S-1

As filed with the Securities and Exchange Commission on June 9, 2009   Registration No.__________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

Loto Inc.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization) 7373 (Primary Standard Industrial Classification Code Number) 27-0156048 (I.R.S. Employer Identification No.)

23-5250 Satellite Dr., Mississauga

Ontario, Canada M8X 1B8

416-500-7799

(Address and telephone number of principal executive offices and principal place of business)

United Corporate Services, Inc.

202 South Minnesota Street.

Carson City, NV

89703

 (Name, address and telephone number of agent for service)

Copies of all communications to:

Travis Gering, Esq.

Wuersch & Gering LLP

100 Wall Street, 21st Floor

New York, New York 10005

Phone: (212) 509-5050

Fax: (212) 610-9104

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

CALCULATION OF REGISTRATION FEE

Title of securities to be registered	Amount to be registered		Proposed maximum offering price per unit (1)(2)		Proposed maximum aggregate offering price		Amount of registration fee
Common Stock for sale by selling stockholders		11,000,000	$	1.25	$	13,750,000	$	767.25

(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act.

(2) The selling stockholders will offer their shares at $1.25 per share. There is currently no established trading market in our common stock.  The price of $1.25 is a fixed price at which the selling stockholders may sell their shares until the Company’s common stock is quoted on the OTC Bulletin Board at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.  We will not receive proceeds from the sale of shares from the selling stockholders.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement is filed with the Securities and Exchange Commission and becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the sale is not permitted.

Subject to completion, dated ___________, 2009

LOTO INC.

11,000,000 SHARES OF COMMON STOCK

This prospectus relates to the sale of up to 11,000,000 shares of common stock in connection with our June 9, 2009 Series A private placement of 15,000,000 shares of restricted common stock.  This is the initial registration of shares of our common stock.  The resale of these shares is not being underwritten.  We will not receive any of the proceeds from the sale of those shares being sold by the selling stockholders.  The selling stockholders may sell or distribute the shares, from time to time, depending on market conditions and other factors, through underwriters, dealers, brokers or other agents, or directly to one or more purchasers.  The selling stockholders will offer their shares at $1.25 per share until our shares are quoted on the OTC Bulletin Board and, assuming we secure this qualification, thereafter at prevailing market prices or privately negotiated prices.  Pursuant to the registration rights granted by us to the selling stockholders, we are obligated to register the shares held by the selling stockholders. We are paying substantially all expenses incidental to registration of the shares.

At the present time, our common stock is not registered for trading or listed on any exchange or quotation system.

Our principal executive offices are located at Mobilotto Systems, Inc., 23-5250 Satellite Drive, Mississauga, Ontario, Canada, and our telephone number is 416-500-7799.

Your investment involves a high degree of risk.  See “Risk Factors” starting on page 6 for certain

information you should consider before you purchase the shares.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is _________, 2009.

2

TABLE OF CONTENTS

	Page
Summary of Our Offering	4
Risk Factors	6
Cautionary Note Regarding Forward Looking Statements	17
Use of Proceeds	17
Determination of Offering Price	17
Dilution	17
Selling Stockholders	18
Plan of Distribution	18
Description of Securities to be Registered	20
Interests of Named Experts and Counsel	21
Business	22
Description of Property	26
Legal Proceedings	26
Market Price of and Dividends on Common Equity and Related Stockholder Matters	26
Management's Discussion and Analysis of Financial Conditions and Results of Operations	28
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	29
Quantitative and Qualitative Disclosures about Market Risk	29
Directors, Executive Officers, Promoters and Control Persons	30
Executive Compensation	31
Security Ownership of Certain Beneficial Owners and Management	31
Transactions with Related Persons, Promoters and Certain Control Persons	32
Board Committees; Director Independence	32
Legal Matters	33
Experts	33
Disclosure of Commission Position on Indemnification for Securities Act Liabilities	33
Where You Can Find More Information	33
Index to Consolidated Financial Statements	F-1
Other Expenses of Issuance and Distribution	35
Indemnification of Officers and Directors	35
Recent Sale of Unregistered Securities	35
Exhibits	36
Undertakings	36
Signatures	38

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the information contained in this prospectus.  We will not make an offer to sell these securities in any jurisdiction where offers and sales are not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of when this prospectus is delivered or when any sale of our common stock occurs.

3

SUMMARY OF OUR OFFERING

Prospectus Summary

The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in our securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements.

Our Business

Our company, Loto Inc. (“Loto”) operates through our wholly owned subsidiary Mobilotto Systems, Inc. (“Mobilotto”).  We are a development stage company.  We have developed a patent-pending software application which permits the secure purchase of lottery tickets on commercially available “smart” phones and similar mobile telecommunications devices.  A smart phone is a mobile phone offering advanced capabilities, often with personal computer-like functionality, such as e-mail, Internet access and other applications.  Our proprietary technology for facilitating the purchase of lottery tickets through commercially available smart phones and other mobile devices addresses all elements of lottery play, including secure player registration and authorization, number selection, settlement, winning number notification and other direct-to-customer marketing opportunities.  We intend to license our software application to governments and other lottery operators as our primary source of revenue.  We do not intend to become a lottery operator.  During the foreseeable future, we expect to pursue our business only outside of the United States since current laws in the United States prohibit sales of lottery tickets utilizing mobile telecommunications devices.

Lottery operators have a pressing need to expand into new sales channels.  The significant industry challenges include cost, player convenience and enhanced marketing.  A cumbersome current requirement for lottery sales is the need to provide access to a lottery sales terminal.  Conventionally, lottery operators must place expensive traditional stand-alone terminals which are limited to high geographic density areas.  In addition, in many jurisdictions the public has become skeptical of the integrity of retail lottery ticket kiosks and their clerks.  Our high technology solutions address all of these issues by providing a secure lottery application for use on commercially available smart phones and other mobile communications devices.  Our application can be used conveniently, securely and privately at any time and in any location within an authorized jurisdiction.  Our software also permits two-way personalized messaging capability for enhanced lottery operator promotional activities.

Loto was incorporated in the state of Nevada on April 22, 2009, and our subsidiary Mobilotto was incorporated in the province of Ontario in September 2008.  On May 13, 2009 we acquired all of the issued and outstanding shares of Mobilotto (including all of the intellectual property of the mobile lottery software application).  We have working models ready for demonstration and we have commenced our initial sales and marketing efforts.  Our mobile lottery software application has not yet been utilized by any lottery operators and we have not yet derived any revenues from our technology.

As a development stage company, we have limited capital and limited operating resources.  As of May 31, 2009, we had working capital of approximately $169,000.  We will not receive any proceeds from the sale of our common stock offered through this prospectus by the selling stockholders.  We do not expect to be able to meet our current needs for cash from revenues in the near future. We believe our current cash on hand will fund our initial expenditures only for a limited time.  Prior to the date of this prospectus, we raised $170,000.00 in initial funding and our Series A private placements of restricted common stock.  The money raised in the initial funding and our Series A private placements will not be sufficient to meet our projected cash flow deficits from operations or to fund the development of our technology and products.  We plan on seeking additional financing, however, we currently have no firm commitments for such financing and we may not be able to obtain additional financing on terms acceptable to us, if available at all, in the future.  The terms and condition of additional financing, if available, could have a material adverse affect on our business, results of operations, liquidity and financial condition.

Our principal executive offices are located at Mobilotto Systems, Inc., 23-5250 Satellite Drive in Mississauga, Ontario Canada, and our telephone number is 416-500-7799, and our website is www.mobilotto.com.  Information contained on our website or any other website does not constitute a part of this prospectus.

4

The Offering

Total shares of common stock outstanding	55,000,000 as of June 9, 2009 (of which 15,000,000 shares currently are held by non-affiliates).
Common stock being registered for sale by  stockholders	11,000,000 shares which were issued to stockholders pursuant to our Series A private placement of restricted common stock. All of the shares offered by this prospectus are being sold by non-affiliate selling stockholders. The shares offered by the selling stockholders pursuant to this prospectus represent 20% of the total number of shares of common stock outstanding or 73.3% of the number of non-affiliated shares of common stock outstanding.   The selling stockholders will offer their shares at $1.25 per share until the Company’s shares are quoted on the OTC Bulletin Board and, assuming we secure this qualification, thereafter at prevailing market prices or privately negotiated prices.
Risk factors	The shares involve a high degree of risk. Investors should carefully consider the information set forth under “RISK FACTORS” beginning on page 6.
Use of proceeds	We will not receive any proceeds from the sale of our common stock offered through this prospectus by the selling stockholders.  All proceeds from the sale of our common stock sold under this Prospectus will go solely to the selling stockholders.

5

RISK FACTORS

Our business is subject to numerous risks. We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.

Risks Related To Our Operations And Financial Condition

We are a development stage company and may never generate revenues.

We are a development stage company and we have not generated any revenues as of the date of this Prospectus.  We have incurred losses of $10,979 for the fiscal year ended May 31, 2009 since inception of our activities in Mobilotto on September 16, 2008.  We expect to operate with net losses within the current fiscal year-ending May 31, 2010 or longer.  We cannot predict the extent of these future net losses, or when we may attain profitability, if at all.  If we are unable to generate significant revenue or attain profitability, we will not be able to sustain operations and will have to curtail significantly or cease operations.

Our Auditors have issued an opinion expressing uncertainty regarding our ability to continue as a going concern.  If we are not able to continue operations, investors could lose their entire investment in our company.

We have a history of operating losses, and may continue to incur operating losses for the foreseeable future. This raises substantial doubts about our ability to continue as a going concern.  Our auditors issued an opinion in their audit report as of June 9, 2009 expressing uncertainty about our ability to continue as a going concern. This means that there is substantial doubt whether we can continue as an ongoing business without additional financing and/or generating profits from our operations.

We operate in highly competitive industries and our success depends on our ability to effectively compete with numerous domestic and foreign businesses.

We face competition from a number of domestic and foreign businesses, some of which have substantially greater financial resources than we do, which could adversely affect our ability to enter into contracts with lottery operators.  We operate in a period of intense price-based competition which could adversely affect the number and the profitability of contracts we may be able to obtain. We currently do not have any contracts and due to competition we do not know when or if we will be able to enter into any contracts. Intense competition could result in pricing pressures, lower sales, reduced margins, and lower market share.  Our ability to compete successfully will depend on a number of factors, both within and outside our control. We expect these factors to include the following:

· our success in designing, testing and delivering new features, including incorporating new technologies on a timely basis;

· our ability to address the needs of end-users and the quality of services for customers of the lottery operators;

· the quality, performance, reliability, features, ease of use and pricing of our application;

· successful implementation and expansion of our application’s capabilities;

· our efficiency of production, and ability to deliver the application to the lottery operators and to end-users;

· the rate at which commercially available smart phone equipment manufactures provide a technologically accessible format for incorporation of our solutions into their devices;

· the market acceptance of our application; and

· product or technology introductions by our competitors.

6

Our competitive position could be damaged if one or more potential lottery operators decide to develop their own solution or utilize a third party solution using alternative software and hardware technologies.  Our prospective lottery operator customers may be reluctant to rely on a relatively small company such as our company.  In addition, contract awards by lottery operators are sometimes challenged by unsuccessful bidders which can result in costly and protracted legal proceedings that can result in delayed implementation or cancellation of the contract.  We cannot assure you that we will be able to compete successfully against current and future competition, and the failure to do so would have a materially adverse effect upon our business, operating results and financial condition.

The market for mobile lottery services is in the early stages of development, and if the market for our services does not develop as we anticipate, it will have a material adverse effect on our business, prospects, financial condition and results of operations.

Mobile lottery services, in general, are in the early stages of development. Our future revenue and profits are substantially dependent upon the widespread acceptance, growth, and use of mobile as an effective sales and purchasing medium.  Most lotteries have generally relied upon more traditional forms of consumer sales of tickets through a variety of third-party owned stores, and most lottery operators have no, or only limited, experience on sales through mobile devices. Mobile lottery services are still in an early stage of development and may not be accepted by consumers or lottery operators for many reasons. If either the consumers or lottery operators reject our services, the commercial utility of our technology and services may not develop as we anticipate.

Risks Related To Our Intellectual Property

Failure to adequately protect our intellectual property and proprietary rights could harm our competitive position.

Our success is substantially dependent upon our proprietary technology, which relates to a variety of business, security, and transactional processes associated with our mobile lottery services technology.  We expect to rely on a combination of patent, trademark, copyright and trade secret laws to protect our proprietary rights.  Although we have filed for certain patent protection over aspects of our technology, much of our proprietary information and processes may not be patentable. We cannot assure you that any pending patent applications will be issued or that their scope is broad enough to provide us with meaningful protection.  Although we have filed applications for registered trademarks covering certain of the marks we use in our business, we cannot assure you that we will be able to secure significant protection for these marks. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our technology and/or services or to obtain and use information that we regard as proprietary. We cannot assure you that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar technology or duplicate our services or design around patents issued to us or our other intellectual property rights. If we are unable to adequately protect our intellectual property and proprietary rights, our business and our operations could be adversely affected.

We may be subject to intellectual property claims that create uncertainty about ownership of technology essential to our business and divert our managerial and other resources.

There has been a substantial amount of litigation in the technology industry regarding intellectual property rights. Our success depends, in part, on our ability to protect our intellectual property and to operate without infringing on the intellectual property rights of others in the process. There can be no guarantee that any of our intellectual property will be adequately safeguarded, or that it will not be challenged by third parties. We may be subject to patent or trademark infringement claims or other intellectual property infringement claims that would be costly to defend and could limit our ability to use certain critical technologies.  We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions.

Any patent litigation or interference proceedings could negatively impact our business by diverting resources and management attention away from other aspects of our business and adding uncertainty as to the ownership of technology and services that we view as proprietary and essential to our business. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. If investors perceive these results to be negative, it could have an adverse effect on the trading price of our common stock.

7

In addition, a successful claim of patent or trademark infringement against us and our failure or inability to obtain a license for the infringed or similar technology or trademark on reasonable terms, or at all, could have a material adverse effect on our business.  Also, an adverse determination of any litigation or defense proceedings could cause us to pay substantial damages, including treble damages if we are found to have willfully infringed, and, also, could put our patent applications at risk of not being issued.

If we are not able to respond to the rapid technological change characteristic of our industry, our products and services may cease to be competitive.

The mobile industry is characterized by rapid change in business models and technological infrastructure, and we will need to constantly adapt to changing markets and technologies to provide new and competitive products and services. If we are unable to ensure that our users, lottery operators, and distribution partners have a high-quality experience with our services, then they may become dissatisfied and stop using our products and services. Accordingly, our future success will depend, in part, upon our ability to develop and offer competitive products and services. We may not, however, be able to successfully do so, and our competitors may develop innovations that render our products and services obsolete or uncompetitive.

Our technical systems are vulnerable to interruption and damage that may be costly and time-consuming to resolve and may harm our business and reputation.

Our systems and operations are vulnerable to damage or interruption from fire, floods and other natural disasters. Furthermore, network failures, hardware failures, software failures, power loss, telecommunications failures, break-ins, terrorism, war or sabotage, computer viruses, penetration of our network by unauthorized computer users and “hackers” and other similar events, and other unanticipated problems all pose serious threats to our success. We may not have developed or implemented adequate protections or safeguards to overcome any of these events. We also may not have anticipated or addressed many of the potential events that could threaten or undermine our technology network. Any of these occurrences could cause material interruptions or delays in our business, result in the loss of data or render us unable to provide services to our customers. In addition, if a person is able to circumvent our security measures, he or she could destroy or misappropriate valuable information or disrupt our operations.

Our business depends on the protection of our intellectual property and proprietary information.

We believe that our success depends, in part, on protecting our intellectual property in those countries in which we will do business. Our intellectual property includes certain pending patents and trademarks relating to our mobile technology and jurisdictional validation as well as proprietary or confidential information that is not subject to patent or similar protection. Our intellectual property protects the integrity of the games, systems, products and services, which is a core value of the industries in which we operate. For example, our intellectual property is designed to ensure the security of the distribution of the lottery tickets we provide as well as simple and secure validation of our lottery tickets sold. Competitors may independently develop similar or superior products, software, systems or business models. In cases where our intellectual property is not protected by an enforceable patent, such independent development may result in a significant diminution in the value of our intellectual property.

There can be no assurance that we will be able to protect our intellectual property. We expect to enter into confidentiality or license agreements with our employees, vendors, consultants, and, to the extent legally permissible, our customers.  We intend to generally control access to, and the distribution of, our game systems and other software documentation and other proprietary information, as well as the designs, systems and other software documentation and other information we license from others. Despite our efforts to protect these proprietary rights, unauthorized parties may try to copy our gaming technology, business models or systems, use certain of our confidential information to develop competing products, or develop independently or otherwise obtain and use our gaming products or technology, any of which could have a material adverse effect on our business. Policing unauthorized use of our technology is difficult and expensive, particularly because of the global nature of our operations. The laws of other countries may not adequately protect our intellectual property.

8

There can be no assurance that our business activities, products and systems will not infringe upon the proprietary rights of others, or that other parties will not assert infringement claims against us. Any such claim and any resulting litigation, should it occur, could subject us to significant liability for damages and could result in invalidation of our proprietary rights, distract management, and/or require us to enter into costly and burdensome royalty and licensing agreements. Such royalty and licensing agreements, if required, may not be available on terms acceptable to us, or may not be available at all. In the future, we may also need to file lawsuits to defend the validity of our intellectual property rights and trade secrets, or to determine the validity and scope of the proprietary rights of others. Such litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources.

Risks Related To Our Business

Our success will depend heavily on our management, and should we fail to hire and retain qualified management and other personnel, we will be adversely affected.

Our performance is substantially dependent on the continued services and performance of our executive officers and other key personnel, and our ability to retain and motivate our officers and key employees. Our future success also depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial and marketing personnel. Competition for qualified personnel is intense, and we cannot assure you that we will be successful in attracting and retaining such personnel. The failure to attract and retain our officers or the necessary technical, managerial and marketing personnel could have a material adverse effect on our business, prospects, financial condition and results of operations.

We do not have employment agreements with our key employees.

As of the date of this registration statement, we have not entered into employment agreements with any of our officers or employees.  We are currently negotiating terms and conditions for agreements with our officers and key employees.  If we are not able to negotiate mutually acceptable terms and conditions for agreements and continued services to our company by officers and key employees, the loss of the services of these persons could materially and adversely harm our business, financial condition and results of operations.

Our dependence on management creates risks. The loss of our experienced officers and key employees could adversely affect our business.

Our plan for success is dependent, in large part, on the active participation of our executive officers. The loss of their services would materially and adversely affect our business and future success.  We do not have key-man life insurance in effect at the present time.  Should any of our key employees die or become incapacitated, we may not be able to replace them in a timely or cost effective manner which could materially and adversely harm our business, financial condition and results of operations.

We expect that our anticipated future growth may strain our management, administrative, operational and financial infrastructure, which could adversely affect our business.

We anticipate that significant expansion of our present operations will be required to capitalize on market opportunities. This expansion is expected to place a significant strain on our management, operational and financial resources. We expect to add a substantial number of additional key personnel in the future, including key managerial, technical, and software development employees who will have to be fully integrated into our operations. In order to manage our growth, we will be required to continue to implement and improve our operational and financial systems, to expand existing operations, to attract and retain superior management, and to train, manage and expand our employee base. We cannot assure you that we will be able to effectively manage the expansion of our operations, that our systems, procedures or controls will be adequate to support our operations or that our management will be able to successfully implement our business plan. If we are unable to manage growth effectively, our business, financial condition and results of operations could be materially adversely affected.

9

We are susceptible to general economic conditions, and the current economic downturn could adversely affect our operating results.

Our operating results will be subject to fluctuations based on general economic conditions. We believe that during periods of lower consumer activity, consumer spending on lotteries may be reduced, and more quickly than many other types of businesses. These factors could cause a material adverse effect on our operating results.  

Providing our products to customers outside of the United States exposes us to risks inherent in international business.

We expect to offer our service only outside of the United States during the foreseeable future and we intend to expand our international operations in the future. Accordingly, we are subject to risks and challenges that we would otherwise not face if we conducted our business only in the United States. The risks and challenges associated with providing our products to customers outside the United States include: localization of our products, including translation into foreign languages and associated expenses; laws and business practices favoring local competitors; compliance with multiple, conflicting and changing governmental laws and regulations; foreign currency fluctuations; different pricing environments; and regional economic and political conditions.  Any of these factors, either individually or collectively, could have an adverse effect on our business and results of operations.

We will need additional funding to meet our obligations and to pursue our business strategy. Additional funding may not be available to us and our financial condition could therefore be adversely affected.

We will require additional funding to meet our ongoing obligations and to implement our business strategy, which may include the selective acquisition of businesses and technologies. We anticipate that we will need to raise amounts of up to $5,000,000 over the next twelve months.  There can be no assurance that additional financing arrangements will be available in amounts or on terms acceptable to us, if at all. Furthermore, if adequate additional funds are not available, we will be required to delay, reduce the scope of, or eliminate material parts of the implementation of our business strategy.  If we do not obtain additional financing in amounts and on terms acceptable to us, our business may fail.

The current economic slowdown may adversely affect our business and financial condition in ways that we cannot predict.

The current economic slowdown may have a negative effect on our business and financial condition. We cannot predict the effect that the economic slowdown will have on us as it also impacts our customers, vendors and business partners. We believe that the lottery gaming businesses are less susceptible to reductions in consumer spending and other parts of the consumer sector. However, there can be no assurance that the continuation or worsening of the current economic slowdown will not negatively impact the lottery gaming businesses.

The current economic slowdown may adversely affect our ability to obtain financing.

The uncertainty surrounding the future of the global credit markets has resulted in reduced access to financing and credit worldwide. Major market disruptions and the current adverse changes in global market conditions and the evolving regulatory restrictions in the United States and worldwide may adversely affect our business or impair our ability to obtain funds as needed. The current adverse market conditions may last longer than we anticipate. These recent and developing economic and governmental factors may have a material adverse effect on our results of operations, financial condition or cash flows and could cause the price of our common stock to decline significantly.

Our business is subject to evolving technology.

The markets for all of our products and services are affected by changing technology, new legislation and evolving industry standards. Our ability to anticipate or respond to such changes and to develop and introduce new and enhanced products and services on a timely basis will be a significant factor in our ability to expand, remain competitive and attract new customers. We can give no assurance that we will achieve the necessary technological advances or have the financial resources needed to introduce new products or services on a timely basis or that we will otherwise have the ability to compete effectively in the markets.

10

Our business competes on the basis of the security and integrity of our systems and products.

We believe that our success depends, in part, on providing secure products and systems to the lottery operators and their playing customers. Attempts to penetrate security measures may come from various combinations of customers, retailers, vendors, employees and others. Our ability to monitor and ensure quality of our products is periodically reviewed and enhanced. Similarly, we intend to regularly assess the adequacy of our security systems to protect against security breaches and take reasonable measures to protect the integrity of the product for end-users. There can be no assurance that our business will not be affected by a security breach or lapse, which could have a material adverse impact on our results of operations, business or prospects.

Implementation of additions to or changes in hardware and software platforms used to deliver our services may result in performance problems and may not provide the additional functionality that was expected

From time to time, we may implement additions to or changes in the hardware and software platforms we use for providing our services. During and after the implementation of additions or changes, a platform may not perform as expected, which could result in interruptions in operations, an increase in response time or an inability to track performance metrics. In addition, in connection with integrating with our customers, we may move their operations to our hardware and software platforms or make other changes, any of which could result in interruptions in those operations. Any significant interruption in our ability to operate any of our services could have an adverse effect on our relationships with users and clients and, as a result, on our financial results. We rely on a combination of purchasing, licensing, internal development, and acquisitions to develop our hardware and software platforms. Our implementation of additions to or changes in these platforms may cost more than originally expected, may take longer than originally expected, and may require more testing than originally anticipated. In addition, we cannot provide assurance that additions to or changes in these platforms will provide the additional functionality and other benefits that were originally expected.

We rely on third party technology and hardware providers, and a failure of service by these providers could adversely affect our business and reputation.

We will rely on third party providers for components of our technology platform, such as hardware and software providers. A failure or limitation of service or available capacity by any of these third party providers could adversely affect our business and reputation.

Risks Related to the Legal and Regulatory Environment in Which We Operate

Government and legal regulations may damage our business.

During the foreseeable future, we do not intend to conduct business in the United States.  As of the date of this prospectus, current U.S. laws prohibit sales of lottery tickets utilizing mobile telecommunications devices. Existing or future laws and regulations in other countries may impair our ability to expand our business and introduce new products and services, or may restrict the use of our services or the features we offer.  Changes to the existing regulatory framework in countries where we intend to offer our services could adversely affect our business plans.

In addition to regulation of lottery ticket sales, the mobile telecommunications industry faces uncertainty related to future government regulation. Due to the rapid growth and widespread use of mobile telephones, legislatures have enacted and may continue to enact various laws and regulations applicable to the mobile telecommunications industry.   Laws and regulations may be adopted in the future which directly govern mobile device lottery services.  The adoption of laws or regulations could decrease the demand for our technology and services and increase our cost of doing business or otherwise have a material adverse effect on our business, prospects, financial condition and results of operations.

In addition, foreign governments may pass laws which could negatively impact our business and/or may prosecute us for violating existing laws. Such laws might include EU member country conforming legislation under applicable EU Privacy and Data Protection Directives. Any costs incurred in complying with foreign laws could negatively affect the viability of our business.

11

Our industry is subject to strict government regulations that may limit our existing operations and have a negative impact on our ability to grow.

In the United States and many other countries, lotteries and other forms of wagering must be expressly authorized by law. Once authorized, such activities are subject to extensive and evolving governmental regulation. Moreover, these gaming regulatory requirements vary from jurisdiction to jurisdiction. Therefore, we may be subject to a wide range of complex gaming laws and regulations in the jurisdictions in which we intend to operate.

The regulatory environment in any particular jurisdiction may change in the future, and any such change could have a material adverse effect on our results of operations, business or prospects. Moreover, there can be no assurance that the sale of lottery services over mobile devices will be approved by additional jurisdictions or that those jurisdictions in which these activities are currently permitted will continue to permit such activities. Although we believe that we plan to develop procedures and policies to comply with the requirements of evolving laws, there can be no assurance that law enforcement or gaming regulatory authorities will not seek to restrict our business in their jurisdictions or institute enforcement proceedings if we are not compliant.

Moreover, in addition to the risk of enforcement action, we are also at risk of loss of business reputation in the event of any potential legal or regulatory investigation whether or not we are ultimately accused of or found to have committed any violation.

We may be required to obtain licenses from various jurisdictions in order to operate certain aspects of our business and we might be subject to extensive background investigations and suitability standards in our lottery business. Lottery authorities generally conduct background investigations of the selected vendor and its employees prior to and after the award of a lottery contract. Generally, regulatory authorities have broad discretion when granting, renewing or revoking these approvals. Lottery authorities may require the removal of any of our employees deemed to be unsuitable and are generally empowered to disqualify us from receiving a lottery contract or operating a lottery system as a result of any such investigation. Our failure, or the failure of any of our key personnel or systems in obtaining a required license or approval in one jurisdiction could negatively impact our ability (or the ability of any of our key personnel or systems) to obtain required licenses and approvals in other jurisdictions. The failure to obtain a required license or approval in any jurisdiction would decrease the geographic areas where we may operate and generate revenues, decrease our share in the gaming marketplace and put us at a disadvantage compared with our competitors.

Some jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage (typically 5% or more) of our equity securities. The failure of these beneficial owners to submit to such background checks and provide required disclosure could jeopardize the award of a contract to us. Additional restrictions are often imposed by international jurisdictions.

While we are firmly committed to full compliance with all applicable laws, there can be no assurance that such steps will prevent the violation of one or more laws or regulations, or that a violation by us or an employee will not result in the imposition of a monetary fine or suspension or revocation of any contract.

Gaming opponents persist in their efforts to curtail legalized gaming, and particularly internet gaming which, if successful, could limit our operations.

Legalized gaming is subject to opposition from gaming opponents. There can be no assurance that this opposition will not succeed in preventing gaming in jurisdictions where these activities are presently legalized, prohibited or prohibiting or limiting the expansion of gaming where it is currently permitted, in either case to the detriment of our business, financial condition, results and prospects.

12

Failure to perform under lottery contracts may result in litigation, substantial monetary liquidated damages and contract termination.

Our business may subject us to contractual penalties and risks of litigation, including due to potential allegations that we have not fully performed under contracts or that goods or services we supply are defective in some respect.  Lottery contracts typically permit a lottery authority to terminate the contract at any time for material failure to perform, other specified reasons and, in many cases, for no reason at all. Lottery contracts also frequently contain exacting implementation schedules and performance requirements and the failure to meet these schedules and requirements may result in substantial monetary liquidated damages, as well as possible contract termination. Material amounts of liquidated damages could be imposed on us in the future, which could, if imposed, have a material adverse effect on our results of operations, business or prospects.  

Risks Related To Our Stock

Our limited operating history makes evaluation of our business difficult.

We started to develop our lottery technology in 2008 and we have not yet commercially deployed our technology.  We, therefore, have limited historical financial data related to our current business upon which to analyze operating expenses or forecast accurately our future operating results. Our limited operating history will make it difficult for investors to evaluate our business and prospects.

We will need to raise additional capital. If we are unable to raise additional capital, our business may fail.

We will need to raise additional capital to provide cash for our operations. Our current working capital is not expected to be sufficient to carry out all of our plans and to fund our operating losses until we are able to generate enough revenues to sustain our business.  The fact that we have not generated any revenues to date may deter potential investors from providing financing.  Uncertainty regarding our ability to generate revenues may make it difficult for us to find financing on acceptable terms.  If we are unable to obtain adequate funding, we may not be able to successfully develop and market our products and our business will most likely fail.  To secure additional financing, we may need to borrow money or sell more securities.  Under these circumstances, we may be unable to secure additional financing on favorable terms or at all.

The market price of our common stock may be volatile.

The trading price of our common stock may be highly volatile and could be subject to wide fluctuations in response to various factors. Some of the factors that may cause the market price of our common stock to fluctuate include:

· fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

· changes in estimates of our financial results or recommendations by securities analysts;

· failure of any of our products to achieve or maintain market acceptance;

· changes in market valuations of similar companies;

· significant products, contracts, acquisitions or strategic alliances of our competitors;

· success of competing products or services;

· changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

· regulatory developments in Canada, United States or foreign countries;

· litigation involving our company, our general industry or both;

· additions or departures of key personnel;

· investors’ general perception of us; and

· changes in general economic, industry and market conditions.

In addition, if the market for technology or mobile lottery service stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

13

Fluctuations in the value of foreign currencies could result in increased costs and operating expenses and adversely affect our business. 

For our projected international operations, the local currency will be designated as the functional currency.  Accordingly, assets and liabilities must be translated into U.S. Dollars at year-end exchange rates, and revenues and expenses will be translated at average exchange rates prevailing during the year.  Fluctuations in the value of other currencies in which we may generate revenues or incur costs may be difficult to predict and could cause us to incur currency exchange losses.  Receivables and liabilities in currencies other than the functional currency could also move adversely to us from the date of accrual by us to the date of actual settlement of receivables or liabilities in a currency other than the functional currency. A disparity between the accrual and settlement amounts due to currency exchange costs could have a material adverse affect on our business. We cannot predict the effect of exchange rate fluctuations on our future operating results.  Future fluctuations in currency exchange rates could materially and adversely affect our business.

Certain governments with whom we may do business may impose restrictions over the conversion of their currencies into U.S. dollars or other foreign currencies.  There can be no assurance that we will be able to convert foreign revenues into U.S. dollars for repatriation and this may adversely affect our business.

We do not currently intend to pay dividends on our common stock and, consequently, the ability to achieve a return on an investment in our common stock will depend on appreciation in the price of our common stock.

We do not expect to pay cash dividends on our common stock. Any future dividend payments are within the absolute discretion of our Board of Directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, contractual restrictions, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our Board of Directors may deem relevant. We may not generate sufficient cash from operations in the future to pay dividends on our common stock.  As a result, the success of an investment in our common stock will depend on future appreciation in its value.  The price of our common stock may not appreciate in value or even maintain the price at which you purchased our shares.

You may experience dilution of your ownership interests due to the future issuance of additional shares of our common stock.

As of that date of this registration statement, we have 55,000,000 shares of our common stock issued and outstanding.  We are authorized to issue up to 100,000,000 shares of common stock. Our Board of Directors may authorize the issuance of additional common or preferred shares under applicable state law without shareholder approval.  We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with the hiring of personnel, future acquisitions, future private placements of our securities for capital raising purposes or for other business purposes. Future sales of substantial amounts of our common stock, or the perception that sales could occur, could have a material adverse effect on the price of our common stock.  If we need to raise additional capital to expand or continue operations, it may be necessary for us to issue additional equity or convertible debt securities.   If we issue equity or convertible debt securities, the net tangible book value per share may decrease, the percentage ownership of our current stockholders may be diluted and such equity securities may have rights, preferences or privileges senior or more advantageous to our common stockholders.

We anticipate that our common stock will initially be considered to be a "Penny Stock."

We anticipate that our common stock will initially be a low-priced security, or a “penny stock” as defined under rules promulgated under the Exchange Act.   A stock is a "penny stock" if it meets one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Exchange Act. These include but are not limited to the following: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a "recognized" national exchange; (iii) it is not quoted on The NASDAQ Stock Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company with net tangible assets less than $2.0 million, if in business more than a continuous three years, or with average revenues of less than $6.0 million for the past three years. The principal result or effect of being designated a "penny stock" is that securities broker-dealers cannot recommend the stock but must trade in it on an unsolicited basis.

14

In accordance with these rules, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document which describes the risks associated with such stocks, the broker-dealer’s duties in selling the stock, the customer’s rights and remedies and certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving the customer for low-priced stock transactions based on the customer’s financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer, and provide monthly account statements to the customer. The effect of these restrictions probably decreases the willingness of broker-dealers to make a market in our common stock, decreases liquidity of our common stock and increases transaction costs for sales and purchases of our common stock as compared to other securities.

Broker-dealer requirements may affect trading and liquidity.

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated there under by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effectuating any transaction in a penny stock for the investor's account.   Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Risks Due to Sale Restrictions Imposed by State “Blue Sky Laws”.

State securities regulations may affect the transferability of our shares.  We have not registered any of our shares for sale or resale under the securities or "blue sky" laws of any state.  We do not currently plant to register or qualify our shares for sale or resale in any state.  In many states, but not all states, shareholders can generally make unsolicited sales of securities through registered broker-dealers.  Arkansas, Georgia, Illinois, Louisiana, New York, North Dakota, Ohio, Oregon and Tennessee, do not permit shareholders to make unsolicited sales of securities through broker dealers.  Persons who desire to purchase our shares in any trading market that may develop in the future should be aware that these state regulations may limit sales and purchases of our shares.

There is no public trading market for our common stock and there is no assurance that the common stock will ever trade on a recognized exchange or dealers’ network; this may adversely affect the ability of our investors to sell their shares.

Our common stock is not listed on any exchange or quoted on any quotation service, and there is currently no public market for our common stock.  We can provide no assurance that our common stock will ever be quoted on any quotation service or that any market for our common stock will ever develop.  Neither we nor our selling stockholders have engaged an underwriter for this offering, and we cannot assure you that any brokerage firm will act as a market maker of our securities.  A trading market may not develop in the future, and if one does develop, it may not be sustained.  As a result, stockholders may be unable to liquidate their investments, or may encounter considerable delay in selling shares of our common stock.

15

If a trading market develops, it may be volatile.

If an active trading market does develop, the market price of our common stock is likely to be highly volatile due to, among other things, the nature of our business and because we are a new public company with a limited operating history.  Furthermore, even if a public market develops, the volume of trading in our common stock will presumably be limited and likely be dominated by a few individual stockholders.  The limited volume, if any, will make the price of our common stock subject to manipulation by one or more stockholders and will significantly limit the number of shares that one can purchase or sell in a short period of time.

The equity markets have recently experienced significant price and volume fluctuations that have adversely affected the market prices for many companies' securities.  These fluctuations may not be directly attributable to the operating performance of these companies.  Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance.  As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.

Shares eligible for future sale may adversely affect the market price of our common stock, as the future sale of a substantial amount of our restricted stock in the public marketplace could reduce the price of our common stock.

From time to time, certain of our stockholders may be eligible to sell their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 of the Securities Act of 1933, as amended, subject to certain compliance requirements.  In general, under Rule 144, unaffiliated stockholders (or stockholders whose shares are aggregated) who have satisfied a six month holding period may sell shares of our common stock, so long as we have filed all required reports under Section 13 or 15(d) of the Exchange Act during the applicable period preceding such sale.  Generally, once a period of six months has elapsed since the date the common stock was acquired from us or from an affiliate of ours, unaffiliated stockholders can freely sell shares of our common stock so long as the requisite conditions of Rule 144 and other applicable rules have been satisfied.  Also generally, twelve months after acquiring shares from us or an affiliate, unaffiliated stockholders can freely sell their shares without any restriction or requirement that we are current in our SEC filings.  Any substantial sales of common stock pursuant to Rule 144 may have an adverse affect on the market price of our common stock.

Failure to Achieve and Maintain Internal Controls in Accordance with Sections 302 and 404(a) of the Sarbanes-Oxley Act of 2002 Could Have A Material Adverse Effect on Our Business and Stock Price.

If we fail to maintain adequate internal controls or fail to implement required new or improved controls, as such control standards are modified, supplemented or amended from time to time, we may not be able to assert that we can conclude on an ongoing basis that we have effective internal controls over financial reporting. Effective internal controls are necessary for us to produce reliable financial reports and are important in the prevention of financial fraud.  If we cannot produce reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and there could be a material adverse effect on our stock price.

Certain holders of our common stock exert significant influence over our company and may make decisions with which other stockholders may disagree.

On May 13, 2009 the two co-founders of Loto entered into a Founders’ Agreement with each other and the company.  Mhalka Capital Investments Limited was issued 20,000,000 shares of Loto restricted common stock in exchange for contributing $20,000.00 to Loto.  On the same date, A Few Brilliant Minds Inc. was issued 20,000,000 shares of Loto restricted common stock in exchange for all of the equity interests of Mobilotto Systems, Inc. which is now a wholly owned subsidiary of Loto.  Each of the co-founders beneficially owns approximately 36.4% of our outstanding common stock.  The Founders’ Agreement includes certain mutual covenants, including nominating and voting for an equal number of representatives to serve on our Board of Directors.  As a result, the co-founders have the ability to exert significant influence over our business and may make decisions with which other stockholders may disagree, including, among other things, the appointment of officers and directors, changes in our business plan, delaying, discouraging or preventing a change of control of Loto or a potential merger, consolidation, tender offer, takeover or other business combination.

16

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements in this prospectus may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this prospectus, including the risks described under “Risk Factors,” “Management’s Discussion and Analysis” and “Our Business.”

There are important factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors, include, without limitation, the following: our ability to develop our technology platform and our products; our ability to protect our intellectual property; the risk that we will not be able to develop our technology platform and products in the current projected timeframe; the risk that our products will not achieve performance standards in clinical trials; the risk that the clinical trial process will take longer than projected; the risk that our products will not receive regulatory approval; the risk that the regulatory review process will take longer than projected; the risk that we will not be unsuccessful in implementing our strategic, operating and personnel initiatives; the risk that we will not be able to commercialize our products; any of which could impact sales, costs and expenses and/or planned strategies. Additional information regarding factors that could cause results to differ can be found in this prospectus and in our other filings with the Securities and Exchange Commission.

USE OF PROCEEDS

We will not receive any proceeds from the sale of our common stock offered through this prospectus by the selling stockholders.

DETERMINATION OF OFFERING PRICE

The selling stockholders will initially offer their shares at $1.25 per share.  Our common stock is not traded on any exchange or quoted for trading on any quotation system.  The price of $1.25 is a fixed price at which the selling stockholders may sell their shares until the Company’s common stock is quoted on the OTC Bulletin Board at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.  We will not receive proceeds from the sale of shares from the selling stockholders.  The selling price has no relationship to any established criteria of value, such as book value or earnings per share.  The price was chosen arbitrarily.  We cannot determine what the actual value of our common stock will be either now or at the time of sale other than within the limited period agreed upon by the selling stockholders.  Upon the effectiveness of this registration statement, or pursuant to exemption from the Securities Act of 1933, as amended, the selling stockholders may sell all or a portion of their shares from time to time at prices $1.25 per share. After our stock is trading on the OTC Bulletin Board, the selling stockholders may sell all or a portion of their shares from time to time at prices prevailing at the time of sale, or related to the market price at the time of sale, or at other negotiated prices.  Consequently, other than the initial $1.25 per share offering price by the selling stockholders, we cannot determine what the actual value of our common stock will be either now or at the time of sale.

DILUTION

The common stock to be sold by the selling stockholders is common stock that is currently issued and outstanding. Accordingly, there will be no dilution to our existing shareholders with respect to the shares offered for sale by the selling stockholders.

17

SELLING STOCKHOLDERS

The common stock which is the subject of this registration statement is being registered to permit public secondary trading of the shares, and the selling stockholders, or their pledgees, donees, transferees or other successors-in interest, may offer all or any portion of the shares for resale from time to time.  None of the selling stockholders is a registered broker-dealer or an affiliate of a registered broker-dealer.

The table below lists the selling stockholders and other information regarding the beneficial ownership of the common stock by each of the selling stockholders. The second column lists the number of common stock beneficially owned by each selling stockholder, based on its ownership of the common stock, as of the date of this prospectus. The fourth column lists the common stock being offered by this prospectus by the selling stockholders. The fifth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.  

The selling stockholders named in this prospectus acquired their shares of Loto in our Series A private placements of restricted common stock which closed on June 9, 2009.  Loto offered and issued the securities in reliance upon the exemptions from registration provided by Section 4(2) of the U.S. Securities Act of 1933, as amended and Regulation S promulgated thereunder.  The table and the other information contained under the captions “Selling Stockholders” and “Plan of Distribution” has been prepared based upon information furnished to us by or on behalf of the selling stockholders.

The named party beneficially owns and has sole voting and investment power over all shares or rights to these shares. The percentages are based on 55,000,000 shares of common stock outstanding on the date of this prospectus.  Loto does not have any options or warrants outstanding or any instruments convertible into the common stock of Loto.

Name of Selling Shareholder	Shares Owned Prior to this Offering		Total Number of Shares to be offered for Selling Stockholders Account		Total Shares Owned Upon Completion of this Offering		Percent Owned Upon Completion of this Offering
NAC Investments Ltd.		2,500,000		1,833,334		666,666		1.2	%
2207496 Ontario Inc.		2,500,000		1,833,333		666,667		1.2	%
2208155 Ontario Inc.		2,500,000		1,833,333		666,667		1.2	%
1476448 Ontario Inc.		2,500,000		1,833,333		666,667		1.2	%
Ananindeau, S.A.		2,500,000		1,833,333		666,667		1.2	%
2207846 Ontario Limited		2,500,000		1,833,334		666,666		1.2	%

None of the selling stockholders has, since the incorporation of Loto on April 22, 2009 or our wholly owned subsidiary Mobilotto on September 16, 2008, held any position, office or material relationship with us or with any of our predecessors or affiliates.

PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock being offered under this prospectus on any stock exchange, market or trading facility on which shares of our common stock are traded or in private transactions.  These sales may be at fixed or negotiated prices.  The selling stockholders may use any one or more of the following methods when disposing of shares:

· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

· purchases by a broker-dealer as principal and resale’s by the broker-dealer for its account;

18

· an exchange distribution in accordance with the rules of the applicable exchange;

· privately negotiated transactions;

· broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

· a combination of any of these methods of sale; and

· any other method permitted pursuant to applicable law.

The shares may also be sold under Rule 144 under the Securities Act of 1933, as amended (“Securities Act”), if available, rather than under this prospectus.  The selling stockholders have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time.

The selling stockholders may pledge their shares to their brokers under the margin provisions of customer agreements.  If a selling security holder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares at any price.

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted by applicable law.

If sales of shares offered under this prospectus are made to broker-dealers as principals, we would be required to file a post-effective amendment to the registration statement of which this prospectus is a part.  In the post-effective amendment, we would be required to disclose the names of any participating broker-dealers and the compensation arrangements relating to such sales.

The selling stockholders and any broker-dealers or agents that are involved in selling the shares offered under this prospectus may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales.  Commissions received by these broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.  Any broker-dealers or agents that are deemed to be underwriters may not sell shares offered under this prospectus unless and until we set forth the names of the underwriters and the material details of their underwriting arrangements in a supplement to this prospectus or, if required, in a replacement prospectus included in a post-effective amendment to the registration statement of which this prospectus is a part.

The selling stockholders and any other persons participating in the sale or distribution of the shares offered under this prospectus will be subject to applicable provisions of the Exchange Act, and the rules and regulations under that act, including Regulation M.  These provisions may restrict activities of, and limit the timing of purchases and sales of any of the shares by, the selling stockholders or any other person.  Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and other activities with respect to those securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions.  All of these limitations may affect the marketability of the shares.

If any of the shares of common stock offered for sale pursuant to this prospectus are transferred other than pursuant to a sale under this prospectus, then subsequent holders could not use this prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders.  We offer no assurance as to whether any of the selling stockholders will sell all or any portion of the shares offered under this prospectus.

19

We have agreed to pay all fees and expenses we incur incident to the registration of the shares being offered under this prospectus.  However, each selling security holder and purchaser is responsible for paying any discounts, commissions and similar selling expenses they incur.

We and the selling stockholders have agreed to indemnify one another against certain losses, damages and liabilities arising in connection with this prospectus, including liabilities under the Securities Act.

Penny Stock

We anticipate that we will initially be a “penny stock.”  The Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

· that a broker or dealer approve a person's account for transactions in penny stocks; and

· the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must

· obtain financial information and investment experience objectives of the person; and

· make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

· sets forth the basis on which the broker or dealer made the suitability determination; and

· that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also must be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

DESCRIPTION OF SECURITIES TO BE REGISTERED

Our authorized capital stock consists of 100,000,000 shares of common stock at a par value of $0.0001 per share.  As of the date of this prospectus, there were 55,000,000 shares of our common stock issued and outstanding.

Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Two shareholders, A Few Brilliant Minds Inc. and Mhalka Capital Investments Ltd., each own 20,000,000 shares of our common stock and together control 72.7% of our outstanding common stock.  Pursuant to the Founders’ Agreement between A Few Brilliant Minds Inc. and Mhalka Capital Investments Ltd., each of these two co-founding stockholders has agreed to jointly nominate and vote for an equal number of their respective nominees directors to our Board of Directors.  Holders of our common stock do not have cumulative voting rights. Therefore, the two holders of a majority of our shares can elect all of the directors.  Holders of our common stock representing a majority of the voting issued and outstanding shares, as represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation.

20

Nevada Anti-Takeover Laws

Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Our articles of incorporation state that these provisions will not apply.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel acting for Loto or Mobilotto or any of the selling security holders named herein was employed for such purpose on a contingent basis, or at the time of such preparation, certification or opinion or at any time thereafter, through the date of effectiveness of the registration statement had, or is to receive in connection with the offering, a substantial interest, direct or indirect, in Loto or Mobilotto or any of its parents, subsidiaries or affiliates, or was connected with Loto or Mobilotto or any of its parents, subsidiaries or affiliates as a promoter, underwriter, voting trustee, director, officer, or employee.  Neither Loto nor Mobilotto has engaged any experts, other than the independent accounting firm who audited the consolidated financial statements, to prepare or certify any part of this prospectus or any other report or valuation for use in connection with the registration statement of which this prospectus is a part.

21

BUSINESS

Our company, Loto, operates through our wholly owned subsidiary Mobilotto.  We are a development stage company.  We have developed a patent-pending software application which permits the secure purchase of lottery tickets on commercially available “smart” phones and similar mobile telecommunications devices.  A smart phone is a mobile phone offering advanced capabilities, often with personal computer-like functionality, such as e-mail, Internet access and other applications.  Our proprietary technology for facilitating the purchase of lottery tickets through commercially available smart phones and other mobile devices addresses all elements of lottery play, including secure player registration and authorization, number selection, settlement, winning number notification and other direct-to-customer marketing opportunities.  We intend to license our software application to governments and other lottery operators as our primary source of revenue.  We do not intend to become a lottery operator.  During the foreseeable future, we expect to pursue our business only outside of the United States since current laws in the United States prohibit sales of lottery tickets utilizing mobile telecommunications devices.  As of the date of this prospectus, our mobile lottery software application has not yet been utilized by any lottery operators and we have not yet generated any revenues from our technology.

Lottery operators have a pressing need to expand into new sales channels.  The significant industry challenges include cost, player convenience and enhanced marketing.  A cumbersome current requirement for lottery sales is the need to provide access to a lottery sales terminal.  Conventionally, lottery operators must place expensive traditional stand-alone terminals which are limited to high geographic density areas.  In addition, in many jurisdictions the public has become skeptical of the integrity of retail lottery ticket kiosks and their clerks.  Our high technology solutions address all of these issues by providing a secure lottery application for use on commercially available smart phones and other mobile communications devices.  Our application can be used conveniently, securely and privately at any time and in any location within an authorized jurisdiction.  Our software also permits two-way personalized messaging capability for enhanced operator promotional activities.

Loto was incorporated in the state of Nevada on April 22, 2009, and our wholly-owned subsidiary Mobilotto was incorporated in the province of Ontario on September 16, 2008.  On May 13, 2009, Loto acquired all of the issued and outstanding shares of Mobilotto (which included all intellectual property of the mobile lottery purchase system).  On June 4, 2009, Loto’s Articles of Incorporation were amended, to change the par value of the Company’s shares from $.001 to $.0001.

In developing our application, we have endeavored to assess and resolve many problems associated with current lottery distribution methods in our target markets, including the following:

1. Lottery operator profitability:

· The current lottery distribution systems generally have excessively high annual fixed infrastructure operating and capital costs, many of which can be avoided.

· The number of sales sites are saturated, leading to stagnant and even declining lottery revenues.

2. Social responsibility:

· Our technology identifies the location of the mobile device at the time of the purchase, thereby restricting out-of-area purchases, should this function be activated by the lottery operator.

· Winning ticket holders are notified directly.

· The current lottery distribution systems generally do not identify or qualify players by age which our technology can do by reference to the mobile telephone subscription, passwords and other proprietary methods.

· Substantial amounts of paper are consumed and wasted through the current paper ticket process.

3. Fraud is easily perpetrated through the current distribution system:

· Paper tickets are negotiable instruments which can easily be separated from the true purchaser.

· There is no registration of a ticket with the actual purchaser of that ticket.

· There are generally thousands of lottery terminals per lottery operator which must be audited and secured on a regular basis.

· There is a general lack of trust in the current retail store distribution channel.

22

4. Convenience and Customer Needs:

· There is an inherent inconvenience in the current model of ticket purchasing, including both requiring customers to line up and identifying winning tickets.

· A substantial percentage of tickets sold are within a day of the draw, indicating latency and the opportunity for greater customer convenience.

· The lottery operators have no ability to directly message or market to players in real or near time.

· Mobile communication devices are generally trusted by users, have the capacity for complex functionality and security, and are generally in their owners’ possession for use for the majority of waking hours.

As of the date of this prospectus, current laws in the United States prohibit sales of lottery tickets utilizing mobile telecommunications devices.  As such, we do not intend to conduct business in the United States during the foreseeable future.  If laws and regulations change in the U.S., we will endeavor to license our application to U.S. state lottery operators where permitted.  We expect to conduct our business outside of the United States until legally permissible to license our products and services in the United States.

Industry Overview

Lotteries are generally regulated and licensed by governmental authorities in over 200 jurisdictions globally. Currently, 44 U.S. states and 4 Canadian regions operate lotteries.  In 2008, lottery revenues exceeded $60 Billion in the U.S. and CAD$9 Billion in Canada. The World Lottery Organization reports members from 76 countries and member revenues of approximately $180 billion.

Although many different types of lottery games exist worldwide, they may generally be categorized into two main groups: instant ticket and traditional draw type lotteries. An instant ticket game is usually played by removing a coating from a pre-printed ticket to determine whether the ticket is a winner. With draw type lottery games, such as the Canadian Lotto6/49, winning is based on a purchaser matching numbers with those randomly selected by the lottery operator.  Outside of North America, various types of sports betting are also popular.  All of these game types can be simulated on mobile devices.

Operational Overview

Our technology can provide location-aware gaming solutions for government-sponsored lotteries and privately operated lotteries.  Our solutions include mobile integration with existing online lottery systems, turnkey mobile gaming systems, custom developed traditional and interactive games, as well as ongoing support, maintenance, and management for each of our solutions.

Our lottery application utilizes proprietary technology to locate, authorize, or restrict game play based on the lottery license holder’s authorized jurisdiction.  When an authorized player leaves the authorized jurisdiction for a game, new game play and additional game features may be disabled.

Lottery Contract Procurement

Government authorized lotteries in the U.S. and Canada typically operates under local government mandated public procurement regulations. Lotteries select an instant ticket or online supplier by issuing a request for proposal, or RFP, which outlines contractual obligations as well as products and services to be delivered. An evaluation committee frequently comprised of key lottery staff evaluates responses based on various criteria. These criteria usually include quality of product and/or technical solutions, security plan and features, experience in the industry, quality of personnel and services to be delivered, and price. We believe that our product functionality, game content, the quality of our personnel, our technical expertise and our demonstrated ability to help the lotteries increase their revenues may provide us with advantages relative to the competition when responding to government lottery RFP's. However, some lotteries still award the contract to the qualified vendor offering the lowest price, regardless of factors other than price. Contract awards by lottery authorities are sometimes challenged by unsuccessful competitors, which can result in protracted legal proceedings. Internationally, lottery authorities do not always utilize such a formal bidding process, but rather negotiate with one or more potential vendors.

23

Most instant ticket lottery contracts typically have an initial term of three to five years and frequently include multiple renewal options, which may be exercised for additional periods ranging from one to five years.  The length of these lottery contracts, together with their renewal options, limits the number of lottery contracts available for bidding in any given year.

Research and Product Development

Our wholly-owned subsidiary, Mobilotto, commenced work on its lottery ticket sales process on September 16, 2008.  Since that date, we have developed working models of our application ready to demonstrate operation of various lottery games through commercially available mobile phones.

We believe our ability to attract new lottery customers and retain existing customers will depend in part on our ability to continue to incorporate technological advances into, and to improve our products, systems and communication abilities with lottery purchaser end-users of our systems. We intend to maintain a development program focusing on systems development as well as improvement and refinement of our present products as well as the expansion of uses and applications.

We intend to invest in new gaming technologies and new game delivery methods.  We will endeavour to continually improve our existing application as well as research, innovate, and implement new solutions.  Through continual development, we believe that we can attract new players for our customers and grow our company by attracting new lottery operators to our company and our technologies.

Intellectual Property

We hold U.S. Provisional Patent 61/106,988 which has established our international priority date as of October 21, 2008.  We consider our provisional patent to be of material importance to our business. Patents extend for varying periods of time according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained. In the U.S., the term of a patent generally expires 20 years from the date of filing. The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the country.  We intend to apply for additional patent protection in Canada and in other key jurisdictions during 2009.

Certain technology material to our lottery application products, processes and systems are the subject of patent applications currently pending, in the U.S. and certain other countries. In our business for instance, we intend to utilize our patent-pending technology for the jurisdictional validation and distribution of lottery tickets.

We also have a U.S. Trademark application currently pending under office action with the United States Patent and Trademark Office.  Trademark protection continues in some countries, including the U.S., for as long as the mark is used and in other countries for as long as it is registered. Registrations generally are for fixed, but renewable, terms.

Should we become aware of any potential infringement of our intellectual property or trade names by competitors and other third parties, we will consider what action, if any, to take in that regard, including, where appropriate, litigation.

Production Processes, Sources and Availability of Components

Our mobile application process is specifically designed to produce secure lottery game tickets for government sanctioned lotteries and promotional games, and to specifically ensure the jurisdiction of play and rules regarding play are complied with, along with meeting social responsibility mandates. Our application is designed for efficient, timely, mobile and secure production of game tickets and storage of game tickets and notification of winning ticket results. Games are delivered consistent with and ready for play with the lottery authority within the jurisdiction of play.

24

Competition

Mobile Lottery Products: International

Our lottery gaming business competes with a variety of suppliers from various international markets. There are numerous SMS-based mobile lottery companies that have emerged globally over the past few years.  Due to heavy regulation in Europe and North America the majority of these companies have set their sights on less regulated emerging markets.  These markets are of significant interest to mobile lottery vendors due to their high population density and the relatively low access to online internet services and traditional convenience store lottery retailers.

Principal direct competitors exist in such emerging markets as India, Mexico, China and South America where lottery vendors provide access to national lotteries through mobile SMS messaging capabilities.  To date the percentage of individuals who use the mobile device sales channel for lottery has remained low.  The need to purchase prepaid cards from retailers and incompatible handsets still remain a challenge for these vendors. Furthermore, these have an inherent weakness as they lack security and do not identify the user’s location.

Additional competition exists within European markets as lottery regulation continues to evolve.  The market for mobile lottery is in its infancy as vendors address both security and regulatory restrictions.  We have engineered our mobile lottery application with both location-based technology and superior cryptology which allows us to meet stringent government regulations.

Competitive Advantages

Technology Advantages

1. Our technology functions as an Application and does not utilize SMS capabilities, which facilitates the following:

· Controlled end-user experience interactive graphical user interface (GUI), matched to phone capabilities;

· Includes secure interface standards;

· Enhanced eCommerce capabilities; and

· Low cost per message.

2. Our  product has the ability to identify the geographical location of players.  This patent-pending process limits out of region play for purposes of controlling compliance with jurisdictional legal requirements.

3. Our application has been tested on a number of different phone types:

· A development plan is underway to cover most of the popular smart model cellular telephones;

· Current development is underway to enable Windows Mobile platforms; and

· Non-smart phones using conventional technologies have development potential.

4. Our application has been built to integrate with existing on-line offerings without duplicating processes or databases to create an efficient, seamless mobile and on-line gaming experience.

5. We believe that Phase 2 gaming (including pro-line, sports select, and multiplayer games) could be developed and accommodated on our system.

6. Our product provides the lottery operator with a non-intrusive, 2-way communication capability which includes screen pop-ups, device start-up screen, and survey capability, as well as enhanced personalized marketing opportunities.

7. We provide full screen notification of lottery results.

8. Our application icon resides on the mobile device and application upgrades are automatic.

25

9. Our working demonstration models are developed and are currently operable for assessment by lottery operators.

Player Experience Advantages:

10. Our product requires few key strokes (as the process is menu driven), which provides for simple and easy play.

11. All functionality and processes can be built onto the mobile device (full mobile solution for player registration, PIN access, lottery purchase, settlement, winning ticket notification, and customer communication).

12. Our application has design and play concepts based on replicating, emulating and interfacing with existing web-based lottery operator offerings for consistency of the lottery experience using a mobile device.

Employees  

We currently have five employees, who are dedicated to the primary functions of sales and marketing to lottery operators, technology development, development of existing and next generation games for mobile application, and administration.  We have engaged consultants for accounting and legal services.

DESCRIPTION OF PROPERTY

Our principal executive offices are located at 23-5250 Satellite Drive, Mississauga, Ontario, L4W 5G5.  We have a month to month lease for this 1,500 square foot location, with a cost of approximately $1,500.00 per month, which commenced in May 2009. We believe that this property is adequate for our current and immediately foreseeable operating needs.  At the present time, we do not own any real estate.  We do not have any policies regarding investments in real estate, securities or other forms of property. 

LEGAL PROCEEDINGS

We are not aware of any pending or threatened litigation against us that we expect will have a material adverse effect on our business, financial condition, liquidity, or operating results. We cannot assure you that we will not be adversely affected in the future by legal proceedings.

MARKET PRICE OF AND DIVDENDS ON THE REGISTRANT’S COMMON EQUITY

AND RELATED STOCKHOLDER MATTERS

Market Information

There is currently no trading market for our common stock.  Upon completion of this offering we intend to take the steps necessary to have our common stock included for quotation on the Over the Counter Bulletin Board.  There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.  

Holders

As of the date of this prospectus there are 55,000,000 shares of common stock issued and outstanding.

As of the date of this prospectus there are 8 holders of record of our common stock.

26

Dividend Policy

We have not paid any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.

Securities Authorized for Issuance Under Equity Compensation Plans

At the present time, we have no securities authorized for issuance under equity compensation plans.

27

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Forward Looking Statements

Some of the statements contained in this prospectus that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this prospectus, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

· Our ability to attract and retain management, and to integrate and maintain technical information and management information systems;

· Our ability to raise capital when needed and on acceptable terms and conditions;

· The intensity of competition;

· General economic conditions; and

· Changes in government regulations.

Plan of Operation

We are a development stage company.  We have developed a patent-pending software application which permits the secure purchase of lottery tickets on commercially available “smart” phones and similar mobile telecommunications devices.  A smart phone is a mobile phone offering advanced capabilities, often with personal computer-like functionality, such as e-mail, Internet access and other applications.  Our proprietary technology for facilitating the purchase of lottery tickets through commercially available smart phones and other mobile devices addresses all elements of lottery play, including secure player registration and authorization, number selection, settlement, winning number notification and other direct-to-customer marketing opportunities.  We intend to license our software application to governments and other lottery operators as our primary source of revenue.  We do not intend to become a lottery operator.  During the foreseeable future, we expect to pursue our business only outside of the United States because current laws in the United States prohibit sales of lottery tickets utilizing mobile telecommunications devices.

Results of Operations

Loto was incorporated in the state of Nevada on April 22, 2009, and our wholly-owned subsidiary Mobilotto was incorporated in the province of Ontario in September 2008.  On May 13, 2009, Loto acquired all of the issued and outstanding shares of Mobilotto (which included all intellectual property of the mobile lottery purchase system).  We have concentrated our efforts on developing our business strategy and obtaining financing.  We have working models ready for demonstration and we have commenced our initial sales and marketing program.  We have had early stage meetings with some lottery operators in Canada and we are actively pursuing other opportunities in Canada and elsewhere.  Our mobile lottery software application has not yet been utilized by any lottery operators and we have not yet derived any revenues from our technology.  There is no guarantee that we will be able to successfully develop and launch our technology or that it will generate sufficient revenue to sustain our operations.

28

Liquidity and Capital Resources

As a development stage company, we have limited capital and limited operating resources. We raised $170,000 under the terms of our co-founders’ agreements and our Series A private placements of restricted common stock.  As of May 31, 2009, we had working capital of approximately $169,000 (this included deposits of $150,000 towards the Series A private placements which closed on June 9, 2009).  Pursuant to the terms of our Series A private placements, we are hereby registering for resale 11,000,000 of the 15,000,000 shares sold in the private placements.  We will not receive any of the proceeds from the sale of shares from the selling stockholders. The funds raised in the prior private placements will not be sufficient to meet our projected cash flow deficits from operations or to fund the development of our technology and products.  We plan on seeking additional financing, however, we currently have no firm commitments for any future financing and we may not be able to obtain additional financing on terms acceptable to us, if available at all, in the future.  The terms and condition of additional financing, if available, could have a material adverse affect on our business, results of operations, liquidity and financial condition.

Furthermore, actual results may differ from our projections if there are material changes in any of the factors or assumptions upon which we have based our projections.  Such factors and assumptions, include, without limitation, the development of our proprietary technology platform and our products, the timing of such development, market acceptance of our products, protection of our intellectual property, our success in implementing our strategic, operating and personnel initiatives and our ability to commercialize our products, any of which could impact sales, costs and expenses and/or planned strategies and timing.  As a result, it is possible that we may require significantly more capital resources to meet our capital needs.

We have omitted Selected Financial Data and Supplemental Financial Data under the permissive authority of Regulation S-K Rules 301 and 302.

Off-Balance Sheet Arrangements

None.

CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have not had any changes in or disagreements with our accountants regarding accounting and financial disclosure.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We did not have any operations which implicated market risk as of the end of the latest fiscal year.  We expect that our planned operations will engender market risk, particularly with respect to foreign currency exchange rate risk.  We intend to implement an analysis and assessment program which will on a regular basis determine exposures of Loto to such risks.  We expect to report the results of all such quantitative and qualitative risk assessments prior to entering into any material agreements, and on a regular monthly and annual basis to our audit committee so that responsive risk management measures can be discussed and actions taken to the extent reasonably feasible.  Inflationary factors in the future, such as increases in overhead costs, may adversely affect our operating results.  A high rate of inflation in the future may have an adverse effect on our ability to manage selling, general and administrative expenses as a percentage of net revenues if our revenues do not increase with these increased costs.

29

MANAGEMENT AND CERTAIN SECURITY HOLDERS

Directors, Executive Officers, Promoters and Control Persons

The following table presents information with respect to our officers, directors and significant employees as of June 9, 2009.  

NAME	AGE	POSITION
Stephen Knight	51	President, Chief Executive Officer and Chief Financial Officer
Gino Porco	42	Director
Marsha Collins	43	Director, Treasurer & Secretary

Stephen Knight.  Mr. Knight has served as Loto’s President and Chief Executive Officer since May 13, 2009.  From October 2008 to May 12, 2009, Mr. Knight was President and CEO of Mobilotto Systems, Inc.  From December 2007 through September 2008, Mr. Knight was engaged in marketing consulting for major brands in the United States and Canada.  From November 1998 through December 2007, Mr. Knight served as Senior Vice President of Credit & Loyalty Management as well as an officer for Hudson’s Bay Company.  Mr. Knight was appointed Chief Financial Officer of Loto on June 3, 2009.

Gino Porco.  Mr. Porco is a Co-Founder of Loto Inc. and he has served as a Director of Loto since May 13, 2009. Mr. Porco has overseen the development of our technology initiatives from planning stage through development and performance testing. Mr. Porco has supervised multiple development teams working on both network development and infrastructure and device applications and technologies, driving our various core offerings.  Since 2002, Mr. Porco has been President of Envenia Networks, which designs and implements best-of-breed, carrier-class voice networking solutions.  Mr. Porco has consulted on various telecommunication projects, lending expertise to the development of Sky Voice, Digital World, Power Telephone, Carrier and Compu-call communication, as well as various Internet projects since its rise to prominence in the late 1990’s.

Marsha Collins.  Ms. Collins has served as Loto’s Director since April 22, 2009.  Ms. Collins was appointed Treasurer on April 28 and Corporate Secretary on June 3, 2009.  Since January 2000, Marsha Collins has served as an officer and director of VC Strategic Investments Inc., a private investment company. 

Term of Office

All of our directors are appointed for a one-year term to hold office until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Executive officers serve at the discretion of the Board of Directors, and are elected or appointed to serve until the next Board of Directors meeting following the annual meeting of stockholders.  Our executive officers are appointed by our Board of Directors and hold office until removed by the Board.

At the present time, two of our stockholders, Mhalka Capital Investments Limited and A Few Brilliant Minds Inc. have agreed as co-founders of the company that the Board shall be composed of an equal number of persons nominated by each founder.  Each founder: (i) shall accept such nominations as exclusive and binding as and when made; and (ii) shall vote only for such persons nominated by the founders, respectively, so that the Board at all times consists of an equal number of representatives of each founder.  If for any reason at any time the Board is not composed of an equal number of persons nominated by each founder, no actions may be taken by the other founder’s representatives other than duly appointing or duly electing a nominee of the other founder then having the right to equalize representation on the Board with such founder’s nominees.

Significant Employees

At the present time, we have no key employees other than our officers and directors.

30

Family Relationships

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past five years, none of the following occurred with respect to a present director, person nominated to become director, executive officer, or control person: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

EXECUTIVE COMPENSATION

Summary Compensation Table

During the fiscal year ended May 31, 2009, neither Loto nor its subsidiary Mobilotto paid any cash compensation to our Chief Executive Officer, Stephen Knight, or any of our other executive officers. Loto is currently negotiating compensation arrangements with its executive officers and expects to enter into agreements with them in the foreseeable future.

The Company had no executive officers whose total annual salary and bonus exceeded $100,000.  Loto was incorporated on April 22, 2009 and Mobilotto was incorporated on September 16, 2008.

Director Compensation

Since inception of Loto on April 22, 2009 and Mobilotto on September 16, 2008, no compensation has been paid to the directors.

Employment Agreements

The Company currently has no employment agreements with its executive officers or other employees.

Outstanding Equity Awards at Fiscal Year-End

Neither Loto nor Mobilotto has paid any stock, options or other equity awards to any officer, director, employee or other person to date.  Loto may adopt an option plan in the future.  No stock, options or other equity awards are anticipated to be issued by Mobilotto.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number of shares of common stock beneficially owned as of June 9, 2009 by (i) those persons or groups known to us to beneficially own more than 5% of our common stock; (ii) each director; (iii) each executive officer; and (iv) all directors and executive officers as a group. Except as indicated below, each of the stockholders listed below possesses sole voting and investment power with respect to their shares.  The percentage of ownership set forth below reflects each holder’s ownership interest in the 55,000,000 shares of Loto’s common stock issued and outstanding as of June 9, 2009.

31

Name of Beneficial Owner	Common Stock Beneficially Owned		Percentage of Common Stock
A Few Brilliant Minds Inc. (1)		20,000,000		36.36	%
Mhalka Capital Investments Ltd. (2)		20,000,000		36.36	%
Stephen Knight		0		0	%
Gino Porco through A Few Brilliant Minds Inc. (1)		20,000,000		36.36	%
Marsha Collins (3)		0		0	%
All officers and directors as a group (3 persons) (1, 2, 3)		20,000,000		36.36	%

For each individual or entity listed above, the mailing address is: c/o Loto Inc., 23-5250 Satellite Dr., Mississauga, Ontario, Canada M8X 1B8.

(1) Gino Porco, Director and co-founder, has sole voting and dispositive control over the Loto shares owned by A Few Brilliant Minds Inc., which is located at c/o Loto Inc., 23-5250 Satellite Dr., Mississauga, Ontario, Canada M8X 1B8.

(2) The voting and dispositive control over the shares of Loto owned by Mhalka Capital Investments Ltd. is exercised by Perpetum Finance Inc., which is located at c/o Alyco Advisory AG, Stockerstrasse 44, P.O. Box 1078, 8039 Zurich, Switzerland.

(3) Marsha Collins, Director, is a contingent beneficiary of a trust which is the sole owner of Mhalka Capital Investments Ltd.  Ms. Collins does not have any voting control or power of disposition over any of the shares owned by Mhalka Capital Investments Ltd. or the trust.

Changes in Control

At the present time, there are no arrangements known to Loto, including any pledge by any person of securities of Loto, the operation of which may at a subsequent date result in a change in control of Loto.

STOCK OPTION PLAN INFORMATION

To date, Loto has not adopted a Stock Option Plan.  Loto may adopt an option plan in the future.

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS  

In connection with the founding of Loto and the acquisition of Mobilotto, on May 13, 2009, Loto issued 20,000,000 shares of restricted common stock to A Few Brilliant Minds Inc. in exchange for all of the issued and outstanding shares of Mobilotto Systems, Inc. to Loto.  The sole owner of A Few Brilliant Minds Inc., Mr. Gino Porco, is a director of Loto.  On the same date, Loto issued 20,000,000 shares of restricted common stock to Mhalka Capital Investments Ltd. in consideration for the payment of $20,000.00 to Loto.  Ms. Marsha Collins serves as a director of Loto as nominated by Mhalka Capital Investments Ltd.  Mr. Porco and Ms. Collins, as the sole directors of Loto and as representatives of the sole shareholders of Loto as of the date of the foregoing transactions, ratified and approved the transactions pursuant to the terms and conditions of the Founders’ Agreement by and among A Few Brilliant Minds Inc., Mhalka Capital Investments Ltd. and Loto.  Since the beginning of the last fiscal year, neither Loto nor Mobilotto entered into any other transactions, nor are there any currently proposed transactions, in which Loto or Mobilotto was, or is, to be a participant and the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest.

BOARD COMMITTEES; DIRECTOR INDEPENDENCE

Currently, all actions that would otherwise be performed by standing committees of the Board of Directors are performed by the entire Board, including the recent hiring of an executive officer and his compensation, the hiring of our independent public accountants and the oversight of the independent auditor relationship, the review of our significant accounting policies and our internal controls.

32

The Board of Directors has analyzed the independence of each director and has determined that neither of Loto’s two directors, Gino Porco and Marsha Collins, are independent under the rules of the NASDAQ Stock Market LLC.  The Board of Directors has determined that each of Loto’s directors has relationships that would cause him and her not to be independent under the specific criteria of Section 4200(a)(15) of the NASDAQ Manual.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon for us by Michael J. Morrison Esq., Nevada special counsel to Loto.  Mr. Morrison’s mailing address is 1495 Ridgeview Drive, Suite 220 Reno, Nevada 89509.

EXPERTS

Our financial statements as of May 31, 2009 and for the period April 22, 2009 (date of inception) through May 31, 2009, have been included herein in reliance upon the report of Paritz & Company, P.A. Certified Public Accountants, independent registered public accounting firm, appearing elsewhere herein, and upon authority of said firm as experts in accounting and auditing.

DISCLOSURE OF COMMISSION POSITION ON

INDEMNIFICATION

FOR SECURITIES ACT LIABILITIES

We have a provision in our by-laws providing for indemnification of our officers and directors.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Commission a registration statement on this Form S-1 under the Securities Act, with respect to the common stock offered by this prospectus. This prospectus, filed as part of the registration statement, does not contain all of the information set forth in the registration statement and its exhibits and schedules. For further information regarding us and the shares offered hereby, please refer to the registration statement. You may inspect a copy of the registration statement without charge at the Commission's principal offices, and you may obtain copies of all or any part of the registration statement from such office upon payment of the fees prescribed by the Commission.

In addition to this registration statement, we are also required to file periodic reports and other information with the Securities and Exchange Commission, including quarterly reports and annual reports which include our audited financial statements.  You may read and copy any reports, statements or other information we file at the Commission’s public reference facility maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00am to 3:00pm. You can request copies of these documents, upon payment of a duplicating fee, by writing to the Commission. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings are also available to the public through the Commission Internet site at http\\www.sec.gov. These filings may be inspected and copied (at prescribed rates) at the Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.

33

You may also request a copy of our filings at no cost, by writing of telephoning us at:

Loto Inc.

23-5250 Satellite Dr., Mississauga

Ontario, Canada M8X 1B8

Telephone: 416-500-7799

Attention: Mr. Stephen Knight

Chief Executive Officer, President and Chief Financial Officer

34

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Certified Public Accountants Paritz & Company, P.A. on the consolidated financial statements of Loto Inc., dated as of June 9, 2009	F-2
Loto Inc. Consolidated Financial Statements	F-3

F-1

Paritz & Company, P.A	15 Warren Street, Suite 25 Hackensack, New Jersey 07601 (201) 342-7753 Fax:  (201) 342-7598 E-Mail:  PARITZ@paritz.com
Certified Public Accountants

Board of Directors

Loto Inc.

(A Development Stage Company)

Mississauga, Ontario, Canada

We have audited the accompanying consolidated balance sheet of Loto Inc. (A Development Stage Company) (the “Company”) as of May 31, 2009 and the related consolidated statements of operations, changes in stockholders’ equity  and cash flows for the period from inception (September 16, 2008) to May 31, 2009.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenues since inception, has an accumulated loss of $10,979 as of May 31, 2009 and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon, among other things, the continued financial support from its shareholders, the ability of the Company to obtain necessary equity or debt financing and the attainment of profitable operations.  These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. There is no assurance that the Company will be able to generate revenues in the future. These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to continue as a going concern.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Loto Inc.  (A Development Stage Company) as of May 31, 2009, and the results of its operations and its cash flows for the period from inception (September 16, 2009) to May 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

Paritz & Company, P.A.

Hackensack, New Jersey

June 9, 2009

F-2

LOTO INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEET

MAY 31, 2009

ASSETS
CURRENT ASSETS:
Cash	$	169,203
TOTAL CURRENT ASSETS AND TOTAL ASSETS	$	169,203
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued expenses	$	10,000
Deposit for subscription to common stock		150,000
Due to stockholder		91
TOTAL CURRENT LIABILITIES AND TOTAL LIABILITIES		160,091
STOCKHOLDERS’ EQUITY:
Common stock, par value $.0001,
100,000,000 shares authorized
40,000,000 shares issued and outstanding		4,000
Additional paid-in capital		16,091
Deficit accumulated during development stage		(10,979	)
TOTAL STOCKHOLDERS’ EQUITY		9,112
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	169,203

See notes to consolidated financial statements

F-3

LOTO INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS

FROM INCEPTION (SEPTEMBER 16, 2008) TO MAY 31, 2009

REVENUES	$	-
COSTS AND EXPENSES:
General and administrative expenses		10,979
NET LOSS	$	(10,979	)

See notes to consolidated financial statements

F-4

LOTO INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FROM INCEPTION (SEPTEMBER 16, 2008) TO MAY 31, 2009

	Shares		Amount		Additional Paid-In Capital			Deficit Accumulated During Development Stage			Total
BALANCE – SEPTEMBER 16, 2008		-	$	-	$	-		$	-		$	-
Capital contribution in connection with formation of Mobilotto, Inc.		-		-		91			-			91
Net loss		-		-					(10,979	)		(10,979	)
Sale of 20,000,000 shares at $.001 per share		20,000,000		2,000		18,000			-			20,000
Shares issued in connection with Acquisition of Mobilotto, Inc.		20,000,000		2,000		(2,000	)		-			-
BALANCE – MAY 31, 2009		40,000,000	$	4,000	$	16,091		$	(10,979	)	$	9,112

See notes to consolidated financial statements

F-5

LOTO INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS

FROM INCEPTION (SEPTEMBER 16, 2008) TO MAY 31, 2009

OPERATING ACTIVITIES:
Net loss	$	(10,979	)
Change in operating assets and liabilities:
Accrued expenses		10,000
NET CASH USED IN OPERATING ACTIVITIES		(979	)
INVESTING ACTIVITIES:
Sale of common stock		20,091
Deposit for stock subscription		150,000
Loan from stockholder		91
NET CASH PROVIDED BY INVESTING ACTIVITIES		170,182
INCREASE IN CASH AND CASH – END OF PERIOD	$	169,203

See notes to consolidated financial statements

F-6

LOTO INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2009

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization and Business Description

Loto Inc. (“Loto” or the “Company”), together with our wholly owned subsidiary Mobilotto Systems, Inc. (“Mobilotto”), are development stage companies.  We have developed a patent-pending software application that permits the secure purchase of lottery tickets on commercially available “smart” phones and similar mobile telecommunications devices.  A smart phone is a mobile phone offering advanced capabilities, often with personal computer-like functionality, such as e-mail, Internet access and other applications.  Our proprietary technology for facilitating the purchase of lottery tickets addresses all elements of lottery play, including secure player registration and authorization, number selection, settlement, winning number notification and other direct-to-customer marketing opportunities.  We intend to operate or license our software application with governments and other lottery operators as our primary source of revenue.  We do not intend to become a lottery operator.  During the foreseeable future, we expect to pursue our business only outside of the United States since current laws in the United States prohibit sales of lottery tickets utilizing mobile telecommunications devices.  Our mobile lottery software application has not yet been utilized by any lottery operators and we have not yet generated any revenues from our technology.

Basis of Consolidation and Development Stage Activities

These consolidated financial statements include the accounts of Loto Inc. which was incorporated on April 22, 2009 in the state of Nevada and its wholly-owned subsidiary, Mobilotto Systems, Inc which was incorporated in Ontario, Canada on September 16, 2008.   On May 13, 2009 the stockholders of Mobilotto contributed all of the outstanding equity interests in Mobilotto to the Company in exchange for 20,000,000 shares of the Company’s common stock.   This transaction has been accounted for as a transaction between entities under common control in accordance with Financial Accounting Standard Board Statement 141 (“SFAS 141”) . Accordingly, the net assets were recognized in the consolidated financial statements at their carrying amounts in the accounts of Mobilotto at the transfer date and the results of operations of Mobilotto are included as though the transaction had occurred at the beginning of the period,

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars.  All intercompany balances and transactions have been eliminated.

Since inception the Company has been engaged in organizational activities, has been developing its business model and has not earned any revenue from operations.  Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Enterprise”, as set forth in Financial Accounting Standards Board Statement No. 7 (SFAS 7").   Among the disclosures required by SFAS 7 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations, stockholders’ equity and cash flows disclose activity since the date of the Company’s inception.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity or remaining maturity at the date of purchase of three months or less to be cash equivalents.

F-7

Property and Equipment

Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight line basis over the expected useful life as follows:

Computer equipment and software	3 years
Office furniture and equipment	5 years
Leasehold improvements	term of the lease

Repairs and maintenance expenditures are charged to operating expense as incurred.  Replacements and major renewals are capitalized.

Accounting for the Impairment or Disposal of Long-Lived Assets

Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of the asset may not be recoverable.  For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset, or group of assets, is less than their carrying value.  If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and the fair value.  Fair values are determined based on quoted market values, discounted cash flows, or internal and external appraisals, as applicable.  Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

We recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable when we have persuasive evidence of an arrangement, prices are fixed or determinable, services or products are provided to the customer, and collectability is probable and reasonably assured depending upon the applicable revenue recognition guidance followed.  The following are specific revenue recognition policies.

Loto expects to have contracts between the mobile network operators and/or the lottery operators, depending upon the jurisdiction of business.  Revenue from lottery services is determined as a percentage of the amount of retail sales of lottery tickets pursuant to the terms of the contract.  This revenue will be recognized when the lottery purchase transaction is completed and confirmed to the mobile device.

Revenue from the sale of a lottery system, which includes the customization of software, is recognized on the percentage of completion method of accounting, based on the ratio of costs incurred to estimated costs to complete.

Revenue from the licensing of customized lottery software is recognized over the term of license on the basis as identified in the contracts.

Revenue derived from software maintenance on lottery software is recognized ratably over the maintenance period.

Revenue derived from enhancements to lottery software is recognized at the time such enhancements are accepted by the customer.

Development Costs

It is the Company’s policy to expense all software and application development costs as the Company’s future revenues and business operations are uncertain as to quantum, timing, and realization.

F-8

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 Foreign Currency Translation, using the exchange rate prevailing at the balance sheet date. Revenue and expenses accounts are translated at average exchange rates during the period.  Historical cost balances are re-measured using historical exchange rates. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income.  Foreign currency transactions are primarily undertaken in Canadian dollars.  The Company has not to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Income Taxes

Income tax expense is based on pre-tax financial accounting income.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences 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.  Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Basic and Diluted Net (Loss) Per Common Share (“EPS”)

Basic net (loss) per share is computed by dividing the net (loss) attributable to the common stockholders by the weighted average number of common shares outstanding during the reporting period.  Diluted net income per common share includes the potential dilution that could occur upon exercise of warrants or conversion of debt to acquire common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share.

Fair Value of Financial Instruments

The Company’s financial instruments include cash and accrued expenses.  The fair value of these financial instruments approximates their carrying values due to their short maturities.

Recent Accounting Pronouncements

Business Combinations (SFAS 141R) requires most identifiable assets, liabilities, non-controlling interests and goodwill acquired in a business combination to be recorded at “full fair value”.  Under SFAS 141R, all business combinations will be accounted for under the acquisition method.  Significant changes, among others, from current guidance resulting from SFAS 141R include the requirement that contingent assets and liabilities and contingent consideration shall be recorded at the estimated fair value as at the acquisition date, with any subsequent changes to fair value charged or credited to earnings.  Further, acquisition related costs will be expensed rather than treated as part of the acquisition.  SFAS is effective for periods beginning on or after December 15, 2008.

Non-Controlling Interests in Consolidated Financial Statements (FAS 160)  requires the ownership interests in subsidiaries held by other parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position.  FAS 160 is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008.

The Hierarchy of Generally Accepted Accounting Principles (SFAS 162)  identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of non-government entities that are presently in conformity with U.S. GAAP.

We do not expect the adoption of any recent accounting pronouncements to have a material effect on the financial statements of the Company.

F-9

NOTE 3 – GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenues since inception, has an accumulated loss of $10,979 as of May 31, 2009 and is unlikely to  generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon, among other things, the continued financial support from its shareholders, the ability of the Company to obtain necessary equity or debt financing and the attainment of profitable operations.  These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. There is no assurance that the Company will be able to generate revenues in the future. These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to continue as a going concern.

NOTE 4 – DEPOSIT FOR SUBSCRIPTION TO COMMON STOCK

Loto has received subscriptions for private placements pending for the sale of an aggregate of 15,000,000 shares of restricted common stock to six accredited investors at a purchase price of U.S. $0.01 per share for an aggregate purchase price of U.S. $150,000.  The private placement is anticipated to close by mid-June.

NOTE 5 - LITIGATION

The Company is not aware of any legal actions against it.  From time to time in the future, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.

NOTE 6 – SUBSEQUENT EVENT

On June 4, 2009, Loto amended its certificate of incorporation to change its par value from $.001 per share to $.0001 per share.  Retroactive effect has been given to the above in the accompanying statement of stockholders’ equity.

F-10

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.     Other Expenses of Issuance and Distribution

The following table sets forth the estimated costs and expenses to be incurred in connection with the issuance and distribution of the securities registered under this registration statement. All amounts are estimates except the Commission registration fee. The following estimated expenses will be borne solely by us.

Commission registration fee	$	767.25
Legal fees and expenses	$	35,000.00
Accounting fees and expenses	$	12,000.00
Miscellaneous expenses	$	5,000.00
Total	$	52,767.25

We have agreed to bear expenses related to the registration of the shares of common stock covered by this registration statement.

Item 14.     Indemnification of Directors and Officers

Our articles of incorporation provide that no director or officer shall be personally liable for damages for breach of fiduciary duty for any act or omission unless such acts or omissions involve intentional misconduct, fraud, knowing violation of law, or payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes.

Our bylaws provide that we shall indemnify any and all of our present or former directors and officers, or any person who may have served at our request as director or officer of another corporation in which we own stock or of which we are a creditor, for expenses actually and necessarily incurred in connection with the defense of any action, except where such officer or director is adjudged to be liable for negligence or misconduct in performance of duty. To the extent that a director has been successful in defense of any proceeding, the Nevada Revised Statutes provide that he shall be indemnified against reasonable expenses incurred in connection therewith.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Loto pursuant to the foregoing provisions, or otherwise, Loto has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable.

Item 15.     Recent Sales of Unregistered Securities

On May 13, 2009 the two co-founders of Loto entered into a Founders’ Agreement with each other and the company.  Mhalka Capital Investments Limited was issued 20,000,000 shares of Loto restricted common stock in exchange for contributing $20,000.00 to Loto.  On the same date, A Few Brilliant Minds Inc. was issued 20,000,000 shares of Loto restricted common stock in exchange for all of the equity interests of Mobilotto Systems, Inc. which is now a wholly owned subsidiary of Loto.  Each of the co-founders beneficially owns approximately 36.4% of our outstanding common stock.  The sole owner of A Few Brilliant Minds Inc. is Mr. Gino Porco, a director of Loto.  Ms. Marsha Collins serves as a director of Loto as nominated by Mhalka Capital Investments Ltd.  Loto issued the shares of restricted common stock in the co-founder transactions in reliance on the exemption from securities registration under Section 4(2) of the U.S. Securities Act of 1933, as amended, and Regulation S promulgated thereunder.

On June 9, 2009, we sold an aggregate of 15,000,000 shares of our restricted common stock in a Series A private placement with six accredited investors at a purchase price of $0.01 per share for an aggregate purchase price of $150,000.  These issuances were exempt from registration under Section 4(2) of the Securities Act of 1933, as amended.  With respect to five of the six investors, we also relied upon the exemption from registration provided by Regulation S.

35

Item 16.     Exhibits and Financial Statement Schedules.

EXHIBITS

The following exhibits are included as part of this registration statement.

Exhibit No.	Description of Exhibits
Exhibit 3.1	Articles of Incorporation of the Company.
Exhibit 3.2	Bylaws of the Company.
Exhibit 3.3	Amendment to the Articles of Incorporation of the Company.
Exhibit 5.1	Opinion of Michael Morrison, Nevada counsel to the Company. Opinion based upon Nevada state law.
Exhibit 10.1	Founders’ Agreement, by and between the Company, A Few Brilliant Minds Inc. and Mhalka Capital Investments Ltd., dated as of May 13, 2009.
Exhibit 10.2	Form of Subscription Agreement, by and between the Company and the Series A Financing Subscribers (Regulation S Subscribers).
Exhibit 10.3	Form of Subscription Agreement, by and between the Company and the Series A Financing Subscribers (Section 4(2) Subscribers).
Exhibit 10.4	Form of Registration Rights Agreement, by and between the Company and the Series A Financing Subscribers.
Exhibit 14.1	Loto Inc. Code of Ethics.
Exhibit 21	List of Subsidiaries.
Exhibit 23.1	Consent of Paritz & Co.
Exhibit 23.2	Consent of Michael Morrison, Nevada counsel to the Company (included in Exhibit 5.1).
Exhibit 24	Power of Attorney (included on Signature Page).

Item 17.     Undertakings 

The undersigned Company hereby undertakes to:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement, and

36

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes:

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

37

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Ontario, Canada, on the 9th day of June, 2009.

LOTO INC.
By:	/s/ Stephen F. Knight
	Stephen F. Knight.
	President, Chief Executive Officer and Chief Financial Officer

DIRECTOR AND OFFICER SIGNATURES AND POWERS OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen F. Knight as his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file such amendments, together with exhibits and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying the confirming all that said attorney-in-fact and agent, or any substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ Stephen F. Knight	Chief Executive Officer, President and Chief Financial Officer	June 9, 2009
Stephen F. Knight	(Principal executive officer, Principal Financial Officer and Principal Accounting Officer)
/s/ Marsha Collins	Director, Corporate Secretary, and Treasurer	June 9, 2009
Marsha Collins
/s/ Gino M. Porco	Director	June 9, 2009
Gino M. Porco

38

EXHIBIT INDEX

The following exhibits are included as part of this registration statement.

Exhibit No.	Description of Exhibits
Exhibit 3.1	Articles of Incorporation of the Company.
Exhibit 3.2	Bylaws of the Company.
Exhibit 3.3	Amendment to the Articles of Incorporation of the Company.
Exhibit 5.1	Opinion of Michael Morrison, Nevada counsel to the Company. Opinion based upon Nevada state law.
Exhibit 10.1	Founders’ Agreement, by and between the Company, A Few Brilliant Minds Inc. and Mhalka Capital Investments Ltd., dated as of May 13, 2009.
Exhibit 10.2	Form of Subscription Agreement, by and between the Company and the Series A Financing Subscribers (Regulation S Subscribers).
Exhibit 10.3	Form of Subscription Agreement, by and between the Company and the Series A Financing Subscribers (Section 4(2) Subscribers).
Exhibit 10.4	Form of Registration Rights Agreement, by and between the Company and the Series A Financing Subscribers.
Exhibit 14.1	Loto Inc. Code of Ethics.
Exhibit 21	List of Subsidiaries.
Exhibit 23.1	Consent of Paritz & Co.
Exhibit 23.2	Consent of Michael Morrison, Nevada counsel to the Company (included in Exhibit 5.1).
Exhibit 24	Power of Attorney (included on Signature Page).

39

EX-3.1

EX-3.2

  
    Unassociated Document
    
    
    
    
    
    

EX-5.1

MICHAEL J. MORRISON

ATTORNEY AND COUNSELOR AT LAW

1495 RIDGEVIEW DRIVE, SUITE 220

RENO, NEVADA 89509

TEL: 775-827-6300

FAX: 775-827-6311

E-MAIL: morrisonlaw@pyramid.net

WEBSITE:www.VentureLawUSA.com

June 9, 2009

Loto Inc.

23-5250 Satellite Dr., Mississauga

Ontario M8X 1B8

Canada

Re: Registration Statement on Form S-1

Ladies and Gentlemen:

I have acted as counsel to Loto Inc., a Nevada corporation (the “Company”), in connection with a registration statement on Form S-1 (the “Registration Statement”) to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to the sale from time to time of up to 11,000,000 shares subject to the Registration Statement (the “Registered Shares”).

I have examined such documents and have reviewed such questions of law as I have considered necessary and appropriate for the purposes of our opinions set forth below.  In rendering our opinions set forth below, I have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies.  I have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties.  As to questions of fact material to our opinions, I have relied upon certificates of officers of the Company and of public officials.

Based on the foregoing, I am of the opinion that the Registered Shares have been duly authorized by all requisite corporate action and are validly issued, fully-paid and non-assessable.

This opinion is based on the laws of the State of Nevada.

I hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and to the reference to our firm under the heading “Legal Matters” in the Prospectus constituting part of the Registration Statement. In giving this consent, I do not thereby admit that I am within the category of persons whose consent is required under Section 7 of the Act, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

Very truly yours,

/s/ Michael J. Morrison, Esq.

Michael J. Morrison, Esq. 

EX-10.1

Execution Version

LOTO INC.

FOUNDERS' AGREEMENT

THIS FOUNDERS' AGREEMENT (the “Agreement”) is made as of the date set forth on the signature page hereto by and among LOTO INC.,a Nevada corporation (the “Company”), A FEW BRILLIANT MINDS INC.(the “Inventor”) and MHALKA CAPITAL INVESTMENTS LTD. (“Mhalka,” and together with the Inventor, the “Founders” and together with the Company and the Inventor, the “Parties”).

Whereas, Mobilotto Systems Inc. (“Mobilotto”) is an Ontario corporation that has a business model utilizing a proprietary software application which allows for the encrypted purchase of lottery tickets on a mobile device (the “Technology”);

Whereas, as of the date hereof, Mobilotto is the sole owner and holder of all intellectual property rights pertaining to the Technology;

Whereas, Mhalka is a company whose principals have expertise in the areas of corporate development, finance, investments, mergers, acquisitions and strategic business alliances;

Whereas, the Founders have agreed that it is in their respective mutual best interests to enter into strategic partnership in the form of the Company which was incorporated on April 22, 2009;

Now, therefore, in consideration of the mutual representations, warranties, covenants and agreements set forth in this Agreement, the Parties hereto hereby agree as follows:

Section 1.                      Purchase and Sale.

1.1           Mhalka hereby purchases twenty million (20,000,000) shares of Company Common Stock (the “Mhalka Shares”) in consideration for payment of the aggregate purchase price of twenty thousand dollars ($20,000.00) at a per share purchase price of Company Common Stock of $0.001 par value per share (the “Mhalka Purchase Price”);

1.2           The Inventor hereby purchases twenty million (20,000,000) shares of Company Common Stock (the “Inventor Shares”) in consideration of the contribution to the Company of all of the issued and outstanding equity interests of Mobilotto (the “Mobilotto Shares”), the value of which is twenty thousand dollars ($20,000.00) at a per share purchase price of Company Common Stock of $0.001 par value per share (the “Inventor Purchase Price”).

1.3           Prior to the Closing the Inventor shall have completed the assignment and transfer of all of the Intellectual Property, as such term is defined below, to Mobilotto.

Page 1 of 14

Loto Inc. Founders' Agreement

1.4           The Parties intend that the purchase of the Mhalka Shares and the Inventor Shares (collectively referred to herein as the “Company Shares”) and the transfers of the Mobilotto Shares and Intellectual Property shall constitute transactions in which no gain or loss is recognized in accordance with the provisions of Section 351 of the Internal Revenue Code of 1986, as amended.

1.5           The “Intellectual Property” which the Inventor shall transfer to Mobilotto prior to the Closing means all rights arising from or in respect of any of the following in any jurisdiction throughout the world as relates to the Technology: (i) patents, patent applications, patent disclosures and inventions, utility models, supplementary protection certificates and applications therefore (including provisional applications, invention disclosures, certificates of invention and applications for certificates of invention) and divisionals, continuations, continuations-in-part, patents of addition, reissues, renewals, extensions, re-examinations, and equivalents thereof, including any continuations, continuations-in-part, renewals and reissues for any of the foregoing, (ii) Internet domain names, trademarks, service marks, service names, fictional business names, trade dress rights, trade names, brand marks and names, slogans, logos and corporate names and registrations and applications for registration thereof together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered, published and unpublished) and copyrightable works and registrations and applications for registration thereof, and mask works and registrations and applications for registration thereof, (iv) computer software, (specifically excluding all shrink wrap software), data, data bases and documentation thereof, (v) trade secrets and other confidential and proprietary information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, process technology, research and development information, drawings, blue-prints, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information), (vi) copies and tangible embodiments thereof (in whatever form or medium); URLs and internet domain names, and all other intellectual property, industrial rights or proprietary rights (however defined); in each case, owned, used, or licensed by the Inventor as licensee or licensor.

Section 2          Closing.

The purchase and sale of the Company Shares shall occur at a Closing to be held contemporaneously with the execution hereof (the “Closing Date”).  At the Closing, Mhalka is hereby delivering the Mhalka Purchase to the Company and the Company is issuing the Mhalka Shares registered in the name of Mhalka.  At the Closing, the Inventor is hereby assigning, transferring and delivering the Inventor Purchase Price to the Company and the Company is issuing the Inventor Shares registered in the name of the Inventor.

Section 3.         Corporate Governance.

3.1.           Composition of the Board.  The Board of Directors of the Company (the “Board”) shall be composed of an equal number of persons nominated by each Founder.  All Founders: (i) shall accept such nominations as exclusive and binding as and when made; and (ii) shall vote only for such persons nominated by the Founders, respectively, so that the Board at all times consists of an equal number of representatives of each Founder.  If for any reason at any time the Board is not composed of an equal number of persons nominated by each Founder, no actions may be taken by the Board other than duly appointing or duly electing a nominee of the Founder then having the right to equalize representation on the Board with such Founder’s nominees.

Page 2 of 14

Loto Inc. Founders' Agreement

3.2.           Vacancies; Removal.

(a)           If one of the directors shall cease to serve as a director of the Company for any reason, including without limitation any of the reasons set forth in Section 3.2(b) below, the vacancy resulting thereby shall be filled by another person nominated by the Founder who appointed such vacating director, with the same full force and effect as set forth in Section 3.1 above.

(b)           Except as provided in this Section 3.2 each Founder agrees that, at any time that it is then entitled to vote for the election or removal of directors, it will not vote in favor of the removal of a director appointed by a Founder unless: (i) the nominating Founder of such director has recommended such removal or the nominating Founder of such director has waived Section 3.2(a) of this Agreement; (ii) such director has been found by a court of competent jurisdiction or arbitral body to have acted in a manner constituting gross negligence or willful misconduct in his or her capacity as a director of the Company; or (iii) the Board determines in good faith on the basis of reasonable independent evidence that such director is impaired from properly performing his or her duties by reason of any physical or mental incapacity for a period of more than ninety (90) consecutive days in any six month period.

3.3.           Cooperation.  Each Founder shall vote all of its shares of common stock of the Company (the “Common Stock”) and shall take all other necessary or desirable actions within its control (including, without limitation, attending all meetings in person or by proxy for purposes of obtaining a quorum, executing all written consents in lieu of meetings and voting to remove members of the Board, as applicable), and the Company shall take all necessary and desirable actions within its control (including, without limitation, calling special Board and shareholder meetings and voting to remove members of the Board, as applicable), to effectuate the provisions of this Section 3.

Section 4.        Restrictions on Transfers of Stock.

4.1.           A Founder may transfer his Common Stock to only as follows (such transfers are referred to herein as “Permitted Transfers”) (i) to their estate in the event of death; (ii) to such Founder's spouse or issue; (iii) to a trust for the benefit of such Founder’s spouse or issue; (iv) to a family partnership, limited liability company or similar entity of which the Founder is the only member; (v) to an “affiliate” of such Founder, which term shall include any person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Founder; or (vi) to any other person or entity in circumstances where such transfer is necessary for purposes of regulatory compliance, tax efficiencies or estate planning, and where the other Founder has consented to such transfer, which consent shall not be unreasonably withheld.

Page 3 of 14

Loto Inc. Founders' Agreement

4.2           As a condition to any Permitted Transfer, unless otherwise agreed by unanimous consent of the Founders, the Founder shall retain by irrevocable written proxy all rights contained herein to nominate, vote for directors or vote for removal of directors of the Company, and shall not permit any and all such rights to be exercised by any other persons or legal entities other than the Founder.  In the event of the Founder’s incapacity or death, the Founder’s legal estate, legal custodian or legal guardian shall retain all such Founder rights.

4.3           No Founder shall transfer any shares of Common Stock, whether owned on the date hereof or acquired hereafter, other than in a Permitted Transfer, without the prior unanimous written consent of the Founders.

4.4.           Any transferee of Common Stock (including any transferee pursuant to a Permitted Transfer) who is not a Founder shall upon consummation of and as a condition to such transfer, execute and deliver to the Company an agreement in form and substance satisfactory to the Founders, pursuant to which it agrees to be bound by the terms of this Agreement for the benefit of the Parties hereto and such transferee shall thereafter be deemed to be subject to the terms and conditions of this Agreement, except that any and all rights to nominate, vote for directors or vote for removal of directors shall not be transferred to any such transferee and the Founder shall retain all such rights, as provided in Section 4.2 above.

4.5.           Any transfer or attempted transfer of Common Stock in violation of any provision of this Agreement shall be null and void, and the Company shall not record such transfer on its books or treat any purported transferee of such Common Stock as the owner of such Common Stock for any purpose.

Section 5.        Right of First Refusal.

5.1.           Except with respect to Permitted Transfers, in the event of any proposed transfer or series of proposed transfers of Common Stock to a third party by any Founder (in each case, a “Selling Founder”), the following shall apply if and only if the other Founder consents to such transfer:

(a)           The Selling Founder shall give the other Founders (each, a “First Offeree”) and the Company written notice of its intent to transfer all or portion of its Common Stock (the “First Offer Notice”) and the minimum price and terms and conditions of such transfer, and offer to sell such Common Stock to the First Offeree.

(b)           Following receipt of a First Offer Notice, a First Offeree may purchase such Common Stock proposed to be sold pro rata at the percentage of Common Stock then held by such First Offeree, which proportion shall be determined with respect to all Founders of the Company as if the Selling Founder had no Common Stock of the Company.

(c)           If the First Offeree shall not, within 30 days after receipt of the First Offer Notice accept the offer contained therein, then subject to Section 4 the Selling Founder shall be free to sell the interests specified in the First Offer Notice, at a price and on other terms and conditions no less favorable than those specified in the First Offer Notice, at any time within 30 days following the expiration of the such First Offer 30-day period, after which the provisions of the First Offer must be re-initiated.

Page 4 of 14

Loto Inc. Founders' Agreement

(d)           If the Selling Founder shall not have consummated the proposed transfer within 120 days after the expiration of the 30-day period referred to in clause (c) above, the Selling Founder may not thereafter sell such Common Stock without again complying with the First Offer Notice provisions hereof.

(e)           If the First Offeree shall accept such offer within 30 days after receipt of the First Offer Notice, then the First Offeree shall purchase, for cash, the Common Stock specified in such First Offer Notice as promptly as reasonably practicable, but in no event later than 75 calendar days after receipt of the First Offer Notice, or such later date as the Selling Founder may agree in writing.

(f)           In the event that a First Offeree declines to purchase all or any portion of Selling Founder’s Common Stock pursuant to a First Offer Notice, then other First Offerees may purchase any or all of such declined Common Stock pro rata as set forth in clause (b) above.

5.2.           Condition Precedent on Transfer.  If any Founder shall transfer any Common Stock or derivative interest therein to any person pursuant to the provisions hereof, it shall be a condition precedent to such transfer that such transferee shall agree in writing to be bound by the terms and conditions of this Agreement otherwise such transfer shall be deemed to be null and void.

Section 6.          Tag-Along Rights.

6.1.           Except with respect to Permitted Transfers, no Selling Founder shall, in any one transaction or any series of related transactions, directly or indirectly transfer to a person who is not a party to this Agreement, any or all of its shares of Common Stock unless (i) consent is granted by the other Founder; (ii) the Selling Founder has complied with the Rights of First Refusal provided herein; and (iii) the terms and conditions of such transfer to such third party include an offer to each other Founder to include, at the option of such other Founder, in such transfer, a number of shares of Common Stock owned by such other Founder, determined in accordance with Section 6.2 hereof, on the same terms and conditions as those applying to the Selling Founder.  Prior to effecting any transfer of Common Stock subject to this Section 6, the Selling Founder shall send a written notice of the terms of such proposed transfer (the “Tag-Along Notice”) to the other Founder, who for purposes of this Section 6 shall not be deemed to be a Selling Founder, unless such other Founder initiates any transaction or any series of related transactions (other than a Permitted Transfer), directly or indirectly, with a view to transfer Common Stock to a Person who is not a party to this Agreement.  At any time within 14 days after receipt of the Tag-Along Notice, each other Founder may accept the offer included in the Tag-Along Notice for up to such number of shares of Common Stock as is determined in accordance with the provisions of Section 6.2 by furnishing written notice of such acceptance to the Selling Founder and delivering to the Selling Founder the certificate or certificates representing the shares of Common Stock to be transferred pursuant to such offer by such other Founder.

Page 5 of 14

Loto Inc. Founders' Agreement

6.2.           Each Founder (other than the Selling Founder) shall have the right, pursuant to Section 6.1 hereof, to sell pursuant to the third party's offer a number of shares of Common Stock (rounded down to the nearest whole number of shares) equal to the product of (A) the total number of shares of Common Stock to be acquired by the third party, and (B) a fraction, the numerator of which shall be the aggregate number of shares of Common Stock then owned by such Founder and the denominator of which shall be the aggregate number of shares of Common Stock then outstanding (the “Tag Along Amount”).  The Selling Founder shall reduce the number of shares of Common Stock it is to sell accordingly to allow for the Tag Along Amount of shares of Common Stock of the other Founder to be sold.

6.3.           Simultaneously with the consummation of the transfer of the shares of Common Stock held by the Selling Founder and any other Founder to the third party pursuant to the third party's offer, the Selling Founder shall notify such other Founder thereof and shall cause the third party purchaser to remit to such other Founder the total sale price of the shares of Common Stock transferred by such other Founder to such third party.  The Selling Founder may deduct from the sale price payable to such other Founder pursuant to this Section 6 such other Founder's pro rata portion of the reasonable out-of-pocket fees and expenses payable by the Selling Founder in respect of the completion of such sale, including, without limitation, brokers', legal and accounting fees and expenses.

6.4.           If within 14 days after the receipt of the Tag-Along Notice, any Founder (other than the Selling Founder) has not accepted the offer contained in the Tag-Along Notice, such other Founder shall be deemed to have waived any and all rights with respect to the transfer of shares of Common Stock described in the Tag-Along Notice and the Selling Founder may for a period of 30 days from the date of the Tag-Along Notice to transfer not more than the amount of shares of Common Stock described in the Tag-Along Notice plus any shares of any other Founder included in such transfer pursuant to this Section 6, on terms not more favorable to the Selling Founder than those set forth in the Tag-Along Notice.  If, at the end of such time period the Selling Founder has not completed the transfer of shares of Common Stock held by the Selling Founder and any other Founder in accordance with the terms of the third party's offer, the Selling Founder shall return to all other Founders all certificates representing the shares of Common Stock which such other Founder delivered for sale or other disposition pursuant to this Section 6.  Any subsequent transfer after the expiration of such 30 day period shall require re-initiation of Tag-Along Notice.

Section 7.          Conflicting Agreements.  Each Founder represents and warrants that such Founder has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with any provision of this Agreement, and no holder of Common Stock shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with any provision of this Agreement.

Page 6 of 14

Loto Inc. Founders' Agreement

Section 8.            Covenants, Representations and Warranties.

8.1           Each Party hereto represents and warrants to all other Parties hereto as follows:

(a)           The Party has full power and authority to execute, deliver and perform its obligations under this Agreement;

(b)           This Agreement has been duly and validly authorized, executed and delivered by the undersigned Party, and constitutes a valid and binding agreement, enforceable against such Party in accordance with the terms and conditions herein, except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally; and

(c)           The Party is not a signatory or adherent to any agreement which is inconsistent with the rights of any party hereunder or otherwise conflicts with the provisions hereof.

(d)           The Party is in good standing and is duly authorized under its respective charter and constitutional governing instruments to execute and deliver this agreement.  There is no order and no proceeding, investigation or claim of any kind whatsoever, at law or in equity, pending or, to the Parties knowledge, threatened against the Parties, which would give a third party the right to enjoin or rescind the transactions contemplated by this Agreement or otherwise prevent the Parties from complying with the terms and provisions of this Agreement.

(e)           The Party does not require any governmental consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing to execute, deliver and cause the effectiveness of this Agreement.

8.2           The Inventor hereby covenants, represents and warrants to all other Parties hereto as follows:

                                 (a)           The Inventor is the sole beneficial and record owner of the Mobilotto Shares and has good and marketable title to all Mobilotto Shares free and clear of all Liens convertible rights, derivative rights, pre-emptive rights and contingent rights, and the Company shall at the Closing acquire from the Inventor all of the Inventor’s right, title and interest in and to the Mobilotto Shares.  The Mobilotto Shares represent the sole equity ownership interests in Mobilotto.  No other person has any right, title or interest in the Inventor’s Mobilotto Shares, contingent or otherwise, or any option or other right to acquire the Mobilotto Shares or claim of any direct or indirect interests in the Mobilotto Shares, or any ownership or rights of any nature or kind in any other issued or unissued securities or equity interests of Mobilotto.  The Mobilotto Shares are not the subject of any domestic consent decree or domestic relations order.  If the Mobilotto Shares are marital property, the Inventor has fully disclosed the existence of this Agreement to his spouse and obtained written consent for the sale of the Mobilotto Shares hereunder.  Other than the transactions contemplated by this Agreement, the Inventor has not entered into any agreement or letter of intent or other commitment to acquire or dispose of any securities or assets of Mobilotto.  For purposes of this Agreement “Lien” means any and all liens, charges, mortgages, deeds of trust, pledges, easements, encumbrances of any and all nature or kind, derivative third party rights and direct or indirect contingent third party rights.

Page 7 of 14

Loto Inc. Founders' Agreement

                                (b)           The Inventor has not previously assigned, transferred, conveyed or otherwise encumbered any of his rights, title or interests in any of the Intellectual Property or the business plan developed for Mobilotto.  The Inventor was the sole owner of the Intellectual Property prior to its transfer to Mobilotto and no other persons or entities has or shall have any claim of ownership with respect to any part of the Intellectual Property.  To the best of the Inventor’s knowledge after reasonable investigation, no persons are infringing any of the intellectual property rights of the Inventor in connection with respect to the Technology and the Technology does not infringe on any of the intellectual property rights of any other persons or parties.   As of the Closing Mobilotto is in compliance with any and all federal, state, provincial, regional, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other similar pronouncement binding upon or affecting Mobilotto as adopted or issued by any and all governmental authorities having competent jurisdiction over Mobilotto, except where non-compliance would not materially or adversely affect the Company.

                                (c)           Prior to the Closing, the Inventor shall have transferred to Mobilotto: (i) the Intellectual Property, and all rights and all derivative rights thereof; and (ii) any and all rights to the Mobilotto business model, in each case free and clear of all Liens and Indebtedness. At the Closing Mobilotto shall be the sole owner of all of the Intellectual Property, and all rights and all derivative rights thereof free and clear of all Liens and Indebtedness.  For purposes of this Agreement, “Indebtedness” means (a) all liabilities and obligations for credit in advance of payment, borrowed money or funded indebtedness or issued in substitution for or exchange for borrowed money or funded Indebtedness (including obligations in respect of principal, accrued interest, any applicable prepayment charges or premiums and any unpaid fees, expenses or other monetary obligations in respect thereof); (b) any indebtedness evidenced by any note, bond, debenture or other debt security; (c) any lease obligations required to be capitalized in accordance with GAAP; (d) all obligations for reimbursement then-required to be made as an obligor of any banker’s acceptance or similar transactions (including, without limitation, standby letters of credit and similar contingent sureties and guaranties); (e) all obligations for the deferred purchase price of property, all conditional sale obligations under any title retention agreement; (f) any obligations with respect to the termination of any interest rate hedging or swap agreements; (g) all obligations of the type referred to in clauses (a) through (f) of this definition with respect to any Person for the payment of which either Company is responsible or liable, directly or indirectly, as guarantor, obligor, surety or otherwise (excluding intercompany debt); and (h) obligations of the type referred to in clauses (a) through (g) of this definition with respect to other Persons secured by any Lien on any property or asset of the Company.

                                (d)           As of the Closing, the Inventor shall assume primary responsibility for payment of any and all Mobilotto Indebtedness existing prior to Closing.  As of the Closing Date, Mobilotto shall have no liabilities, contingent or otherwise, with respect to any and all vendors, suppliers, employees, former employees, contractors, consultants or professional service providers or any other accounts of any nature or kind.

Page 8 of 14

Loto Inc. Founders' Agreement

                                (e)           At the Closing, the Inventor is hereby delivering the Mobilotto Shares to the Company together with a duly executed stock power, whereby the Company shall irrevocably become the sole legal and equitable owner of the Mobilotto Shares.  At the Closing, there shall be no shall no direct or indirect Liens or contingent Liens on any of the Mobilotto assets or the Mobilotto Shares or the Intellectual Property.

(f)           All books and records of Mobilotto are true, correct and complete in all material respects and shall continue to be maintained in accordance with good corporate practice and as otherwise required pursuant to the laws, rules and regulations applicable to the Company, and shall at all times be made available to all directors of the Company and to each of the Founders and their respective authorized representatives during ordinary business hours upon reasonable notice.  The Inventor will execute any and all agreements, filings or other documents necessary to document and record the transfer of the Intellectual Property to the Company, as the Company may reasonably request.

(g)           The Inventor hereby acknowledges that no employment relationship between the Company and the Inventor is or will be created hereby.

(h)           The Inventor represents and warrants that Inventor is acquiring the Company Shares for investment for Inventor's own account, not as a nominee or agent and not with the view to, or for resale in connection with, any distribution thereof.  The Inventor understands that the Company Shares have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Inventor's representations as expressed herein. Inventor has not been formed for the specific purpose of acquiring the Company Shares. Inventor further understands that the Company shall have no obligation to register the Company Shares under the Act on behalf of Inventor.

8.3           Mhalka hereby covenants and agrees as follows:

(a)           At the Closing, Mhalka is hereby paying the Mhalka Purchase Price for the Mhalka Shares.

(b)           Mhalka hereby covenants and agrees to develop and execute strategic plans to obtain operational financing for the Company in accordance with the budget mutually agreed upon by the Founders and approved by the Board of Directors.  The funds received by the Company in respect of the Mhalka Purchase Price shall be utilized in accordance with Mhalka’s financing plans for the Company.

Page 9 of 14

Loto Inc. Founders' Agreement

8.4           Mhalka and the Inventor hereby covenant and agree as follows:

(a)           All fees costs, expenses and disbursements of the Company after acquisition of Mobilotto will be at the sole charge of the Company from proceeds of financing activities.

(b)           The Inventor and Mobilotto will execute the operation and deployment of the Technology according to the Mobilotto business plan and assure compliance with all applicable governmental authorities and third parties necessary for legal operation of the Technology.

(c)           The Parties will use their respective best efforts to obtain any and all approvals from all government authorities and contract partners which may be applicable to formation and commencement of operations of Mobilotto and the Company.

(d)           Mobilotto shall after acquisition by the Company continue its operations and deploy its business plan as a wholly owned subsidiary of the Company.  All officers and employees of Mobilotto shall continue in their respective capacities for Mobilotto.

(e)           Neither Mhalka nor Mobilotto nor any of their respective affiliates will grant any contingent interests, pledges or options on Company Shares without the prior unanimous consent of the Founders.  Any unauthorized pledge or option shall be deemed null and void and shall not be recorded on the books and records of the Company.

Section 9.             Indemnification. From and after the Closing, the Inventor shall indemnify the Company and Mhalka and their respective directors, officers, employees, affiliates, stockholders, agents, attorneys, representatives, successors and permitted assigns, against and hold such Parties harmless from any and all loss or costs incurred by those Parties in any action to defend the Company’s use of or rights to the Mobilotto Shares, the Intellectual Property and Mobilotto’s business plan, which in any such case is attributable to facts or circumstances which existed prior to the Closing date.

Section 10             Duration of Agreement; Termination.  The rights and obligations of each Founder under this Agreement shall terminate at such time as the Founders shall mutually agree.

Section 11.            Amendment and Waiver.  Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against the Company or any Founder unless such modification, amendment or waiver is approved in writing by all of the Founders.  The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

Section 12.            Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

Page 10 of 14

Loto Inc. Founders' Agreement

Section 13.          Entire Agreement.  This agreement is the complete and entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes any and all prior understandings, agreements or representations by or among the Parties, written or oral, which may have related to the subject matter hereof in any way, including but not limited to the memorandum of understanding contemplating this agreement.  Nothing in this Agreement shall limit or impair the right of the Company or any Founder party to this Agreement to enter amendments, into additional agreements regarding supplemental terms and conditions applicable to ownership or rights pertaining to the Common Stock in accordance with the terms and conditions of this Agreement.

Section 14.           Information and Accounting.  The Company shall furnish the Founders and their representatives with information concerning the business and operations of the Company from time-to-time as determined by the Board.

Section 15.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction of incorporation of the Company without giving effect to the principles of conflicts of law.

Section 16.            Dispute Resolution.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled exclusively by binding arbitration in Toronto, Ontario, Canada pursuant to the rules of an arbitral forum mutually agreed upon by the Founders.  In the event that an arbitral forum is not agreed upon after delivery of notice by the Founder initiating such arbitration and forty-five days after confirmed receipt of such notice by the other Founder, then any court having competent jurisdiction over the Founders shall have full power and authority to appoint an arbitrator in Toronto, Ontario, Canada, who shall be a solicitor with not less than ten years corporate transactional experience.  The fees and costs of such arbitration shall be paid by the non-prevailing party.

Section 17.             Confidentiality; Non-Competition.  Each Founder acknowledges that all information about the Company and its finances and operations is confidential and proprietary and each Founder agrees not to disclose any such information to any other person or entity, provided, however, that the foregoing shall not limit or restrict the ability of any Founder who is also a director, officer or employee of the Company from taking any actions necessary or appropriate to the performance of its duties in connection therewith; provided, further, that each Founder may disclose such information (1) to its affiliates, attorneys, accountants, consultants and other professionals to the extent necessary to utilize their services in connection with investment in the Company; or (2) as may otherwise be required by law, provided that such Founder takes reasonable steps to minimize the extent of any such required disclosure.  The Parties hereto expressly agree that no Founder shall at any time engage in business ventures or activities which directly compete with the Company's business, and each Founder further agrees that the foregoing restriction shall apply for a period of three (3) years following the date on which any person or legal entity ceases to be a Founder of the Company.  Notwithstanding the foregoing or anything to the contrary herein, the Parties hereto expressly acknowledge and agree that each of the Parties hereto and their affiliates are, or may in the future, be involved in other business activities and nothing herein shall be interpreted to limit such other activities so long as such activities do not directly compete against the Company.  The Parties hereto and their respective affiliates may at any time engage in and possess interests in other businesses and ventures of any and every nature and description, independently or with others, however, neither Founder nor any other person or affiliate of such Founder shall have any right, title or interest in or to the other Founder’s independent activities or to the income or profits derived therefrom.

Page 11 of 14

Loto Inc. Founders' Agreement

Section 18.             Legend.  Each Founder and the Company shall take all such action necessary (including exchanging with the Company certificates representing shares of Common Stock issued prior to the date hereof) to cause each certificate representing outstanding shares of Common Stock to bear restricted transfer legends containing the following provision:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS SET FORTH IN THE FOUNDERS’ AGREEMENT A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE COMPANY.

Section 19.              After-Acquired Shares.  All of the provisions of this Agreement shall apply to all of the shares of Common Stock now owned or hereafter issued or transferred to a Founder or to its Permitted Transferees who have become a party to this Agreement in connection with any additional issuance, purchase, exchange, exercise of conversion rights or reclassification of shares of Common Stock, corporate reorganization, or any other form of recapitalization, or consolidation, or merger, or share split, or share dividend, or capitalization issue, or which are acquired by a Founder in any other manner.

Section 20.              Availability of Equitable Remedies.  Each Founder acknowledges that a breach of the provisions of this Agreement could not adequately be compensated by money damages. Accordingly, each party hereto shall be entitled, in addition to any other right or remedy available to it, to an injunction restraining such breach or a threatened breach and to specific performance of any provision of this Agreement, and in either case no bond or other security shall be required in connection therewith, and the Parties hereto hereby consent to such an injunction and to the ordering of specific performance.

Section 21.              Notices. All notices and communications to be given or otherwise to be made to any party to this Agreement shall be deemed to be sufficient or contained in a written instrument if sent by messenger, telecopied, faxed or mailed by registered or certified mail, or by a recognized national or international courier service, postage or charges prepaid, return receipt requested, to the addresses set forth on the signature page hereto (or to such other address, as may be specified by the Parties hereto from time to time).

Page 12 of 14

Loto Inc. Founders' Agreement

Section 22.               Counterparts.  This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.  Signatures on this Agreement delivered electronically by e-mail, scan, fax or telecopier shall be considered delivery of original signatures for purposes of effectiveness of this Agreement to the same and full extent as an original thereof.

#           #           #

Page 13 of 14

Loto Inc. Founders' Agreement

IN WITNESS WHEREOF, the Parties hereto have executed this Founders' Agreement as of this 13th day of May, 2009.

THE COMPANY:

LOTO INC.

By:	/s/ Marsha Collins
	Name:  Marsha Collins
	Title: Corporate Secretary & Treasurer
	Address for Notices:
	United Corporate Services Inc.
	202 South Minnesota Street
	Carson City, NV 89703

THE FOUNDERS:

A FEW BRILLIANT MINDS INC.

By:	/s/ Gino Porco
	Name: Gino Porco
	Title:
	Address for Notices:
	81 CHARTWELL RD
	TORONTO, ONTARIO
	M8Z 4G8
	CANADA

MHALKA CAPITAL INVESTMENTS LTD.

By:	/s/ Perpetum Finance Inc.
	Name: Perpetum Finance Inc.
	Title: Director
	Address for Notices:
	c/o Alyco Advisory AG
	Stockerstrasse 44/46
	PO Box 1502
	8027 Zurich
	Switzerland

Page 14 of 14

EX-10.2

LOTO INC.

SUBSCRIPTION AGREEMENT

(Regulation S)

Common Stock

US$0.01 Per Share of Common Stock

1.1  Subscription.

(a) The undersigned subscriber (the “Subscriber”), intending to be legally bound, hereby irrevocably subscribes for and agrees to purchase such number of shares of Company Common Stock (the “Shares”) as set forth on the signature page hereof, to be issued by Loto Inc., a Nevada corporation (the “Company”) in an offshore transaction negotiated outside the United States and to be consummated and closed outside the United States pursuant to the terms and conditions of this Agreement (this “Agreement”).

(b) The Subscriber acknowledges and agrees that thepurchaseprice is US$0.01 (One U.S. Cent) per Share.

1.2  Procedure for Purchase of Shares.

Following delivery of this Agreement to the Company together with Subscriber’s anti-money laundering due diligence information, the Company shall make a determination of acceptance or rejection of the Subscription.  Upon notice of acceptance of this Agreement, the Subscriber shall deliver to the Company the full purchase price by wire transfer of immediately available funds in amount equal to the number of Shares subscribed by the Subscriber and accepted by the Company (the “Purchase Price”).  The issuance of the Shares in respect of the aggregate Purchase Price delivered to the Company shall be rounded to the nearest whole share.  Wire instructions are attached hereto as Exhibit A.  The Subscriber shall fax a copy of the wire transfer information to the Company.

1.3  Acceptance or Rejection.

(a) The Subscriber understands and agrees that the Company reserves the right to accept or reject at its sole discretion this Subscription Agreement.  The Company reserves the right to accept the subscription in part and refund any balance of the Purchase Price for any unaccepted portion of the subscription.  At any time prior to the Closing the Company may reject or terminate the subscription at any time for any reason notwithstanding delivery of notice of acceptance of the subscription.  The Company also reserves the right exercisable at any time and at its sole discretion to return the Purchase Price and cancel the issuance of the Shares if the Company determines that issuance of the Shares would cause any actual or potential violation of any U.S. laws, rules or regulations or the rules of any stock market, securities exchange or securities quotation system.

(b) The Subscriber understands and agrees that its subscription under this Agreement for the Shares is irrevocable.

(c) In the event the sale of the Shares subscribed by the Subscriber is not consummated by the Company for any reason (in which event this Subscription Agreement shall be deemed to be rejected), this Subscription Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription shall thereafter have no force or effect and the Company shall promptly return or cause to be returned to the Subscriber the Purchase Price remitted to the Company by the Subscriber, without interest thereon or deduction therefrom (except for third party banking and wire transfer fees), in exchange for the Shares.

2.1  Closing.

The closing (the “Closing”) of the purchase and sale of the Shares, shall occur following notice of acceptance by the Company of the Subscriber's subscription.  The Subscriber must deliver the Purchase Price to the Company within five (5) business days of notice of acceptance of the Subscription by the Company.  The Company shall use commercially reasonable efforts to deliver the Stock Certificates representing the Shares to the Subscriber within ten (10) business days after the date of receipt of the Purchase Price.  The Closing shall be deemed to occur upon confirmation of receipt by the Subscriber of the Stock Certificates representing all purchased Shares.  If the Company does not receive the Purchase Price from the Subscriber by wire transfer within five (5) business days of notice of acceptance of the Subscription by the Company, the Company may at its sole discretion terminate the Subscription Agreement without recourse by the Subscriber.  A business day is any weekday on which banks in New York City are open for normal business, which for clarity excludes Saturdays, Sundays and legal bank holidays.  Delivery of the Purchase Price by the Subscriber prior to acceptance of the Subscription Agreement by the Company shall not bind the Company in any way.

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

3.1  Subscriber Representations and Warranties.

The Subscriber hereby acknowledges, represents and warrants to, and agrees with, the Company as follows:

(a) The Subscriber represents and warrants that it is an individual, or an entity regulated under the laws of the jurisdiction set forth on the signature page hereto.  The Subscriber acknowledges and agrees that it is acquiring the Stock solely for its own account for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part; and no other person has a direct beneficial interest in such Stock or any portion thereof.  The Subscriber does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Shares for which the Subscriber is subscribing or any part of the Shares.  The Subscriber does not control, nor is the Investor controlled by or under common control with, any other Subscriber or investor in the Company.  No person or persons other than Subscriber has a beneficial interest subscribed hereunder.

(b) The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of this Agreement has been duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber.

(c) The Subscriber is not acquiring the Stock as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting, or pursuant to any solicitation of a subscription by a person not previously known to the Subscriber in connection with investment securities generally.

(d) The Subscriber understands that the Company intends to register the Shares under the U.S. Securities Act of 1933, as amended (the “Securities Act”), provided, however, there can be no assurance or guarantees with respect to effectiveness of such registration and the Company expressly disclaims any obligation to assist the Subscriber in complying with the Securities Act or the securities laws of any state of the United States or of any foreign jurisdiction.

(e) The Subscriber is (i) experienced in making investments of the kind described in this Agreement and the related documents, (ii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and (iii) able to afford the entire loss of its investment in the Shares.  The Subscriber further understands that the Company is in inception stage of development and has no business or operations, the Company currently has no agreements or arrangements with any persons in connection therewith.

(f) The Subscriber acknowledges its understanding that the offering and sale of the Shares is intended to be exempt from registration under the Securities Act; (i) The Subscriber acknowledges that the basis for the exemption from registration of the Shares may not be present if, notwithstanding such representations, the Subscriber is merely acquiring the Shares for a short term fixed or short determinable period in the future for less than one year, or for a market rise, or for sale if the market does not rise, provided, however, the Subscriber reserves the right to make decisions regarding disposition of the Shares at its own discretion; (ii) the Subscriber has the financial ability to bear the economic risk of his investment, has adequate means for providing for his current needs and personal contingencies and has no need for liquidity with respect to his investment in the Company; (iii) the Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment in the Shares;  (iv) the Subscriber represents it has not been organized for the purpose of acquiring the Shares; and (v) the Subscriber has been provided an opportunity for a reasonable period of time prior to the date of signature by the Subscriber of this Subscription to obtain additional information concerning the offering of the Shares, the Company and all other information to the extent the Company possesses such information or can acquire it without unreasonable effort or expense.

(g) The Subscriber is not relying on the Company, or its affiliates or agents with respect to economic considerations involved in this investment.  The Subscriber has relied solely on its own respective advisors in making an investment determination.

2

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

(h) No representations or warranties have been made to the Subscriber by the Company, or any officer, employee, agent, affiliate or subsidiary of the Company, other than the representations of the Company contained herein, and in subscribing for the Shares the Subscriber is not relying upon any representations other than those contained herein.

(i) Any resale of the Shares during the distribution compliance period as defined in Rule 902(f) to Regulation S shall only be made in compliance with exemptions from registration afforded by Regulation S.  Further, any such sale of the Shares in any jurisdiction outside of the United States will be made in compliance with the securities laws of such jurisdiction.  The Subscriber will not offer to sell or sell the Shares in any jurisdiction unless the Subscriber obtains all applicable required legal consents and regulatory approvals.

(j) The Subscriber understands that the Shares are being offered and sold in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the Securities Act and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein in order to determine the applicability of such exemptions and the suitability of the Subscriber to acquire the Shares.  In this regard, the Subscriber in its own capacity represents, warrants and agrees that: (i) the Subscriber is not a U.S. Person (as defined below) and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company and is not acquiring the Shares for the account or benefit of a U.S. Person.  A U.S. Person means any one of the following: (1) any natural person resident in the United States of America; (2) any partnership or corporation organized or incorporated under the laws of the United States of America; (3) any estate of which any executor or administrator is a U.S. person; (4) any trust of which any trustee is a U.S. person; (5) any agency or branch of a foreign entity located in the United States of America; (6) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (7) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States of America; and (8) any partnership or corporation if: (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts; (ii) At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement by the Subscriber, the Subscriber were outside of the United States; (iii) the Subscriber will not, during the period commencing on the date of issuance of the Shares and ending on the first anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S; (iv) the Subscriber will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws; (v) the Subscriber was not in the United States, engaged in, and prior to the expiration of the Restricted Period and will not engage in, any short selling of or any hedging transaction with respect to the Shares, including without limitation, any put, call or other option transaction, option writing or equity swap; (vi) Neither the Subscriber nor or any person acting on his behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Shares and the Subscriber and any person acting on his behalf has complied and will comply with the offering restrictions requirements of Regulation S under the Securities Act; (vii) The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act; (viii) Neither the Subscriber nor any person acting on their respective behalf have undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Shares; (ix) the Subscriber agrees not to cause any advertisement of the Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws; (x) the Subscriber consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company in order to implement the restrictions on transfer of the Shares set forth in this Agreement; and (xi) Each certificate representing the purchased Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

3

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND SOLD TO NON-U.S. PERSONS, AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.  TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

(k) The Subscriber is an accredited investor as that term is defined in Rule 501 of the General Rules and Regulations under the Securities Act by reason of Rule 501(a)(3).

(l) The Subscriber understands that an investment in the Shares is a speculative investment which involves a high degree of risk and the potential loss of his entire investment.

(m) The Subscriber's overall commitment to investments which are not readily marketable is not disproportionate to the Subscriber's net worth, and an investment in the Shares will not cause such overall commitment to become excessive.

(n) The Subscriber has received all documents, records, books and other information pertaining to the Subscriber’s investment in the Company that have been requested by the Subscriber in writing as such request has been delivered to the Company with independent confirmation of receipt by the Company from the U.S. Postal Service or international courier.

(o) The Subscriber represents and warrants to the Company that all information that the Subscriber has provided to the Company, including, without limitation, the information set forth herein and attached hereto or previously provided to the Company is correct and complete as of the date of signature and the date of acceptance of this Subscription.

(p) The Subscriber represents1 and warrants to the Company that the consideration tendered by the Subscriber to the Company are not and will not be directly or indirectly derived from activities that may contravene federal, state and international laws and regulations, including anti-money laundering laws; and The OFAC prohibits, among other things, the engagement in transactions with, and the provisions of services to, certain foreign countries, territories, entities and individuals.  The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website.  The Subscriber hereby represents and warrants, to the best of its knowledge, that none of the Subscriber, any person controlling, controlled by, or under common control with, the Subscriber, any person having a beneficial interest in the Subscriber, or any person for whom the Subscriber is acting as agent or nominee in connection with this investment is: a country, territory, individual or entity named on an OFAC list, or is an individual or entity that resides or has a place of business in a country or territory named on such lists,  a senior foreign political figure2, or any immediate family member3 or close associate4 of a senior foreign political figure within the meaning of the U.S. Department of Treasury’s Guidance on Enhanced Scrutiny for Transactions That May Involve the Proceeds of Foreign Official Corruption5 and as referenced in the USA Patriot Act of 2001;6 or a "foreign shell bank"7 and does not transact business with a "foreign shell bank." The Subscriber agrees to promptly notify the Company should the Subscriber become aware of any change in the information set forth in these representations.  The Subscriber understands that, by law, the Company may be obligated to "freeze the account" of such Subscriber, either by prohibiting additional amounts, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations, and the Company may also be required to report such action and to disclose the Subscriber’s identity to OFAC. The Subscriber understands that the Company may not accept any contributed amounts from the Subscriber if the Subscriber cannot make the representation set forth above and the Company may return any amounts to Subscriber if the information provided to the Company is incomplete or is deemed suspicious.  The Subscriber represents and warrants that the acceptance of the Subscriber's Subscription Agreement together with the appropriate remittance will not breach any applicable anti-money laundering rules and regulations.  The Subscriber undertakes to provide verification of its identity reasonably satisfactory (on a confidential basis), to the Company and/or any entity acting on the Company’s behalf in respect of the acceptance of subscriptions, promptly on request.

1The Subscriber should check the U.S. Treasury Department’s Office of Foreign Assets Control ("OFAC") website at http://www.treas.gov/ofac before making the representations.

2 A “senior foreign political figure” is defined as a current or former official in the executive, legislative, administrative, military or judicial branches of a non-U.S. government (whether elected or not), a senior official of a major non-U.S. political party, or a senior executive of a non-U.S. government-owned corporation.  In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

3 “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.

4 A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

5 Please see http://www.federalreserve.gov/boarddocs/srletters/2001/sr0103a1.pdf for a more extensive discussion of the referenced terms and definitions.

6 The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. I. No. 107-56 (2001).

7 A “foreign shell bank” is a foreign bank that does not have a physical presence in any country

4

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

(q) The Subscriber is aware that no federal or state agency has (i) made any finding or determination as to the fairness of this investment, (ii) made any recommendation or endorsement of the Shares or the Company, or (iii) guaranteed or insured any investment in the Shares or any investment made by the Company.

(r) The Subscriber understands that the price of the Shares offered hereby bear no relation to the assets, book value or net worth of the Company and were determined arbitrarily by the Company. The Subscriber further understands that there is a substantial risk of further dilution on his or its investment in the Company.

4.0  The Company represents and warrants to the Subscriber as follows:

4.1 Organization of the Company.  The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Nevada, and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

4.2 Authority.  (a) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue the Shares; (b) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors is required; and (c) this Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

4.3 Share Capitalization. As of the date of acceptance of this Subscription, the authorized capital stock of the Company consists of 100,000,000 shares of common stock.  All the outstanding shares are validly issued and are fully paid and nonassessable.  The Common Stock has a par value US$0.001 per share (the “Common Stock”).  Par Value is a nominal value that is a vestige of creditors’ rights laws that was arbitrarily assigned to the shares of Common Stock for purposes of compliance with applicable state law at the date of the Company’s incorporation. It bears no direct relationship to the market value of the stock, or the Purchase Price of the Common Stock, or any ultimate sale or disposition value which may be derived from the Common Stock.

4.4 Exemption from Registration; Valid Issuances.  The sale and issuance of the Shares, on the basis of the representations and warranties of the Subscriber set forth herein, may and shall be properly issued by the Company to the Subscriber pursuant to Section 4(2), Regulation S and/or any applicable U.S state law.  When issued and paid for as herein provided, the Shares shall be duly and validly issued, fully paid, and nonassessable. Neither the sales of the Shares pursuant to, nor the Company's performance of its obligations under, this Agreement shall (a) result in the creation or imposition of any liens, charges, claims or other encumbrances upon the Shares or any of the assets of the Company, or (b) entitle the other holders of the Common Stock of the Company to preemptive or other rights to subscribe to or acquire the Common Stock or other securities of the Company.

4.5 No General Solicitation or Advertising in Regard to this Transaction. Neither the Company nor any of its affiliates nor any person acting on its or their behalf (a) has conducted or will conduct any general solicitation (as that term is used in Rule 502(c) of Regulation D) or general advertising with respect to any of the Shares, or (b) made any offers or sales of any security or solicited any offers to buy any security under any circumstances that would require registration of the Common Stock under the Securities Act.

5

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

4.6 No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, including without limitation the issuance of the Shares, do not and will not (a) result in a violation of the Certificate or By-Laws of the Company or (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture, instrument or any "lock-up" or similar provision of any underwriting or similar agreement to which the Company is a party, or (c) result in a violation of any federal, state, local or foreign law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations)applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a material adverse effect on the business, operations, properties, prospects or condition (financial or otherwise) of the Company) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The Company is not required under U.S. federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or issue and sell the Common Stock in accordance with the terms hereof (other than any SEC, NASD or state securities filings that may be required to be made by the Company subsequent to the Closing); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of the Subscriber herein.

5.1 Registration.  The Subscriber acknowledges that the Shares are restricted.  The Company undertakes to use commercially reasonable efforts to register the Shares with the U.S. Securities and Exchange Commission (the “SEC”), provided, however, any and all determinations regarding such registration shall be made at the sole discretion of the Company.  The Subscriber expressly acknowledges and agrees that there can be no assurance the Company will be able to successfully obtain a declaration of effectiveness from the SEC with respect to a registration statement for the Shares or to facilitate the trading of the Shares on any market at any time.  The Company may defer, cease or withdraw registration of the Shares at any time for any reason.  The Company makes no undertakings in respect of maintaining the effectiveness of any registration of the Shares if granted by the SEC.  The Subscriber agrees to promptly cooperate with any and all requests by the Company to provide information responsive to preparation, filing and requests for effectiveness of the registration statement for the Shares.  The Subscriber will comply with any and all laws, rules and regulations pertaining to such registration and in regard to any and all offers, solicitations, sales or trading of such Shares.

6.1 Indemnity.  The Subscriber agrees to indemnify and hold harmless the Company, its officers and directors, employees and its affiliates and their respective successors and assigns and each other person, if any, who controls any thereof, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty or breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.  The Subscriber releases, indemnifies and holds harmless the Company’s attorney in connection with receipt of the Purchase Price to the attorney trust account and transmission of such funds to the Company.

6.2 Modification.  Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.

6.3 Notices.  Any notice, demand or other communication which any party hereto may be required, or may elect, to give to party hereto shall be sufficiently given if (a) sent by registered or certified mail, return receipt requested, addressed to such address as provided herein, (b) Sent by internationally recognized courier with confirmation of delivery or evidence of refusal; or (c) delivered personally at such address.  In the case of the Company, all notices shall be deemed given two business days after mailing to the Subscriber; and in the case of the Subscriber, all notices shall be deemed given to the Company upon written confirmation of receipt by the Company.  The Company may give notice of acceptance of this Subscription by verbal advice, e-mail or fax to any address or phone number provided to the Company by the Subscriber on the Signature page below.

6

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

6.4 Counterparts.  This Agreement may be executed through the use of separate signature pages or in any number of counterparts and by facsimile, and each of such counterparts shall, for all purposes, constitute one agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart. Signatures may be facsimiles or electronically scanned copies which shall be deemed to have the same full force and effect as a manually signed original thereof.

6.5 Binding Effect.  Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and assigns.  If the Subscriber is more than one person, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators and successors.  The representations and warranties of the Subscriber shall survive the execution and delivery hereof and the Closing.

6.6 Entire Agreement.  This Agreement and the documents referenced herein contain the entire agreement of the parties and there are no representations, covenants or other agreements except as stated or referred to herein and therein.

6.7 Assignability.  This Agreement is not transferable or assignable by the Company or the Subscriber.

6.8 Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of law principles.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.  All disputes and controversies arising out of or relating to this Agreement shall be finally settled and binding under the Rules of International Commercial Dispute Resolution of the American Arbitration Association (“ICDR”).  The place of arbitration shall be New York.  The Arbitration shall be conducted in English by a single arbitrator appointed in accordance with the ICDR rules.  Any award, verdict or settlement issued under such arbitration may be entered by any party for order of enforcement by any court of competent jurisdiction.  The arbitrator shall have no power to take interim measures he or she deems necessary, including injunctive relief and measures for the protection or conservation of property.

6.9 Pronouns.  The use herein of the masculine pronouns "him" or "his" or similar terms shall be deemed to include the feminine and neuter genders as well and the use herein of the singular pronoun shall be deemed to include the plural as well.

[ Signature Page Follows ]

7

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

IN WITNESS WHEREOF, the Subscriber has executed this Agreement for the Subscription of Shares:

US$.01 Per Share

Common Stock

(Regulation S)

Purchase of Shares consisting of the following:

Total Shares Purchased:

Total Purchase Price:

SUBSCRIBER:

Print Full Legal Name:

Address:

Telephone (with country code):

Fax Number:

E-mail:

Address for Notices (if different from above)

Permanent Address  (if different from above)

Legal form if an entity (trust, corporation, partnership, etc.):

Jurisdiction of organization if an entity:

Jurisdiction of registration and regulation if a bank:

Anti-money laundering documentation: Attach copy of a valid passport (notarized as a true copy or certified by a lawyer) and a recent utility bill showing the name of the Subscriber and the subscription address of record (notarized as a true copy or certified by a lawyer).  For corporate entities, please deliver certified copies of charter documents and individual due diligence information for all officers, directors and all beneficial owners who have the right to vote the Shares or power of disposition over the Shares.

By (Signature):

Print Name:

The Company hereby accepts the above application for subscription of the Shares as of the ________ day of ______________, 2009:

LOTO INC.

By:

Name:

Title:

8

LOTO INC. - SUBSCRIPTION AGREEMENT (REGULATION S)

Exhibit A

Wiring Instructions

For Payment of the Purchase Price of the Stock:

The following are the wire instructions for the account into which the payment of the Purchase Price for the Stock subscribed should be wired after acceptance of the Agreement.

FOR PROPER CREDIT, PLEASE MAKE SURE THAT THE WIRE TRANSFER INFORMATION CLEARLY INCLUDES THE NAME OF THE SUBSCRIBER OF RECORD.  PLEASE RETAIN A COPY OF ALL WIRE TRANSFERS INSTRUCTIONS AND CONFIRMATIONS.

9

Loto Inc.

Series A Investors (Regulation S)

Name of Investor	Shares Purchased
NAC Investments Ltd.	2,500,000
2207496 Ontario Inc.	2,500,000
1476448 Ontario Inc.	2,500,000
2207846 Ontario Limited	2,500,000
2208155 Ontario Inc.	2,500,000

10

EX-10.3

Loto Inc.

SUBSCRIPTION AGREEMENT

COMMON STOCK

Section 4(2) Exempt Offering

Loto Inc.

23-5250 Satellite dr.

Mississauga, ON

L4W 5G5 Canada

Ladies and Gentlemen:

1.            Subscription. This subscription agreement (this “Agreement”) is submitted to Loto Inc. (the “Company”) in connection with the private offering by the Company to accredited investors, as such term is defined below, of shares of Company common stock, par value $.001 per share (the “Common Stock”) pursuant to the terms and conditions contained herein (the “Offering”).  The undersigned (the “Subscriber”) hereby agrees to purchase (the “Purchase”) from Loto Inc. (the “Company”) the number of shares of Common Stock (each, a “Share” and collectively the “Shares”) as set forth on the signature page hereto at a purchase price of One Cent ($0.01) per Share.

2.            Payment and Signature Pages.  The Subscriber encloses herewith a check or shall initiate a wire transfer payable to “Loto Inc.” in the full amount of the purchase price of the Shares.  Such funds will be held for the Subscriber’s benefit and will be returned promptly, without interest or offset, if this Agreement is not accepted by the Company within ten (10) business days of the date of receipt by the Company of such payment together with (a) two signed copies of this Agreement; (b) two signed copies of the Accredited Investor Certification set forth on Exhibit A attached hereto (the “Accredited Investor Certification”); and (c) two signed copies of the Company Stockholders’ Agreement attached hereto as Exhibit B (the “Stockholders’ Agreement”).

3.             Representations and Warranties.

(A) The Company hereby represents, warrants, acknowledges and agrees as follows:

(a)           The Company is a Nevada corporation which has been duly organized and is validly existing and in good standing under the laws of Nevada.  The Company is duly qualified to transact business as a corporation and is in good standing under the laws of each jurisdiction where the location of the Company’s properties or the conduct of its business makes such qualification necessary.

(b)           The Company possesses all requisite power and authority to conduct its business as presently conducted and as proposed to be conducted, to enter into and perform its obligations under this Agreement and to issue, sell and deliver the Shares.  The execution and delivery of each of the Agreement has been duly authorized by all necessary Company action. This Agreement has been duly executed and delivered and constitutes valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, (i) except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers; and (ii) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(c)           None of the execution and delivery of, or performance by, the Company under the Agreement or the consummation of the transactions herein contemplated conflicts with or violates, or will result in the creation or imposition of any lien, charge or other encumbrance upon any of the assets of the Company under any agreement or other instrument to which the Company is a party or by which the Company’s assets may be bound, any term of the Articles of Incorporation, as amended (the “Charter”), the By-laws or the Stockholders’ Agreement of the Company, or any license, permit, judgment, decree, order, statute, rule or regulation applicable to the Company and any of its assets.

(d)           The affairs of the Company are governed by the Charter and the By-laws. The Charter authorizes one class of Common Stock .  Under the Charter and the By-laws, the Company is subject to the authority of the Board of Directors which is further authorized to appoint officers to act on behalf of the Company.

(e)           The Shares to be issued in connection with the Offering have been duly authorized and, when issued and delivered against payment therefor and upon acceptance by the Company as provided in this Agreement, the Shares will be validly issued, fully paid, nonassessable and will be free and clear of all liens, charges, restrictions, claims and encumbrances other than as subject to the Charter and the Bylaws and as provided in this Agreement and applicable securities laws. No holder of any of the Shares will be subject to personal liability solely by reason of being such a holder.

Loto Inc. Subscription Agreement - Section 4(2) Exempt Offering

(f)           On the basis of the representations and warranties made by the Subscriber herein, no consent, authorization or filing with any court or governmental authority is required in connection with the issuance of the Shares relating specifically to the Purchase which is made hereby pursuant to Section 4(2) of the Securities Act.

(g)           There are no actions, proceedings, claims or investigations, before or by any court or governmental authority, pending or, to the knowledge of the Company, threatened, against the Company, or involving its assets or, to the knowledge of the Company, involving any of either of its officers or the Board of Directors.

(h)           The Company is not in violation of: (i) its Charter or By-laws; (ii) any indenture, mortgage, deed of trust, note or other agreement or instrument to which the Company is a party or by which the Company is or may be bound or to which any of its assets may be subject; (iii) any statute, rule or regulation currently applicable to the Company; or (iv) any judgment, decree or order applicable to the Company.

(B) The Subscriber hereby acknowledges, represents, warrants, and agrees as follows:

(a)           The Shares are not registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws. The Subscriber understands that the offering and sale of the Shares is intended to be exempt from registration under the Securities Act pursuant to Section 4(2) thereof based upon the representations, warranties and agreements of the Subscriber contained in this Agreement.  The Shares are restricted securities, as such term is defined under the Securities Act and certificates issued in respect of the Shares shall bear a legend as set forth below.  The Company makes no undertaking to register the Shares at any time.

(b)           The Subscriber has had ample opportunity to request and review information pertaining to the Company.  The Subscriber has been provided with an opportunity to consult with Subscriber’s own attorney, accountant, subscriber representative and/or tax adviser (collectively, the “Advisers”) and opportunity for such Advisers to carefully review all information pertaining to investment in the Shares.  All documents, records, and books pertaining to the investment in the Shares have been made available for inspection by the Subscriber and its Advisers.

(c)           The Subscriber has had an opportunity to ask questions of, and receive answers from, the Company’s chief executive officer concerning the offering of the Shares by the Company and the business and financial condition of the Company, and all such questions have been answered to the full satisfaction of the Subscriber.

(d)           In evaluating the suitability of an investment in the Company, the Subscriber has not relied upon any representation or other information (oral or written) other than as stated herein or as contained in documents delivered to the Subscriber or answers furnished in writing to the Subscriber or its Advisers in response to questions delivered to the Company.

(e)           The Subscriber is unaware of, is in no way relying on, and did not become aware of the Shares through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio and is not subscribing for Shares and did not become aware of the Shares through or as a result of any seminar or meeting to which the Subscriber was invited by, or any solicitation of a subscription by, a person not previously known to the Subscriber in connection with investments in securities generally.

(f)           The Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby and, in turn, to be paid to any third party.

(g)           The Subscriber, together with its Advisers, as the case may be, has such knowledge and experience in financial, tax, and business matters and, in particular, investments in securities, so as to enable it to utilize the information made available to it in connection with the Purchase to evaluate the merits and risks of an investment in the Shares and the Company and to make an informed investment decision with respect thereto.

(h)           The Subscriber is not relying on the Company or any of its employees or agents with respect to the legal, tax, economic and related considerations of an investment in the Shares and the Subscriber has relied only on the advice of its Advisers in such regard.

(i)           The Subscriber is acquiring the Shares solely for such Subscriber’s own account for investment purposes only and not with a view to resale or distribution thereof, in whole or in part. The Subscriber has no agreement or arrangement with any person to sell or transfer all or any part of the Shares and the Subscriber has no plans to enter into any such agreement or arrangement.

Page 2 of 9

Loto Inc. Subscription Agreement - Section 4(2) Exempt Offering

(j)           The Subscriber must bear the substantial economic risks of the investment in the Shares indefinitely because none of the Shares may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available. A Legend as follows will be placed on the Shares to the effect that they have not been registered under the Securities Act or applicable state securities laws and appropriate notations thereof will be made in the Company’s stock books; there can be no assurance that there will be any market for resale of the Shares, nor can there be any assurance that such Shares will be freely transferable at any time in the foreseeable future:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF LOTO INC. (THE “COMPANY”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY PURSUANT TO EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, OR PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER, IN EACH CASE, PROVIDING A LEGAL OPINION OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY IN ITS SOLE DISCRETION.

(k)           The Subscriber has adequate means of providing for the Subscriber’s current financial needs and foreseeable contingencies and has no need for liquidity of its investment in the Shares for an indefinite period of time.

(l)           The Subscriber is aware that an investment in the Shares involves significant risks, many of which cannot be foreseen as of this date, and the Subscriber has carefully considered such risks regarding investment in the Company, including, without limitation, that the Company is newly formed and has no operating history.  The Subscriber acknowledges that the investment in the Shares may result in the entire loss of investment capital and there can be no certainty or assurance of actual outcomes.

(m)          The Subscriber is an “accredited investor” as defined under Rule 501 or Regulation D promulgated under the Securities Act and is familiar with the legal requirements to be an accredited investor, and has completed Exhibit B attached hereto in such regard.

(n)           The Subscriber represents that (i) it was not formed for the specific purpose of acquiring the Shares; (ii) it is duly organized, validly existing and in good standing under the laws of the state of its organization; (iii) the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of state law or its charter or other organizational documents; (iv) it has full power and authority to execute and deliver this Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the Shares; (v) the execution and delivery of this Agreement has been duly authorized by all necessary action; and (vi) this Agreement has been duly executed and delivered on behalf of Subscriber and is a legal, valid and binding obligation of Subscriber. The execution and delivery of this Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling document to which the Subscriber is a party or by which it is bound.

(o)           The Subscriber and the Advisers, if any, have had the opportunity to obtain any additional information, to the extent the Company had such information in its possession or could acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information and all documents received or reviewed in connection with the purchase of the Shares and have had the opportunity to have representatives of the Company provide them with such additional information regarding the terms and conditions of this particular investment and the financial condition and business of the Company deemed relevant by the Subscriber or the Advisers, if any, and all such requested information, to the extent the Company had such information in its possession or could acquire it without unreasonable effort or expense, has been provided to the full satisfaction of the Subscriber and the Advisers, if any.

(p)           The Subscriber has significant prior investment experience, including investment in non-listed and non-registered securities and is knowledgeable about investment considerations in development-stage companies. The Subscriber has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such a loss should occur. The Subscriber’s overall commitment to investments which are not readily marketable is not excessive in view of the Subscriber’s net worth and financial circumstances and the purchase of the Shares will not cause such commitment to become excessive. The investment is suitable for the Subscriber.

(q)           The Subscriber is satisfied that the Subscriber has received adequate information with respect to all matters which it or the Advisers, if any, consider material to its decision to make this investment.

(r)           The Subscriber acknowledges that any estimates or forward-looking or similar statements have been prepared by the Company in good faith but that the attainment of any such estimates or forward-looking or similar statements cannot be guaranteed by the Company and may not be relied upon in respect of assurances or guarantees of actual outcomes.

(s)           No oral or written representations have been made, or oral or written information furnished, to the Subscriber or the Advisers, if any, in connection with the Purchase which are inconsistent with the information contained in writing.

(t)           Promptly after receipt of a request from the Company, the Subscriber will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.

Page 3 of 9

Loto Inc. Subscription Agreement - Section 4(2) Exempt Offering

(u)           The Subscriber acknowledges that the Shares have not been recommended nor approved by any federal or state securities commission or regulatory authority.  In making an investment decision the Subscriber must rely on its own examination of the Company and the terms of the Purchase, including the merits and risks involved.  Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Agreement or any ancillary materials delivered in connection herewith. Any representation to the contrary is a criminal offense. The Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act, and the applicable state securities laws, pursuant to registration or exemption therefrom. The Subscriber should be aware that it will be required to bear the financial risks of this investment for an indefinite period of time.

(v)           The Subscriber should check the Office of Foreign Assets Control (“OFAC”) website at http:/www.treas.gov/ofac before making the following representations. The Subscriber represents that the amounts invested by it in the Company were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations.  Federal regulations and executive orders administered by OFAC prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at http://www.treas.gov/ofac. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists.

(w)           To the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs. Please be advised that the Company may not accept any amounts from a prospective investor if such prospective investor cannot make the representation set forth in the preceding paragraph. The Subscriber agrees to promptly notify the Company should the Subscriber become aware of any change in the information set forth in these representations. The Subscriber understands and acknowledges that, by law, the Company may be obligated to “freeze the account” of the Subscriber, either by prohibiting additional subscriptions from the Subscriber, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations. The Subscriber further acknowledges that the Company may, by written notice to the Subscriber, suspend the Subscriber’s redemption rights, if any, if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company.

(x)           To the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with this investment is a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure, as such terms are defined in the footnotes below.

(y)           If the Subscriber is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Subscriber receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Subscriber represents and warrants to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.

(z)           The Subscriber acknowledges and agrees that (i) the Board of Directors may in the future issue securities representing equity interests in the Company, including, without limitation, additional Shares and derivative rights, options and other instruments convertible thereto, to subsequent investors, financiers, strategic alliance partners, vendors, officers, directors, employees, consultants and any other persons or organizations to the extent permitted under the Nevada General Corporation Law, the Company’s Charter and By-laws and applicable securities laws; and (ii) the Company does not intend to make distributions of capital during the foreseeable future and all such distributions, shall be subject to the governing provisions of the Company’s Charter and By-laws.

________________________________

1       These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

2           A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branch of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

3           “Immediate family” of a senior foreign political figure typically includes the figures parents, siblings, spouse, children and in-laws.

4            A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

Page 4 of 9

Loto Inc. Subscription Agreement - Section 4(2) Exempt Offering

4.            Irrevocability; Binding Effect.  The Subscriber hereby acknowledges and agrees that the subscription hereunder is irrevocable by the Subscriber, except as required by applicable law, and that this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and permitted assigns.  This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

5.            Modification.  This Agreement shall not be modified or waived except by a written instrument signed by the party against whom any such modification or waiver is sought.

6.            Notices.  Any notice or other communication required or permitted to be given hereunder shall be in writing and given or made (a) by personal delivery, (b) by facsimile with evidence of receipt, or (c) by recognized overnight courier service at the following addresses, or at such other address as any party hereto may subsequently furnish in writing to the other party (x) if to the Company, at the address set forth above, or (y) if to the Subscriber, at the address set forth on the signature page hereof (or, in either case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 6).

7.           Assignability.  This Agreement and the rights, interests and obligations hereunder are not transferable or assignable by the Subscriber and the transfer or assignment of the Shares shall be made only in accordance with all applicable laws.

8.            Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without reference to the principles thereof relating to the conflict of laws.

9.            Dispute Resolution.

(A)  In case any controversy or claim arises out of or in relation to this Agreement, the parties shall seek to resolve the matter amicably through discussions.  If the parties fail to resolve such controversy, claim or breach within thirty (30) days by amicable arrangement and compromise, either party may seek arbitration as set forth below.

(B)  All disputes and controversies arising out of or relating to this Agreement shall be finally settled and binding under the Rules of International Commercial Dispute Resolution of the American Arbitration Association (“ICDR”).  The place of arbitration shall be New York.  The Arbitration shall be conducted in English by a single arbitrator appointed in accordance with the ICDR rules.  Any award, verdict or settlement issued under such arbitration may be entered by any party for order of enforcement by any court of competent jurisdiction.  The arbitrator shall have no power to take interim measures he or she deems necessary, including injunctive relief and measures for the protection or conservation of property.  Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any such proceeding and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such proceeding brought in any such court has been brought in an inconvenient forum.

10.          Use of Pronouns.  All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require.

11.          Confidentiality.  The Subscriber acknowledges and agrees that any information or data the Subscriber has acquired from or about the Company, not otherwise properly in the public domain, was received in confidence. The Subscriber agrees not to divulge, communicate or disclose, except as may be required by law or for the performance of this Agreement, or use to the detriment of the Company or for the benefit of any other person(s), or misuse in any way, any confidential information of the Company, including any scientific, technical, trade or business secrets of the Company and any scientific, technical, trade or business materials that are treated by the Company as confidential or proprietary, including, but not limited to, ideas, discoveries, inventions, developments and improvements belonging to the Company and confidential information obtained by or given to the Company about or belonging to third parties.

12.          Miscellaneous.

(a)           This Agreement constitutes the entire agreement between the Subscriber and the Company with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings, if any, relating to the subject matter hereof. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.  Each provision of this Agreement shall be considered separable and, if for any reason any provision(s) hereof are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining portions of this Agreement.   A business day for purposes of this Agreement shall be any day on which the New York Stock Exchange is open for business.  Time is of the essence.

Page 5 of 9

Loto Inc. Subscription Agreement - Section 4(2) Exempt Offering

(b)           The parties’ representations and warranties made in this Agreement shall survive the execution and delivery hereof and delivery of the Shares.

(c)           Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated.

(d)           Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text.

[Signature Page Follows]

Page 6 of 9

Loto Inc. Subscription Agreement - Section 4(2) Exempt Offering

IN WITNESS WHEREOF, the Subscriber has executed this Agreement for the Subscription of Shares:

US$.01 Per Share

Common Stock

Section 4(2) Exempt Offering

The Subscriber herewith Purchases the Shares consisting of the following:

Total Shares Purchased:

Total Purchase Price:

SUBSCRIBER:

Print Full Legal Name:

Address:

Telephone (with country code):

Fax Number:

E-mail:

Address for Notices (if different from above)

Permanent Address (if different from above)

Legal form if an entity (trust, corporation, partnership, etc.):

Jurisdiction of organization if an entity:

Jurisdiction of registration and regulation if a bank:

Anti-money laundering documentation: Attach copy of a valid passport (notarized as a true copy or certified by a lawyer) and a recent utility bill showing the name of the Subscriber and the subscription address of record (notarized as a true copy or certified by a lawyer). For corporate entities, please deliver certified copies of charter documents and individual due diligence information for all officers, directors and all beneficial owners who have the right to vote the Shares or power of disposition over the Shares.

By (Signature):

Print Name:

The Company hereby accepts the above application for subscription of the Shares as of the ________ day of ______________, 2009:

LOTO INC.

By:

Name:

Title:

Page 7 of 9

Loto Inc. Subscription Agreement - Section 4(2) Exempt Offering

Exhibit A

Wiring Instructions

For Payment of the Purchase Price of the Stock:

The following are the wire instructions for the account into which the payment of the Purchase Price for the Stock subscribed should be wired after acceptance of the Agreement.

FOR PROPER CREDIT, PLEASE MAKE SURE THAT THE WIRE TRANSFER INFORMATION CLEARLY INCLUDES THE NAME OF THE SUBSCRIBER OF RECORD.  PLEASE RETAIN A COPY OF ALL WIRE TRANSFERS INSTRUCTIONS AND CONFIRMATIONS.

Page 8 of 9

Exhibit “A”

Loto Inc. - Accredited Investor Certification

TO:        Loto Inc.  (the “Company”)

The undersigned hereby certifies that the undersigned, and each beneficial party, if any, on whose behalf the undersigned is subscribing for Common Stock, satisfies one or more of the following categories of an Accredited Investor as that term is defined in Regulation D ("Regulation D") adopted pursuant to the U.S. Securities Act of 1933, as amended (the “Securities Act”).  Please initial beside each definition that applies.  All monetary references in this Schedule A are in United States dollars.  Accredited Investor (defined in Rule 501(a) of Regulation D), includes any person who comes within any of the following categories at the time of the sale of the securities to that person.  The investor should initial beside the portion of the above definition applicable to it.

_______  1.	Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Corporation licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
_______  2.	Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
_______  3.	Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
_______  4.	Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
_______  5.	Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
_______  6.	Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
_______  7.	Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) and
_______  8.	Any entity in which all of the equity owners are accredited investors.

Print Name of Subscriber

By:

Name:

Address

THIS IS NOT A PUBLIC DOCUMENT

Page 9 of 9

Loto Inc.

Series A Investors (Section 4(2))

Name of Investor	Shares Purchased
Ananindeau S.A.	2,500,000

EX-10.4

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the “Agreement”) is made as of the date set forth on the signature page hereto, by and between LOTO, INC., a Nevada corporation (the “Company”) and the undersigned, a stockholder of the Company (the “Stockholder”).

WHEREAS, the Company and the Stockholder have entered into that certain Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Company shall sell to the Stockholder, and the Stockholder shall purchase from the Company, the shares set forth therein (the “Shares”) of the Common Stock, par value $0.001 per share, of the Company (the “Common Stock”); and

WHEREAS, in connection therewith the parties wish to enter into this Agreement to provide the Stockholder the right to register the number of Shares set forth on the signature page hereto, pursuant to the terms and conditions below;

NOW, THEREFORE, it is agreed between the parties as follows:

1.           Registration Rights.  The Company shall file a registration statement under the Securities Act of 1933, as amended (the “Act”) covering the registration of the Shares within ninety (90) days of the date hereof.

2.           Obligations of the Company.  Whenever required hereunder to effect the registration of the Shares, the Company shall, as expeditiously as reasonably possible:

(a)           Prepare and file with the Securities and Exchange Commission (the “SEC”) a registration statement with respect to the Shares and use its commercially reasonable efforts to cause such registration statement to become effective and remain effective for a period of up to twelve (12) months or until the distribution contemplated in the registration statement has been completed; provided, however, that (such period shall be extended for a period of time equal to the number of days that the registration statement may be suspended pursuant to Section 8 below.

(b)           Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement.

(c)           Furnish to the Stockholder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Shares.

(d)           Notify the Stockholder at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

(e)           Any determination to register and qualify the securities covered by such registration statement under the blue sky laws of those states of the United States shall be made at the sole discretion of the Company and the Company shall not be required in connection therewith, or as a condition thereto, to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

3.           Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to the registration of the Shares hereunder that the Stockholder shall furnish to the Company such information required to effect the registration of the Shares.

4.           Sale Price.  The Company’s common stock is not traded on any exchange or quoted for trading on any quotation system.  Following effectiveness of registration, none of the Shares may be sold for a sales price other than US$1.25 per share until the Company’s common stock is quoted on the OTC Bulletin Board (the “Restricted Period”), at which time the Shares may be sold at prevailing market prices or privately negotiated prices. The Stockholder hereby acknowledges that can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority (FINRA), which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. 

5.           Short Selling Not Permitted.  The Stockholder will not sell short any security of the Company, and will not allow any security of the Company which they own to be loaned for the purpose of short selling, or to be located for short selling.

6.           Other Restrictions on Stockholders.  The Stockholder hereby represents and warrants as follows:

(a)           The Stockholder will comply with any and all rules and regulations of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) concerning the sale and distribution of the Shares, including but not limited to Regulation M thereunder.

(b)           The Stockholder is aware that the Exchange Act may limit the timing of purchases and sales of the Shares, and will comply with such restriction.

(c)           The Stockholder is aware that under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and other activities with respect to those securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions.  

(d)           The Stockholder is aware that if the Shares are transferred other than pursuant to a sale under a valid registration statement, then subsequent holders will not be permitted to use any current prospectus until a post-effective amendment or prospectus supplement is filed by the Company, naming such holders.

2

(e)           The Stockholder is aware that the limitations set forth in this Section 6 may affect the marketability of the Shares.

7.           Expenses of Registration.  All expenses incurred in connection with registrations, filings or qualifications herein, including all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company shall be borne by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 1 if the registration is subsequently withdrawn at the request of the Stockholder.

8.           Suspension of Registration. Notwithstanding anything to the contrary contained herein, for not more than twenty (20) consecutive days or for a total of not more than forty (40) days in any twelve (12) month period, the Company may temporarily suspend the use of any registration statement or prospectus if, in the reasonable opinion of counsel to the Company, the Company is required (under federal or state securities laws or any other rules or regulations of any government authority) to update any information contained in the registration statement or prospectus.

9.           Indemnification.  In the event the Shares are included in a registration statement hereunder:

(a)           To the extent permitted by law, the Company will indemnify and hold harmless the Stockholder, its director and officers, any underwriter and each person, if any, who controls the Stockholder (together, the “the Stockholder Indemnified Persons”) against any losses, claims, damages, or liabilities, joint or several, or actions in respect thereof (cumulatively, the “Losses”) to which they may become subject under the Act or the Exchange Act or other federal or state law, insofar as such Losses arise out of or are based upon any of the following (each, a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Act or the Exchange Act or any state securities law; and the Company will pay to each Stockholder Indemnified Person any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss; provided, however, that the indemnity obligation contained in this Section 9(a) shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such Loss to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any Stockholder Indemnified Person.

3

(b)           To the extent permitted by law, the Stockholder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, any underwriter and each person, if any, who controls the Company within the meaning of the Act (together, the “Company Indemnified Persons”), against any Losses to which any Company Indemnified Person may become subject under the Act or the Exchange Act or other federal or state law, insofar as such Losses arise out of or are based upon any Violation, in each case to the extent that such Violation occurs in reliance upon and in conformity with written information furnished by any Stockholder Indemnified Person expressly for use in connection with such registration; and the Stockholder will pay to each Company Indemnified Person any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss; provided, however, that the indemnity obligation contained in this Section 9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Stockholder (which consent shall not be unreasonably withheld).

(c)           Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, to assume the defense thereof with counsel mutually satisfactory to the parties.

(d)           If the indemnification provided for in this Section 9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any Loss or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other.

10.           Rule 144.  The Company will use its best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder on a timely basis and will use its best efforts to take such further action as the Stockholder may reasonably request, all to the extent required from time to time to enable the Stockholder to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act and any similar rule or regulation under the federal securities laws.

11.           Assignment of Registration Rights.  The rights to cause the Company to register the Shares hereunder may be assigned by the Stockholder to (a) a purchaser of all of the Shares or (b) any affiliate of the Stockholder, provided that, in each case: (i) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of the transferee, and (ii) such transferee agrees in writing to be bound by and subject to the terms and conditions of this Agreement.

4

12.          Expiration of Registration Rights.  The Stockholder’s registration rights hereunder shall expire at such time as the Stockholder can sell all of the Shares in a single transaction without limitation under Rule 144.

13.          Miscellaneous.

a.           Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, and if not during normal business hours of the recipient, then on the next business day, (c) three (3) calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the other party hereto at such party’s address hereinafter set forth on the signature page hereof, or at such other address as such party may designate by written notice to the other party hereto.

b.           Successors and Assigns.  This Agreement shall inure to the benefit of the successors and assigns of the Company and the Stockholder.

c.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of laws provisions thereof.

d.           Further Assurances.  The parties agree to take all such further commercially reasonable action(s) as may reasonably be necessary to carry out and consummate the transactions contemplated by this Agreement as soon as practicable, and to take whatever commercially reasonable steps may be necessary to obtain any governmental approval in connection with or otherwise qualify the issuance of the Shares.

e.           Entire Agreement; Amendment.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings, whether written or oral.  This Agreement may not be amended, modified or revoked, in whole or in part, except by an agreement in writing signed by each of the parties hereto.

f.           Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and such that the objectives contemplated by the parties when entering into this Agreement may be realized and (c) the balance of this Agreement shall be enforceable in accordance with its terms.

5

14.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.  Signatures hereto may be facsimiles or electronically scanned copies which shall be deemed to have the same full force and effect as a manually signed original.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date written below.

NUMBER OF SHARES SUBJECT TO

REGISTRATION RIGHTS:

DATED: _____________________

LOTO, INC.
By:
	Name:
	Title:

STOCKHOLDER:

By:
	Name:
	Title:

6

Loto Inc.

Series A Investors

Name of Investor	Shares to be Registered
NAC Investments Ltd.	1,833,334
2207496 Ontario Inc.	1,833,333
Ananindeau S.A.	1,833,333
1476448 Ontario Inc.	1,833,333
2207846 Ontario Limited	1,833,334
2208155 Ontario Inc.	1,833,333

EX-14.1

LOTO INC.

CODE OF ETHICS

Adopted as of May 8, 2009

TOPICS

1.          Statement of Policy

2.          Implementation and Enforcement

3.          Relations with Competitors and Other Third Parties

4.          Insider Trading, Securities Compliance and Public Statements

5.          Financial Reporting

6.          Human Resources

7.          Environmental, Health and Safety

8.          Conflicts of Interest

9.          International Trade

10.          Government Relations

11.          Contractors, Consultants, and Temporary Workers

12.          Conclusion

13          Acknowledgement and Agreement

14.          Annex: List of Examples of Reportable Violations

- 2 - -

1.   STATEMENT OF POLICY

The Company has adopted eight Corporate Values: Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work.  These Values provide a framework for all employees in conducting ourselves in our jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping you to conduct the Company's business in accordance with our Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that you will use common sense, good judgment, high ethical standards and integrity in all your business dealings.

If you encounter a situation you are not able to resolve by reference to these policies, ask for help. Contact the Chief Financial Officer, who has been identified as responsible for overseeing compliance with these policies.

Violations of the law or the Company's policies will subject employees to disciplinary action, up to and including termination of employment. In addition, individuals involved may subject themselves and the Company to severe penalties including fines and possible imprisonment. Compliance with the law and high ethical standards in the conduct of Company business should be a top priority for each employee, officer and director.

2.   IMPLEMENTATION AND ENFORCEMENT.

The Chief Financial Officer has been appointed as Compliance Officer of the Company, responsible for overseeing compliance with, and enforcement of, all Company policies.

Employees are expected to be familiar with these policies as they apply to their duties. They should consult with their managers if they need assistance in understanding or interpreting these policies. Each employee is required to follow these policies and to comply with their terms. A refusal by any employee to agree to be bound by these policies shall be grounds for discipline up to and including dismissal.

Any employee who, in good faith, has reason to believe a Company operation or activity is in violation of the law or of these policies must call the matter to the attention of the Chief Financial Officer. If you have reason to believe that it would be inappropriate to report the operation or activity to the Chief Financial Officer, you should report it to the Board of Directors. All reports will be reviewed and investigated and as necessary under the circumstances, and the reporting employee should provide sufficient information to enable a complete investigation to be undertaken.

- 3 - -

Any employee who makes an allegation in good faith reasonably believing that a person has violated these policies or the law, will be protected against retaliation.

3.   RELATIONS WITH COMPETITORS AND OTHER THIRD PARTIES.

The Company's policy is to comply fully with competition and antitrust laws throughout the world. These laws generally prohibit companies from using illegal means to maintain, obtain or attempt to obtain a monopoly in a market. They also prohibit companies from engaging in unfair trade practices. "Unfair trade practices" include fixing prices, dividing markets, agreeing with competitors not to compete, or agreeing to boycott certain customers. It is advised that you consult with the Chief Financial Officer before attending a meeting with a party who may be viewed as a competitor.

4.   INSIDER TRADING, SECURITIES COMPLIANCE AND PUBLIC STATEMENTS.

Securities laws prohibit anyone who is in possession of material, non-public information ("Insider Information") about a company from purchasing or selling stock of that company, or communicating the information to others. Information is considered "material" if a reasonable investor would consider it to be important in making a decision to buy or sell that stock. Some examples include financial results and projections, new products, acquisitions, major new contracts or alliances prior to the time that they are publicly announced. Employees who become aware of such Inside Information about the Company must refrain from trading in the shares of the Company until the Inside Information is publicly announced.

Employees must also refrain from disclosing that information to persons who do not have a Company need to know, whether they are inside the Company or outside, such as spouses, relatives or friends.

The Company makes regular formal disclosures of its financial performance and results of operations to the investment community. We also regularly issue press releases. Other than those public statements, which go through official Company channels, employees are prohibited from communicating outside the Company about the Company's business, financial performance or future prospects. Such communications include questions from securities analysts, reporters or other news media, but also include seemingly innocent discussions with family, friends, neighbors or acquaintances.

5.   FINANCIAL REPORTING.

The Company is required to maintain a variety of records for purposes of reporting to the government. The Company requires all employees to maintain full compliance with applicable laws and regulations requiring that its books of account and records be accurately maintained. Specifics of these requirements are available from the Chief Financial Officer.

- 4 - -

6.   HUMAN RESOURCES.

The Company has a strict policy of maintaining a work environment that is free from unlawful harassment and discrimination, and respects the dignity of its employees.  Each employee is expected to abide by this policy.

7.   ENVIRONMENTAL, HEALTH AND SAFETY.

The Company is committed to protecting the health and safety of our employees, as well as the environment in general. The Company expects employees to obey all laws and regulations designed to protect the environment, and the health and safety of our employees, and to obtain and fully observe all permits necessary to do business.

At the very least, all employees should be familiar with and comply with safety regulations applicable to their work areas. The Company will make, to the extent possible, reasonable accommodations for the known physical or mental limitations of our employees. Employees who require an accommodation should contact the Chief Financial Officer. The Company will then engage in an interactive process to determine the extent of reasonable accommodations which can be provided.

8.   CONFLICTS OF INTEREST.

Each employee is expected to avoid any activity, investment or association that interferes with the independent exercise of his or her judgment in the Company's best interests ("Conflicts of Interest"). Conflicts of Interest can arise in many situations. They occur most often in cases where the employee or the employee's family obtains some personal benefit at the expense of the Company's best interests.

No employee, or any member of employee's immediate family, shall accept money, gifts of other than nominal value, unusual entertainment, loans, or any other preferential treatment from any customer or supplier of the Company where any obligation may be incurred or implied on the giver or the receiver or where the intent is to prejudice the recipient in favor of the provider. Likewise, no employee shall give money, gifts of other than nominal value, unusual entertainment or preferential treatment to any customer or supplier of the Company, or any employee or family members thereof, where any obligation might be incurred or implied, or where the intent is to prejudice the recipient in favor of the Company. No such persons shall solicit or accept kickbacks, whether in the form of money, goods, services or otherwise, as a means of influencing or rewarding any decision or action taken by a foreign or domestic vendor, customer, business partner, government employee or other person whose position may affect the Company's business. All employees must abide by the laws, rules and regulations pertaining to the Foreign Corrupt Practices Act in respect of gifts and payments to any and all persons.

- 5 - -

No employee shall use Company property, services, equipment or business for personal gain or benefit.

Employees may not: (1) act on behalf of, or own a substantial interest in, any company or firm that does business, or competes, with the Company; (2) conduct business on behalf of the Company with any company or firm in which the employee or a family member has a substantial interest or affiliation.  Exceptions require advance written approval from the Chief Financial Officer or the Board of Directors.

Employees should not create the appearance that they are personally benefitting in any outside endeavor as a result of their employment by the Company, or that the Company is benefitting by reason of their outside interests. Any employee who is not sure whether a proposed action would present a conflict of interest or appear unethical should consult with the Chief Financial Officer.

9.   INTERNATIONAL TRADE.

The Company must comply with a variety of laws around the world regarding its activities. In some cases, the law prohibits the disclosure of information, whether the disclosure occurs within the U.S. or elsewhere, and whether or not the disclosure is in writing.

Payments or gifts to non-U.S. government officials are prohibited by law and by Company policy. The Foreign Corrupt Practices Act precludes payments to non-U.S. government officials for the purpose of obtaining or retaining business, even if the payment is customary in that country. This law applies anywhere in the world to U.S. citizens, nationals, residents, businesses or employees of U.S. businesses. Because Loto Inc. is a U.S. company, this law applies to the Company and all of its subsidiaries. Any questions on this policy should be directed to the Chief Financial Officer.

10.   GOVERNMENT RELATIONS.

The Company is prohibited by law from making any contributions or expenditures in connection with any U.S. national election. This includes virtually any activity that furnishes something of value to an election campaign for a federal office. Use of the Company's name in supporting any political position or ballot measure, or in seeking the assistance of any elected representative, requires the specific approval of the Chairman and Chief Executive Officer of the Company. Political contributions or expenditures are not to be made out of Company funds in any foreign country, even if permitted by local law, without the consent of the Company's Chairman and Chief Executive Officer.

- 6 - -

U.S. law also prohibits giving, offering, or promising anything of value to any public official in the U.S. or any foreign country to influence any official act, or to cause an official to commit or omit any act in violation of his or her lawful duty. Company employees are expected to comply with these laws.

11.   VENDORS, CONTRACTORS, CONSULTANTS AND TEMPORARY WORKERS.

Vendors, contractors, consultants or temporary workers who are acting on the Company's behalf, or on Company property, are expected to follow the law, Company policies and honor Company Values. Violations will subject the person or firm to sanctions up to and including loss of the contract, contracting or consulting agreement, or discharge from temporary assignment.

12.   CONCLUSION.

This Code of Ethics is not intended to cover every possible situation in which you may find yourself. It is meant to give you the boundaries within which the Company expects you to conduct yourself while representing Loto Inc. You may find yourself in a situation where there is no clear guidance given by this Code of Ethics. If that occurs, return to the foundations stated earlier: common sense, good judgment, high ethical standards and integrity, and refer to the Company's Values.  Together we can make Loto Inc. a company that sets a standard for corporate ethics.

13.   ACKNOWLEDGEMENT AND AGREEMENT.

I have read and agree to adhere to the Loto Inc. Code of Ethics:

(Signature:)                              

Print Name:

Date:

- 7 - -

Annex: Examples of Reportable Violations

Accounting Error

Accounting Omissions

Accounting Misrepresentations

Auditing Matters

Compliance Violations

Corporate Scandal

Domestic Violence

Discrimination

Embezzlement

Environmental Damage

Ethics Violation

Fraud

Harassment

Industrial Accidents

Laws, Rules or Regulation Violations

Misconduct

Mistreatment

Poor Customer Service

Poor Housekeeping

Sabotage

Securities Violation

Sexual Harassment

Substance Abuse

Theft

Threat of Violence

Unfair Labor Practice

Unsafe Working Conditions

Vandalism

Waste

Waste of Time and Resources

Workplace Violence

- 8 - -

EX-21.1

Subsidiaries of Loto Inc.

Name:       Jurisdiction of Incorporation:

Mobilotto Systems, Inc.    Ontario, Canada