Financial Analysis

Note 3. Business Combination TDAC Combination On October 29, 2021, the Company and AutoLotto consummated the transactions contemplated by the Merger Agreement. At the Closing, each share of common stock and preferred stock of AutoLotto that was issued and outstanding immediately prior to the effective time of the Merger (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. The Merger closing was a triggering event for the Series B convertible notes, of which $ 63.8 million was converted into 16,243 shares of AutoLotto that were then converted into 48,823 shares of Lottery.com common stock using the Exchange Ratio. At the Closing, each option to purchase AutoLottos 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. The Company accounted for the Business Combination as a reverse recapitalization whereby AutoLotto was determined as the accounting acquirer and TDAC as the accounting acquiree. Refer to Note 2, Summary of Significant Accounting Policies , for further details. Accordingly, the Business Combination was treated as the equivalent of AutoLotto issuing stock for the net assets of TDAC, accompanied by a recapitalization. The net assets of TDAC are stated at historical cost, with no goodwil …

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Note 14. Commitments and Contingencies Indemnification Agreements The Company enters into indemnification provisions under its agreements with other entities in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. 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 Companys activities or, in some cases, as a result of the indemnified partys activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2025 and 2024. Digital Securities In 2018, the Company commenced a sale offering and issuance (the LDC Offering) of 285 million revenue participation interests (the Digital Securities) of the net raffle revenue of LDC Crypto Universal Public Company Limited (LDC). The Digital Securities do not have any voting rights, redemption rights, or liquidation rights, nor are they tied in any way to other equity securities of LDC or the Company nor do they otherwise hold any rights that a holder of equ …

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Note 9. Notes Payable and Convertible Debt Secured Convertible Note In 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 6,991 shares of the Companys common stock. (see Note 11). Series A Notes From August to October 2017, the Company entered into seven Convertible Promissory Note Agreements with unaffiliated investors for an aggregate amount of $ 821,500 . The notes bear interest at 10 % per year, are unsecured, and were due and payable on June 30, 2019. The parties verbally agreed to extend the maturity of the notes to December 31, 2021 . As of both December 31, 2023 and December 31, 2022, the balance due on these notes was $ 771,500 . The Company could not prepay the loan without consent from the noteholders. As of December 31, 2021, there were no Qualified Financing events, that triggered conversion, this included the TDAC combination. As of both December 31, 2025, and December 31, 2024 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, 2025 and 2024. Series B Notes From November …

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Note 7. Write-Off of Goodwill and Intangibles As 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, 2025, 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. The Company reviewed the goodwill and intangibles acquired in the acquisitions of TinBu, LLC, Global Gaming Enterprises, Inc., Sports.com Media Ltd, and 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. The company performed a quantitative assessment for each of the reporting units described above and determined that goodwill and intangibles were not impaired for the year ended December 31, 2025. For 2023, the Company performed a valuation of each of the reporting units using discounted cash flow methodologies and estimates of fair market value. Based on 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. Accordingly, the Company recognized goodwill impairment charges of $ 5.65 million for the TinBu reporting …

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Note 13. Income Taxes The Company accounts for income taxes in accordance with ASC 740, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences and net operating loss (NOL) carryforwards. Income Tax Provision For the years ended December 31, 2025 and 2024, the Company recorded an income tax provision of $ 0 . The Company has generated net losses in the current and prior periods and does not expect to incur current income tax expense. Accordingly, no current income tax expense has been recorded. Deferred tax assets generated during the period have been fully offset by a valuation allowance, resulting in no net deferred tax benefit recognized in the consolidated statements of operations. Deferred Tax Assets and Valuation Allowance The Companys deferred tax assets primarily relate to net operating loss carryforwards and other temporary differences. Due to cumulative losses and uncertainty regarding the timing and extent of future taxable income, the Company has recorded a full valuation allowance against its deferred tax assets as of December 31, 2025 and 2024. As a result, no net deferred tax assets are presented on the consolidated balance sheets. Net Operating Loss Carryforwards As of December 31, 2025, the Company has generated federal and state net operating loss carryforwards. Such carryforwards may be subject to limitations under Section 382 of the Internal Revenue Code due to ownership changes. T …

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Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires enhanced disclosures regarding significant segment expenses and other segment items for entities that report segment information under ASC 280. The amendments do not change the definition of a segment, the method for determining reportable segments, or the criteria for aggregating operating segments. The Company adopted ASU 2023-07 effective January 1, 2024 for annual reporting purposes. The adoption did not have a material impact on the Companys consolidated financial statements but required expanded segment disclosures. In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires expected credit losses on financial assets held at the reporting date to be measured based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted ASU 2016-13 effective January 1, 2023. The adoption did not have a material impact on the Companys consolidated financial statements or related disclosures. …

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Note 15. Related Party Transactions The Company has from time to time entered into transactions with related parties. The Company regularly reviews these transactions; however, the Companys results of operations may have been different if these transactions were conducted with nonrelated parties. During the year ended December 31, 2020, the Company entered into borrowing arrangements with the individual founders to provide operating cash flow for the Company. The Company paid $ 4,700 during 2021 and the outstanding balance was $ 13,000 on December 31, 2025 and December 31, 2024. Christopher Gooding, appointed as a director of the Company on August 10, 2023, is an attorney licensed in the United Kingdom. He previously provided limited consulting services to the Companys outside general counsel on select U.K. legal matters that could potentially impact the Company. These consulting services began in February 2024, and Mr. Gooding was compensated separately from his director compensation, receiving a total of $ 264,000 in 2024. To maintain his independence as a director, Mr. Gooding ceased providing consulting services to the Companys outside general counsel as of June 30, 2025. His compensation for consulting services from January 1, 2025 to June 30, 2025 was $ 144,000 . Other than matters where Mr. Gooding is a named defendant alongside the Company, he provides opinions on all Board matters solely in his capacity as an independent director, without additional compensation from …

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Note 2. Significant Accounting Policies Basis of Presentation The 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. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ( ASC ) and Accounting Standards Update ( ASU ) of the Financial Accounting Standards Board ( FASB ). All intercompany accounts and transactions have been eliminated in consolidation. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and classification of liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern. Pursuant to the requirements of the Financial Accounting Standards Boards ASC Topic 205-40, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, co …

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Note 10. Stockholders Equity Reverse Split On August 28, 2025, the Company filed a Certificate of Amendment (the Certificate of Amendment) with the Secretary of State of the State of Delaware to amend the Companys Third Amended and Restated Certificate of Incorporation to effect, effective as of 5:30 p.m. Eastern Time on August 28, 2025, a 10-for-1 reverse stock split (the Reverse Stock Split) of its common stock, par value $ 0.001 per share (Common Stock). At the effective time of the Reverse Stock Split, every ten(10) shares of Common Stock either issued and outstanding or held as treasury stock was automatically reclassified into one new share of Common Stock. The total number of shares of Common Stock authorized for issuance did not change as a result of the Reverse Stock Split. The Reverse Stock Split was approved by the Companys stockholders at the Companys 2024 annual meeting of its stockholders held virtually on February 20, 2025 (the Annual Meeting) and approved by the board of directors of the Company (the Board) on August 13, 2025. The new CUSIP number for the Common Stock following the Reverse Stock Split is 54570M306. The par value per share of Common Stock will remain unchanged at $ 0.001 . The Companys publicly traded warrants continue to be traded on Nasdaq under the symbol LTRYW and the CUSIP number for the warrants remains unchanged. In addition, as a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of Common Sto …

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Note 16. Subsequent Events Management has evaluated these events in accordance with ASC 855, Subsequent Events, and determined that they represent non-recognized subsequent events, as it relates to conditions arising after the balance sheet date. Accordingly, no adjustments to the consolidated financial statements were required. Related Party Transaction On January 15, 2026, the Company entered into certain convertible promissory notes with Robert Stubblefield, CFO and Interim CEO & President and to Greg Potts, COO, for unpaid compensation still owed to Messrs. Stubblefield and Potts from 2023 and 2024. As officers of the Company, they are related parties. The maturity date of the convertible promissory notes is January 15, 2027. Interest at a rate of 10 % per annum shall accrue on the principal amount of each note until the maturity date. The principal amount is: $ 291,485 and $ 258,448 , respectively for Messrs. Stubblefield and Potts. As of the date of this report, neither Messrs. Stubblefield or Potts have converted any portion of their notes. Other Convertible Note On January 15, 2026, the Company entered into a convertible promissory note with the Amar Ali Law, PLLC for outstanding legal fees provided to the Company. The maturity date of the convertible promissory note is January 15, 2027 . Interest at a rate of 10 % per annum shall accrue on the principal amount of $ 1,445,361 for the note until the maturity date. As of the date of this report, no portion of the no …

SubsequentEventsTextBlock · excerpt; the full note is in the filing