

Net cash used in investing activities

Cash flow from financing activities

Proceeds (Payments) from loans from execs

Proceeds (Payments) from convertible

notes payable

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net change in net cash and restricted cash

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

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

TO CONSOLIDATED FINANCIAL STATEMENTS

Nature of Operations

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

or “the Company”), was formed as

During fiscal year 2024,

the Company continued to address legacy issues while identifying and securing partnerships along with completing key acquisitions in

order to stage Lottery.com for growth in fiscal year 2025.

The cornerstone of the Company’s operational progress for fiscal year 2025 will be driven

by technology, M&A, the monetization of Sports.com and product and service and capability enhancements.

(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.

2 unchanged sentences

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 with, and its business is subject to, regulation in each

2 unchanged sentences

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,

1 unchanged sentence

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

4 unchanged sentences

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”).

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.

On September 1, 2024, the

Company completed the acquisition of S&MI Ltd.

Finalizing this acquisition is the foundation for the monetization of Sports.com.

In 2024, the Company launched the Sport.com app providing users around the world with access to curated sports content.

Additionally,

the Company partnered with BOXXER to stream two live championship boxing matches to sports fans in multiple African nations.

Significant Accounting Policies

1 unchanged sentence

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 (“

of the Financial Accounting Standards Board (“

FASB ”).

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

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

All intercompany accounts and transactions have been eliminated

5 unchanged sentences

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.

1 unchanged sentence

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

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.

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,

the Company sustained additional operating losses and anticipates additional operating losses for the next twelve months.

These conditions

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

connection with the Company’s 2022 Operational Cessation, the Company has experienced recurring net losses and negative cash

flows from operations and has on a consolidated basis an accumulated deficit of approximately $258.9

million and working capital of approximately negative $7.5

million on December 31, 2024.

For the year ending December 31, 2024, the Company sustained a net loss of $23.9

The Company sustained a loss from operations of $18.2

million and $17.7

million for the years ending December 31, 2024 and 2023, respectively.

Subsequently, the Company sustained additional

operating losses and anticipates additional operating losses for the next twelve months.

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

1 unchanged sentence

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.

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.

(“UCIL”) on July 21, 2023, 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 the business plan for the relaunch of its core business, the successful monetization of Sports.com, and keeping

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.

2 unchanged sentences

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

(“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;

2 unchanged sentences

maintaining the pre-existing AutoLotto headquarters;

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.

7 unchanged sentences

(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

3 unchanged sentences

Non-controlling

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.

interest represents 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.

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

17 unchanged sentences

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.

In addition, deposits aggregating approximately $13,356 at April 10,

2024 are held in foreign banks.

Management 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,

5 unchanged sentences

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

11 unchanged sentences

Company had no marketable securities as of December 31, 2024 and December 31, 2023.

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

3 unchanged sentences

each period and records a bad debt provision for accounts receivable it believes it may not collect in full.

The Company did not record

any allowance for uncollectible receivables as of December 31, 2023 and 2022.

The Company has not incurred bad debt expense historically.

expenses consist of payments made on contractual obligations for services to be consumed in future periods.

The Company entered into

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.

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.

The current portion of prepaid expenses is included

in current assets on the consolidated balance sheets.

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

years ended December 31, 2023 and 2022, respectively.

In the fall of 2024, the

Company completed a project whereby certain older items in accounts receivable for the TinBu subsidiary were offset against the allowance for

uncollectible receivables, resulting in a reduction in the number of individual items in accounts receivable which were aged greater

than 90 days and the total amount for them.

At the completion of this project, the balance in the allowance for uncollectible receivables was

At the end of 2024 the Company increased the allowance for uncollectible receivables by $10,984 .

At December 31, 2024 the allowance for uncollectible receivables was $33,000

whereas, before the project described above, it was $94,270

at December 31, 2023.

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.

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 had total remaining prepaid expenses of $14,449,333

and $19,020,159 for the years ended December 31, 2024 and 2023, respectively.

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

15 unchanged sentences

of Depreciation of Property and Equipment

Computers and equipment

Furniture and fixtures

assets (“ROU assets”) represent the Company’s right to use an underlying asset for the lease term and lease liabilities

and equipment

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.

29 unchanged sentences

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 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) ”,

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

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:

7 unchanged sentences

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

6 unchanged sentences

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.

3 unchanged sentences

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

of all lottery game sales as it retains physical possession of lottery game sales tickets from time of sale until the point of redemption.

The Company also retains inventory risk an all lottery game sales tickets as they would be responsible for any potential winnings related

The Company also retains inventory risk on all lottery game sales tickets as they would be responsible for any potential winnings related

to lost or unredeemable tickets at the time of redemption.

2 unchanged sentences

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.

1 unchanged sentence

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.

2 unchanged sentences

with multiple performance obligations

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

For such arrangements, management allocates revenue

8 unchanged sentences

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

6 unchanged sentences

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 .

12 unchanged sentences

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

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

10 unchanged sentences

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.

1 unchanged sentence

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

tax purposes, the Company’s 2020 through 2023 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

For state tax purposes, the Company’s 2019 through 2023 tax years remain open for examination

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

1 unchanged sentence

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.

17 unchanged sentences

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.

Accounting Pronouncements

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.

Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative

impairment test is necessary.

The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero

or negative carrying amounts.

The amendments in this ASU are effective for goodwill impairment tests in fiscal years beginning after

December 15, 2021, and early adoption is permitted.

The Company is currently evaluating this new standard and management does not currently

believe it will have a material impact on its consolidated financial statements, depending on the outcome of future goodwill impairment

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which requires

disclosures of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among

other disclosure requirements.

ASU 2023-09 is effective for the fiscal year beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of the new standard.

November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable

Segment Disclosures,” to enhance disclosures for significant segment expenses for all public entities required to report segment

information in accordance with ASC 280.

The standard did not change the definition of a segment, the method for determining segments

or the criteria for aggregating operating segments into reportable segments.

The amendments are effective for fiscal years beginning

after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Retrospective adoption is required

for all prior periods presented in the financial statements.

The Company adopted the standard effective January 1, 2024.

Company adopted the amendment effective January 1, 2024 for annual reporting purpose.

The adoption did not have a material impact to

the Company’s financial statements or disclosures.

June 2016, the FASB issued ASU No.

1 unchanged sentence

Measurement of Credit Losses

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

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

3 unchanged sentences

for annual reporting periods beginning after December 15, 2022, and early adoption is permitted.

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”

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

is effective for annual reporting periods beginning after December 15, 2021, and early adoption is permitted.

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

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

The Company adopted the standard effective

January 1, 2023.

The adoption did not have a material impact to the Company’s financial statements

or disclosures.

Business Combination

3 unchanged sentences

(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.

Merger closing was a triggering event for the Series B convertible notes, of which $63.8 million was converted into 3,248,526 shares

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

Merger closing was a triggering event for the Series B convertible notes, of which $63.8 million was converted into 164,426 shares of

AutoLotto that were then converted into 488,225 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.

6 unchanged sentences

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

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

4 unchanged sentences

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 300,000 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 200,000 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

no earnout shares were granted specific to that criteria.

As of December 31, 2021, 3,000,000 of the Seller Earnout Shares and 2,000,000

TDAC Founder Earnout Shares were still eligible Earnout Shares until December 31, 2022.

150,000 of the Seller Earnout Shares and 100,000 TDAC Founder Earnout Shares

were still eligible Earnout Shares until December 31, 2022.

Conditions for the earnout were not met and the potential earnout shares

were forfeited on December 31, 2022.

Gaming Acquisition

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.

(“Aganar”)

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

and JuegaLotto, S.A.

(“JuegaLotto”).

JuegaLotto is federally licensed by the Mexico regulatory authorities with jurisdiction

6 unchanged sentences

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.

11 unchanged sentences

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

of Tangible and Intangible Asset Acquisition

of Identified Tangible and Intangible Asset Acquired

Accounts receivable, net

1 unchanged sentence

Other assets, net

Other Receivables

Intangible assets

Accounts payable and other liabilities

Director’s Loan

Customer deposits

11 unchanged sentences

Total Intangibles

Ltd Acquisition

September 1, 2024, the Company finalized an agreement for the acquisition of S&MI, Ltd.

with its shareholders (the “Share Purchase

and Sale Agreement”), wherein the Purchase Price is the total equivalent One Million Dollars USD ($1,000,000.00) in restricted

stock units of common shares in the Company.

(the “Payment-In-Kind”) fixed at Three Dollars USD ($3.00) per share (the “Fixed

Purchase Price is to be paid out over five payments on the following schedule :

The first payment of $150,000 in

restricted common stock (50,000 shares) of the Company is due and payable on September 1, 2024 (the “Completion Date” and

the “First Issuance Date”.).

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

Company will be made as follows:

(i) a second payment of $212,500 (70,833 shares) due on or before the 31 st day following

ninety days after the Completion Date (the Second Issuance Date”);

(ii) a third payment, of $212,500 (70,833 shares) due on or

before the 31 st day following ninety days after the Second Issuance Date (the Third Issuance Date”);

(iii) a fourth

payment of $212,500 (70,833 shares) due on or before the 31 st day following ninety days after the Third Issuance Date (the

“Fourth Issuance Date”);

and (vi) a final and fifth payment of $212,500 (70,834 shares) due on or before the 31 st

day following ninety days after the Fourth Issuance Date.

the event that the closing price of the restricted stock units of common shares of the Company to be issued to the shareholders of S&MI,

is lower than the Fixed Purchase Price on the six (6) month anniversary of any issuance date of said shares (collectively the “Anniversary

Issuance Price”), then the Fixed Purchase Price shall be adjusted downward to the volume-weighted average price (“VWAP”)

of the common stock for the five (5) consecutive trading days immediately preceding the six (6) month anniversary date of said issuance

Accordingly, the Company shall be obligated to tender to the shareholders of S&MI, Ltd.

additional restricted stock units of

common shares of the Company to make up the difference between the Fixed Purchase Price and the Anniversary Issuance Price.

The opening balance of S&MI Ltd has

been included in our consolidated balance sheet since the date of the acquisition.

Since the S&MI Ltd’s financial statements

were denominated in British Pounds, the exchange rate of 1.3141 pounds per dollar was used to translate the balances.

The net purchase price was allocated to

the assets and liabilities acquired as per the table below.

Goodwill represents the future economic benefits arising from other assets

acquired that could not be individually identified and separately recognized.

The fair values of the acquired intangible assets were determined

using the valuation analysis performed by a third-party valuation firm.

total purchase price of $1,000,000

consists of 333,333

shares of common stock at $3.00

The total consideration transferred after net assets

and assumption of long-term debt was approximately $440,000, reflecting the purchase price, net of cash on hand at S&MI Ltd and the

principal amount of certain loans assumed by the Company.

The purchase price is for a 100 %

ownership interest.

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 Identified Tangible and Intangible Asset Acquired

Accounts receivable, net

Other Receivables

Intangible assets

Accounts payable and other liabilities

Director’s Loan

Total liabilities

Total net assets of Acquirees

Property and Equipment, net

6 unchanged sentences

Property and equipment, net

expense for the years ended December 31, 2023 and 2022 amounted to $90,138 and $160,466, respectively.

expense for the years ended December 31, 2024 and 2023 amounted to $9,185 and $90,744,

respectively.

Prepaid Expenses

expenses consist primarily of advertising credits from two top tier media organizations that operate in the United States.

The advertising

credits were obtained in return for warrants, shares of common stock and shares of preferred stock.

The agreements do not specify a time

period for utilizing these credits and there is no requirement to provide cash or other consideration in connection with utilizing them.

The balance can be utilized at any time at the mutual consent of the parties.

The Company expects to begin

utilizing these credits in the second quarter of 2025 and anticipates fully utilizing all of them by the end of 202 5.

they are presented as current assets.

Notes Receivable

March 22, 2022, the Company entered into a three-year 3 secured promissory note agreement with a principal amount of $2,000,000.

bears simple interest at the rate of approximately 3.1% annually, due upon maturity of the note.

The note is secured by all assets, accounts,

and tangible and intangible property of the borrower and can be prepaid any time prior to its maturity date.

As of December 31, 2024,

the entire $2,000,000 in principle was outstanding.

note was received in consideration for a portion of the development work that the Company performed for the borrower who had intended

to use the Company’s technology to launch its own online game in a jurisdiction outside the U.S., where the Company is unlikely

On October 5, 2021, the Company

provided $250,000

to SP Global Holdings in exchange for a 3 year promissory note with interest at 8%.

Principal and accrued interest are due in a balloon payment

Write-Off of Goodwill and Intangibles

required by ASC 350 Intangibles –

Goodwill and Other Impairment and ASC 360 –

Impairment Testing:

Long-Lived Assets, in connection

with preparing the consolidated financial statements for the period ended December 31, 2023, management conducted a review as to whether

there are conditions or circumstances that might indicate the impairment of its long-lived assets, goodwill and other indefinite-lived

intangible assets.

Company reviewed the goodwill and intangibles acquired in the acquisitions of TinBu, LLC and Global Gaming Enterprises, Inc., the domain

names and software purchased from third parties, and software developed in-house.

Each of TinBu, Global Gaming, and Lottery.com is considered

a reporting unit for application of the annual review for potential impairment.

company performed a valuation of each of the reporting units described above, using discounted cash flow methodologies and estimates

of fair market value.

Given the results of the quantitative assessment, the company determined that the goodwill for the TinBu and Global

Gaming reporting units was impaired.

For the year ended December 31, 2023, the company recognized goodwill impairment charges of $5.65

million for the TinBu reporting unit

million for the Global Gaming reporting

The total impairment charges related to goodwill were $6.71

In addition, it was determined

that there was an impairment of certain intangible assets related to Global Gaming.

For the year ended December 31, 2023, the Company

recorded impairment charges of $488,000

to trade names and trademarks and

to technology acquired from Global

The total impairment charges to intangible assets were $800,000 .

Additionally,

in connection with completion of the tax provision for

2023, a transaction which had been recorded for the year ended December 31, 2021 was reevaluated and a decision was made that it should

not have been recorded and should be reversed.

Specifically, at the end of 2021, a decision was made to increase goodwill related to

the acquisition of Global Gaming Enterprises, Inc.

due to an incorrect conclusion that “an adjustment should be made to goodwill

for the recording of related deferred tax liabilities as the Company released $1.6 million of valuation allowance since the additional

deferred tax liabilities represent a future source of taxable income”.

This approach improperly accelerated the effects of future

amortization of intangible assets related to Global Gaming, resulting in inappropriately releasing part of a valuation allowance for

deferred taxes which is not in compliance with GAAP.

At that time, the Company recorded an increase to goodwill for Global Gaming and

an income tax benefit each in the amount of $1,653,067.

We have reversed this transaction by reducing goodwill for Global Gaming by $1,653,067

and have increased accumulated deficit to remove the income tax benefit which was incorrectly recorded for year ended December 31, 2021.

Similarly, the company performed an impairment

analysis for the three months ended September 30 th , 2024 and as a result of that analysis it was determined that impairment

charges were necessary.

Impairments of goodwill for $1.6 million against Tinbu’s goodwill and $1.9 million against Global Gaming’s

goodwill were recorded and $817,000 against

intangibles of Global Gaming was recorded.

This consisted of impairments against Trade Names & Technology in the amount of $547,000,

Technology in the amount of $119,000,

and Customer Relationships in the amount of $150,000.

There were no other impairments identified or recorded for the year ended December 31, 2024.

Intangible assets, net

Gross carrying values and accumulated amortization of intangible assets:

carrying values and accumulated amortization of intangible assets:

of Finite Lived Intangible Assets Amortization Expenses

Carrying Amount

December 31, 2024

December 31, 2023

Gross Carrying Amount

Accumulated Amortization

Gross Carrying Amount

Accumulated Amortization

Amortizing intangible assets

Customer relationships

$ (1,318,033 )

$ (1,006,389 )

Software agreements

1 unchanged sentence

Internally developed software

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

which is included in depreciation and amortization in the Statements of Operations.

The Company determined that there was an impairment

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.

$ (22,996,556 )

$ (17,577,599 )

expense with respect to intangible assets for the year ended December 31, 2024 and 2023 totaled $5,011,329

and $5,550,882, respectively, which is included in depreciation and amortization in the Statements of Operations.

Company determined that there was an impairment 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.

In connection with the annual review of goodwill and intangibles, the Company determined

that it was necessary to write down goodwill by $5,650,000 for TinBu and $1,060,200 for Global Gaming.

The total impairment charges related

to goodwill were $6,710,200 for the year ended December 31, 2023.

It was also determined that there was impairment of certain intangible

assets related to Global Gaming.

As a result, the Company recorded impairment charges of $488,300 to trade names and trademarks and $311,500

to technology acquired from Global Gaming.

The total impairment charges to intangible assets for the year ended December 31, 2023 were

Similarly, the company performed an impairment

analysis for the three months ended September 30, 2024 and as a result of that analysis it was determined that impairment charges were

Impairments of goodwill for $1.6 million against Tinbu’s goodwill and $1.9 million against Global Gaming’s goodwill

were recorded and $817,000 against intangibles

of Global Gaming was recorded.

This consisted of impairments against Trade Names & Technology in the amount of $547,000,

Technology in the amount of $119,000,

and Customer Relationships in the amount of $150,000.

There were no other impairments identified or recorded for the year ended December 31, 2024.

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

double check future amortization.

of Estimated Amortization Expense

Years ending December 31,

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, 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.

Company had software development costs of $476,850 related to projects not placed in service as of both December 31, 2024 and December

31, 2023, which is included in intangible assets in the Company’s consolidated balance sheets.

Amortization will be calculated

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

Notes Payable and Convertible Debt

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 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).

In March 2021, the Secured Convertible Note was fully converted into 69,910 share of the Company’s

common stock.

(see Note 11).

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

5 unchanged sentences

on these notes was $771,500.

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

The Company could not 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, 2022, the remaining

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.

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

As of both December 31, 2024, and

December 31, 2023 the remaining 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 on December 31, 2024.

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

12 unchanged sentences

the Series B Convertible Notes had a balance of $0.

The Company also issued additional convertible promissory notes with unaffiliated

investors for an aggregate amount of $10,000,000 which bear interest at 6% per year, are unsecured and are due in May 2023.

the year ended December 31, 2021, the Company entered into amendments with six of the Series B promissory noteholders to increase the

4 unchanged sentences

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 was 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 pre-reverse stock split shares

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

of October 29, 2021, all except $185,095 of the series B convertible notes were converted into 488,226 shares of Lottery.com common stock

after accounting for the 20:1 reverse stock split that took place on 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

Accrued interest

on this note payable as of December 31, 2023 and 2022 was $79,647 and $64,799, 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, provided for loans to qualifying businesses for

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

1 unchanged sentence

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

1 unchanged sentence

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

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

The loan has a thirty-year 30 term and bears interest at a rate of 3.75% per annum.

5 unchanged sentences

the balance of the loan was $150,000.

As of December 31, 2023, the accrued interest on this note was $5,253

As of December 31, 2024 and December 31, 2023, the accrued interest on this note was $6,756 and

$5,253 respectively.

August 2020, the Company entered into three separate note payable agreements with three individuals for an aggregate amount of $37,199.

10 unchanged sentences

to be loan modifications and accounted for accordingly.

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

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.

of both December 30, 2024 and December 31, 2023, the balance of the notes was $2,601,370.

Accrued interest on these notes was $350,434

on December 31, 2024 and $242,831 on December 31, 2023, respectively.

Stockholders’ Equity

August 9, 2023, the Company amended

its Charter to implement, effective at 5:30 p.m., Eastern time, a 1-for-20 Reverse Stock Split.

At the effective time of the Reverse

Stock Split, every 20 shares of common stock either issued and outstanding or held as treasury stock were automatically combined into

one issued and outstanding share of common stock, without any change in the par value per share.

who would have otherwise been entitled to fractional shares of common stock as a result of the Reverse Stock Split received a cash payment

in lieu of receiving fractional shares.

In addition, as a result of the Reverse Stock Split, proportionate adjustments will be made to

the number of shares of common stock underlying the Company’s outstanding equity awards, the number of shares issuable upon the

exercise of the Company’s outstanding warrants and the number of shares issuable under the Company’s equity incentive plans

and certain existing agreements, as well as the exercise, grant and acquisition prices of such equity awards and warrants, as applicable.

The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders on

August 7, 2023 and was subsequently approved by the Board of Directors on August 7, 2023.

An adjustment was made

to the Company’s warrants based on the 1-for-20

The adjustment was made automatically.

The number of shares of common stock issued subject to stock options, warrants,

or convertible securities was automatically decreased by the split ratio and the exercise price or conversion ratio will automatically

be proportionately increased by the same split ratio.

of the Reverse Stock Split were reflected in the Quarterly Report on Form 10-Q for the period ended September 30, 2023 and in all subsequent

reports for all periods presented.

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

17 unchanged sentences

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.

of December 31, 2024 and December 31, 2023, 18,877,045

and 2,877,045

shares of Common Stock, 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.

similar issuances occurred in 2023.

of Common Stock

Issuance of Common Stock for legal settlement

Exercise of options (Note 10)

Restricted stock award

Public Warrants became exercisable 30 days after the Closing as the Company has an effective registration statement under the Securities

of December 31, 2021

of Common Stock for legal settlement

of options (Note 11)

of December 31, 2022

of common stock

of December 31, 2023

Public Warrants

Public Warrants became exercisable 30 days after the Closing;

the Company has an effective registration statement under the Securities

Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available

7 unchanged sentences

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

the warrant holders;

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 $320.00 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 the warrant holders;

and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants

2 unchanged sentences

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

settled by the Company in any event.

of December 31, 2021, there were 20,125,000 Public Warrants outstanding.

Immediately after giving effect to the Business Combination,

there were 20,125,002 warrants to purchase share of Common stock outstanding, 20,125,000 of which are public warrants and two of which

were previously warrants of AutoLotto, which are now warrants of Lottery.com and are exercisable to purchase an aggregate of 395,675

shares of common stock.

giving effect to the Business Combination, as of December 31, 2024 there were Public Warrants outstanding for the issuance of 1,006,250

shares of common stock of the Company, which total includes previously issued warrants of AutoLotto, now warrants of Lottery.com Inc.,

which are exercisable for the purchase of an aggregate of 19,784 shares of common stock of the Company.

An adjustment was made to the Company’s

warrants based on the 1-for-20 split ratio.

The adjustment was made automatically.

The number of shares of common stock issued subject

to stock options, warrants, or convertible securities was automatically decreased by the split ratio and the exercise price or conversion

ratio will automatically be proportionately increased by the same split ratio.

warrants of TDAC issued before the business combination were forfeited and did not transfer to the surviving entity.

2 unchanged sentences

exercisable at $240.00 per Unit (or an aggregate exercise price of $21,000,000) commencing on the consummation of the Business Combination.

The 1,750,000 Units represents the right to purchase 1,750,000 shares of common stock and 1,750,000 warrants to purchase 1,750,000 shares

of common stock.

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 87,500 Units represents the right to purchase 87,500 shares of common stock and 87,500 warrants to purchase 87,500 shares of common

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

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’

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

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, 2023, all 87,500 Units have been forfeited.

Stock Warrants

4 unchanged sentences

31, 2024 and 2023.

of Common Stock Warrant

Outstanding at December 31, 2020

Schedule of Common Stock Warrants

at December 31, 2022

Forfeited/cancelled

Outstanding at December 31, 2021

at December 31, 2023

Granted (1) & (2)

Forfeited/cancelled

Outstanding at December 31, 2023 and 2022

Exercisable at December 31, 2023 and 2022

Conversion Feature - Convertible Debt

detailed in Note 7 - Notes Payable and Convertible Debt, the Company has issued two series of convertible debt.

Both issuances resulted

in the recognition of the beneficial conversion features contained within both of the instruments.

The Company recognized the proceeds

allocable to the beneficial conversion feature of $8,480,697 as additional paid in capital and a corresponding debt discount of $2,795,000.

This additional paid in capital is reflected in the accompanying consolidated Statements of Equity.

at December 31, 2024

detailed in Note 4 - as part of the TDAC Combination as of December 31, 2021 a total of 5,000,000 Earnout Shares were eligible for issuance

until December 31, 2022.

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

Conditions for the earnout were not met and the potential earnout shares were forfeited on December 31, 2022.

Stock-based Compensation

Expense 2015 Stock Option Plan

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

9 unchanged sentences

The maximum number of shares of

Common Stock which may be issued over the term of the Plan shall not exceed Four Hundred Fifty Thousand (450,000).

Common Stock which may be issued over the term of the Plan shall not exceed Twenty-Two Thousand Five Hundred (22,500).

Options are exercisable

2 unchanged sentences

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.

6 unchanged sentences

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

on and including January 1, 2031 by a number of shares of Company common stock equal to five percent (5%) of the total outstanding shares

of Company common stock on the last day of the prior calendar year.

Notwithstanding the foregoing, the Board may act prior to January

1st of a given year to provide that there will be no such increase in the share reserve for such year or that the increase in the share

reserve for such year will be a lesser number of shares of Company common stock than would otherwise occur pursuant to the preceding

As of December 31, 2022, the Company has not granted awards under the 2021 Plan.

Company did not issue any new stock options during the years ended December 31, 2023 and 2022.

The following table shows stock option

activity for the years ended December 31, 2023 and 2022:

Award Plan (the “2021 Plan”) under which 616,518

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 on and including January 1, 2031 by a number of shares of Company common stock equal to five percent (5 %)

of the total outstanding shares of Company common stock on the last day of the prior calendar year.

Notwithstanding the foregoing, the

Board may act prior to January 1st of a given year to provide that there will be no such increase in the share reserve for such year

or that the increase in the share reserve for such year will be a lesser number of shares of Company common stock than would otherwise

occur pursuant to the preceding sentence.

Equity Incentive Plan

October 10, 2023, the Board adopted the Lottery.com 2023 Employees’ Directors’ and Consultants Stock Issuance and Option

Plan (the “2023 Plan”) under which 500,000 shares of Class A common stock were initially reserved for issuance.

Plan allows for the issuance of incentive and non-qualified stock options, and restricted stock.

As of December 31, 2024, the Company

had awarded 350,000 shares under the 2023 Plan.

February 5, 2024, the Company issued stock options to officers, directors, and key consultants.

The exercise price for the options is

$1.95 and the maturity date in February 5, 2029.

There were no grants of stock options during the year ended December 31, 2023.

The following

table shows stock option activity for the years ended December 31, 2024 and 2023:

of Stock Option Activity

Outstanding at December 31, 2020

at December 31, 2022

Forfeited/cancelled

Outstanding at December 31, 2021

Forfeited/cancelled (uncancelled)

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

vesting, service-based vesting, and performance-based vesting.

In accordance with ASC 718, the Company has classified the restricted

stock as equity.

employee issuances, the measurement date is the date of grant, and the Company recognizes compensation expense for the grant of the restricted

shares, over the service period for the restricted shares that vest over a period of multiple years and for performance-based vesting

awards, the Company recognizes the expense when management believes it is probable the performance condition will be achieved.

December 31, 2021, the Company had granted 3,832,431 shares with vesting to begin April 2022.

For the year ended December 31, 2022, the

Company recognized $27,137,991 of stock compensation expense related to the employee restricted stock grants.

As of December 31, 2022,

unrecognized stock-based compensation associated with the restricted stock awards is $4,061,294 which will be expensed over the next

Company had restricted stock activity summarized as follows:

of Restricted Stock Awards Activity

Outstanding at December 31, 2022

at December 31, 2023

Forfeited/cancelled

Restricted shares unvested at December 31, 2023

(uncancelled)

at December 31, 2024

compensation expense related to the employee options was $0

for the year ended December 31, 2024, and 2023.

Loss Per Share

6 unchanged sentences

$ (25,563,699 )

Weighted average common shares

Net loss per common share

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

out shares and 1,750,000 of unit purchase options from the calculation of diluted net loss per share with the effect being anti-dilutive.

of December 31, 2021, the Company excluded 345,661 stock options, 2,012,774 convertible debt into common shares, 3,832,431 of restricted

awards, 3,869,305 of warrants, 1,726,027 of earn out shares and 604,110 of unit purchase options from the calculation of diluted net

loss per share with the effect being anti-dilutive.

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.

average common shares outstanding

loss per common share

of December 31, 2024, the Company excluded 10,456 stock options, 23,417 restricted awards, 24,415 warrants, 250,000 earn out shares and

87,500 unit purchase options from the calculation of diluted net loss per share with the effect being anti-dilutive.

of December 31, 2024, the Company excluded 17,283 stock options, 100,639 convertible debt into common shares, 191,622 restricted awards,

193,465 warrants, 86,301 earn out shares and 30,206 unit purchase options from the calculation of diluted net 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, 2024 and December 31, 2023:

of Pre-tax Income (Loss) by Jurisdiction

ended December 31, 2023

$ (25,047,740 )

$ (25,567,244 )

(28,561,697 )

(25,563,699 )

provision for income taxes for continuing operations for the year ended December 31, 2024 and 2023 consist of the following

Schedule of Income Tax for

Continuing Operations

ended December 31, 2024

current income taxes

deferred income taxes

Income Tax Expense (benefit)

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, 2024 includes state minimum taxes, permanent differences, and deferred tax assets for which a full valuation allowance has been placed.

of Increase in the Valuation Allowance

ended December 31, 2024

Expense at statutory federal rate of 21%

$ (5,510,503 )

$ (5,369,121 )

income taxes, net of federal income tax benefit

Rate Differential

in Valuation Allowance

tax expense (benefit)

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

deferred tax assets:

Net Operating Loss Carryforwards

Compensation & Benefits

Net Operating Loss Carryforwards

deferred tax assets before valuation allowance

tax liabilities:

deferred tax liabilities

(39,525,950 )

deferred tax assets and liabilities

the year ended December 31, 2024, the valuation allowance increased by $10,265,807.

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, 2024, our carryforwards available to offset future taxable income consisted of federal net operating loss (“NOL”)

carryforwards of approximately $173,229,125.

Of this total $22,050,149 expires between 2035 and 2037 and $151,178,976 of which has no

expiration date.

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, 2024.

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

Company files U.S.

federal and state returns.

The Company’s foreign subsidiaries also file local tax returns in their jurisdiction.

federal, state, Mexican and United Kingdom perspective the years that remain open to examination are consistent with each

jurisdiction’s statute of limitations.

The Company has not filed its 2023 and 2024 U.S.

federal and state corporate income tax

The Company’s foreign subsidiaries in Mexico and the United Kingdom are current with the filing of their tax returns through

The Company expects to file U.S.

federal and state tax returns for 2023 and 2024 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

of penalties 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 2020-2023 remain subject to examination by the Internal Revenue Service.

The state returns for 2019-2023 are also open

for examination.

Commitments and Contingencies

Indemnification Agreements

Indemnification

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

1 unchanged sentence

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

6 unchanged sentences

2024 and 2023.

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”).

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

5 unchanged sentences

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.

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.

of December 31, 2023, future minimum rent payments due under non-cancellable leases with initial maturities greater than one year are

For the years ended

December 31, 2024 and 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.

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

2022, 2023,or 2024.

Company leased office space in Spicewood, Texas which expired January 31, 2024 and had continued to utilize that facility on a month-to-month

basis with monthly rent of $1,669 per month until August 31, 2024.

On September 1, 2024, the company moved its headquarters to Fort Worth,

Texas under a membership agreement with monthly cost of $154.

Additionally, the Company has leased retail space in Waco, TX which expires

on December 31, 2024 with monthly rent of $2,434.

The Company also leases a campus in Boca Raton Florida for $25,000 per

month under a 12 month lease agreement that commenced on August 1, 2024 and continues thru July 31, 2025.

For the three months ended

September 30, 2024 and 2023 rent expense was $106,728 and $12,309, respectively.

of December 31, 2024, future minimum rent payments due under non-cancellable leases with initial are as follows:

of Future Minimum Rent Payments Due Under Non-Cancellable Leases

Years ending December 31,

ending December 31,

and Other Loss Contingencies

4 unchanged sentences

of its size and scope.

See Note 15 for additional information.

See Part II, Item 1 for additional information.

Related Party Transactions

1 unchanged sentence

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.

1 unchanged sentence

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

The Company paid $4,700 during 2021 and the outstanding balance was $13,000 on December 31, 2024 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.

20 unchanged sentences

documentation for this transaction has been signed.

January of 2023, the company paid $53,000 to Master Goblin Games for settlement of outstanding obligations of $316,919 and the parties

mutually agreed to terminate the business relationship.

Christopher Gooding, a

director of the Company appointed on August 10, 2023, is an attorney licensed in the United Kingdom who works with the

Company’s outside general counsel on various matters that could potentially impact the Company.

compensated for his services separately from his compensation as a director of the Company.

Gooding began

providing legal services to the Company through the firm Amar Ali Law PLLC in February 2024.

He was paid a total of $264,000

in 2024 for his legal services.

During the quarter ended September 30, 2024, the Company entered into a

borrowing arrangement with Robert Stubblefield, the Company’s Chief Financial Officer, to provide funding for certain operating

expenses of the Company.

At September 30, 2024 the Loan amount was $57,682.

Additional amounts were provided by Mr.

Stubblefield during

the quarter ended December 31, 2024.

The loan amount at year end was $67,941.The Loan was issued at zero percent interest.

Company has not made any payments on the loan as of the date of this report.

Subsequent Events

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.

February 11, 2025, Sports.com entered into

a multi-year global partnership agreement with Soccerex, the world’s leading soccer (hereinafter referred to as “football”)

business event organizer.

The Agreement makes Sports.com the title sponsor for six global events including Soccerex 2025 for MENA, Europe

and USA to be held in Cairo, Amsterdam and Miami, respectively.

This partnership will provide the Company with an influential platform

to engage with key stakeholders in the football industry, further solidifying Sports.com’s position at the intersection of sports,

technology and entertainment.

Working with the Soccerex team and its community presents an opportunity to build brand awareness internationally

for the Company’s gaming, content and entertainment brands.

On February 18, 2025, the Company announced the establishment of a global

advisory board to provide active strategic guidance and support the Company’s growth, structure and expansion into new markets.

The Advisory Board will focus on the Company’s two primary brands, Lottery.com and Sports.com, along with its subsidiaries.

Advisory Board will provide independent advice on evolving trends and challenges to Lottery.com’s board of directors and executive

management team, helping evaluate the Company’s current business model, refine operations and explore new trends and prospects

to accelerate growth.

Additionally, the Advisory Board will support corporate governance and offer strategic recommendations to ensure

compliance and long-term stability.

On February 24, 2025, Texas Lottery Commission Executive

Director Ryan Mindell announced that lottery ticket courier services are not allowed under Texas law and that the agency will move forward

with proposed rule amendments prohibiting lottery courier services within the state.

The Policy prohibits the Company and other courier

services from holding a Texas Lottery retail license or procuring tickets from other licensed retailers.

On February 25, 2025, the Court in the SDNY in the Preston Million Class

Action granted in part and denied in part the Company’s MTD Third Amended Complaint (the “Order).

As set forth in the Order,

the Class Plaintiffs’

Section 10(b) claim shall proceed against Defendant Dickinson and the Company based on post−merger representations

regarding Lottery’s financial performance and financial reporting.

Class Plaintiffs’

and Hoffman’s Section 20(a) claim

premised on Section 10(b) shall likewise proceed against Defendant Dickinson.

Class Plaintiffs’

Section 14(a) claim shall proceed

against the Company and Defendants DiMatteo, Clemenson and Dickinson with respect to certain legal and regulatory compliance statements

in the Proxy.

The remainder of Plaintiffs’

claims were dismissed, including all claims against Komissarov.

The Court also ordered

that Plaintiffs shall have leave to amend within twenty−one (21) days of this opinion and order.

On March 13, 2025, the Court granted

Plaintiff Hoffman’s motion for leave for additional time to amend his complaint.

Accordingly, Hoffman’s’

Third Amended

Complaint shall be due April 24, 2025.

Defendants’

motions to dismiss shall be due June 30, 2025;

Plaintiff Hoffman’s opposition

brief will be due August 14, 2025;

and Defendants’

reply briefs shall be due September 17, 2025.

25, 2025, the United States District Court for the Southern District of Florida has ruled in favor of the Company and Matthew McGahan

(“Defendants”), granting with prejudice the Motion to Dismiss for Failure to State a Claim in the case styled Sharon A.

Lottery.com, Inc.

and Matthew McGahan (Case No.

24-60993-CIV-DAMIAN).

The Court’s ruling underscored the lack of

credible evidence presented by the Plaintiffs.

The Court determined that the allegations did not meet the required legal threshold, thereby

rejecting all claims brought against Lottery.com and Matthew McGahan.

On March 7, 2025, the Company received notice from received a notice from

The Nasdaq Stock Market LLC (“Nasdaq”) determining that as a result of the closing bid price of the Company’s common

share being $1.00 or above for the last twenty business days, the Company regained compliance with Nasdaq Listing Rule 5450(a)(1) (the

“Minimum Bid Price Requirement”).

Notably, the Company regained compliance with the Minimum Bid Price Requirement without

effectuating a reverse stock split that was approved by the shareholders at the 2024 Annual Stockholder’s Meeting.

Additionally,

the Company’s market value of publicly held shares being $5,000,000 or above during the same period, the Company regained compliance

with Nasdaq Listing Rule 5450(b)(1)(C).

2025, the Company completed the acquisition of Spektrum Ltd from PlusEvo Ltd through a signed Share Purchase Agreement (SPA).

This acquisition,

valued at $1.5 million in common stock at $3 per share, supports Lottery.com’s strategic expansion and the development of Lottery.com

International.

The acquisition provides the Company with a compliant platform to support lottery, sweepstakes and social gaming operations

in dozens of international jurisdictions.

On March 25, 2025, Sports.com Studios (“SDCS”) was launched by the Company.

will serve as the Company’s dedicated content creation arm, producing original content for the Sports.com platform along with generating

revenue through content licensing and distribution to third parties.

2025, the Company registered Sports.com as a fictitious name under AutoLotto, Inc.in the state of Florida.

This permits the Company to

conduct business in the state under the Sports.com brand name.

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

1 unchanged sentence

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