What changed in this filing

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Item 9A. Controls and Procedures

2022-03-31 compared with 2021-03-29 · 1815 added, 1697 removed, 791 unchanged (82% of the section changed)

1 unchanged sentence

of Disclosure Controls and Procedures.

Disclosure controls and procedures

are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under

the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to

be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Executive

Chairman and our Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as

appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management,

including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls

and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Disclosure controls

and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange

Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed

in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Executive Chairman

and our Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate,

to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including

our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and

procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Based on this evaluation, the Certifying Officers concluded

that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on

Remediation of Material Weakness Disclosed in Form 10-K for the Year

Ended December 31, 2019.

As disclosed in the annual report on Form 10-K for

the year ended December 31, 2019, the Company identified a material weakness in its internal control over financial reporting.

weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a

reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected

on a timely basis.

In connection with the audit of our consolidated financial

statements and related disclosures as of and for the year ended December 31, 2019, we identified certain misstatements in our draft year-end

footnote disclosures which were not individually material but which in aggregate led to a material weakness in our internal control over

financial reporting.

All significant identified errors were corrected.

The material weakness did not result in any identified misstatements

in the related financial statements or footnote disclosures and there were no changes to previously released financial statements or footnote

disclosures apart from two immaterial account reclassifications, one on the balance sheet and one on the statement of cash flows.

concluded that the misstatements in the footnote disclosures were the result of several unusual events occurring during the fourth quarter

2019 and during the related accounting closing and reporting period leading up to our Annual Report on Form 10-K including office closures

due to the COVID-19 outbreak, a significant acquisition, and first time adoption of accounting standards which, in the aggregate, contributed

to a breakdown in related controls over footnote disclosures review.

As a result of the material weakness, management concluded that our

internal control over financial reporting was not effective as of December 31, 2019.

Enhancements to processes and controls which have

been implemented during 2020 and during the related year-end accounting closing and reporting period as well as changes in circumstances

have improved the control environment surrounding financial reporting, as follows:

● We enhanced our review controls and procedures for footnote disclosures adding additional review

points throughout the footnote disclosure drafting process.

● We increased the extent of reviews of footnote disclosures adding an additional reviewer.

● Since early 2020, working from home has become the norm.

The additional complications caused by

the office closures in the early stages of the COVID-19 outbreak have not recurred during 2020 as processes have been adapted to effectively

handle the new working environment.

As a result, more time has been available to dedicate to the initial process of drafting the financial

statements and related footnote disclosures, including reviewing the support schedules prepared by others.

Management has completed our assessment of the design and effectiveness

of the enhanced internal controls and determined that as of December 31, 2020, the controls were adequately designed and operating

therefore, management concludes that the material weaknesses has been remediated.

Management’s

that the Company’s disclosure controls and procedures were not effective, due to the material weakness described below.

In light of this material

weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with

generally accepted accounting principles.

Accordingly, management believes that the financial statements included in this

Annual Report on Form 10-K present fairly in all material respects our financial position, results of operations and cash flows for the

periods presented.

Report on Internal Control Over Financial Reporting

required by the SEC rules and regulations for the implementation of Section 404 of the Sarbanes-Oxley Act of 2002, our management

is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control over

financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation

of our consolidated financial statements for external reporting purposes in accordance with U.S.

Our internal control over

financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions

of the assets of our Company;

provide reasonable assurance that transactions are recorded as necessary to permit the preparation of consolidated financial statements

in accordance with U.S.

GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of

our management and directors;

provide reasonable assurance regarding prevention or timely detection of any unauthorized acquisition, use or disposition of our

assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations,

internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because

of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness

of our internal control over financial reporting as of December 31, 2020.

In making this assessment, management used the criteria set

forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control —

Integrated Framework

Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective

as of December 31, 2020.

As a non-accelerated filer, the

Company is not required to include in this report a report on the effectiveness of internal control over financial reporting by the Company’s

independent registered public accounting firm.

Changes in Internal Control Over Financial Reporting

Except for the changes noted above regarding the material

weakness remediation, there have been no other changes in our internal control over financial reporting (as such term is defined in Rules

13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely

to materially affect, our internal control over financial reporting.

As required by the

SEC rules and regulations relating to the implementation of Section 404 of the Sarbanes-Oxley Act of 2002, our management is

responsible for establishing and maintaining adequate internal control over financial reporting.

This is the first year in which we

are required to adopt the enhanced requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002;

therefore, this Annual Report

on Form 10-K includes an opinion by our external auditors on the effectiveness of internal controls over financial reporting at

December 31, 2021 in addition to Management’s assessment of the effectiveness of internal controls over financial reporting

under the requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002.

Our internal control over financial reporting is

designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated

financial statements for external reporting purposes in accordance with U.S.

Our internal control over financial reporting

includes those policies and procedures that:

(1) pertain to the maintenance

of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company;

(2) provide reasonable assurance

that transactions are recorded as necessary to permit the preparation of consolidated financial statements in accordance with U.S.

and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

(3) provide reasonable assurance

regarding prevention or timely detection of any unauthorized acquisition, use or disposition of our assets that could have a material

effect on the consolidated financial statements.

Internal control over financial

reporting may not prevent or detect errors or misstatements in our consolidated financial statements.

Also, projections of any evaluation

of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that

the degree or compliance with the policies or procedures may deteriorate.

Management has assessed

the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 based on the criteria set

forth in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework .

Based on that assessment, we identified a material weakness (the “Risk Assessment and Response Material Weakness”) related

to an ineffective risk assessment and response process.

A material weakness is defined

as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility

that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.

Company has not established an effective control environment due to the ineffective design and implementation of certain process controls,

including management review controls.

These controls pertain to accounting estimates, account reconciliations and approval processes

of some of the Company’s significant accounts.

These deficiencies represent material weaknesses in the Company’s internal

control over financial reporting as there is a reasonable possibility that a material misstatement with respect to certain of the Company’s

significant accounts and disclosures will not be prevented or detected on a timely basis.

Factors contributing to

the Risk Assessment and Response Material Weakness included the fact that during 2021, the Company centralized all its finance functions into one location and

implemented a new Enterprise Resource Planning (“ERP”) System which went live much later in the year than initially planned,

as it had to be put on hold due to the impact that the COVID-19 pandemic had on the Company.

As a result, there was insufficient time

prior to year-end to implement or operate certain controls which were newly designed or re-designed as a result of the impact of the

ERP implementation.

The Company has also been without its Chief Financial Officer for a period of time due to illness, which required

a redistribution of roles and responsibilities, including those related to controls.

of Material Weakness

Management is taking

steps to remediate the Material Weakness, including (1) establishing an executive steering committee to

monitor the remediation of the underlying control deficiencies, (2) recruiting an additional SOX specialist to support the Chief Financial

Officer and Director of Finance, and (3) process mapping each business process to identify relevant process risk points and re-designing,

implementing or strengthening responsive manual and automated controls and underlying evidence of their operation.

While management has

begun the remediation process, these underlying control deficiencies cannot be considered remediated until the enhanced controls have

been re-designed, implemented, and operated effectively for a sufficient period of time.

in Internal Control Over Financial Reporting

Except for the changes noted

above, there have been no other changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f)

and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

the Shareholders and Board of Directors of

Entertainment, Inc.

and Subsidiaries

Opinion on Internal Control over Financial Reporting

have audited Inspired Entertainment, Inc.

and Subsidiaries ’s (the “Company”) internal control over financial reporting

as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weakness described in the

following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control

over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission.

material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there

is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented

or detected on a timely basis.

The following material weakness has been identified and included in “Management’s Annual Report

on Internal Control Over Financial Reporting”:

Company has not established an effective control environment due to the ineffective design and implementation of process controls, including

management review controls.

These inadequate controls pertain to accounting estimates, account reconciliations and approval

processes of the Company’s significant accounts.

These deficiencies represent a material weakness in the Company’s internal control

over financial reporting as there is a reasonable possibility that a material misstatement with respect to the Company’s significant

accounts and disclosures will not be prevented or detected on a timely basis.

material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal December

31, 2021 consolidated financial statements, and this report does not affect our report dated December 31, 2021 on those financial statements.

have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the consolidated balance sheets as of December 31, 2021 and 2020 and the related consolidated statements of operations and comprehensive

(loss) income, stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2021 of the Company

and our report dated March 31, 2021 expressed an unqualified opinion on those financial statements.

Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the

effectiveness of internal control over financial reporting, included in the accompanying “ Management Annual Report on Internal

Control Over Financial Reporting”.

Our responsibility is to express an opinion on the Company’s internal control over financial

reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect

to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

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

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

reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing

the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based

on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

that our audit provides a reasonable basis for our opinion.

and Limitations of Internal Control over Financial Reporting

company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance

of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance

with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with

authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that degree of compliance with the policies or procedures may deteriorate.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Officers and Corporate Governance.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2021

Annual Meeting of Stockholders, which will be filed with the SEC.

If such proxy statement is not filed on or before April 30,

2021, the information called for by this item will be filed as part of an amendment to this Annual Report on Form 10-K on or before

The information called for by this item is incorporated herein by reference to our definitive

proxy statement relating to our 2022 Annual Meeting of Stockholders, which will be filed with the SEC.

If such proxy statement is not

filed on or before such date, the information called for by this item will be filed as part of an amendment to this Annual Report on

Form 10-K on or before such date.

Executive Compensation.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2021

Annual Meeting of Stockholders, which will be filed with the SEC.

If such proxy statement is not filed on or before April 30,

2021, the information called for by this item will be filed as part of an amendment to this Annual Report on Form 10-K on or before

The information called for

by this item is incorporated herein by reference to our definitive proxy statement relating to our 2022 Annual Meeting of Stockholders,

which will be filed with the SEC.

If such proxy statement is not filed on or before such date, the information called for by this item

will be filed as part of an amendment to this Annual Report on Form 10-K on or before such date.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2021

Annual Meeting of Stockholders, which will be filed with the SEC.

If such proxy statement is not filed on or before April 30,

2021, the information called for by this item will be filed as part of an amendment to this Annual Report on Form 10-K on or before

The information called for

by this item is incorporated herein by reference to our definitive proxy statement relating to our 2022 Annual Meeting of Stockholders,

which will be filed with the SEC.

If such proxy statement is not filed on or before such date, the information called for by this item

will be filed as part of an amendment to this Annual Report on Form 10-K on or before such date.

Certain Relationships and Related Transactions, and Director Independence.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2021

Annual Meeting of Stockholders, which will be filed with the SEC.

If such proxy statement is not filed on or before April 30,

2021, the information called for by this item will be filed as part of an amendment to this Annual Report on Form 10-K on or before

PRINCIPAL ACCOUNTING FEES AND SERVICES.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2021

Annual Meeting of Stockholders, which will be filed with the SEC.

If such proxy statement is not filed on or before April 30,

2021, the information called for by this item will be filed as part of an amendment to this Annual Report on Form 10-K on or before

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following documents

are filed as part of this report:

Financial Statements.

The information called for

by this item is incorporated herein by reference to our definitive proxy statement relating to our 2022 Annual Meeting of Stockholders,

which will be filed with the SEC.

If such proxy statement is not filed on or before such date, the information called for by this item

will be filed as part of an amendment to this Annual Report on Form 10-K on or before such date.

Principal Accountant Fees and Services.

The information called for

by this item is incorporated herein by reference to our definitive proxy statement relating to our 2022 Annual Meeting of Stockholders,

which will be filed with the SEC.

If such proxy statement is not filed on or before such date, the information called for by this item

will be filed as part of an amendment to this Annual Report on Form 10-K on or before such date.

Exhibits and Financial Statement Schedules.

following documents are filed as part of this report:

The required consolidated financial statements and notes thereto are presented starting on page F-1 of this report.

Financial Statement

All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and

not required, or the required information is presented in the consolidated financial statements and notes thereto presented

starting on page F-1 of this report.

Exhibits listed

Statement Schedules.

All financial statement schedules are omitted because they are not applicable or the amounts are immaterial

and not required, or the required information is presented in the consolidated financial statements and notes thereto presented starting

on page F-1 of this report.

listed on page 62.

ENTERTAINMENT, INC.

2 unchanged sentences

OF DECEMBER 31, 2021 AND 2020

Report of Independent Registered Public Accounting Firm

of Independent Registered Public Accounting Firm PCAOB ID # 688

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive (Loss) Income

Consolidated Statements of Stockholders’

Consolidated Statements of Stockholders’ Deficit

Consolidated Statements of Cash Flows

1 unchanged sentence

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

Inspired Entertainment, Inc.

the Shareholders and Board of Directors of

Entertainment, Inc.

and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Inspired Entertainment, Inc.

and Subsidiaries (the “Company”) as of December 31, 2020 and 2019, the

related consolidated statements of operations and comprehensive (loss) income, stockholders’

deficit and cash flows for the

years ended December 31, 2020 and 2019, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2020 and 2019, and the results of its operations and its cash flows for the years ended December 31, 2020 and 2019,

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

Basis for Opinion

on the Financial Statements

have audited the accompanying consolidated balance sheets of Inspired Entertainment, Inc.

and Subsidiaries (the “Company”)

as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity

and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as

the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three

years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the Company’s internal control over financial reporting as of March 31, 2021, based on the criteria established in Internal Control -

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 , expressed

an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence material

These financial statements are the responsibility

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether

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

The Company is not required to have,

nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required

to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the

effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures

to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the financial statements.

are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with

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

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

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

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

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated

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

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any

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

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

Revenue Recognition –

Use of IT Systems to track

and invoice revenue and the determination of the various promises in the arrangement

Certain of the Company’s revenue

contracts with customers include multiple promises (such as hardware, software and maintenance, among others).

The Company is required

to evaluate whether each promise represents a performance obligation.

The evaluation of whether promises are both capable of being

distinct and distinct in the context of a contract (and thus constitute performance obligations) can require significant judgment

and could change the amount of revenue recognized in a given period.

We identified the determination of performance

obligations for contracts with higher contract values as a critical audit matter because of the judgments and estimates management

makes to evaluate such contracts and the impact of such judgments on the amount of revenue recognized in a given period.

This required

a high degree of auditor judgment and an increased extent of testing.

Addressing the matter involved performing

procedures on a sample basis and evaluation of audit evidence that included, among others

● Evaluating contract terms and conditions,

● Reviewing and assessing the methodology applied and testing the reliability and mathematical accuracy

of the underlying data and calculations,

● Testing management’s identification of performance obligations by evaluating whether the

promises were both capable of being distinct and distinct within the context of the contract, including reading the selected contracts

and inquiring of certain of the Company’s accounting and operations personnel to understand the nature of the promises and

how they are delivered to the customer, and

● Evaluating and concluding on the reasonableness of management’s judgments and estimates.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

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

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

The communication of critical audit matters

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

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Recognition – Use of IT Systems to track and invoice revenue and the determination of the various promises in the arrangement

of the Company’s revenue contracts with customers include multiple promises (such as hardware, software and maintenance, among

The Company is required to evaluate whether each promise represents a performance obligation.

The evaluation of whether promises

are both capable of being distinct in the context of a contract (and thus constitute performance obligations) can require significant

judgment and could change the amount of revenue recognized in a given period.

identified the determination of performance obligations for contracts with higher contract values as a critical audit matter because

of the judgments and estimates management makes to evaluate such contracts and the impact of such judgments on the amount of revenue

recognized in a given period.

This required a high degree of auditor judgment and an increased extent of testing.

the matter involved performing procedures on a sample basis and evaluation of audit evidence that included, among others

contract terms and conditions,

and assessing the methodology applied and testing the reliability and mathematical accuracy of the underlying data and calculations,

management’s identification of performance obligations by evaluating whether the promises were both capable of being distinct

and distinct within the context of the contract, including reading the selected contracts and inquiring of certain of the Company’s

accounting and operations personnel to understand the nature of the promises and how they are delivered to the customer, and

and concluding on the reasonableness of management’s judgments and estimates.

involved IT professionals with specialized skills and knowledge, who assisted in evaluating the sufficiency of the audit evidence obtained

IT controls and IT application controls for the relevant IT systems used to gather and process data,

transfer of information among the different systems used to gather the data, and

configuration and change management controls for the reports that were used from the various systems to determine the amount of revenue

Capitalization

of Internally and Externally Developed Software

Company classifies software development costs as either internal use software or external use software, any costs incurred during preliminary

project stages are expensed as incurred;

direct costs incurred during the application development stages are capitalized;

and costs incurred

during the post-implementation/operation stages are expensed.

Once the software is placed in operation, the Company amortizes the capitalized

cost of the software over its economic useful life, which ranges from two to five years.

During the year ended December 31, 2021, the

Company capitalized $9,900,000 of software development costs.

identified the evaluation of the Company’s capitalization of internal direct labor costs as a critical audit matter.

inherent challenges in obtaining an understanding of the structure of systems and processes used to capture the large volumes of internal

direct labor data.

Furthermore, subjective judgement was required to evaluate the relevant data that was captured and aggregated, and

to assess the sufficiency of the audit evidence obtained.

primary procedures we performed to address this critical audit matter included the following.

We involved IT professionals with specialized

skills and knowledge, who assisted in evaluating the sufficiency of the audit evidence obtained related to:

● General IT controls and IT application controls for the relevant IT systems used to gather and

process data,

● The transfer of information among the different systems used to gather the data, and

● The configuration and change management controls for the reports that were used from the various

systems to determine the amount of revenue recognized.

Capitalization of Internally and Externally Developed

The Company classifies software development

costs as either internal use software or external use software, any costs incurred during preliminary project stages are expensed

direct costs incurred during the application development stages are capitalized;

and costs incurred during the post-implementation/operation

stages are expensed.

Once the software is placed in operation, the Company amortizes the capitalized cost of the software over

its economic useful life, which ranges from two to five years.

During the year ended December 31, 2020, the Company capitalized

$14,600,000 of software development costs.

We identified the evaluation of the Company’s

capitalization of internal direct labor costs as a critical audit matter.

There were inherent challenges in obtaining an understanding

of the structure of systems and processes used to capture the large volumes of internal direct labor data.

Furthermore, subjective

judgement was required to evaluate the relevant data that was captured and aggregated, and to assess the sufficiency of the audit

evidence obtained.

The primary procedures we performed to

address this critical audit matter included the following..

We involved IT professionals with specialized skills and knowledge,

who assisted in evaluating the sufficiency of the audit evidence obtained related to:

● General IT controls and IT application controls for the relevant IT systems used to gather and

process data,

● The transfer of information among the different systems used to gather the data, and

● The configuration and change management controls for the reports that were used from the various

systems to determine the amount of internal direct labor costs to capitalize.

In addition, we evaluated, on a sample

basis, the Company’s manual aggregation of information from various IT systems, to determine the sufficiency of the audit

evidence obtained, by:

● Inspecting the capital project codes to assess that the nature of the activity is capitalized in

accordance with U.S.

generally accepted accounting principles,

● Comparing salary and wage information for capitalized internal direct labor costs to employee human

resource documents and system profiles,

● Comparing the hours of capitalized internal direct labor to the hours recorded to capital activities

on the employees’

● Inquiring of employees and project managers as to the accuracy of the hours reflected as capital

activities on the employee timesheets, and

● Evaluating the methodology used to determine the labor rates and comparing the cost types, dates

incurred, and amounts of labor costs used to derive the labor rates to data from the source systems.

have served as the Company’s auditor since 2016

IT controls and IT application controls for the relevant IT systems used to gather and process data,

transfer of information among the different systems used to gather the data, and

configuration and change management controls for the reports that were used from the various systems to determine the amount of internal

direct labor costs to capitalize.

addition, we evaluated, on a sample basis, the Company’s manual aggregation of information from various IT systems, to determine

the sufficiency of the audit evidence obtained, by:

the capital project codes to assess that the nature of the activity is capitalized in accordance with U.S.

generally accepted accounting

salary and wage information for capitalized internal direct labor costs to employee human resource documents and system profiles,

the hours of capitalized internal direct labor to the hours recorded to capital activities on the employees’ timesheets,

of employees and project managers as to the accuracy of the hours reflected as capital activities on the employee timesheets, and

the methodology used to determine the labor rates and comparing the cost types, dates incurred, and amounts of labor costs used to

derive the labor rates to data from the source systems.

have served as the Company’s auditor since 2016

ENTERTAINMENT, INC.

5 unchanged sentences

Prepaid expenses and other current assets

Corporate tax and other current taxes receivable

Total current assets

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Other acquired intangible assets subject to amortization, net

Right of use asset

Liabilities and Stockholders’

Operating lease right of use asset

Liabilities and Stockholders’ Deficit

Current liabilities

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Other current liabilities

Current portion of long-term debt

Warrant liability

Current portion of finance lease liabilities

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Commitments and contingencies

Stockholders’

Stockholders’ deficit

Preferred stock;

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1,000,000 shares authorized

Series A Junior Participating Preferred stock;

$0.0001 par value;

1,000,000 shares authorized;

49,000 shares designated;

no shares issued and outstanding at December 31, 2020 and December 31, 2019

Common stock;

5 unchanged sentences

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

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Depreciation and amortization

Net operating income (loss)

Net operating (loss) income

Other expense

Interest income

Interest expense

Interest expense, net

Change in fair value of earnout liability

Change in fair value of derivative liability

Change in fair value of warrant liability

Loss from equity method investee

Other finance (expense) income

Other finance income (expense)

Total other expense, net

Loss before income taxes

Income tax expense

Other comprehensive loss:

Foreign currency translation loss

Income tax benefit (expense)

Other comprehensive income (loss):

Foreign currency translation gain (loss)

Change in fair value of hedging instrument

Reclassification of loss (gain) on hedging instrument to comprehensive income

Actuarial losses on pension plan

Other comprehensive loss

Actuarial gains (losses) on pension plan

Other comprehensive income (loss)

Comprehensive loss

Net loss per common share –

basic and diluted

Weighted average number of shares outstanding during the year –

basic and diluted

Net loss per common share – basic and diluted

Weighted average number of shares outstanding during the year – basic and diluted

Supplemental disclosure of stock-based compensation expense

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AND SUBSIDIARIES

STATEMENTS OF STOCKHOLDERS’

STATEMENTS OF STOCKHOLDERS’ DEFICIT

millions, except share data)

comprehensive

stockholders’

Balance as of January 1, 2019

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Shares issued upon net settlement of RSUs

Shares issued under ESPP

Shares issued under ESPP, shares

Shares issued upon exercise of warrants

Shares issued upon exercise of warrants, shares

Stock-based compensation expense

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Shares issued upon net settlement of RSUs

Stock-based compensation expense - ESPP

Shares issued under ESPP

Stock-based compensation expense

Balance as of December 31, 2020

Foreign currency translation adjustments

Actuarial gains on pension plan

Change in fair value of hedging instrument

Reclassification of loss on hedging instrument to comprehensive income

Reclassification of gain (loss) on hedging instrument to comprehensive income

Shares issued upon net settlement of RSUs

Shares issued upon exercise of warrants

Stock-based compensation expense

Balance as of December 31, 2021

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

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Impairment of investment in equity method investee

Foreign currency translation on senior bank debt

Foreign currency translation on cross currency swaps

Unrealized transactional currency gain/loss on senior bank debt

Unrealized transactional currency gain/loss on cross currency swaps

Change in fair value of warrant liability

Reclassification of loss on hedging instrument to comprehensive income

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Purchases of property and equipment

Acquisition of subsidiary company assets

Cash paid for NTG Acquisition

Purchases of capital software

Software development expenditure

Net cash used in investing activities

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Proceeds from issuance of revolver

Proceeds from exercise of warrants

Repayments of revolver and long-term debt, including exit premium

Payment of financing costs

Debt fees incurred

Repayments of finance leases

Net cash (used in) provided by financing activities

Payment of debt issuance costs

Payment in connection with terminated interest rate swaps

Principal payments under finance leases

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash

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Property and equipment acquired through finance lease

Property and equipment transferred to inventory

Capitalized interest payments

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Nature of Operations,

Management’s Plans and Summary of Significant Accounting Policies

of Operations, Management’s Plans and Summary of Significant Accounting Policies

Description and Nature of Operations

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lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business

We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide

range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through

third party networks.

Our content and other products can be found through the consumer-facing portals of our interactive customers

and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway

service areas and leisure parks.

We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range

of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party

Our content and other products can be found through the consumer-facing portals of our interactive customers and, through our

land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure

Company was incorporated in Delaware on May 30, 2014 under the name Hydra Industries Acquisition Corp.

(“Hydra”) as

a “blank check company”

for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition,

stock purchase, reorganization, recapitalization or other similar business transaction, one or more operating businesses.

23, 2016 (the “Closing Date”), the Company acquired Inspired Gaming Group (“Inspired”), pursuant to a

share sale agreement dated as of July 13, 2016 (the “Sale Agreement”).

The transaction was accounted for as a reverse

merger where Inspired was the acquirer and Hydra was the acquired company.

In connection with the acquisition, we changed our

name from Hydra to Inspired Entertainment, Inc.

We refer to the acquisition and the other transactions contemplated by the Sale

Agreement, collectively, as the “Business Combination”

or the “Merger.”

On October 1, 2019,

the Company completed the acquisition of the Gaming Technology Group of Novomatic UK Ltd., a division of Novomatic Group, an international

supplier of gaming equipment and solutions.

We subsequently

changed our name from Hydra to Inspired Entertainment, Inc.

October 1, 2019, the Company completed the acquisition of the Gaming Technology Group of Novomatic UK Ltd., a division of Novomatic Group,

an international supplier of gaming equipment and solutions (the “NTG Acquisition”).

Liquidity Plans

of December 31, 2020, the Company’s cash on hand was $47.1 million, and the Company had working capital of $27.1 million.

The Company recorded net losses of $29.2 million and $37.0 million for the year ended December 31, 2020 and 2019, respectively.

Net losses include excess depreciation and amortization over capital expenditure of $22.4 million and $14.5 million for the year

ended December 31, 2020 and 2019, respectively, and non-cash stock-based compensation of $4.8 million and $9.0 million for the

year ended December 31, 2020 and 2019, respectively.

Historically, the Company has generally had positive cash flows from operating

activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing

of existing debt to fund its obligations.

Cash flows provided by operations amounted to $52.9 million and $30.7 million for the

year ended December 31, 2020 and 2019, respectively.

Working capital of $27.1 million includes a non-cash settled item of $11.5

of December 31, 2021, the Company’s cash on hand was $ 47.8

million, and the Company had working capital of $ 44.9

The Company recorded net losses of $ 36.7

million, $ 32.4

million and $ 41.1

million for the year ended December 31, 2021,

2020 and 2019, respectively.

Net losses include excess depreciation and amortization over capital expenditure of $ 21.4

million, $ 22.4

million and $ 14.5

million for the year ended December 31, 2021,

2020 and 2019, respectively, non-cash stock-based compensation of $ 13.0

million, $ 4.8

million and $ 9.0

million for the year ended December 31, 2021,

2020 and 2019, respectively, and non-cash changes in fair value of warrant liability of $ 0.9 ,

million gain and $ 3.2

million and $ 4.1

million losses for the year ended December 31,

2021, 2020, and 2019, respectively.

Historically, the Company has generally had positive cash flows from operating activities and has

relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund

its obligations.

Cash flows provided by operations amounted to $ 6.2

million, $ 52.9

million and $ 30.7

million for the year ended December 31, 2021,

2020 and 2019, respectively.

Working capital of $ 44.9

million includes a non-cash settled item of $ 7.7

million of deferred income.

Management currently believes that, absent any long-term coronavirus (“COVID-19”) impact

(see below), the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control

and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s

net cash requirements through March 2022.

business is being and will continue to be adversely affected by the continuing nature of the coronavirus (COVID-19) pandemic.

Due to the speed and fluidity with which the situation continues to develop, we are not able at this time to estimate the extent

of the impact of the COVID-19 pandemic on our financial results and operations in future periods.

The “second wave”

has seen various governments re-impose restrictions on our operations, including complete or partial closures of retail venues

and the long-term impacts of the pandemic on the global economy, trade relations, consumer behavior, our industry and our business

As of the date of this report, the majority of retail venues in the UK, Italy, and Greece are closed.

a result of the significant reductions in revenue and other changes to our business, at least in the short term (which also affects

other companies in our industry), we are working to protect our existing available liquidity by pro-actively managing capital

expenditures and working capital as well as identifying both immediate and longer term opportunities for cost savings.

Management currently

believes that, absent any long-term coronavirus (“COVID-19”) impact (see below), the Company’s cash balances on hand,

cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s

external borrowings will be sufficient to fund the Company’s net cash requirements through March 2023.

March 11, 2020, the World Health Organization declared COVID-19 to be a global pandemic which affected our retail businesses throughout

From mid-December 2020 to mid-April 2021, all retail venues were once again closed due to government-mandated shutdowns.

Full restrictions

did not fall away in the United Kingdom until July 2021 and there remains an element of social distancing in venues in Greece and in

remains uncertain as to whether and when further restrictions or closures could happen in each jurisdiction and how long they may last.

We continue to protect our existing available liquidity by pro-actively managing capital expenditures and working capital as well as

identifying both immediate and longer-term opportunities for cost savings.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

of Presentation

accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally

accepted in the United States of America (“U.S.

GAAP”).

Recharacterization

of Previously Reported Information

prior years, and up to and including the interim period nine months ended September 30, 2020, the Company operated its business

along three operating segments:

Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses.

the period subsequent to September 30, 2020, the Company has completed the process of changing its internal structure, which has

been ongoing since the NTG Acquisition, and as a result has changed the composition of its operating segments.

The Company now

operates its business along four operating segments, which are segregated based on the basis of revenue stream:

Gaming, Virtual

Sports, Interactive and Leisure.

The Company believes this method of segment reporting reflects both the way its business segments

are now managed and the way the performance of each segment is now evaluated.

As part of the recharacterization exercise, certain items of

Revenue, Cost of Sales and Selling and Administrative Expenses have been recharacterized to ensure consistency with similar items

across the Group.

The revenue recharacterizations are to ensure spares and similar items are reflected with other items of hardware

(Product Sales).

The resulting impact on previously reported information for the year ended December 31, 2019 is as follows:

Revenue, previously reported $134.9 million, now $134.5 million;

Product Sales Revenue, previously reported $18.5 million, now

$18.9 million;

Cost of Service, previously reported $23.5 million, now $25.4 million;

Cost of Product Sales, previously reported

$12.6 million, now $12.9 million;

Selling, General and Administrative Expenses (excluding Stock-based compensation), previously

reported $72.6 million, now $70.4 million.

The recharacterization has no impact on the previously reported Net Operating Loss,

Net Loss or Net Comprehensive Loss for the year ended December 31, 2019.

accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted

in the United States of America (“U.S.

of Consolidation

monetary values set forth in these consolidated financial statements are in US Dollars (“USD”) unless otherwise stated

monetary values set forth in these consolidated financial statements are in US Dollars (“USD”) unless otherwise stated herein.

The accompanying consolidated financial statements include the results of the Company and its wholly owned subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

All significant

intercompany balances and transactions have been eliminated in consolidation.

Currency Translation

most of our operations, the British pound (“GBP”) is our functional currency.

Our reporting currency is the USD.

also have operations where the local currency is the functional currency, including our operations in mainland Europe and North

Assets and liabilities of foreign operations are translated at period-end rates of exchange, equity is translated at

historical rates of exchange and results of operations are translated at the average rates of exchange for the period.

losses resulting from translating the foreign currency financial statements are recorded as a separate component of accumulated

other comprehensive loss in stockholders’

Gains or losses resulting from foreign currency transactions are included

in Selling, general and administrative expenses, Interest income (expense) and Other finance (costs) income in the Consolidated

Statement of Operations and Comprehensive Loss.

have operations where the local currency is the functional currency, including our operations in mainland Europe and North America.

and liabilities of foreign operations are translated at period-end rates of exchange, equity is translated at historical rates of exchange

and results of operations are translated at the average rates of exchange for the period.

Gains or losses resulting from translating

the foreign currency financial statements are recorded as a separate component of accumulated other comprehensive loss in stockholders’

Gains or losses resulting from foreign currency transactions are included in Selling, general and administrative expenses, Interest

expense, net and Other finance (expense) income in the Consolidated Statement of Operations and Comprehensive Loss.

preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and judgments

that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date

of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

ongoing basis, management evaluates these estimates, including those related to the revenue recognition for contracts involving

software and non-software elements, allowance for doubtful accounts, inventory reserve for net realizable value, currency swaps,

valuation of hedging activities, goodwill and intangible assets, useful lives of long-lived assets, stock-based compensation,

valuation allowances on deferred taxes, earnout liability, pension liability, commitments and contingencies and litigation, among

Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable

under the circumstances.

We regularly evaluate these significant factors and make adjustments when facts and circumstances dictate.

GAAP requires management to make estimates and judgments that

affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated

financial statements and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates

these estimates, including those related to the revenue recognition for contracts involving software and non-software elements, allowance

for doubtful accounts, inventory reserve for net realizable value, currency swaps, valuation of hedging activities, goodwill and intangible

assets, useful lives of long-lived assets, stock-based compensation, valuation allowances on deferred taxes, warrant liability, pension

liability, commitments and contingencies and litigation, among others.

Management bases its estimates on historical experience and on

various other assumptions that are believed to be reasonable under the circumstances.

We regularly evaluate these significant factors

and make adjustments when facts and circumstances dictate.

Actual results may differ from these estimates.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

We deposit cash with

financial institutions that management believes are of high credit quality.

Substantially all of the Company’s cash is held

outside of the U.S.

The cash balance of $47.1 million at December 31, 2020 includes amounts of $6.7 million of ring-fenced cash

in respect of interest payable under our Senior Facilities Agreement (see Note 13), and $0.5 million of ring-fenced cash relating

to a letter of credit held by the Company.

The interest payable is a rolling quarterly amount, whilst the letter of credit cash

is expected to be released on April 30, 2021.

deposit cash with financial institutions that management believes are of high credit quality.

Substantially all of the Company’s

cash is held outside of the U.S.

receivable are recorded at the invoiced amount and do not bear interest.

The allowance for doubtful accounts is our best estimate

of the amount of probable credit losses in our existing accounts receivable.

Changes in circumstances relating to the collectability

of accounts receivable may result in the need to increase or decrease our allowance for doubtful accounts in the future.

the allowance based on historical experience, current market trends, and our customers’

financial condition.

We continually

review our allowance for doubtful accounts.

Past due balances and other higher risk amounts are reviewed individually for collectability.

Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery

is considered remote.

Our standard credit terms are net 30 to 60 days.

The allowance

for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable.

Changes in circumstances

relating to the collectability of accounts receivable may result in the need to increase or decrease our allowance for doubtful accounts

in the future.

We determine the allowance based on historical experience, current market trends, and our customers’ financial condition.

We continually review our allowance for doubtful accounts.

Past due balances and other higher risk amounts are reviewed individually

for collectability.

Account balances are charged against the allowance after all collection efforts have been exhausted and the potential

for recovery is considered remote.

certain contracts, the timing of our invoices does not coincide with revenue recognized under the contract.

We have unbilled accounts

receivable which represent revenue recorded in excess of amounts invoiced under the contract and generally become billable at

contractually specified dates.

These amounts consist primarily of revenue from our share of net winnings earned on a daily basis

where the billing period does not fall on the last day of the period.

We had $8.2 million and $15.3 million of unbilled accounts

receivable as of December 31, 2020 and December 31, 2019, respectively.

standard credit terms are net 30 to 60 days.

From time to time, we allow for certain digital customers to pay on an enhanced

revenue share basis for the software license whereby the customer pays an incremental revenue share percentage over a specific

period of time.

We consider these types of arrangements to be extended payment terms as the full consideration for the arrangement

may not be received until several years after the date of the sale depending on the net winnings from the game or application.

receivable which represent revenue recorded in excess of amounts invoiced under the contract and generally become billable at contractually

specified dates.

These amounts consist primarily of revenue from our share of net winnings earned on a daily basis where the billing

period does not fall on the last day of the period.

We had $ 17.4 million and $ 8.2 million of unbilled accounts receivable as of December

31, 2021 and December 31, 2020, respectively.

consist primarily of component parts and related parts used in gaming terminals.

Inventories are stated at the lower of cost or

net realizable value, using the weighted average cost method.

We determine the lower of cost or net realizable value of our inventory

based on estimates of potentially excess and obsolete inventories after considering historical and forecasted demand and average

selling prices.

Demand for gaming terminals and parts inventory is also subject to technological obsolescence.

Cost includes all

direct costs and an appropriate proportion of fixed and variable overheads.

Inventories are stated at the lower of cost or net realizable

value, using the first-in-first-out method.

We determine the lower of cost or net realizable value of our inventory based on estimates

of potentially excess and obsolete inventories after considering historical and forecasted demand and average selling prices.

for gaming terminals and parts inventory is also subject to technological obsolescence.

Cost includes all direct costs and an appropriate

proportion of fixed and variable overheads.

and Equipment

and equipment are recorded at cost, and when placed into service, depreciated and amortized to their residual values using the

straight-line method over the estimated useful lives of the related assets as follows:

of the useful life or the life of the lease

Server based gaming

and equipment are recorded at cost, and when placed into service, depreciated and amortized to their residual values using the straight-line

method over the estimated useful lives of the related assets as follows:

of Property and Equipment Estimated Useful Lives

Leasehold property

Shorter of the useful life or the life of the lease

Server based gaming terminals

Motor vehicles

Plant and machinery

and fixtures and fittings

Plant and machinery and fixtures and fittings

Computer equipment

policy is to periodically review the estimated useful lives of our fixed assets.

We also assess the recoverability of long-lived

assets (or asset groups) whenever events or changes in circumstances indicate that the carrying amount of such an asset (or asset

groups) may not be recoverable.

We also assess the recoverability of long-lived assets

(or asset groups) whenever events or changes in circumstances indicate that the carrying amount of such an asset (or asset groups) may

not be recoverable.

and maintenance costs are expensed as incurred.

Upon retirement or sale, the cost of assets disposed and the related accumulated

depreciation are written off and any resulting gain or loss is credited or charged to income.

Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation

are written off and any resulting gain or loss is credited or charged to income.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

1 unchanged sentence

classify software development costs as either internal use software or external use software.

We account for costs incurred to

develop internal use software in accordance with Accounting Standards Codification (“ASC”) ASC 350-40, Internal Use

Consequently, any costs incurred during preliminary project stages are expensed;

direct costs incurred during the application

development stages are capitalized;

We account for costs incurred to develop

internal use software in accordance with Accounting Standards Codification (“ASC”) 350-40, Internal Use Software.

Consequently,

any costs incurred during preliminary project stages are expensed;

direct costs incurred during the application development stages are

and costs incurred during the post-implementation/operation stages are expensed.

software is placed in operation, we amortize the capitalized internal use software cost over its estimated economic useful life,

which range from two to five years.

Once the software is placed in operation,

we amortize the capitalized internal use software cost over its estimated economic useful life, which range from two to five years.

purchase, license and incur costs to develop external use software to be used in the products we sell or provide to customers.

Such costs are capitalized under ASC 985-20, Costs of Software to Be Sold Leased or Marketed.

Costs incurred in creating software

are expensed when incurred as Selling, General and Administrative Expenses until technological feasibility has been established,

after which costs are capitalized up to the date the software is available for general release to customers.

We capitalize the

payments made for software that we purchase or license for use in our products that has previously met the technological feasibility

criteria prior to our purchase or license.

Annual amortization of capitalized external use software development costs is recorded

over the estimated economic life, which is two to five years.

are capitalized under ASC 985-20, Costs of Software to Be Sold Leased or Marketed.

Costs incurred in creating software are expensed when

incurred as Selling, General and Administrative Expenses until technological feasibility has been established, after which costs are

capitalized up to the date the software is available for general release to customers.

We capitalize the payments made for software that

we purchase or license for use in our products that has previously met the technological feasibility criteria prior to our purchase or

Annual amortization of capitalized external use software development costs is recorded over the estimated economic life, which

is two to five years.

and development costs are expensed as incurred.

Research and development related primarily to software product development costs

is expensed until technological feasibility has been established.

Research and development costs amounting to $3.9 million and

$3.8 million were expensed during the year ended December 31, 2020 and 2019, respectively.

Employee related costs associated with

related product development are included in Selling, general and administrative expenses in the Consolidated Statement of Operations

and Comprehensive Loss.

Research and development related primarily to software product development costs is expensed

until technological feasibility has been established.

Research and development costs amounting to $ 3.1 million, $ 3.9 million

and $ 3.8 million

were expensed during the year ended December 31, 2021, 2020 and 2019, respectively.

Employee related costs associated with related product

development are included in Selling, general and administrative expenses in the Consolidated Statement of Operations and Comprehensive

and Other Acquired Intangible Assets

principal acquired intangible assets relate to goodwill, trademarks and customer relationships.

Goodwill represents the excess

purchase price over the fair value of the identifiable net assets acquired in a business combination, and increased in the prior

year due to the NTG acquisition (see Note 2).

Trademarks and customer relationships were originally recorded at their fair values

in connection with business combinations.

Goodwill represents the excess purchase

price over the fair value of the identifiable net assets acquired in a business combination, and increased in 2019 due to the NTG acquisition

(see Note 2).

Trademarks and customer relationships were originally recorded at their fair values in connection with business combinations,

and increased in 2021 due to the Sportech Acquisition (see Note 2).

and other intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually.

Intangible assets with finite lives are amortized on a straight-line basis over three to ten years to their estimated residual

values and reviewed for impairment.

Factors considered when assigning useful lives include legal, regulatory and contractual provisions,

product obsolescence, demand, competition and other economic factors.

Intangible assets with finite lives are amortized on a straight-line basis over three to thirteen years to their estimated residual values

and reviewed for impairment.

Factors considered when assigning useful lives include legal, regulatory and contractual provisions, product

obsolescence, demand, competition and other economic factors.

of Goodwill and Long-Lived Assets

test for goodwill impairment at least annually on the last day of our fiscal period, and whenever other facts and circumstances

indicate that the carrying value may not be recoverable.

For goodwill impairment evaluations, we first make a qualitative assessment

to determine if goodwill is likely to be impaired.

If it is more-likely-than-not that a reporting unit’s fair value is less

than its carrying value, we then compare the fair value of the reporting unit to its respective carrying amount.

Goodwill is carried,

and therefore tested, at the reporting unit level.

We have four segments, Gaming, Virtual Sports, Interactive and Leisure, as

detailed in Note 26.

If the fair value of the reporting unit is less than its carrying amount, the amount of the impairment loss,

if any, will be measured by comparing the implied fair value of goodwill to its carrying amount and would be charged to operations

as an impairment loss.

A mixture of qualitative and quantitative tests were carried out as of December 31, 2020 and 2019 and no

impairment was required at any of these dates.

test for goodwill impairment at least annually on the last day of our fiscal period, and whenever other facts and circumstances indicate

that the carrying value may not be recoverable.

For goodwill impairment evaluations, we first make a qualitative assessment to determine

if goodwill is likely to be impaired.

If it is more-likely-than-not that a reporting unit’s fair value is less than its carrying

value, we then compare the fair value of the reporting unit to its respective carrying amount.

Goodwill is carried, and therefore tested,

at the reporting unit level.

We have four segments, Gaming, Virtual Sports, Interactive and Leisure, as detailed in Note 26.

value of the reporting unit is less than its carrying amount, the amount of the impairment loss, if any, will be measured by comparing

the implied fair value of goodwill to its carrying amount and would be charged to operations as an impairment loss.

A mixture of qualitative

and quantitative tests were carried out as of December 31, 2021 and 2020 and no impairment was required at any of these dates.

assess the recoverability of long-lived assets and intangible assets with finite useful lives whenever events arise or circumstances

change that indicate the carrying amount of an asset may not be recoverable.

Recoverability of long-lived assets (or asset groups)

to be held and used is measured by a comparison of the carrying amount of the asset (or asset group) to the expected net future

undiscounted cash flows to be generated by that asset (or asset group) or, for identifiable intangibles with finite useful lives,

by determining whether the amortization of the intangible asset balance over its remaining life can be recovered through expected

net future undiscounted cash flows.

The amount of impairment of other long-lived assets and intangible assets with finite lives

is measured by the amount by which the carrying amount of the asset exceeds the fair market value of the asset.

Recoverability of long-lived assets (or asset groups) to

be held and used is measured by a comparison of the carrying amount of the asset (or asset group) to the expected net future undiscounted

cash flows to be generated by that asset (or asset group) or, for identifiable intangibles with finite useful lives, by determining whether

the amortization of the intangible asset balance over its remaining life can be recovered through expected net future undiscounted cash

The amount of impairment of other long-lived assets and intangible assets with finite lives is measured by the amount by which

the carrying amount of the asset exceeds the fair market value of the asset.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

2 unchanged sentences

the Company uses the equity method of accounting.

On October 1, 2019, the Company acquired a 40% noncontrolling interest in Innov8

Gaming Limited in connection with the Acquisition (see Note 2), and in April 2020 this interest was disposed of.

of the Company’s equity method investment was $0.7 million as of December 31, 2019, and was impaired to $Nil in March

2020 prior to disposal.

The Company’s share of earnings from its equity method investee, including the impairment, is presented

in Loss from equity method investee in the Consolidated Statement of Operations and Comprehensive Loss.

On October 1, 2019, the Company acquired a 40 % noncontrolling interest in Innov8 Gaming

Limited in connection with the Acquisition (see Note 2), and in April 2020 this interest was disposed of.

The value of the Company’s

equity method investment was $ 0.7 million as of December 31, 2019, and was impaired to $Nil in March 2020 prior to disposal.

The Company’s

share of earnings from its equity method investee, including the impairment, is presented in Loss from equity method investee in the

Consolidated Statement of Operations and Comprehensive Loss.

Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying

amounts of such investment may not be recoverable.

The difference between the carrying value of the equity method investment and

its estimated fair value is recognized as an impairment charge when the loss in value is deemed other-than-temporary.

The difference between the carrying value of the equity method investment and its

estimated fair value is recognized as an impairment charge when the loss in value is deemed other-than-temporary.

Revenue and Deferred Cost of Sales, excluding depreciation and amortization

revenue arises from the timing differences between the shipment or installation of gaming terminals and systems products and the

satisfaction of all revenue recognition criteria consistent with our revenue recognition policy, as well as prepayment of contracts

which are recognized ratably over a service period, such as maintenance or licensing fees.

Deferred cost of sales, excluding depreciation

and amortization, recorded as prepaid expenses and other assets, consists of the direct costs associated with the manufacture

of gaming equipment and systems products for which revenue has been deferred.

Amounts expected to be recognized as revenue within

the 12 months following the balance sheet date are classified as deferred revenue in current liabilities.

Amounts not expected

to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current

revenue arises from the timing differences between the shipment or installation of gaming terminals and systems products and the satisfaction

of all revenue recognition criteria consistent with our revenue recognition policy, as well as prepayment of contracts which are recognized

ratably over a service period, such as maintenance or licensing fees.

Deferred cost of sales, excluding depreciation and amortization,

recorded as prepaid expenses and other assets, consists of the direct costs associated with the manufacture of gaming equipment and systems

products for which revenue has been deferred.

Amounts expected to be recognized as revenue within the 12 months following the balance

sheet date are classified as deferred revenue in current liabilities.

Amounts not expected to be recognized as revenue within the 12

months following the balance sheet date are classified as deferred revenue, net of current portion.

Issuance Costs

issuance costs incurred in connection with the Company’s debt are capitalized and amortized as interest expense over the

term of the related debt.

issuance costs incurred in connection with the Company’s debt are capitalized and amortized as interest expense over the term of

the related debt.

The Company presents debt issuance costs as a reduction from the carrying amount of debt.

that are wholly attributable to obtaining the related debt finance are treated as debt issuance costs.

Any other costs are expenses

to the Consolidated Statement of Operations and Comprehensive Loss as part of Acquisition and integration related transaction

Company is subject to Value Added Tax (“VAT”) in some locations.

The amount of VAT liability is determined by applying

the applicable tax rate to the invoiced amount of goods and services sold less VAT paid on purchases made with the relevant supporting

VAT is collected from customers by the Company on behalf of the tax authorities and is therefore not charged to the

Consolidated Statement of Operations and Comprehensive Loss.

Only costs that are wholly

attributable to obtaining the related debt finance are treated as debt issuance costs.

Any other costs are expenses to the Consolidated

Statement of Operations and Comprehensive Loss as part of Acquisition and integration related transaction expenses.

Company is subject to Value Added Tax (“VAT”) in some locations.

The amount of VAT liability is determined by applying the

applicable tax rate to the invoiced amount of goods and services sold less VAT paid on purchases made with the relevant supporting invoices.

VAT is collected from customers by the Company on behalf of the tax authorities and is therefore not charged to the Consolidated Statement

of Operations and Comprehensive Loss.

Stock Purchase Warrants and Derivative Financial Instruments

Company reviews any common stock purchase warrants and other freestanding derivative financial instruments at each balance sheet

date and classifies them on the consolidated balance sheet as:

if they (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement

or settlement in its own shares (physical settlement or net-share settlement), or

Assets or liabilities

if they (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if

that event is outside the Company’s control), or (ii) give the counterparty a choice of net-cash settlement or settlement

Company reviews any common stock purchase warrants and other freestanding derivative financial instruments at each balance sheet date

and classifies them on the consolidated balance sheet as:

if they (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement

in its own shares (physical settlement or net-share settlement), or

or liabilities if they (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs

and if that event is outside the Company’s control), or (ii) give the counterparty a choice of net-cash settlement or settlement

in shares (physical settlement or net-share settlement).

2 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Company assesses classification of its common stock purchase warrants and other freestanding derivatives at each reporting date

to determine whether a change in classification between assets and liabilities is required.

The Company determined that its outstanding

common stock purchase warrants satisfied the criteria for classification as equity instruments at December 31, 2020 and December

time to time we enter into foreign currency forward contracts to mitigate the risk associated with cash payments required to be

made in non-functional currencies or to mitigate the risk associated with cash to be received in non-functional currencies.

Company assesses classification of its common stock purchase warrants and other freestanding derivatives at each reporting date to determine

whether a change in classification between assets and liabilities is required.

the quarter ending December 31, 2021, (i) an aggregate of 2,651,129 shares of common stock were issued pursuant to the exercise of 5,302,258

Public Warrants and (ii) an aggregate of 1,027,836 shares of common stock were issued pursuant to the exercise (on a cashless basis)

of 9,049,230 Private Warrants.

There were no warrants outstanding as of December 31, 2021.

December 31, 2020, the Company considered that the warrants did not meet the criteria for equity classification and must be recorded

as liabilities.

As the warrants met the definition of a derivative as contemplated in ASC 815, the warrants were measured at fair value

at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in

the Consolidated Statements of Operations and Comprehensive Loss in the period of change.

time to time we enter into foreign currency forward contracts to mitigate the risk associated with cash payments required to be made

in non-functional currencies or to mitigate the risk associated with cash to be received in non-functional currencies.

Policy for Derivative Instruments and Hedging Activities

ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities

with the intent to provide users of financial statements with an enhanced understanding of:

(a) how and why an entity uses derivative

instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments

and related hedged items affect an entity’s financial position, financial performance, and cash flows.

Further, qualitative

disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative

disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related

contingent features in derivative instruments.

instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and

related hedged items affect an entity’s financial position, financial performance, and cash flows.

Further, qualitative disclosures

are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about

the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative

required by ASC 815, the Company records all derivatives on the balance sheet at fair value.

The accounting for changes

in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a

derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria

necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value

of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair

value hedges.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or

other types of forecasted transactions, are considered cash flow hedges.

Derivatives may also be designated as hedges of the foreign

currency exposure of a net investment in a foreign operation.

Hedge accounting generally provides for the matching of the timing

of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset

or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions

in a cash flow hedge.

The Company may enter into derivative contracts that are intended to economically hedge certain of its risk,

even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

accordance with the FASB’s fair value measurement guidance in ASU 2011-04, “Fair Value Measurements,”

made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master

netting agreements on a net basis by counterparty portfolio.

Company adopted Accounting Standards Codification (“ASC”) 606 –

Revenue from Contracts with Customers”

(“ASC 606”) as of January 1, 2019 using the modified retrospective method.

This method allows the Company to apply

ASC 606 to new contracts entered into after January 1, 2019, and to its existing contracts for which revenue earned through December

31, 2018 has been recognized under the guidance in effect prior to the effective date of ASC 606.

The revenue recognition processes

the Company applied prior to adoption of ASC 606 align with the recognition and measurement guidance of the new standard, therefore

adoption of ASC 606 did not require a cumulative adjustment to opening equity.

ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct

goods and services, to a customer.

Revenue is recognized when performance obligations are satisfied and the customer obtains control

of promised goods or services.

The amount of revenue recognized reflects the consideration to which the Company expects to be

entitled to receive in exchange for goods or services.

Under the standard, a contract’s transaction price is allocated to

each distinct performance obligation.

To determine revenue recognition for arrangements that the Company determines are within

the scope of ASC 606, the Company performs the following five steps:

The accounting for changes in the fair value

of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging

relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment

attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Derivatives designated and qualifying

as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash

Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation.

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition

of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the

earnings effect of the hedged forecasted transactions in a cash flow hedge.

The Company may enter into derivative contracts that are

intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge

accordance with the FASB’s fair value measurement guidance in ASU 2011-04, “Fair Value Measurements,” the Company made

an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements

on a net basis by counterparty portfolio.

Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers” (“ASC

606”) as of January 1, 2019 using the modified retrospective method.

This method allows the Company to apply ASC 606 to new contracts

entered into after January 1, 2019, and to its existing contracts for which revenue earned through December 31, 2018 has been recognized

under the guidance in effect prior to the effective date of ASC 606.

The revenue recognition processes the Company applied prior to adoption

of ASC 606 align with the recognition and measurement guidance of the new standard, therefore adoption of ASC 606 did not require a cumulative

adjustment to opening equity.

ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods

and services, to a customer.

Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised

goods or services.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive

in exchange for goods or services.

Under the standard, a contract’s transaction price is allocated to each distinct performance

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company

performs the following five steps:

the contracts with a customer;

identify the performance

obligations within the contract, including whether they are distinct and capable of being distinct in the context of the contract;

the performance obligations within the contract, including whether they are distinct and capable of being distinct in the context

of the contract;

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

determine the transaction

allocate the transaction

price to the performance obligations in the contract;

recognize revenue

when, or as, the Company satisfies each performance obligation.

the transaction price;

the transaction price to the performance obligations in the contract;

revenue when, or as, the Company satisfies each performance obligation.

1 – Identify the contract

Company identifies contracts with its customers when all parties have approved the contract and are committed to perform their

respective obligations, when each party’s rights and the payment terms regarding the goods or services to be transferred

can be identified.

The contract must also have commercial substance, and it must be probable that the Company will collect the

consideration to which it will be entitled.

entered into at or near the same time with the same customer or related parties of the customer are accounted for as one contract

if any of the following criteria are met:

were negotiated as a single commercial package (including whether a contract would be loss-making without taking into account

the consideration received under another contract)

Consideration in

one contract depends on the other contract

Goods or services

(or some of the goods or services) are a single performance obligation.

Company identifies contracts with its customers when all parties have approved the contract and are committed to perform their respective

obligations, when each party’s rights and the payment terms regarding the goods or services to be transferred can be identified.

The contract must also have commercial substance, and it must be probable that the Company will collect the consideration to which it

will be entitled.

entered into at or near the same time with the same customer or related parties of the customer are accounted for as one contract if

any of the following criteria are met:

were negotiated as a single commercial package (including whether a contract would be loss-making without taking into account the

consideration received under another contract)

Consideration

in one contract depends on the other contract

or services (or some of the goods or services) are a single performance obligation.

2 – Identify performance obligations

obligations are identified by considering whether a good or service is distinct.

The Company considers a good or service to be

distinct only when the customer can benefit from it either on its own or together with other resources that are readily available,

and when the promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

The Company considers a good or service to be distinct

only when the customer can benefit from it either on its own or together with other resources that are readily available, and when the

promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Company applies the series guidance to its performance obligations where the following criteria apply:

distinct good or service in the series meets the criteria to be a performance obligation satisfied over time.

The same method

would be used to measure progress toward complete satisfaction of the performance obligation to transfer each distinct good

or service in the series to the customer.

same method would be used to measure progress toward complete satisfaction of the performance obligation to transfer each distinct

good or service in the series to the customer.

3 – Determine the transaction price

3 unchanged sentences

Company assesses usage-based fees to determine whether they qualify as variable consideration.

It also considers the impact of

any liquidated damages clauses or service level agreements.

the Company’s performance obligations are determined to be a series, variable consideration is not estimated upfront in

accordance with the exception allowed by ASC 606.

non-refundable upfront fees are included in the Company’s contracts with customer, the Company considers whether or not

they represent payment for a transferred good or service.

Where they represent payment for future goods or services, the Company

further considers whether they represent a material right.

It also considers the impact of any liquidated

damages clauses or service level agreements.

the Company’s performance obligations are determined to be a series, variable consideration is not estimated upfront in accordance

with the exception allowed by ASC 606.

non-refundable upfront fees are included in the Company’s contracts with customer, the Company considers whether or not they represent

payment for a transferred good or service.

Where they represent payment for future goods or services, the Company further considers whether

they represent a material right.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

4 – Allocate the transaction price

Company allocates a transaction price to each performance obligation based on the relative standalone selling prices of the goods

or services being provided.

Where a contract includes multiple performance obligations, the Company determines the standalone

selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and

allocates the transaction price in proportion to those standalone selling prices.

Where possible, the Company uses the price charged

for the good or service to other customers in similar circumstances as evidence of standalone selling price.

Where this is not

possible, the standalone selling price is estimated by experienced management using the best available judgement.

respect to performance obligations that are considered to be a series, where appropriate and where the required criteria are met,

variable consideration is allocated entirely to a distinct good or service that is part of a series.

Company allocates a transaction price to each performance obligation based on the relative standalone selling prices of the goods or

services being provided.

Where a contract includes multiple performance obligations, the Company determines the standalone selling price

at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction

price in proportion to those standalone selling prices.

Where possible, the Company uses the price charged for the good or service to

other customers in similar circumstances as evidence of standalone selling price.

Where this is not possible, the standalone selling

price is estimated by experienced management using the best available judgement.

respect to performance obligations that are considered to be a series, where appropriate and where the required criteria are met, variable

consideration is allocated entirely to a distinct good or service that is part of a series.

5 – Recognize revenue

Company recognizes revenue over time for performance obligations that meet one of the following criteria:

The customer simultaneously

receives and consumes the benefits provided by the Company’s performance as the Company performs.

The Company’s

performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

The Company’s

performance does not create an asset with an alternative use to the Company, and the Company has an enforceable right to payment

for performance completed to date

for the Company’s remaining performance obligations that do not meet one of the above criteria is recognized at the point

at which the customer obtains control of the good or service.

from Gaming terminals, access to our content and platform, including electronic table gaming products is recognized in accordance

with the criteria set forth in ASC 606 and is usually based upon a contracted percentage of the operator’s net winnings

from the terminals’

Where this is not the case, including in the case of maintenance only contracts on self-serve

betting terminals, revenue is based upon a fixed daily or weekly usage fee.

We recognize revenue from these arrangements in accordance

with the series guidance over time on a daily basis over the term of the arrangement, or when not specified over the expected

customer relationship period.

Performance obligations under these arrangements may include the delivery and installation of our

terminals for use over a term, as well as service obligations related to terminal repairs and server based content and maintenance.

Consideration with respect to these performance obligations typically takes the form of usage based fees, billed at the end of

a set period (usually monthly) and due typically 30 days from the date of the invoice.

sales take the form of a transfer of ownership of our developed gaming terminals, and are recognized as Product Sales at a point

in time upon delivery as they are considered to meet the required criteria to be considered distinct.

Payment for terminal sales

is typically due a set number of days after delivery.

arrangements typically include service level agreements, consisting of a specified amount of ‘uptime’

with financial

penalties for breaches in excess of specified levels.

customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs.

Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

Company’s performance does not create an asset with an alternative use to the Company, and the Company has an enforceable right

to payment for performance completed to date

for the Company’s remaining performance obligations that do not meet one of the above criteria is recognized at the point at which

the customer obtains control of the good or service.

from Gaming terminals, access to our content and platform, including electronic table gaming products is recognized in accordance with

the criteria set forth in ASC 606 and is usually based upon a contracted percentage of the operator’s net winnings from the terminals’

Where this is not the case, including in the case of maintenance only contracts on self-serve betting terminals, revenue is

based upon a fixed daily or weekly usage fee.

We recognize revenue from these arrangements in accordance with the series guidance over

time on a daily basis over the term of the arrangement, or when not specified over the expected customer relationship period.

obligations under these arrangements may include the delivery and installation of our terminals for use over a term, as well as service

obligations related to terminal repairs and server based content and maintenance.

Consideration with respect to these performance obligations

typically takes the form of usage based fees, billed at the end of a set period (usually monthly) and due typically 30 days from the

date of the invoice.

sales take the form of a transfer of ownership of our developed gaming terminals, and are recognized as Product Sales at a point in time

upon delivery as they are considered to meet the required criteria to be considered distinct.

Payment for terminal sales is typically

due a set number of days after delivery.

arrangements typically include service level agreements, consisting of a specified amount of ‘uptime’ with financial penalties

for breaches in excess of specified levels.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

1 unchanged sentence

from licensing of our gaming software is recognized in accordance with the criteria set forth in ASC 606.

Virtual sports retail

revenue, which includes the provision of virtual sports content and services to retail betting outlets, and virtual sports online

revenue, which includes the provision of virtual sports content and services to mobile operators, is usually based upon a contracted

percentage of the operator’s net winnings or, occasionally, a fixed rental fee.

We recognize revenue for these fees over

time on a daily or weekly basis over the term of the arrangement, or, where appropriate when the contracted percentages vary prospectively

with total operator’s net winnings generated, we estimate the amount of variable consideration to which we will be entitled,

up to and including the date at which the contracted percentages reset, and recognize this estimated consideration over time.

Consideration with respect to these performance obligations typically takes the form of usage based fees, billed at the end of

a set period (usually monthly) and due typically 30 days from the date of the invoice.

arrangements also may include a perpetual license billed up front, granted to the customer for access to our gaming platform and

As these up front bills represent payment for future services, revenue from the licensing of perpetual licenses is recognized

ratably over time, or when not specified, over the expected customer relationship period.

Upfront fees are normally billed upon

signing of the relevant agreement, and become due and payable at set times thereafter.

from the development of bespoke games licensed on a perpetual basis to mobile and online operators is recognized at a point in

time on delivery and acceptance by the customer.

We have no ongoing service obligations subsequent to customer acceptance of our

bespoke games, and they meet the criteria to be considered as distinct.

Payment for bespoke games is typically due a set number

of days after delivery.

Sports arrangements typically include service level agreements, consisting of a specified amount of ‘uptime’

financial penalties for breaches in excess of specified levels.

revenue, which includes slot and table game offerings from our Gaming segment, as well as interactive-only content, via our remote

gaming servers, is based upon a contracted percentage of the operator’s net winnings or a fixed rental fee.

revenue for these fees over time on a daily or weekly basis over the term of the arrangement, or, where appropriate when the contracted

percentages vary prospectively with total operator’s net winnings generated, we estimate the amount of variable consideration

to which we will be entitled, up to and including the date at which the contracted percentages reset, and recognize this estimated

consideration over time.

Consideration with respect to these performance obligations typically takes the form of usage based fees,

billed at the end of a set period (usually monthly) and due typically 30 days from the date of the invoice.

Leisure segment earns revenue from providing gaming machine terminals and amusement machine terminals to pubs, holiday resorts

and amusement arcades, both standalone and within motorway service stations.

Revenue from these activities is based upon a contracted

percentage of the operator’s net winnings from the terminals’

daily use, or a fixed daily or weekly rental fee.

Virtual sports retail revenue,

which includes the provision of virtual sports content and services to retail betting outlets, and virtual sports online revenue, which

includes the provision of virtual sports content and services to mobile operators, is usually based upon a contracted percentage of the

operator’s net winnings or, occasionally, a fixed rental fee.

We recognize revenue for these fees over time on a daily or weekly

basis over the term of the arrangement, or, where appropriate when the contracted percentages vary prospectively with total operator’s

net winnings generated, we estimate the amount of variable consideration to which we will be entitled, up to and including the date at

which the contracted percentages reset, and recognize this estimated consideration over time.

Consideration with respect to these performance

obligations typically takes the form of usage based fees, billed at the end of a set period (usually monthly) and due typically 30 days

from the date of the invoice.

arrangements also may include a perpetual license billed up front, granted to the customer for access to our gaming platform and content.

As these up front bills represent payment for future services, revenue from the licensing of perpetual licenses is recognized ratably

over time, or when not specified, over the expected customer relationship period.

Upfront fees are normally billed upon signing of the

relevant agreement, and become due and payable at set times thereafter.

from the development of bespoke games licensed on a perpetual basis to mobile and online operators is recognized at a point in time on

delivery and acceptance by the customer.

We have no ongoing service obligations subsequent to customer acceptance of our bespoke games,

and they meet the criteria to be considered as distinct.

Payment for bespoke games is typically due a set number of days after delivery.

Sports arrangements typically include service level agreements, consisting of a specified amount of ‘uptime’ with financial

penalties for breaches in excess of specified levels.

revenue, which includes slot and table game offerings from our Gaming segment, as well as interactive-only content, via our remote gaming

servers, is based upon a contracted percentage of the operator’s net winnings or a fixed rental fee.

We recognize revenue for these

fees over time on a daily or weekly basis over the term of the arrangement, or, where appropriate when the contracted percentages vary

prospectively with total operator’s net winnings generated, we estimate the amount of variable consideration to which we will be

entitled, up to and including the date at which the contracted percentages reset, and recognize this estimated consideration over time.

Consideration with respect to these performance obligations typically takes the form of usage based fees, billed at the end of a set

period (usually monthly) and due typically 30 days from the date of the invoice.

Leisure segment earns revenue from providing gaming machine terminals and amusement machine terminals to pubs, holiday resorts and amusement

arcades, both standalone and within motorway service stations.

Revenue from these activities is based upon a contracted percentage of

the operator’s net winnings from the terminals’ daily use, or a fixed daily or weekly rental fee.

jointly operate arcades within holiday resorts with the resort owners.

Revenue is based on a contractually agreed share of takings.

We also wholly operate a number of gaming arcades within certain motorway service stations.

recognize revenue from these arrangements, in accordance with the series guidance as set forth in ASC 606, over time over the

term of the arrangement, or when not specified over the expected customer relationship period.

All revenue is recognized in the

period that the machine cash collections occur, with adjustments to account for the movement of income uncollected in the specific

obligations under these arrangements may include the delivery and installation of our terminals for use over a term, as well as

service obligations related to terminal repairs and content and maintenance.

Consideration with respect to these performance obligations

typically takes the form of usage based fees, billed at the end of a set period (usually monthly) and due typically 30 days from

the date of the invoice.

also wholly operate a number of gaming arcades within certain motorway service stations.

recognize revenue from these arrangements, in accordance with the series guidance as set forth in ASC 606, over time over the term of

the arrangement, or when not specified over the expected customer relationship period.

All revenue is recognized in the period that the

machine cash collections occur, with adjustments to account for the movement of income uncollected in the specific period.

obligations under these arrangements may include the delivery and installation of our terminals for use over a term, as well as service

obligations related to terminal repairs and content and maintenance.

Consideration with respect to these performance obligations typically

takes the form of usage based fees, billed at the end of a set period (usually monthly) and due typically 30 days from the date of the

also provide terminal and spares management services to third parties.

Revenue in respect to these services takes the form of

fixed fee, either per machine or per time period, and is recognized at the point in time when control transfers to the customer,

which is normally upon delivery and acceptance by the customer, or at the point that services are rendered.

This revenue is recognized

as Service Revenue when included as part of a larger performance obligation, and as Product Sales when it is offered as a separate

distinct performance obligation.

Revenue in respect to these services takes the form of fixed fee,

either per machine or per time period, and is recognized at the point in time when control transfers to the customer, which is normally

upon delivery and acceptance by the customer, or at the point that services are rendered.

This revenue is recognized as Service Revenue

when included as part of a larger performance obligation, and as Product Sales when it is offered as a separate distinct performance

Revenue is invoiced in arrears and settled within 30 days

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Disaggregation

on disaggregation of revenue is included in Note 26, “Segment Reporting and Geographic Information.”

and Handling Costs

and handling costs for products sales and terminals related to subscription services are included in cost of sales, excluding

depreciation and amortization for all periods presented.

and handling costs for products sales and terminals related to subscription services are included in cost of sales, excluding depreciation

and amortization for all periods presented.

Payment Arrangements

Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation”

ASC 718 requires generally that all equity awards be accounted for at their “fair value.”

This fair value

is measured on the grant date for stock-settled awards, and at subsequent exercise or settlement for cash-settled awards.

value is equal to the underlying value of the stock for “full-value”

awards such as restricted stock and restricted

stock units that have time vesting conditions, and stock options and performance shares that have market conditions are valued

using an option-pricing model with traditional inputs for “appreciation”

equal to these fair values are recognized ratably over the requisite service period based on the number of awards that are expected

to vest, or in the period of grant for awards that vest immediately and have no future service condition.

For awards that vest

over time, previously recognized compensation cost is reversed if the service or performance conditions are not satisfied and

the award is forfeited.

Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC

ASC 718 requires generally that all equity awards be accounted for at their “fair value.” This fair value is

measured on the grant date for stock-settled awards, and at subsequent exercise or settlement for cash-settled awards.

Fair value is

equal to the underlying value of the stock for “full-value” awards such as restricted stock and restricted stock units that

have time vesting conditions, and stock options and performance shares that have market conditions are valued using an option-pricing

model with traditional inputs for “appreciation” awards.

equal to these fair values are recognized ratably over the requisite service period based on the number of awards that are expected to

vest, or in the period of grant for awards that vest immediately and have no future service condition.

For awards that vest over time,

previously recognized compensation cost is reversed if the service or performance conditions are not satisfied and the award is forfeited.

modifications to outstanding awards result in incremental cost if the fair value is increased as a result of the modification.

The incremental

cost is charged over the estimated derived service period.

taxes are accounted for under the asset and liability method.

Our provision for income taxes is principally based on current period

income (loss), changes in deferred tax assets and liabilities and changes in estimates with regard to uncertain tax positions.

We estimate current tax expense and assess temporary differences resulting from differing treatments of items for tax and accounting

purposes using enacted tax rates in effect for each taxing jurisdiction in which we operate for the period in which those temporary

differences are expected to be recovered or settled.

Our provision for income taxes is principally based on current period income

(loss), changes in deferred tax assets and liabilities and changes in estimates with regard to uncertain tax positions.

We estimate current

tax expense and assess temporary differences resulting from differing treatments of items for tax and accounting purposes using enacted

tax rates in effect for each taxing jurisdiction in which we operate for the period in which those temporary differences are expected

to be recovered or settled.

These differences result in deferred tax assets and liabilities.

deferred tax assets are principally comprised of depreciation and net operating loss carry forwards.

Our total deferred tax assets are principally

comprised of depreciation and net operating loss carry forwards.

management judgment is required to assess the likelihood that deferred tax assets will be recovered from future taxable income.

In assessing the realizability of these deferred tax assets, management considers whether it is more likely than not that some

portion or all of the deferred tax assets will be realized.

Management makes this assessment on a jurisdiction by jurisdiction

basis considering the historical trend of taxable losses, projected future taxable income and the reversal of deferred tax liabilities.

evaluate income tax uncertainties, assess the probability of the ultimate settlement with the applicable taxing authority and

records an amount based on that assessment.

Interest and penalties, if any, associated with uncertain tax positions are included

in income tax expense.

the realizability of these deferred tax assets, management considers whether it is more likely than not that some portion or all of the

deferred tax assets will be realized.

Management makes this assessment on a jurisdiction by jurisdiction basis considering the historical

trend of taxable losses, projected future taxable income and the reversal of deferred tax liabilities.

evaluate income tax uncertainties, assess the probability of the ultimate settlement with the applicable taxing authority and records

an amount based on that assessment.

Interest and penalties, if any, associated with uncertain tax positions are included in income tax

Comprehensive

include and separately classify in comprehensive loss unrealized gains and losses and hedges from our foreign currency translation

adjustments, gains or losses associated with pension or other post-retirement benefits, prior service costs or credits associated

with pension or other post-retirement benefits and transition assets or obligations associated with pension or other post-retirement

include and separately classify in comprehensive loss unrealized gains and losses and hedges from our foreign currency translation adjustments,

gains or losses associated with pension or other post-retirement benefits, prior service costs or credits associated with pension or

other post-retirement benefits and transition assets or obligations associated with pension or other post-retirement benefits.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), followed in July 2018 by ASU 2018-10, Codification Improvements

to Topic 842 Leases, and ASU 2018-11, Leases (Topic 842):

February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), followed in July 2018 by ASU 2018-10, Codification Improvements to Topic

842 Leases, and ASU 2018-11, Leases (Topic 842):

Targeted Improvements.

Under the new transition method, an entity initially

applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained

earnings in the period of adoption.

As a result of this adoption and the required disclosures, the Company revised its accounting

policy for leases as stated below in the prior year.

The guidance is effective for all public business entities and certain not-for-profit

Under the new transition method, an entity initially applies

the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings

in the period of adoption.

As a result of this adoption and the required disclosures, the Company revised its accounting policy for leases

as stated below in the year ended December 31, 2019.

The guidance was effective for all public business entities and certain not-for-profit

entities in fiscal years beginning after December 15, 2018, and for all other entities in fiscal years beginning after December 15, 2020.

Early adoption is permitted.

As the Company was an emerging growth company until December 31, 2019 and elected to use

the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section

13(a) of the Exchange Act, it adopted the standard as of January 1, 2019 on December 31, 2019.

elected to adopt the package of practical expedients to not reassess prior conclusions related to contracts containing leases,

lease classification and initial direct costs, along with the practical expedient to use hindsight when determining the lease

As the Company was an emerging growth company until December 31, 2019 and elected to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act, it adopted the standard

as of January 1, 2019 on December 31, 2019.

elected to adopt the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease

classification and initial direct costs, along with the practical expedient to use hindsight when determining the lease term.

determine if an arrangement is a lease at inception of the arrangement.

Once it is determined that an arrangement is, or contains,

a lease, that determination should only be reassessed if the legal arrangement is modified.

Once it is determined that an arrangement is, or contains, a

lease, that determination should only be reassessed if the legal arrangement is modified.

Changes to assumptions such as market-based

1 unchanged sentence

Determining whether a contract contains a lease requires judgement.

In general, arrangements

are considered to be a lease when all of the following apply:

it conveys the right

to control the use of an identified asset for a period of time in exchange for consideration;

we have substantially

all economic benefits from the use of the asset;

we can direct the

use of the identified asset.

In general, arrangements are

considered to be a lease when all of the following apply:

conveys the right to control the use of an identified asset for a period of time in exchange for consideration;

have substantially all economic benefits from the use of the asset;

can direct the use of the identified asset.

terms of a lease arrangement determine how a lease is classified and the resulting income statement recognition.

When the terms

of a lease effectively transfer control of the underlying asset, the lease represents an in substance financed purchase (sale)

of an asset and the lease is classified as a finance lease by the lessee and a sales-type lease by the lessor.

When a lease does

not effectively transfer control of the underlying asset to the lessee, but the lessor obtains a guarantee for the value of the

asset from a third party, the lessor would classify a lease as a direct financing lease.

All other leases are classified as operating

a lease contains more than one component, the consideration in the contract is allocated on a relative standalone price basis

to the separate lease components and the non-lease components.

When the terms of a

lease effectively transfer control of the underlying asset, the lease represents an in substance financed purchase (sale) of an asset

and the lease is classified as a finance lease by the lessee and a sales-type lease by the lessor.

When a lease does not effectively

transfer control of the underlying asset to the lessee, but the lessor obtains a guarantee for the value of the asset from a third party,

the lessor would classify a lease as a direct financing lease.

All other leases are classified as operating leases.

a lease contains more than one component, the consideration in the contract is allocated on a relative standalone price basis to the

separate lease components and the non-lease components.

– the Company as lessee

of December 31, 2019, our impact resulting from first-time recognition of operating leases was as follows:

we recognized right-of-use

(ROU) assets of $9.4 million and lease liabilities of $8.8 million;

the short-term portion

of the lease liabilities amounted to $3.6 million and

the long-term portion

of the lease liabilities amounted to $5.2 million.

assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term

at commencement date.

As our operating leases do not provide an implicit rate, we use our incremental borrowing rate based on

the information available at January 1, 2019 or commencement date, if later, in determining the present value of future payments.

Finance leases are included using the rate implicit in the lease.

The lease ROU asset includes any lease payment made and initial

direct costs incurred.

Our operating lease terms may include options to extend or terminate the lease which are included in the

measurement of the ROU assets and lease liabilities when it is reasonably certain that we will exercise that option.

assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement

As our operating leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available

at January 1, 2019 or commencement date, if later, in determining the present value of future payments.

Finance leases are included using

the rate implicit in the lease.

The lease ROU asset includes any lease payment made and initial direct costs incurred.

Our operating

lease terms may include options to extend or terminate the lease which are included in the measurement of the ROU assets and lease liabilities

when it is reasonably certain that we will exercise that option.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term.

Finance lease assets

are amortized straight-line over their useful life where the lease transfers ownership of the underlying asset, or to the earlier

of the end of the useful life of the asset and the end of the lease term where ownership is not transferred.

Interest on finance

leases is recognized as the amount that results in a constant periodic discount rate on the remaining balance of the liability.

Finance lease assets are

amortized straight-line over their useful life where the lease transfers ownership of the underlying asset, or to the earlier of the

end of the useful life of the asset and the end of the lease term where ownership is not transferred.

Interest on finance leases is recognized

as the amount that results in a constant periodic discount rate on the remaining balance of the liability.

have operating lease agreements with lease and non-lease components.

The Company did not make the election to treat the lease

and non-lease components as a single component and considers the non-lease components as a separate unit of account.

The Company did not make the election to treat the lease and non-lease

components as a single component and considers the non-lease components as a separate unit of account.

Company has elected not to apply the recognition requirements of ASC 842 to short-term operating leases.

We recognize the lease

payments for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which

the obligation for those payments is incurred

We recognize the lease payments

for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which the obligation

for those payments is incurred

– the Company as lessor

Company’s lease arrangements are a mixture of sales-type leases and operating leases.

lease receivables are recognized based on the net investment in the lease, at the present value of future minimum lease payments

receivable over the lease term, plus any guaranteed residual value of the underlying asset, at the commencement date.

Company’s lease arrangements are a mixture of sales-type leases and operating leases.

lease receivables are recognized based on the net investment in the lease, at the present value of future minimum lease payments receivable

over the lease term, plus any guaranteed residual value of the underlying asset, at the commencement date.

discount rate used in determining the present value of the future minimum lease payments is the rate implicit in the lease.

is calculated using the fair value of the underlying asset and the present value of any unguaranteed residual value.

This is calculated

using the fair value of the underlying asset and the present value of any unguaranteed residual value.

underlying asset is derecognized at the point of inception and a selling profit is recognized at lease commencement.

interest income is recognized over the term of the lease, at an amount that produces a constant periodic discount rate on the

remaining balance of the net investment in the lease.

Subsequent interest

income is recognized over the term of the lease, at an amount that produces a constant periodic discount rate on the remaining balance

of the net investment in the lease.

operating leases, we continue to recognize the underlying asset.

Lease income is recognized on a straight-line basis over the

Lease income is recognized on a straight-line basis over the lease term.

Issued Accounting Standards

June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments –

Credit Losses (Topic 326):

Measurement of Credit

Losses on Financial Instruments”

(“ASU 2016-13”).

In November 2018, the FASB issued ASU 2018-19, “Codification

Improvements to Topic 326, Financial Instruments - Credit Losses”

(“ASU 2018-19”) and in November 2019, the

FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses”

2019-11”).

ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual

right to receive cash.

ASU 2016-13 requires an entity to recognize expected credit losses rather than incurred losses for financial

The guidance will be effective beginning on January 1, 2023, including interim periods within that

year and requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as

of the beginning of the period of adoption.

Under the modified retrospective method of adoption, prior year reported results are

not restated.

We are still evaluating the effect of this guidance, however, the adoption of ASU 2016-13 is not expected to

have a material impact on the Company’s financial statement presentation or disclosures.

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”

(“ASU 2019-12”).

ASU 2019-12 removes certain exceptions to the general principles in Topic 740, “Income Taxes”.

It also improves consistent application and simplifies other areas by clarifying and amending existing guidance.

will be effective beginning on January 1, 2021, including interim periods within that year.

The adoption of ASU

2019-12 is not expected to have a material impact on the Company’s financial statement presentation or disclosures.

2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses

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

In November 2018, the FASB issued ASU 2018-19, “Codification Improvements

to Topic 326, Financial Instruments - Credit Losses” (“ASU 2018-19”) and in November 2019, the FASB issued ASU 2019-11,

“Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”).

affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash.

2016-13 requires an entity to recognize expected credit losses rather than incurred losses for financial assets.

The guidance will be

effective beginning on January 1, 2023, including interim periods within that year and requires a modified retrospective transition approach

through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.

Under the modified retrospective

method of adoption, prior year reported results are not restated.

We are still evaluating the effect of this guidance, however, the adoption

of ASU 2016-13 is not expected to have a material impact on the Company’s financial statement presentation or disclosures.

March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of

Reference Rate Reform on Financial Reporting”

(“ASU 2020-04”).

ASU 2020-04 provides optional expedients and

exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions

affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging

relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate

Reform on Financial Reporting” (“ASU 2020-04”), and in January 2021 extended the scope of Topic 848 to other derivative

ASU 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to contracts,

hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only

to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships

entered into or evaluated after December 31, 2022.

The amendments are elective and are effective upon issuance for all

The Company has made certain elections in accordance with ASU 2020-04 and as a result there is no material impact

on the Company’s financial statement presentations or disclosures.

The amendments are elective and are effective upon issuance for all entities.

Company has made certain elections in accordance with ASU 2020-04 and as a result there is no material impact on the Company’s

financial statement presentations or disclosures.

July 2021, the FASB issued ASU No.

2021-05, “Leases (Topic 842):

Lessors – Certain Leases with Variable Lease Payments”

(“ASU 2021-05”).

ASU 2021-05 amends lease classification requirements for lessors to require a lessor to classify and account

for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following

criteria are met:

1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification

criteria in paragraphs 842-10-25-2 through 25-3;

and 2) the lessor would have otherwise recognized a day-one loss.

The guidance will

be effective beginning on January 1, 2022, including interim periods within that year, and can be applied either retrospectively or prospectively

to leases that commence or are modified on or after the date that the amendments are first applied.

The adoption of ASU 2021-05 is not

expected to have a material impact on the Company’s financial statement presentation or disclosures.

October 2021, the FASB issued ASU No.

2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract

Liabilities from Contracts with Customers” (“ASU 2021-08”).

ASU 2021-08 requires that an acquiring entity recognizes

and measures contract assets and liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date,

an acquirer should account for the related revenue contracts as if it had originated the contracts.

The guidance will be effective beginning

on January 1, 2023, including interim periods within that year, and should be applied prospectively to business combinations occurring

on or after the effective date.

November 2021, the FASB issued ASU No.

2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government

Assistance” (“ASU 2021-10”).

ASU 2021-10 requires entities to disclose information about certain government assistance

that they receive, including 1) the nature of the transactions and the related accounting policies used;

2) the line items on the balance

sheet and income statement that are affected and the amounts applicable to each financial statement line item;

and 3) significant terms

and conditions of the transactions.

The guidance is applicable to annual periods only, and will be effective beginning on January 1,

It can be applied either retrospectively or prospectively to all transactions in the scope of the amendments that are reflected

in the financial statements at the date of initial application and new transactions that are entered into after the date of initial application.

The adoption of ASU 2021-10 is not expected to have a material impact on the Company’s financial statement presentation or disclosures

if applied prospectively.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

October 1, 2019, the Company’s subsidiary, Inspired Gaming (UK) Limited, completed the acquisition of the Gaming Technology

Group of Novomatic UK Ltd.

pursuant to the Share Purchase Agreement, dated as of June 11, 2019 (the “SPA”), comprising:

(i) all of the outstanding equity interests of each of (a) Astra Games Ltd, (b) Bell-Fruit Group Limited, (c) Gamestec Leisure

Limited, (d) Harlequin Gaming Limited, and (e) Playnation Limited, and (ii) 60% of the outstanding equity interests of Innov8

Gaming Limited (“Innov8”, and together with the entities described in clause (i) and certain of their subsidiaries,

the “Acquired Businesses”

and the transactions contemplated by the SPA, the “NTG Acquisition”).

The consideration

for the NTG Acquisition totaled approximately €107.0 million ($131.4 million) in cash, which was financed by the Senior Facilities

Agreement discussed in Note 13.

with the closing of the NTG Acquisition, Inspired transferred a portion of the equity interests it had acquired in Innov8 to the

then-minority equity holders of Innov8 in exchange for the renegotiation of certain funding commitments.

As a result, Inspired

then held approximately 40% of the outstanding equity interests of Innov8.

December 31, 2021, the Company acquired 100 % of the membership interests of Sportech Lotteries, LLC (the “Sportech Acquisition”).

The Company concluded that Sportech Lotteries, LLC’s contract with its only customer represented substantially all of the fair

value of the gross assets acquired and, in accordance with ASC 805, determined that the asset set did not comprise a business.

has therefore applied asset acquisition accounting to the transaction, and has recorded the acquisition of the customer contract as an

intangible asset in the amount of $ 12.3 million.

The intangible asset will be amortized over its remaining useful life of 13.2 years.

October 1, 2019, the Company’s subsidiary, Inspired Gaming (UK) Limited, completed the acquisition of the Gaming Technology Group

of Novomatic UK Ltd.

pursuant to the Share Purchase Agreement, dated as of June 11, 2019 (the “SPA”), comprising:

of the outstanding equity interests of each of (a) Astra Games Ltd, (b) Bell-Fruit Group Limited, (c) Gamestec Leisure Limited, (d) Harlequin

Gaming Limited, and (e) Playnation Limited, and (ii) 60 % of the outstanding equity interests of Innov8 Gaming Limited (“Innov8”,

and together with the entities described in clause (i) and certain of their subsidiaries, the “Acquired Businesses” and the

transactions contemplated by the SPA, the “NTG Acquisition”).

The consideration for the NTG Acquisition totaled approximately

€ 107.0 million ($ 131.4 million) in cash, which was financed by the Senior Facilities Agreement discussed in Note 13.

with the closing of the NTG Acquisition, Inspired transferred a portion of the equity interests it had acquired in Innov8 to the then-minority

equity holders of Innov8 in exchange for the renegotiation of certain funding commitments.

As a result, Inspired then held approximately

40 % of the outstanding equity interests of Innov8.

In April 2020, this interest was disposed of.

NTG Acquisition added scale, content, synergy opportunities and diversification to our business.

of December 31, 2019, the allocation of the purchase price was summarized as follows (in millions):

Purchase Price

Foreign exchange rate at October 1, 2019

Adjusted purchase price in US dollars

Allocated to:

Prepaid expenses and other

Property and equipment

Software development costs

Accounts payable, accrued expenses and other current liabilities

Income taxes payable

Long-term debt

Other long-term liabilities

Net assets acquired

Excess of purchase price over net assets acquired before allocation to identifiable intangible assets and goodwill

fair value of property and equipment was determined using the indirect cost approach which utilizes fixed asset record information

including historical costs, acquisition dates, and asset descriptions and applying asset category specific nationally recognized

indices to the historical cost of each asset to derive replacement cost new less depreciation.

Management also made the initial

determination that all other assets and liabilities acquired are primarily estimated to be stated at their fair values, which

approximates their recorded cost.

Management made a further initial determination that approximately $8.1 million of the excess

of the purchase price over the net assets acquired should be allocated to identifiable intangible assets.

The unidentified excess

of the purchase price over the fair value of the net assets acquired was recorded as goodwill.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Corporate trade names and domains

Customer contracts and relationships

Intangible Assets

accordance with ASC 805, identifiable intangible assets are required to be measured at fair value.

The intangible assets identified

were valued using the income approach, either through the discounted cash flow method, the relief from royalty method or the excess

earnings method.

Determining fair value requires significant judgment concerning the assumptions used in the valuation model,

including discount rates, the amount and timing of expected future cash flows and growth rates, as well as expected royalty rates,

which are based on the estimated rates at which similar assets are being licensed in the marketplace.

The estimated weighted average

useful life of the new intangible assets identified is 10 years.

arising from the NTG Acquisition mainly consists of the synergies of an ongoing business.

Goodwill and intangible assets are tested

for impairment on an annual basis or sooner, if an event occurs or circumstances change that indicate that the carrying amount

of the goodwill or intangible asset may not be recoverable.

The Company incurred advisor fees, legal and other costs related to

the NTG Acquisition of $6.7 million, which excluded the costs of refinance that have been deducted from the senior debt as debt

issuance costs and which have been recognized in operating expenses in the accompanying consolidated statement of operations during

the year ended December 31, 2019.

Further such costs recognized in the accompanying consolidated statement of operations during

the year ended December 31, 2020 amounted to $1.3 million.

asset valuations included above were based on management’s preliminary assessments.

During the year ended 31 December, 2020,

certain valuations were revised as follows;

Property and Equipment $49.3 million to $48.7 million, Inventories $14.6 million to

$14.1 million, Other long-term liabilities $1.6 million to $0.7 million, Goodwill $32.1 million to $32.3 million (see Note 8).

revenues and loss from operations from October 1, 2019 (the acquisition date) through December 31, 2019 amounted to $31.0 million

and $(0.4) million, respectively, and is included in the consolidated statements of operations and comprehensive income.

Company incurred advisor fees, legal and other costs related to the NTG Acquisition of $ 6.7 million, which excluded the costs of refinance

that were deducted from the senior debt as debt issuance costs and which were recognized in operating expenses in the accompanying consolidated

statement of operations during the year ended December 31, 2019.

Further such costs recognized in the accompanying consolidated statement

of operations during the year ended December 31, 2020 amounted to $ 1.3 million.

revenues and loss from operations from October 1, 2019 (the acquisition date) through December 31, 2019 amounted to $ 31.0 million and

$ ( 0.4 ) million, respectively, and is included in the consolidated statements of operations and comprehensive income.

Forma Information (Unaudited)

following unaudited consolidated pro forma information gives effect to the transaction contemplated by the NTG Acquisition as

if such transaction had occurred on January 1, 2019.

The following pro forma information is presented for illustration purposes

only and is not necessarily indicative of the results that would have been attained had the acquisition been completed on January

1, 2019, nor is it indicative of results that may occur in any future periods.

following unaudited consolidated pro forma information gives effect to the transaction contemplated by the NTG Acquisition as if such

transaction had occurred on January 1, 2019.

The following pro forma information is presented for illustration purposes only and is not

necessarily indicative of the results that would have been attained had the acquisition been completed on January 1, 2019, nor is it

indicative of results that may occur in any future periods.

Schedule of Pro Forma Information

Net operating loss

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Accounts Receivable

receivable consist of the following:

of Accounts Receivable

(in millions)

2 unchanged sentences

Finance lease receivables

Receivables from affiliate

Other receivables

2 unchanged sentences

in the allowance for doubtful accounts are as follows:

of Changes in Allowance for Doubtful Accounts

(in millions)

10 unchanged sentences

parts include parts for gaming terminals.

Included in inventory are reserves for excess and slow-moving inventory of $1.5 million

and $0.9 million as of December 31, 2020 and 2019, respectively.

Our finished goods inventory primarily consists of gaming terminals

which are ready for sale.

Included in inventory are reserves for excess and slow-moving inventory of $ 2.0 million and

$ 1.5 million as of December 31, 2021 and 2020, respectively.

Our finished goods inventory primarily consists of gaming terminals which

are ready for sale.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Prepaid Expenses

and Other Assets

Expenses and Other Assets

expenses and other assets consist of the following:

of Prepaid Expenses and Other Assets

(in millions)

2 unchanged sentences

Total prepaid expenses and other assets

Equipment, net

and Equipment, net

of Property and Equipment

(in millions)

Short-term leasehold property

Video lottery terminals

Construction in progress

Server based gaming terminals

Computer equipment

Plant and machinery

Property and equipment, gross

accumulated depreciation and amortization

and amortization expense amounted to $29.9 million and $21.7 million for the years ended December 31, 2020 and 2019, respectively.

Software Development

Property and equipment, net

expense amounted to $ 25.9 million, $ 29.9 million and $ 21.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Development Costs, net

development costs, net consisted of the following:

of Software Development Costs

(in millions)

1 unchanged sentence

accumulated amortization

the years ended December 31, 2020 and 2019, the Company capitalized $14.6 million and $23.5 million of software development costs,

respectively.

Amounts in the above table include $0.8 million and $0.9 million of internal use software as of December 31, 2020

Software development

the years ended December 31, 2021 and 2020, the Company capitalized $ 13.6 million and $ 14.6 million of software development costs, respectively.

Amounts in the above table include $ 2.2 million and $ 0.8 million of internal use software as of December 31, 2021 and 2020, respectively.

total amount of software costs amortized was $ 20.0 million, $ 20.0 million and $ 16.4 million for the years ended December 31, 2021, 2020,

and 2019, respectively.

total amount of software costs amortized was $20.0 million and $16.4 million for the years ended December 31, 2020, and 2019,

respectively.

Software costs written down to net realizable value amounted to $0.0 million and $0.4 million for the years ended

December 31, 2020 and 2019, respectively.

The weighted average amortization period was 3.2 years and 3.0 years for the years ended

December 31, 2020 and 2019, respectively.

Software costs written down to net realizable value amounted to $ 0.2 million, $ 0.0 million and $ 0.4 million for

the years ended December 31, 2021, 2020 and 2019, respectively.

The weighted average amortization period was 3.3 years, 3.2 years and

3.0 years for the years ended December 31, 2021, 2020 and 2019, respectively.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

estimated software amortization expense for the years ending December 31 are as follows:

of Estimated Software Amortization Expense

Year ending December 31, (in millions)

Intangible Assets

Assets and Goodwill

following tables present certain information regarding our intangible assets.

Amortizable intangible assets are being amortized

on a straight-line basis over their estimated useful lives of ten years with no estimated residual values, which materially approximates

the expected pattern of use.

Amortizable intangible assets are being amortized on a

straight-line basis over their estimated useful lives of ten years with no estimated residual values, which materially approximates the

expected pattern of use.

of Intangible Assets

(in millions)

Customer relationships

Intangible assets, gross

accumulated amortization

intangible asset amortization expense amounted to $2.4 million and $3.5 million for the years ended December 31, 2020 and 2019,

respectively.

Intangible assets, net

intangible asset amortization expense amounted to $ 0.9 million, $ 2.4 million and $ 3.5 million for the years ended December 31, 2021,

2020 and 2019, respectively.

estimated intangible asset amortization expense for the years ending December 31 are as follows:

of Estimated Intangible Asset Amortization Expense

Year ending December 31, (in millions)

5 unchanged sentences

Ending balance

relating to the Acquisition of NTG for the year ended December 31, 2020 relate to asset valuations that were revised during the

year (see Note 2).

relating to the Acquisition of NTG for the year ended December 31, 2020 relate to asset valuations that were revised during the year.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

assets consist of the following:

of Other Assets

(in millions)

Long term finance lease receivable

Pension asset

Long term receivables

Long term prepaid expenses and other assets

Accrued Expenses

expenses consist of the following:

of Accrued Expenses

(in millions)

7 unchanged sentences

Other creditors

Contract Liabilities

and Other Disclosures

The following table summarizes contract related balances:

Accrued expenses, net

Liabilities and Other Disclosures

following table summarizes contract related balances:

of Contract Related Balances

(in millions)

2 unchanged sentences

At December 31, 2019

recognized that was included in the deferred income balance at the beginning of the period amounted to $10.3 million and $9.6

recognized that was included in the deferred income balance at the beginning of the period amounted to $ 10.9 million, $ 10.3 million and

$ 9.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

2 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Other Liabilities

liabilities consist of the following:

of Other Liabilities

(in millions)

3 unchanged sentences

Asset retirement obligations

Other creditors

Pension liability

Total other liabilities, long-term

Long Term and

other liabilities

Term and Other Debt

Secured Notes

May 20, 2021, Inspired Entertainment (Financing) PLC, a wholly owned subsidiary of the Company, issued £ 235.0 million ($ 316.7 million,

as translated at December 31, 2021) aggregate principal amount of its 7.875% senior secured notes due 2026 (the “Senior Secured

The Senior Secured Notes bear interest at a rate of 7.875 % per annum and mature on June 1, 2026 .

Interest is payable on

the Senior Secured Notes on June 1 and December 1 of each year, commencing on December 1, 2021

Senior Secured Notes and related guarantees were issued under an indenture (the “Indenture”), among Inspired Entertainment

(Financing) PLC, as issuer, the Company and certain English and U.S.

subsidiaries of the Company, as guarantors (collectively and together

with the Company, the “Guarantors”), GLAS Trustees Limited, as trustee, GLAS Trust Corporation Limited, as security agent

and GLAS Trust Company LLC as paying agent, transfer agent and registrar.

The terms of the Senior Secured Notes and related guarantees

are governed by the Indenture.

Senior Secured Notes are fully and unconditionally guaranteed on a senior secured first-priority basis by the Guarantors on a joint and

several basis.

The Senior Secured Notes and related guarantees are secured, subject to certain permitted collateral liens, on a first-priority

basis by substantially all assets of the Guarantors and all claims of the Inspired Entertainment (Financing) PLC under an intercompany

loan to Gaming Acquisitions Limited, a private limited liability company incorporated under the laws of England and Wales and an indirect

wholly-owned subsidiary of the Company (“GAL”), of the proceeds of the offering of the Senior Secured Notes.

Indenture contains incurrence covenants that limit the ability of the Company and the Company’s restricted subsidiaries to, among

other things, (i) incur or guarantee additional debt and issue certain preferred stock of restricted subsidiaries;

(ii) create or incur

certain liens;

(iii) make restricted payments, including dividends or distributions to the Company’s stockholders or repurchase

the Company’s stock;

(iv) prepay or redeem subordinated debt;

(v) make certain investments, including participating joint ventures;

(vi) create encumbrances or restrictions on the payment of dividends or other distributions by restricted subsidiaries;

(vii) sell assets,

or consolidate or merge with or into other companies;

(viii) sell or transfer all or substantially all of the Company’s assets

or those of the Company’s subsidiaries on a consolidated basis;

(ix) engage in certain transactions with affiliates;

and (x) create

unrestricted subsidiaries.

Certain of these covenants will be suspended if and for so long as the Senior Secured Notes have investment

grade ratings from any two of Moody’s Investors Service, Inc., Standard & Poor’s Investors Ratings Services and Fitch

Ratings, Inc.

These covenants are subject to exceptions and qualifications as set forth in the Indenture.

Entertainment (Financing) PLC may redeem the Senior Secured Notes, in whole or in part, at any time and from time to time prior to June

1, 2023, at a redemption price equal to 100% of the principal amount thereof, plus a “make-whole” premium as set forth in

the Indenture and form of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Inspired Entertainment (Financing) PLC may also redeem the Senior Secured Notes, in whole or in part, at any time and from time to time

on or after June 1, 2023, at the redemption prices set forth in the Indenture and form of the Senior Secured Notes, plus accrued and

unpaid interest, if any, to, but excluding, the redemption date.

In addition, at any time prior to June 1, 2023, Inspired Entertainment

(Financing) PLC may redeem up to 40% of the original aggregate principal amount of the Senior Secured Notes with the net cash proceeds

of one or more equity offerings, as described in the Indenture, at a redemption price equal to 107.875% of the principal amount thereof,

plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

At any time prior to June 1, 2023, Inspired Entertainment

(Financing) PLC may redeem up to 10% of the aggregate principal amount of the Senior Secured Notes within each 12-month period at a redemption

price equal to 103% of the aggregate principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but

excluding, the redemption date .

Credit Facility

connection with the issuance of the Senior Secured Notes on May 20, 2021, the Company and certain of our direct and indirect wholly-owned

subsidiaries, entered into a Super Senior Revolving Credit Facility Agreement (the “RCF Agreement”) with Global Loan Agency

Services Limited, as agent, Barclays Bank plc (“Barclays”) and Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie

UK” and together with Barclays, the “Arrangers”) as arrangers and each lender party thereto (the “Lenders”),

pursuant to which the Lenders agreed to provide, subject to certain conditions, a secured revolving facility loan in an original principal

amount of £ 20 million ($ 27.0 million) under which certain of our subsidiaries are able to draw funds (the “RCF Loan”).

The RCF Loans will terminate on November 20, 2025.

funding of the RCF Loan is subject to customary conditions set forth in the RCF Agreement.

The undrawn commitment of each Lender under

the RCF Loan will automatically terminate, unless previously terminated by the Company, on October 20, 2025.

RCF Loans will bear interest at a rate per annum equal to (i) SONIA for borrowings in sterling, (ii) LIBOR (or, on and after December

31, 2021, SOFR) for borrowings in dollars, or (iii) EURIBOR for borrowings in Euro, as applicable, plus, in each case, a margin (based

on the Company’s consolidated senior secured net leverage ratio) ranging from 4.25 % to 4.75 % per annum.

With respect to the RCF

Loan, a commitment fee of 30 % of the then applicable margin is payable at any time on any unutilized portion of the RCF Loan .

RCF Agreement contains various covenants (which include restrictions regarding the incurrence of liens, the incurrence of indebtedness

by the Company’s subsidiaries and fundamental changes, subject in each case to certain exceptions), representations, warranties,

limitations and events of default (which include non-payment, breach of obligations under the financing documents, cross-default, insolvency

and litigation) customary for similar facilities for similarly rated borrowers and subject to customary carve-outs and grace periods.

Following the occurrence of an event of default which has not been waived or remedied, the Lenders who represent more than 66.67 % of

total commitments under the RCF may, subject to the terms of an intercreditor agreement (which governs the relationship between the Lenders

and the holders of the Senior Secured Notes), instruct the agent to (i) accelerate the RCF Loans, (ii) instruct the security agent to

enforce the transaction security and/or (iii) exercise any other remedies available to the Lenders.

RCF Agreement requires that the Company maintain a maximum consolidated senior secured net leverage ratio of 6.25x on the test date for

the relevant period ending June 30, 2021, stepping down to 6.0x on March 31, 2022, 5.75x on March 31, 2023 and 5.50x from March 31, 2024

and thereafter (the “RCF Financial Covenant”).

The RCF Financial Covenant is calculated as the ratio of consolidated senior

secured net debt to consolidated pro forma EBITDA (defined as net income (loss) excluding depreciation and amortization, interest expense,

interest income and income tax expense) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly

on a rolling basis, subject to the Initial Facility (as defined in the RCF Agreement) being drawn on the relevant test date.

Agreement does not include a minimum interest coverage ratio or other financial covenants.

outstanding principal amount of each advance under the RCF Loans is payable on the last day of the interest period relating to such advance,

unless such advance is rolled over on a cashless basis in accordance with customary rollover provisions contained in the RCF Agreement,

with a final repayment on November 20, 2025 .

of Prior Financing

Company’s previous debt consisted of two tranches of senior secured term loans in a principal amount of £ 145.8 million ($ 196.5

million) with a cash interest rate of 8.25 % plus 3-month LIBOR and € 93.1 million ($ 105.4 million) with a cash interest rate of 7.75 %

plus 3-month EURIBOR, respectively and a secured revolving facility loan in a principal amount of £ 20.0 million ($ 27.0 million)

with a cash interest rate on any utilization of 6.50% plus 3-month LIBOR (the “Prior Financing”)..

connection with the issuance of the Senior Secured Notes and the entry into the RCF Agreement, on May 20, 2021, the Prior Financing was

repaid in full and the senior facilities agreement (dated September 27, 2019, as amended and restated on June 25, 2020, see below) relating

to the Prior Financing was terminated.

No prepayment premium applied to the repayment (although customary break cost provisions applied).

Debt fees of $ 14.4 million were expensed to the Consolidated Statements of Operations and Consolidated Loss within Interest Expense as

part of the repayment.

In addition, on May 19, 2021, we terminated the interest rate swaps relating to the Prior Financing and applicable

termination fees were settled on May 20, 2021 (see Note 14).

Facilities Agreement

connection with the NTG Acquisition, on September 27, 2019, the Company, together with certain direct and indirect wholly-owned

subsidiaries, entered into a Senior Facilities Agreement with Lucid Agency Services Limited, as agent, Nomura International plc

and Macquarie Corporate Holdings Pty Limited (UK Branch) as arrangers and/or bookrunners and each lender party thereto (the “Lenders”),

pursuant to which the Lenders agreed to provide, subject to certain conditions, two tranches of senior secured term loans (the

“Term Loans”), in an original principal amount of £140.0 million ($191.1 million) and €90.0 million ($110.5

million), respectively and a secured revolving facility loan in an original principal amount of £20.0 million ($27.3 million).

On October 1, 2019, the debt was funded and proceeds from the Term Loans were used to, among other things, pay the purchase price

of the NTG Acquisition and to refinance existing indebtedness of the Company under the Note Purchase Agreement and prior Facility

described below.

new facilities are subject to covenant testing.

These tests comprise a leverage ratio (consolidated total net debt/consolidated

pro forma EBITDA) and a capital expenditure level.

The leverage ratio is tested quarterly with the first test date being June

The capital expenditure level is tested annually with the first test date being December 31, 2019.

There is also an

annual excess cash flow calculation required, which, if positive and over certain de minimis limits, could require early prepayment

of part of the facilities.

The Term Loans have

a 5-year duration and are repayable in full on October 1, 2024.

The £140.0 million ($191.1 million) loan initially carried

a cash interest rate of 7.25% plus 3-month LIBOR, the €90.0 million ($110.5 million) loan initially carried a cash interest

connection with the NTG Acquisition, on September 27, 2019, the Company, together with certain direct and indirect wholly-owned subsidiaries,

entered into a Senior Facilities Agreement with Lucid Agency Services Limited, as agent, Nomura International plc and Macquarie Corporate

Holdings Pty Limited (UK Branch) as arrangers and/or bookrunners and each lender party thereto (the “Lenders”), pursuant

to which the Lenders agreed to provide, subject to certain conditions, two tranches of senior secured term loans (the “Term Loans”),

in an original principal amount of £ 140.0 million ($ 188.7 million) and € 90.0 million ($ 101.9 million), respectively and a

secured revolving facility loan in an original principal amount of £ 20.0 million ($ 27.0 million).

On October 1, 2019, the debt

was funded and proceeds from the Term Loans were used to, among other things, pay the purchase price of the NTG Acquisition and to refinance

existing indebtedness of the Company under the Note Purchase Agreement and prior Facility described below.

new facilities were subject to covenant testing.

These tests comprised a leverage ratio (consolidated total net debt/consolidated pro

forma EBITDA) and a capital expenditure level.

The leverage ratio was tested quarterly with the first test date being June 30, 2020.

The capital expenditure level was tested annually with the first test date being December 31, 2019.

There was also an annual excess cash

flow calculation required, which, if positive and over certain de minimis limits, could have required early prepayment of part of the

Term Loans had a 5 -year duration and were repayable in full on October 1, 2024.

The £ 140.0 million ($ 188.7 million) loan initially

carried a cash interest rate of 7.25 % plus 3-month LIBOR, the € 90.0 million ($ 101.9 million) loan initially carried a cash interest

rate of 6.75 % plus 3-month EURIBOR.

The £20.0 million ($27.3 million) revolving credit facility is available until September

The £ 20.0 million ($ 27.0 million) revolving credit facility is available until September 1,

2024 and initially carried a cash interest rate on any utilization at 5.50 % plus 3-month LIBOR, with any unutilized amount initially

3 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

June 25, 2020, the Company, certain direct and indirect subsidiaries of the Company, Lucid Agency Services Limited, and Lucid

Trustee Services Limited as security agent under the SFA and the Intercreditor Agreement (as defined in the SFA), entered into

an Amendment and Restatement Agreement (the “ARA”) with respect to the SFA.

The ARA amended the

SFA by, among other things, (i) capitalizing certain interest payments that fell due on April 1, 2020, (ii) resetting the leverage

and capital expenditure financial covenants applicable under the SFA, removing certain rating requirements under the SFA, (iii)

allowing the Company and its subsidiaries to incur additional indebtedness under the UK Coronavirus Large Business Interruption

Loan Scheme under a stand-alone facility, which may rank pari passu or junior to the facilities under the SFA, in an amount

not exceeding £10.0 million ($13.6 million), (iv) removing certain rating requirements under the SFA, (v) limiting the ability

of the Company and its subsidiaries to incur additional indebtedness, including by reducing the amount of general indebtedness

the Company and its subsidiaries are permitted to incur and removing the ability to incur senior secured, second lien and unsecured

indebtedness in an amount not exceeding the aggregate of (A) an unlimited amount, as long as, pro forma for the utilization of

such indebtedness, the consolidated total net leverage ratio does not exceed the lower of 3.4:1 and the then applicable ratio with

respect to the consolidated total net leverage financial covenant summarized further below, plus (B) an amount equal to the greater

of £16.0 million ($21.8 million) and 25% of the consolidated pro forma EBITDA of the Company and its subsidiaries for the

relevant period (as defined in the SFA, but disregarding, for the purposes of calculating the usage of such cap, any financial

indebtedness applied to refinancing other financial indebtedness, together with any related interest, fees, costs and expenses),

(vi) increasing the margin applicable to the Facilities (as defined in the SFA) by 1%, to 8.25% plus 3-month LIBOR on the £145.8

million ($199.0 million) loan (including capitalized interest payments of £5.8 million ($7.9 million)), and to 7.75% plus

3-month EURIBOR on the €93.1 million ($114.3 million) loan (including capitalized interest payments of €3.1 million ($3.8

million)), respectively, and adding an additional payment-in-kind margin of 0.75% payable on any principal amounts outstanding

under Facility B (as defined in the SFA) after September 24, 2021 (the “Relevant Date”), (vii) adding an exit fee payable

by the Company with respect to any repayment or prepayment of Facility B after the Relevant Date at the time of such repayment

or prepayment in an amount equal to 0.75% of the principal amount of Facility B being repaid or prepaid, (viii) removing any ability

to carry forward or carry back any unused allowance under the capital expenditure financial covenant in the SFA and (ix) granting

certain additional information rights to the Lenders under the SFA, including the provision of a budget, and certain board observation

rights until December 31, 2022.

June 25, 2020, the Company, certain direct and indirect subsidiaries of the Company, Lucid Agency Services Limited, and Lucid Trustee

Services Limited as security agent under the SFA and the Intercreditor Agreement (as defined in the SFA), entered into an Amendment and

Restatement Agreement (the “ARA”) with respect to the SFA.

ARA amended the SFA by, among other things, (i) capitalizing certain interest payments that fell due on April 1, 2020, (ii) resetting

the leverage and capital expenditure financial covenants applicable under the SFA, removing certain rating requirements under the SFA,

(iii) allowing the Company and its subsidiaries to incur additional indebtedness under the UK Coronavirus Large Business Interruption

Loan Scheme under a stand-alone facility, which may rank pari passu or junior to the facilities under the SFA, in an amount not

exceeding £ 10.0 million ($ 13.5 million), (iv) removing certain rating requirements under the SFA, (v) limiting the ability of the

Company and its subsidiaries to incur additional indebtedness, including by reducing the amount of general indebtedness the Company and

its subsidiaries are permitted to incur and removing the ability to incur senior secured, second lien and unsecured indebtedness in an

amount not exceeding the aggregate of (A) an unlimited amount, as long as, pro forma for the utilization of such indebtedness, the consolidated

total net leverage ratio does not exceed the lower of 3.4:1 and the then applicable ratio with respect to the consolidated total net

leverage financial covenant summarized further below, plus (B) an amount equal to the greater of £16.0 million ($21.6 million)

and 25% of the consolidated pro forma EBITDA of the Company and its subsidiaries for the relevant period (as defined in the SFA, but

disregarding, for the purposes of calculating the usage of such cap, any financial indebtedness applied to refinancing other financial

indebtedness, together with any related interest, fees, costs and expenses) , (vi) increasing the margin applicable to the Facilities

(as defined in the SFA) by 1 %, to 8.25 % plus 3-month LIBOR on the £ 145.8 million ($ 196.5 million) loan (including capitalized interest

payments of £ 5.8 million ($ 7.8 million)), and to 7.75 % plus 3-month EURIBOR on the € 93.1 million ($ 105.4 million) loan (including

capitalized interest payments of € 3.1 million ($ 3.5 million)), respectively, and adding an additional payment-in-kind margin of

0.75 % payable on any principal amounts outstanding under Facility B (as defined in the SFA) after September 24, 2021 (the “Relevant

Date”), (vii) adding an exit fee payable by the Company with respect to any repayment or prepayment of Facility B after the Relevant

Date at the time of such repayment or prepayment in an amount equal to 0.75 % of the principal amount of Facility B being repaid or prepaid,

(viii) removing any ability to carry forward or carry back any unused allowance under the capital expenditure financial covenant in the

SFA and (ix) granting certain additional information rights to the Lenders under the SFA, including the provision of a budget, and certain

board observation rights until December 31, 2022.

All other material terms of the SFA remain unchanged in all material respects.

consideration for the amendments listed above, the Company agreed to pay the Lenders an amendment fee equal to 1% of the Total

Commitments (as defined in the SFA) after giving effect to the capitalization of the interest payment described above.

The amendment

fee was payable to the Lenders pro rata to their commitments under the SFA.

modification to the SFA is not considered to be substantial in accordance with Topic 470-50 and has therefore not been treated

as a debt extinguishment.

The amendment fees, amounting to $3.1 million, are associated with the modified debt instrument and

will be amortized along with the existing unamortized debt issuance costs.

Fees payable to third parties are expensed as incurred,

resulting in $1.0 million charged to interest expense for the year ended December 31, 2020.

consideration for the amendments listed above, the Company agreed to pay the Lenders an amendment fee equal to 1% of the Total Commitments

(as defined in the SFA) after giving effect to the capitalization of the interest payment described above.

The amendment fee was payable

to the Lenders pro rata to their commitments under the SFA.

modification to the SFA was not considered to be substantial in accordance with Topic 470-50 and was therefore not treated as a debt

extinguishment.

The amendment fees, amounting to $ 3.1 million, were associated with the modified debt instrument and were to be amortized

along with the existing unamortized debt issuance costs.

Fees payable to third parties were expensed as incurred, resulting in $ 1.0 million

charged to interest expense for the year ended December 31, 2020.

of Note Purchase Agreement and Prior Credit Facility

Company’s previous debt included $140.0 million of senior notes issued under a Note Purchase Agreement and Guaranty dated

August 13, 2018 (the “NPA”) with a 5-year duration and a cash interest rate of 9% plus 3-month LIBOR borrowings and

a revolving credit facility agreement dated August 13, 2018 (the “Prior Facility”) with a 3-year duration and a cash

interest rate on any utilization at 4% plus 3-month LIBOR, with any unutilized amount carrying a 1.4% cash interest cost.

the Company also had a 3-year, fixed-rate, cross-currency swap with respect to the NPA (see Note 14).

termination of the Company’s prior existing indebtedness carried a prepayment premium of 3.00% of the amount repaid or prepaid,

Company’s previous debt included $ 140.0 million of senior notes issued under a Note Purchase Agreement and Guaranty dated August

13, 2018 (the “NPA”) with a 5 -year duration and a cash interest rate of 9 % plus 3-month LIBOR borrowings and a revolving

credit facility agreement dated August 13, 2018 (the “Prior Facility”) with a 3 -year duration and a cash interest rate on

any utilization at 4 % plus 3-month LIBOR, with any unutilized amount carrying a 1.4% cash interest cost.

In addition, the Company also

had a 3-year, fixed-rate, cross-currency swap with respect to the NPA (see Note 14).

termination of the Company’s prior existing indebtedness carried a prepayment premium of 3.00 % of the amount repaid or prepaid,

or $ 4.2 million.

No prepayment premium applied to the Company’s previous revolving facility Agreement.

In addition, on October

1, 2019, the Company terminated the 3-year, fixed-rate, cross-currency swap and wrote off previously unamortized debt issuance

costs amounting to $7.3 million.

1, 2019, the Company terminated the 3 -year, fixed-rate, cross-currency swap and wrote off previously unamortized debt issuance costs

amounting to $ 7.3 million.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

1 unchanged sentence

following reflects outstanding debt and finance leases as of the dates indicated below:

financing charge

Schedule of Outstanding Debt and Capital Leases

(in millions)

4 unchanged sentences

Long-term debt, excluding current portion

financing charge

(in millions)

4 unchanged sentences

Long-term debt, excluding current portion

Company is in compliance with all relevant financial covenants and the long-term debt portion is correctly classified as such

in line with the underlying agreements.

Company is in compliance with all relevant financial covenants and the long-term debt portion is correctly classified as such in line

with the underlying agreements.

term debt as of December 31, 2021 matures as follows:

Schedule of Maturities of Long-term Debt

Fiscal period:

1 unchanged sentence

and Hedging Activities

January 15, 2020, the Company entered into two interest rate swaps with UBS AG designed to protect the Company against adverse

fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of the current floating rate

debt facilities.

The swaps fix the variable interest rate of the current debt facilities and provide protection over potential

interest rate increases by providing a fixed rate of interest payment in return.

These interest rate swaps are for £95 million

($129.7 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and for €60 million ($73.7 million) at a fixed

rate of 0.102% based on the 6 month EURIBOR rate and are effective until maturity on October 1, 2023.

January 15, 2020, the

Company entered into two interest rate swaps with UBS AG designed to protect the Company against adverse fluctuations in interest rates

by reducing its exposure to variability in cash flows on a portion of the previous floating rate debt facilities.

The swaps fixed the

variable interest rate of the debt facilities and provided protection over potential interest rate increases by providing a fixed rate

of interest payment in return.

The interest rate swaps were for £ 95.0

at a fixed rate of 0.9255 %

based on the 6-month LIBOR rate and for € 60.0

at a fixed rate of 0.102 %

based on the 6-month EURIBOR rate .

connection with the issuance of the Senior Secured Notes and the entry into the RCF Agreement, on May 19, 2021, the Company terminated

its two interest rate swaps.

The termination fees were settled on May 20, 2021, for £ 1.3 million ($ 1.9 million) and € 0.1 million

($ 0.2 million), respectively.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

the year ended December 31, 2019, the Company was party to a 3-year, fixed-rate, cross-currency swap with Nomura Global Financial

Products Inc.

which swapped the principal and interest payments that would be payable in USD under the NPA to Euros (“EUR”),

in part, and GBP, in part.

Specifically, with respect to the principal payments 1/3 of the payments would be swapped from USD

to EUR and 2/3 of the payments from USD to GBP.

Additionally, with respect to the interest payments 1/3 would be swapped from

USD to GBP and 2/3 from USD to EUR.

The swap provided for a foreign exchange rate of $1.13935 USD per €1 EUR and $1.27565

USD per £1 GBP.

In connection with the entry into the Senior Facilities Agreement on October 1, 2019, the Company terminated

the 3-year, fixed-rate, cross-currency swap and received a settlement of $1.5 million.

the year ended December 31, 2019, the Company was party to a 3-year, fixed-rate, cross-currency swap with Nomura Global Financial Products

which swapped the principal and interest payments that would be payable in USD under the NPA to Euros (“EUR”), in part,

and GBP, in part.

Specifically, with respect to the principal payments 1/3 of the payments would be swapped from USD to EUR and 2/3 of

the payments from USD to GBP.

Additionally, with respect to the interest payments 1/3 would be swapped from USD to GBP and 2/3 from USD

The swap provided for a foreign exchange rate of $1.13935 USD per €1 EUR and $1.27565 USD per £1 GBP.

In connection

with the entry into the Senior Facilities Agreement on October 1, 2019, the Company terminated the 3 -year, fixed-rate, cross-currency

swap and received a settlement of $ 1.5 million .

of Multiple Risks

Company’s objectives in using interest rate derivatives are to add stability to interest and to manage its exposure to interest

Company’s objectives in using interest rate derivatives were to add stability to interest and to manage its exposure to interest

rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk

management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty

in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional

Company has variable-rate borrowings denominated in currencies other than its functional currency.

As a result, the Company is

exposed to fluctuations in both the underlying variable interest rate and the foreign currency of the borrowing against its functional

To accomplish this objective, the Company primarily used interest rate swaps as part of its interest rate risk management

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange

for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Company had variable-rate borrowings denominated in currencies other than its functional currency in prior years.

As a result, the Company

was exposed to fluctuations in both the underlying variable interest rate and the foreign currency of the borrowing against its functional

currency, GBP.

During the year ended December 31, 2019, the Company used derivatives, including cross-currency interest rate swaps,

to manage its exposure to fluctuations in the variable borrowing rate and the GBP-USD exchange rate.

Cross-currency interest rate

swaps involve exchanging fixed rate interest payments for floating rate interest receipts both of which will occur at the GBP-USD

forward exchange rates in effect upon entering into the instrument.

The Company designated these derivatives as cash flow hedges

of both interest rate and foreign exchange risks.

derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded

in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which

the hedged transaction affects earnings.

Amounts reported in Accumulated Other Comprehensive Income related to derivatives will

be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

During the next twelve

months, the Company estimates that an additional $1.8 million will be reclassified as an increase to interest expense.

of December 31, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges

of interest rate risk:

During the year ended December 31, 2019, the Company used derivatives, including cross-currency interest rate swaps, to

manage its exposure to fluctuations in the variable borrowing rate and the GBP-USD exchange rate.

Cross-currency interest rate swaps

involve exchanging fixed rate interest payments for floating rate interest receipts both of which will occur at the GBP-USD forward exchange

rates in effect upon entering into the instrument.

The Company designated these derivatives as cash flow hedges of both interest rate

and foreign exchange risks.

derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in

Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged

transaction affects earnings.

Amounts reported in Accumulated Other Comprehensive Income related to derivatives will be reclassified

to interest expense as interest payments are made on the Company’s variable-rate debt.

During the next twelve months, the Company

estimates that an additional $ 0.8 million will be reclassified as an increase to interest expense.

of December 31, 2021, the Company did not have any derivatives.

As of December 31, 2020, the Company had the following outstanding interest

rate derivatives that were designated as cash flow hedges of interest rate risk:

Schedule of Outstanding Derivatives Designated as Cash Flow Hedges

Interest Rate Derivative

Number of Instruments

Interest rate swaps

£95 million ($129.7 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and €60 million ($73.7 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate

Company did not have any derivatives as of December 31, 2019.

million ($ 128.0

million) at a fixed rate of 0.9255 %

based on the 6-month LIBOR rate and € 60.0

million ($ 67.9

million) at a fixed rate of 0.102 %

based on the 6 month EURIBOR rate

Non-designated

not designated as hedges were not speculative and were used during the year ended December 31, 2019 to manage the Company’s

exposure to interest rate movements and other identified risks but did not meet the strict hedge accounting requirements.

in the fair value of derivatives not designated in hedging relationships were recorded directly in earnings.

Company did not have any derivatives that were not designated as hedges as of December 31, 2020 or December 31, 2019.

All derivatives

as of December 31, 2020 are designated as cash flow hedges of interest rate risk.

not designated as hedges were not speculative and were used during the year ended December 31, 2019 to manage the Company’s exposure

to interest rate movements and other identified risks but did not meet the strict hedge accounting requirements.

Changes in the fair

value of derivatives not designated in hedging relationships were recorded directly in earnings.

Company did not have any derivatives that were not designated as hedges as of December 31, 2020.

All derivatives as of December 31, 2020

were designated as cash flow hedges of interest rate risk.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

table below presents the fair value of the Company’s derivative financial instruments as well as their classification in

the consolidated balance sheet as of December 31, 2020.

Company did not have any derivative financial instruments as of December 31, 2021.

The table below presents the fair value of the Company’s

derivative financial instruments as well as their classification in the consolidated balance sheet as of December 31, 2020.

Schedule of Fair Value of Derivative Financial Instruments

Balance Sheet

Classification

Balance Sheet

Classification

1 unchanged sentence

(in millions)

designated as hedging instruments:

Rate Products

Value of Hedging Instruments

Current Liabilities and Long Term Derivative Liability

Derivatives designated as hedging instruments:

table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the

year ended December 31, 2020.

of Gain/(Loss)

Interest Rate Products

Fair Value of Hedging Instruments

Other Current Liabilities and Long Term Derivative Liability

Total derivatives designated as hedging instruments

table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended

December 31, 2021.

Schedule of Accumulated Other Comprehensive Income

Amount of Gain/(Loss)

Recognized in

6 unchanged sentences

Income into Income

Rate Products

table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the

year ended December 31, 2019.

of Gain/(Loss)

(in millions)

Interest Rate Products

Interest Expense

table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended

December 31, 2020.

Amount of Gain/(Loss)

Recognized in

6 unchanged sentences

Income into Income

Rate and Foreign Exchange Products

Foreign Currency

Remeasurement

table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations

for the year ended December 31, 2020.

(in millions)

Interest Rate Products

Interest Expense

table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended

December 31, 2019.

Amount of Gain/(Loss)

Recognized in

Comprehensive

Income on Derivative

Location of Gain/(Loss)

Reclassified from

Accumulated Other

Comprehensive

Income into Income

(in millions)

Interest Rate and Foreign Exchange Products

Interest Expense

Foreign Currency Remeasurement

table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations

for the year ended December 31, 2021.

Schedule of Consolidated Income Statements

(in millions)

Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded

3 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations

for the year ended December 31, 2020.

(in millions)

Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded

Gain/(loss) on cash flow hedging relationships in Subtopic 815-20

table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations

for the year ended December 31, 2019.

Remeasurement

2 unchanged sentences

Gain/(loss) on cash flow hedging relationships in Subtopic 815-20

table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments

in the consolidated statements of operations for the year ended December 31, 2019.

Not Designated as Hedging Instruments under Subtopic 815-20

Income on Derivative

Schedule of Financial Instruments Not Designated as Hedging Instruments

Derivatives Not Designated as Hedging Instruments under Subtopic 815-20

Recognized in

Income on Derivative

Rate and Foreign Exchange Products

in fair value of derivative liability

table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives

as of December 31, 2020.

The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair

The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the

consolidated balance sheet.

ISDA Master Agreement between Gaming Acquisitions Limited, a wholly-owned subsidiary of the Company, and UBS AG is documented

using the 2002 Form and the ISDA standard set-off provision in Section 6(f) of the ISDA Master Agreement apply to both parties

and is only modified to include Affiliates of the Payee.

There is no CSA and thus there is no collateral posting.

Offsetting of Derivative Assets

on Derivative

Recognized in

on Derivative

(in millions)

Interest Rate and Foreign Exchange Products

Change in fair value of derivative liability

table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of

December 31, 2020.

of Recognized

The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value.

tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance

ISDA Master Agreement between Gaming Acquisitions Limited, a wholly-owned subsidiary of the Company, and UBS AG was documented using

the 2002 Form and the ISDA standard set-off provision in Section 6(f) of the ISDA Master Agreement applied to both parties and was only

modified to include Affiliates of the Payee.

There was no CSA and thus there was no collateral posting.

Schedule of Offsetting of Derivative Assets and Liabilities

of Derivative Assets

Offset in the

the Statement

Gross Amounts Not Offset in the

Amounts Not Offset in the

Statement of Financial Position

(in millions)

Fair value of hedging instrument

Offsetting of Derivative Liabilities

value of hedging instrument

of Derivative Liabilities

December 31, 2020

of Recognized

Offset in the

of Liabilities

the Statement

Gross Amounts Not Offset in the

Amounts Not Offset in the

Statement of Financial Position

(in millions)

Fair value of hedging instrument

of hedging instrument

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Credit-risk-related

Contingent Features

Company has entered into an industry standard ISDA Master Agreement, with a negotiated Scheduled thereto (the “ISDA Agreement”),

with the counterparty to its derivative transactions and which ISDA Agreement sets forth various provisions which govern the trading

relationship between the Company and its counterparty.

Such provisions include certain events which, if triggered by either party,

may give rise to an acceleration of the ISDA Agreement, thus triggering the exchange of a breakage payment between the parties.

ISDA Agreement with the Company’s derivative counterparty contains a provision where the Company could be declared in default

on its derivative obligations if, among others, its repayment of the underlying indebtedness is accelerated by the lender due

to the Company’s default on the indebtedness.

The ISDA Agreement can also be accelerated if Lucid Trustee Services Limited

requests or requires that the lender terminates or closes-out any Transaction under the ISDA Agreement pursuant to Clause 4.10

of the Intercreditor Agreement between primarily the Company, Lucid Agency Services as Senior Agent and Lucid Trustee Services

Limited as Security Agent;

in the event of certain refinancing circumstances;

and in the event of certain reductions in the principal

with respect to amounts loaned under the Senior Facilities Agreement.

of December 31, 2020, the fair value of derivatives in a net liability position, which includes accrued interest but excludes

any adjustment for nonperformance risk, related to the ISDA Agreements was $2.6 million.

As of December 31, 2020, the Company

has not posted any collateral related to the ISDA Agreement, as no collateral is required under the terms of such ISDA Agreement.

If the Company had breached any of the provision under the ISDA Agreement which resulted in an acceleration of the ISDA Agreement

at December 31, 2020, it could have been required to settle its obligations under the ISDA Agreement at its termination value

of $3.2 million.

Fair Value Measurements

value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in

the principal or most advantageous market for the asset and liability in an orderly transaction between market participants at

the measurement date.

Value Measurements

value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal

or most advantageous market for the asset and liability in an orderly transaction between market participants at the measurement date.

We estimate the fair value of our assets and liabilities utilizing an established three-level hierarchy.

The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as

Quoted prices in

active markets for identical assets or liabilities.

Observable inputs

other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient

The hierarchy is based upon

the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

prices in active markets for identical assets or liabilities.

inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient

volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable

or can be derived principally from or corroborated with observable market data for substantially the full term of the assets

or liabilities.

Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market

data, as well as quoted prices that were adjusted for security-specific restrictions.

Unobservable inputs

that are supported by little or no market activity that are significant to the fair value of the asset or liability.

3 inputs also include non-binding market consensus prices or non-binding broker quotes that are unable to be corroborated

with observable market data.

fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as

or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.

Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as

quoted prices that were adjusted for security-specific restrictions.

inputs that are supported by little or no market activity that are significant to the fair value of the asset or liability.

3 inputs also include non-binding market consensus prices or non-binding broker quotes that are unable to be corroborated with observable

fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate.

We believe the fair value of our financial instruments approximates their recorded values.

each period, derivative financial instrument assets and liabilities measured at fair value on a recurring basis are included in

the financial statements as per the table below.

(in millions)

Derivative liability (see Note 14)

Long term receivable (included in other assets)

each period, derivative financial instrument assets and liabilities measured at fair value on a recurring basis are included in the financial

statements as per the table below.

Schedule of Derivative Financial Instrument Assets and Liabilities Measured at Fair Value on Recurring Basis

Warrants (included in warrant liability)

term receivable (included in other assets)

Placement Warrants (included in warrant liability)

liability (see note 14)

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the

fair value of the derivative liabilities.

For fair value measurements categorized within Level 3 of the fair value hierarchy,

the Company’s principal financial officer, who reports to the principal executive officer, determines its valuation policies

and procedures.

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value

calculations are the responsibility of the Company’s Principal Financial Officer and approved by the Principal Executive

fair value of our long-term senior debt as of December 30, 2021, was $ 323.2 million, based upon quoted prices in the marketplace, which

are considered Level 2 inputs.

3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value

of the derivative liabilities.

For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s

principal financial officer, who reports to the principal executive officer, determines its valuation policies and procedures.

The development

and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of

the Company’s Principal Financial Officer and approved by the Principal Executive Officer.

December 31, 2021 and December 31, 2020, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.

Stockholders’

Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share in one or more series.

The Company’s Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, the

relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable

to the shares of each series.

At December 31, 2020 and December 31, 2019, there were no shares of preferred stock issued or outstanding.

The Company’s

Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional

or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series.

31, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.

Company is authorized to issue 49,000,000 shares of common stock, par value $ 0.0001 per share.

Holders of the Company’s

common stock are entitled to one vote for each common share.

of December 31, 2020 and December 31, 2019, the Company had 19,079,130 outstanding warrants to purchase an aggregate of 9,539,565

shares of the Company’s common stock, which includes 7,999,900 warrants originally issued as part of the initial public

offering (the “IPO”) (the “Public Warrants”) and 11,079,230 warrants issued in private placements in connection

with the IPO and the Merger (the “Private Placement Warrants”).

Each warrant entitles its holder to purchase one-half

of one share of the Company’s common stock at an exercise price of $11.50 per whole share and will expire on December 23,

The warrants may be exercised only for a whole number of shares of common stock.

No fractional shares will be issued upon

exercise of the warrants.

The warrants became exercisable 30 days after the Closing Date.

The Company may redeem the Public Warrants

at a price of $0.01 per warrant if the last sale price of the common stock equals or exceeds $24.00 per share for any 20 trading

days within a 30-trading day period.

The Company may not redeem the Private Placement Warrants so long as they are held by the

initial purchaser or such purchasers’

permitted transferees;

if held by other persons, the Private Placement Warrants will

be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Stock-Based Compensation

Company’s stock-based compensation plans authorize awards of restricted stock units (“RSUs”), stock options

and other equity-related awards to employees, officers, directors and other service providers of the Company and its affiliates.

In May 2019, in conjunction with the Company’s stockholders approving the 2018 Omnibus Incentive Plan (the “2018 Plan”),

which authorizes a total of 2,550,000 shares to be issued pursuant to awards thereunder, the balances available for awards under

the Company’s predecessor plans (i.e., the 2016 Long-Term Incentive Plan and the Second Long-Term Incentive Plan) (collectively,

the “Prior Plans”) were terminated.

Although outstanding awards under the Prior Plans remain governed by the terms

of the Prior Plans, no new awards will be granted or become available for grant under the Prior Plans.

of December 31, 2020, there were (i) 2,411,319 shares subject to outstanding awards under the Prior Plans, including 1,092,633

shares subject to market-price vesting conditions, and (ii) 1,734,937 shares subject to outstanding awards under the 2018 Plan,

including 100,000 shares subject to performance-based target awards and 241,077 shares subject to awards that were previously

subject to performance criteria that were determined to be met in June 2020 (at a level equal to approximately 87% of the target

awards) which awards continue to remain subject to a time-based vesting schedule.

As of December 31, 2020, there were 267,311

shares available for new awards under the 2018 Plan and no shares available for new awards under the Prior Plans.

All awards consist

of RSUs and Restricted Stock.

The Compensation Committee of the Board has authority to determine the terms and conditions applicable

to awards, subject to the terms of the plan, including the vesting schedules of awards.

Awards typically vest over a period of

one to four years.

Holders of the Company’s common

stock are entitled to one vote for each common share .

of December 31, 2020, the Company had 19,079,130 outstanding warrants to purchase an aggregate of 9,539,565 shares of the Company’s

common stock, which included 7,999,900 warrants originally issued as part of the initial public offering (the “IPO”) (the

“Public Warrants”) and 11,079,230 warrants issued in private placements in connection with the IPO and the Merger (the “Private

Placement Warrants”).

The warrants became exercisable 30 days after the closing of the Merger and had an expiration date of December

Each warrant entitled its holder to purchase one-half of one share of the Company’s common stock at an exercise price

of $ 11.50 per whole share.

The warrants were able to be exercised only for a whole number of shares of common stock.

of December 31, 2020, the warrants met the definition of a derivative under ASC 815 and were classified as a liability measured at fair

value, with changes in fair value each period reported in earnings.

the quarter ending December 31, 2021, (i) an aggregate of 2,651,129 shares of common stock were issued pursuant to the exercise of 5,302,258

Public Warrants and (ii) an aggregate of 1,027,836 shares of common stock were issued pursuant to the exercise (on a cashless basis)

of 9,049,230 Private Warrants.

There were no warrants outstanding as of December 31, 2021.

Company’s stock-based compensation plans authorize awards of restricted stock units (“RSUs”), stock options and other

equity-related awards.

The Company’s 2021 Omnibus Incentive Plan (“2021 Plan”) was adopted by the Company’s Board

of Directors on April 12, 2021 and approved by our stockholders on May 11, 2021.

The 2021 Plan succeeds the Company’s 2018 Omnibus

Incentive Plan (the “2018 Plan”) such that shares subject to the 2018 Plan’s unused reserve (e.g., as a result of termination

or forfeiture of awards) are instead rolled over to the 2021 Plan.

The Company has two other predecessor plans, the 2016 Long-Term Incentive

Plan and the Second Long-Term Incentive Plan (collectively, the “Prior Plans”), whose available balances were terminated

in connection with approval of the 2018 Plan.

Although outstanding awards under the Prior Plans remain governed by the terms of the Prior

Plans, no new awards may be granted or become available for grant under the Prior Plans.

of December 31, 2021, there were (i) 1,552,284 shares subject to outstanding awards under the 2021 Plan, including 512,399 shares subject

to performance-based target awards, 232,500 shares subject to market-price vesting conditions and 165,000 shares subject to awards as

to which the applicable vesting conditions have been met which remain subject to deferred settlement ;

(ii) 751,934 shares subject to

outstanding awards under the 2018 Plan, including 75,000 shares subject to performance-based target awards, 20,195 shares subject to

awards that were previously subject to performance criteria that were determined to have been met for the applicable performance year

which awards continue to remain subject to a time-based vesting schedule and 99,964 shares subject to awards as to which the applicable

vesting conditions have been met which remain subject to deferred settlement;

and (iii) 1,318,686 shares subject to outstanding awards

under the Prior Plans as to which the applicable vesting conditions have been met which remain subject to deferred settlement.

December 31, 2021, there were 1,490,785 shares available for new awards under the 2021 Plan (which includes shares rolled over from the

2018 Plan) and no shares available for new awards under the Prior Plans.

All awards outstanding as of December 31, 2021 consisted of

RSUs (including time-based RSUs, performance-based RSUs and stock price based RSUs).

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Company also has an employee stock purchase plan (“ESPP”) that authorizes the issuance of up to an aggregate of 500,000

shares of common stock pursuant to purchases thereunder by employees.

The ESPP, which was approved by stockholders in July 2017,

is administered by the Compensation Committee which has discretion to designate the length of offering periods and other terms

subject to the requirements of the ESPP.

The Company held a twelve-month offering period under the ESPP that began on June 3,

2019 and ended on June 2, 2020.

This offering period authorized employees to contribute up to 10% of their base compensation to

purchase a maximum of 1,000 shares at a discounted purchase price that would be equal 85% of the lower of:

(i) the closing

price at the beginning of the offering period and (ii) the closing price at the end of the offering period.

A total of 7,649 shares

were purchased on the last day of the offering period, June 2, 2020, at a discounted price of $3.2215 per share.

As of December

31, 2020, a total of 467,751 shares remain available for purchase under the ESPP.

summary of the Company’s RSU activity is as follows:

Company also has an employee stock purchase plan (“ESPP”) that authorizes the issuance of up to an aggregate of 500,000 shares

of common stock pursuant to purchases thereunder by employees.

The ESPP, which was approved by stockholders in July 2017, is administered

by the Compensation Committee which has discretion to designate the length of offering periods and other terms subject to the requirements

As of December 31, 2021, a total of 467,751 shares remained available for purchase under the ESPP.

summary of the Company’s RSU activity is as follows:

of Restricted Stock Unit Activity

Unvested Outstanding at January 1, 2021

Forfeited (2)

( 1,317,873 )

Unvested Outstanding at December 31, 2021

RSUs that were granted during the year ended December 31, 2021 included:

(a) 47,405 RSUs under the Board’s compensation

program for non-employee directors which vest during the year of grant and remain unsettled until the director leaves the Company;

(b) 769,634 RSUs under an incentive program for management and other personnel which vest in installments through December 31,

to which 100,000 RSUs vest in installments through December 31, 2023 and 100,000 RSUs are subject to annual performance conditions

for each year through 2023;

and (d) 100,000 RSUs as a sign-on award under our new employment agreement with our Executive Chairman

which vests on June 30, 2021.

In addition, such agreement with our Executive Chairman provides that he would receive a further

750,000 RSUs as special grants (a mix of time-based RSUs, performance-based RSUs and stock-price based RSUs) during the year ending

December 31, 2021, subject to the condition that our stockholders approve an increase in our equity incentive plan share authorization

limit at the annual meeting of our stockholders to be held during 2021.

The provisions under the agreement with respect to the

award of these RSUs would not be implemented if such approval by stockholders is not obtained during 2021.

(a) 48,466 RSUs under the Board’s compensation program

for non-employee directors which vest during the year of grant and remain unsettled until the director leaves the Company;

RSUs under an incentive program for management and other personnel, as to which one-half was in the form of performance-based RSUs

that are conditioned on attainment of performance criteria for fiscal year 2021 and subject to a time-based service period through

December 31, 2023 and the other one-half vests in instalments through December 31, 2023;

and (c) sign-on awards covering an aggregate

of 975,000 RSUs to members of senior management in connection with their entering into new employment agreements or amendments thereof

which have vesting schedules through December 31, 2025, including 750,000 RSUs to our Executive Chairman (comprised of a mix of time-based

RSUs, performance-based RSUs and stock price based RSUs).

RSUs that were forfeited during the year ended December 31, 2021 included 468,517 RSUs subject to market price vesting conditions

that had a satisfaction deadline of December 23, 2021.

The applicable market price targets were not met by the deadline.

RSUs that vested during the year ended December 31, 2021 included:

(a) 214,998 RSUs that remain subject to deferred settlement

terms such that the awards do not settle until the participant’s services terminate;

and (b) 269,867 RSUs that vested on

December 31, 2020, resulting in 163,732 shares being issued in settlement thereof and 106,135 withheld for taxes (the processing

of the issuance and delivery of such 163,732 shares did not occur until January 2021).

The Company issued 25,099 shares

during the year ended December 31, 2020 in connection with the settlement of RSUs held by a director whose services ended and

issued a total of 166,959 shares during the year ended December 31, 2020 in connection with the net settlement of RSUs that vested

during the preceding year (on December 31, 2019).

compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting

For performance awards that are contingent upon the Company achieving certain pre-determined financial performance targets,

compensation expense is calculated based on the number of shares expected to vest after assessing the probability that the performance

criteria will be met.

(a) 213,466 RSUs that remain subject to deferred settlement terms

such that the awards do not settle until the participant’s services terminate;

(b) 285,069 RSUs that vested June 30, 2021,

resulting in 160,390 shares being issued in connection with the net settlement thereof and 124,679 withheld for taxes;

and (c) 819,338

RSUs that vested on December 31, 2021, resulting in 442,817 shares being issued in settlement thereof and 376,521 withheld for taxes

(the processing of the issuance and delivery of such 442,817 shares did not occur until January 2022).

Company issued a total of 324,122 shares during the year ended December 31, 2021 in connection with the vesting of RSUs, of which 160,390

were issued in net settlement of RSUs that vested on June 30, 2021 and 163,732 were issued in connection with the net settlement of RSUs

that vested on December 31, 2020.

summary of the Company’s Restricted Stock activity is as follows:

of Restricted Stock Activity

Unvested Outstanding at January 1, 2021

Forfeited (1)

Unvested Outstanding at December 31, 2021

forfeiture of unvested restricted stock awards which had been subject to market price vesting

conditions that had a satisfaction deadline of December 23, 2021.

The applicable market price

targets were not met by the deadline.

compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period.

For performance awards that are contingent upon the Company achieving certain pre-determined financial performance targets, compensation

expense is calculated based on the number of shares expected to vest after assessing the probability that the performance criteria will

Determining the probability of achieving a performance target requires estimates and judgment.

For market-based awards that are

contingent upon the Company’s stock achieving certain pre-determined price targets, compensation expense is calculated based upon

the determination of the fair value of the awards as derived through multiple running of the Monte Carlo valuation model, with the fair

value recognized on a straight-line basis over the requisite service period.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Company recognized stock-based compensation expense as follows:

of Stock Based Compensation Expense

(in millions)

RSAs and RSUs

Restricted Stock and RSUs

Payroll taxes on vesting of RSUs

unrecognized compensation expense related to unvested stock awards and unvested RSUs at December 31, 2020 amounts to $6.1 million

and is expected to be recognized over a weighted average period of 1.2 years.

Accumulated Other

Comprehensive Loss (Income)

unrecognized compensation expense related to unvested stock awards and unvested RSUs at December 31, 2021 amounts to $ 11.6 million and

is expected to be recognized over a weighted average period of 1.8 years.

Other Comprehensive Loss (Income)

accumulated balances for each classification of comprehensive loss (income) are presented below:

of Accumulated Other Comprehensive (Loss) Income

Fair Value of

7 unchanged sentences

Balance at December 31, 2020

within accumulated other comprehensive income is an amount of $0.6 million relating to the change in fair value of discontinued

hedging instruments.

This amount will be amortized as a charge to income over the life of the original instrument, to August 2021

in accordance with US GAAP.

The remaining $2.2 million relates to currently active hedging instruments.

loss per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number

of common shares outstanding during the period, excluding the effects of any potentially dilutive securities.

Diluted EPS gives

effect to all dilutive potential shares of common stock outstanding during the period, including stock options, restricted stock,

RSUs and warrants, using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted

Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their

inclusion would be anti-dilutive:

Change during the period

Balance at December 31, 2021

within accumulated other comprehensive income is an amount of $ 1.0 million relating to the change in fair value of discontinued hedging

This amount will be amortized as a charge to income over the life of the original instruments, in accordance with US GAAP.

Loss per Share

loss per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of

common shares outstanding during the period, excluding the effects of any potentially dilutive securities.

Diluted EPS gives effect to

all dilutive potential shares of common stock outstanding during the period, including stock options, restricted stock, RSUs and warrants,

using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted method, unless the inclusion

would be anti-dilutive.

computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their inclusion

would be anti-dilutive:

of Anti-dilutive Securities Excluded from Computation of Earnings per Share

Unvested Restricted Stock

Stock Warrants

Anti-dilutive

securities excluded from computation of earnings per share

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Other Finance

(Expense) Income

Finance (Expense) Income

finance (expense) income consisted of the following:

of Other Finance Income (Costs)

(in millions)

3 unchanged sentences

Foreign currency remeasurement on hedging instrument

following comprises the loss before income taxes:

Other finance income

effective tax rate for the years ended December 31, 2021 and 2020 were 4.2 % and ( 1.2 )% respectively.

For the year ended December 31,

2021, the Company’s effective tax rate differs from the federal statutory rate primarily due to losses in certain jurisdictions

where the Company presently has recorded a valuation allowance against the related tax benefit and non-deductible officer’s compensation.

For the year ended December 31, 2020, the Company’s effective tax rate differs from the federal statutory rate primarily due to

losses in certain jurisdictions where the Company has recorded a valuation allowance against the related tax benefit.

components of earnings (loss) before income taxes on the Company’s consolidated statement of operations by the United States and

foreign jurisdictions were as follows:

of Earnings (Loss) Before Income Tax

Year Ended December 31,

(in millions)

North America

Mainland Europe

South America

United States

Foreign jurisdictions

Total loss before income taxes

income tax expense consisted of the following:

tax provision (benefit), as reflected in the Company’s consolidated statement of operations, consists of the following:

of Provision for Income Taxes

(in millions)

Income tax expense:

Mainland Europe

Total current taxes

Current (benefit) provision

Total current

(in millions)

Deferred (benefit) provision

Total current

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

differences between the federal statutory tax rate and our effective rate are reflected in the following table for the years ended December

31, 2021, 2020 and 2019:

Schedule of Differences Between the Federal Statutory Tax Rate and our Effective Rate

(in millions)

Statutory income tax

State taxes (net of federal)

Non-deductible officer compensation

Tax effect of other permanent differences

Effect of foreign taxes

Valuation allowance

Effective income tax rate

net deferred tax assets and liabilities arising from temporary differences are as follows:

of Deferred Tax Assets and Liabilities

(in millions)

1 unchanged sentence

Other temporary differences

Total deferred tax assets

Total gross deferred tax assets

Valuation allowance balance

Net deferred tax assets

Deferred tax liabilities

Gross deferred tax assets

Intangible assets

Other temporary differences

Net deferred tax liabilities

differences between the US statutory tax rate and our effective rate are reflected in the following table:

Gross deferred tax liabilities

Net deferred tax assets

in the valuation allowance are as follows:

Schedule of Changes in the Valuation Allowance

(in millions)

Statutory income tax

State taxes (net of federal)

Tax effect of permanent differences

Effect of foreign taxes

Valuation allowance

Effective income tax rate

valuation allowance on deferred tax assets has been determined by considering all available evidence, both positive and negative,

in order to ascertain whether it is more likely than not that carried forward deferred tax assets will be realized.

has a total potential net deferred tax asset carried forward of $76.4 million at December 31, 2020.

assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion

or all of the deferred income tax assets will not be realized.

The ultimate realization of deferred income tax assets is dependent

upon the generation of future taxable income during the periods in which those temporary differences become deductible.

considered the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies

in making this assessment.

Based on the consideration of these items, management determined that it is more likely than not that

the Company will not realize the deferred income tax asset balances and therefore, recorded a full valuation allowance of $76.4

million as of December 31, 2020.

there are no U.S.

federal, state or foreign jurisdiction tax audits pending.

The Company’s corporate U.S.

federal and state

tax returns from 2017 to 2019 remain subject to examination by tax authorities and the Company’s foreign tax returns from

2013 to 2019 remain subject to examination by tax authorities.

addition to the UK, the Company is subject to taxation in the US, and in certain foreign jurisdictions (primarily in Europe),

where the total of non-UK taxes payable for the year ended December 31, 2020 is $0.4 million.

Company has not recognized deferred tax liabilities in respect of unremitted earnings that are considered indefinitely reinvested

in foreign subsidiaries.

utilization of the Company’s pre-Merger net operating losses is subject to a limitation due to the “change of ownership

provisions”

under Section 382 of the Internal Revenue Code and similar state provisions.

The CARES Act was enacted in the United

States on March 27, 2020.

The CARES Act includes several U.S.

income tax provisions related to, among other things, net operating

loss carrybacks, alternative minimum tax credits, modifications to the net interest deduction limitations, and technical amendments

regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017.

The CARES Act

does not have a material impact on our financial results for the year ended December 31, 2020.

Beginning balance

Increase (decrease)

Reversal of allowance

Ending balance

of December 31, 2021 and 2020, the Company has $ 39.5 million and $ 34.8 million, respectively, of gross federal net operating loss carry

forwards, the earliest of which will begin to expire in 2034.

The utilization of the Company’s pre-merger net operating losses

is subject to a limitation due to the “change of ownership provisions” under Section 382 of the Internal Revenue Code.

of December 31, 2021 and 2020 the Company also has gross net operating losses in foreign jurisdictions, primarily the United Kingdom,

totaling $ 83.2 million and $ 89.9 million, respectively.

The majority of these net operating losses have an unlimited carry forward period.

It is anticipated that these losses will not be utilized due to continuing losses in these jurisdictions, as such, the losses are fully

offset with a valuation allowance.

assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all

of the deferred income tax assets will not be realized.

The ultimate realization of deferred income tax assets is dependent upon the

generation of future taxable income during the periods in which those temporary differences become deductible.

Management considered

the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this

Based on the consideration of these items, management determined that it is more likely than not that the Company will not

realize the deferred income tax asset balances and therefore, recorded full valuation allowances of $ 104.5 million and $ 76.4 million

as of December 31, 2021 and 2020.

Company has not recognized deferred tax liabilities in respect of unremitted earnings that are considered indefinitely reinvested in

foreign subsidiaries.

We do not provide for taxes on our undistributed earnings of foreign subsidiaries that have not been previously

taxed because we intend to invest such undistributed earnings indefinitely outside of the United States.

there are no federal, state or foreign jurisdiction tax audits pending.

The Company’s corporate federal and state tax returns from

2018 to 2020 remain subject to examination by tax authorities and the Company’s foreign tax returns from 2014 to 2020 remain subject

to examination by tax authorities.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Related Parties

Vora Special Opportunities Master Fund, Ltd.

(“HGV Fund”), the owner of approximately 16% of our common stock, purchased

the promissory notes issued under the NPA which were repaid on October 1, 2019 in connection with the Company’s refinancing

(see Note 13).

The interest expense payable with respect to the promissory notes for the year ended December 31, 2019 amounted

to $12.3 million and the repayment of the promissory notes included an exit payment premium in the amount of $4.2 million for

repayment on an early basis.

HGV Fund also holds warrants to purchase 400,000 shares of our common stock and is a stockholder

and investor in Leisure Acquisition Corp., a special purpose acquisition company affiliated with two members of our management.

Macquarie Corporate

Holdings Pty Limited (UK Branch) (“Macquarie UK”), is an affiliate of MIHI LLC, the beneficial owner of approximately

13% of our common stock.

Macquarie UK is one of the lending parties with respect to our senior secured term loans and revolving

credit facility under our senior facilities agreement dated September 27, 2019, as amended and restated on June 25, 2020 (the

“SFA”) (see Note 13).

The portion of the total loans of $313.3 million at December 31, 2020, and $288.6 million at

December 31, 2019, under these facilities held by Macquarie UK at December 31, 2020 and December 31, 2019 was $30.7 million and

Vora Special Opportunities Master Fund Limited (“HG Vora”) (a purchaser of our Senior Secured Notes issued on May 20, 2021)

was a significant stockholder until October 12, 2021.

Interest expense payable to HG Vora while a related party for the year ended

December 31, 2021 amounted to $ 1.7

Vora previously held promissory notes of the Company issued under a note purchase agreement and guaranty dated August 13, 2018 which

were repaid on October 1, 2019 (see note 13).

The interest expense payable with respect to the promissory notes for the year ended December

31, 2019 amounted to $ 12.3 million and the repayment of the promissory notes included an exit payment premium in the amount of $ 4.2 million

for repayment on an early basis.

Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”), (an arranger and lending party under our RCF Agreement),

and Macquarie Capital (Europe) Limited (“Macquarie EUR”), (an arranger and initial purchaser of our Senior Secured Notes),

are affiliates of MIHI LLC, which beneficially owned approximately 11.4 %

of our common stock as of December 31, 2021.

Macquarie UK was also one of the lending parties with respect to the Prior Financing and

its associated revolving credit facility.

The portion of the Company’s aggregate senior debt of $ 316.7

million at December 31, 2021, and $ 313.3

million at December 31, 2020 held by Macquarie

UK at December 31, 2021 and December 31, 2020 was $ 0.0

million and $ 30.7

million, respectively.

Interest expense payable to Macquarie UK for the year ended December 31, 2020 and 2019 amounted to

$2.2 million and $0.5 million, respectively.

In addition, $0.6 million and $0.5 million of accrued interest payable was due to

Macquarie UK at December 31, 2020 and 2019, respectively, and Macquarie UK received $0.3 million of the total $3.1 million of

SFA amendment fees paid (see Note 13).

MIHI LLC also holds warrants to purchase 1,000,000 shares of our common stock and is a

party to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant to which, subject

to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors to be nominated

for election as directors of the Company at any annual or special meeting of stockholders at which directors are to be elected,

until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold less than 5% of the outstanding shares of the

Company held a 40% non-controlling equity interest in Innov8 Gaming Limited (“Innov8”) from October 2019 until April

Interest expense payable

to Macquarie UK for the years ended December 31, 2021, 2020 and 2019 amounted to $ 0.9

million, $ 2.2

million and $ 0.5

million, respectively.

In addition, $ 0.0

million and $ 0.6

million of accrued interest payable was due to

Macquarie UK at December 31, 2021 and December 31, 2020, respectively and Macquarie EUR received $ 0.6 million of $ 5.5 million of fees

paid in connection with the issuance of the Senior Secured Notes and the RCF in the year to December 31, 2021, and Macquarie UK received

million of a total $ 3.1

million of amendment fees paid with respect to

the Prior Financing in the year ended December 31, 2020.

MIHI LLC is also a party to a stockholders agreement with the Company and other

stockholders, dated December 23, 2016, pursuant to which, subject to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor

LLC, are permitted to designate two directors to be nominated for election as directors of the Company at any annual or special meeting

of stockholders at which directors are to be elected, until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold

less than 5 %

of the outstanding shares of the Company.

incurred certain offering expenses in connection with an underwritten public offering of shares held by a significant stockholder, the

Landgame Trust, which closed on June 1, 2021, as to which our expenses were reimbursed by the stockholder.

For the year ended December

31, 2021, the aggregate amount invoiced for reimbursement was $ 0.2 million.

The stockholder sold an aggregate of 6,217,628 shares in

the offering (including 810,995 shares subject to an over-allotment option that was exercised in full) at an offering price of $ 9.25

per share, less underwriting discounts and commissions of $ 0.4625 per share.

One of the participating underwriters in the offering was

Macquarie Capital (USA) Inc., an affiliate of MIHI LLC (see paragraph above), pursuant to which it purchased 870,468 of the shares including

113,539 shares subject to the over-allotment option.

Company held a 40 % non-controlling equity interest in Innov8 Gaming Limited (“Innov8”) from October 2019 until April 2020

when the Company disposed of its interest.

Revenue earned from Innov8 while a related party for the year ended December 31,

2020 and 2019 amounted to $0.6 million and $0.4 million, respectively and purchases from Innov8 while a related party for the

year ended December 31, 2020 and 2019 amounted to $0.2 million and $0.0 million, respectively.

Amounts owed by Innov8 at December

31, 2019 amounted to $0.9 million.

Revenue earned from Innov8 while a related party for the year ended December 31, 2020 and

2019 amounted to $ 0.6 million and $ 0.4 million, respectively and purchases from Innov8 while a related party for the year ended December

31, 2020 and 2019 amounted to $ 0.2 million and $ 0.0 million, respectively.

Amounts owed by Innov8 at December 31, 2019 amounted to $ 0.9

The value of the investment was impaired by $ 0.7 million to $ Nil in March 2020 prior to disposal.

3 unchanged sentences

include a lease (of the property) and a non-lease (provision of services) component which are accounted for separately.

lease costs are variable due to future rent reviews, these are treated as part of the lease asset and lease liabilities as they

are considered to qualify as variable lease costs which are subject to an index or rate.

These costs are included at the amount

prior to any reviews, as it is not permitted to estimate future rent reviews.

Where real estate leases contain an option to terminate,

any period beyond the option date is only included as part of the lease term if the Company is reasonably certain not to exercise

Vehicle leases typically contain a lease (of the vehicle) and a non-lease (provision of services) component which

are accounted for separately.

Where lease costs

are variable due to future rent reviews, these are treated as part of the lease asset and lease liabilities as they are considered to

qualify as variable lease costs which are subject to an index or rate.

These costs are included at the amount prior to any reviews, as

it is not permitted to estimate future rent reviews.

Where real estate leases contain an option to terminate, any period beyond the option

date is only included as part of the lease term if the Company is reasonably certain not to exercise the option.

Vehicle leases typically

contain a lease (of the vehicle) and a non-lease (provision of services) component which are accounted for separately.

leases have remaining terms of 1 to 11 years.

the year to December 31, 2020, certain concessions were granted with respect to the Company’s operating leases in light

These have taken the form of lease extensions, where nothing is paid for a period of time with that same period of

time and payments added onto the lease at the end, payment holidays, where payments are deferred until a later date, but with

no lease extension, and discounted payments, where payments are reduced and are not repaid either at a later date or through lease

The Company has elected to use the practical expedient granted by the FASB and account for the concessions as if they

were part of the enforceable rights and obligations of the parties under the existing lease contract for all affected operating

Lease extensions and discounted payments are accounted using the ‘cash basis’

approach, with the lease liability

and right-of-use asset continuing to be accounted for as if payments are still being made under the original terms of the lease.

Payment holidays are accounted for using the ‘remeasurement consistent with resolving a contingency’

approach, which

involves remeasuring the liability and the right-of-use asset and continuing to recognize the total cost of the lease on a straight

line basis over the period to which it relates.

the year to December 31, 2021 and 2020, certain concessions were granted with respect to the Company’s operating leases in light

These have taken the form of lease extensions, where nothing is paid for a period of time with that same period of time

and payments added onto the lease at the end, payment holidays, where payments are deferred until a later date, but with no lease extension,

and discounted payments, where payments are reduced and are not repaid either at a later date or through lease extensions.

has elected to use the practical expedient granted by the FASB and account for the concessions as if they were part of the enforceable

rights and obligations of the parties under the existing lease contract for all affected operating leases.

Lease extensions and discounted

payments are accounted using the ‘cash basis’ approach, with the lease liability and right-of-use asset continuing to be

accounted for as if payments are still being made under the original terms of the lease.

Payment holidays are accounted for using the

‘remeasurement consistent with resolving a contingency’ approach, which involves remeasuring the liability and the right-of-use

asset and continuing to recognize the total cost of the lease on a straight line basis over the period to which it relates.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Company is also party to finance leases with third parties, the main one of which is with respect to fit out works at the Company’s

Company is also party to finance leases with third parties, with respect to gaming machines and fit out works at the Company’s

main UK office.

This lease has a remaining term of 16 months.

Amounts outstanding with respect to other finance leases are insignificant.

The leases have remaining terms of between 4 and 36 months.

components of lease expense were as follows:

Operating lease

Short-term lease

of Lease Expenses

(in millions)

Finance lease costs:

Operating lease costs

Short-term lease costs

Variable lease costs

Weighted average remaining lease term –

finance leases

Weighted average remaining lease term –

operating leases

Weighted average discount rate –

finance leases

Weighted average discount rate –

operating leases

Weighted average remaining lease term – finance leases

Weighted average remaining lease term – operating leases

Weighted average discount rate – finance leases

Weighted average discount rate – operating leases

leased under finance leases had a cost of $ 4.2 million and $ 1.7 million at December 31, 2021 and 2020, respectively, and accumulated

depreciation associated with these assets was $0.1 and $0.0 million at December 31, 2020 and 2019, respectively.

depreciation associated with these assets was $ 0.6 million and $ 0.1 million at December 31, 2021 and 2020, respectively.

minimum finance lease payments as of December 31, 2021 were as follows:

of Future Minimum Finance Lease Payments

Year ending December 31, (in millions)

2 unchanged sentences

minimum operating lease payments as of December 31, 2021 were as follows:

of Future Minimum Operating Lease Payments

Year ending December 31, (in millions)

4 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

1 unchanged sentence

Company is party to leases with third parties with respect to various gaming machines.

Gaming machine leases typically include

a lease (of the machine) and a non-lease (provision of software services) component.

Gaming machine leases typically include a lease

(of the machine) and a non-lease (provision of software services) component.

leases have remaining terms of 1 to 5 years.

the year to December 31, 2020, the Company granted concessions to customers in the form of lease extensions granted during the

lockdown period, where nothing is paid during the concession period, with that same period of time and payments added onto the

lease at the end.

The Company has elected to use the practical expedient granted by the FASB and account for the concessions as

if they were part of the enforceable rights and obligations of the parties under the existing lease contract for all affected

leased under operating leases had a cost of $5.9 million and $4.1 million at December 31, 2020 and 2019, respectively, and accumulated

depreciation associated with these assets was $1.8 and $0.3 million at December 31, 2020 and 2019, respectively.

expense for the year ended December 31, 2020 and 2019 amounted to $1.5 million and $0.3 million, respectively.

the year to December 31, 2021 and 2020, the Company granted concessions to customers in the form of lease extensions granted during the

lockdown period, where nothing is paid during the concession period, with that same period of time and payments added onto the lease

The Company has elected to use the practical expedient granted by the FASB and account for the concessions as if they were

part of the enforceable rights and obligations of the parties under the existing lease contract for all affected leases.

leased under operating leases had a cost of $ 6.8

million and $ 5.9

million at December 31, 2021 and 2020, respectively,

and accumulated depreciation associated with these assets was $ 2.8

million at December 31, 2021 and 2020, respectively.

Depreciation expense for the year ended December 31, 2021, 2020 and 2019 amounted to $ 1.4

million, $ 1.5

million and $ 0.3

million, respectively.

components of lease income were as follows:

of Lease Income

(in millions)

3 unchanged sentences

minimum sales type lease receivables as of December 31, 2021 were as follows:

of Future Minimum Sales Type Lease Receivables

Year ending December 31, (in millions)

2 unchanged sentences

minimum operating lease receivables as of December 31, 2021 were as follows:

of Future Minimum Operating Type Lease Receivables

Year ending December 31, (in millions)

3 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Commitments and

Contingencies

and Contingencies

are party to employment agreements with our executive officers and other employees of the Company and our subsidiaries which contain,

among other terms, provisions relating to severance and notice requirements.

discussed in Note 17 above, our new employment agreement with our Executive Chairman dated October 9, 2020 provides that, subject

to the terms and conditions thereunder, our Executive Chairman would receive special grants covering 750,000 RSUs (a mix of time-based

RSUs, performance-based RSUs and stock-price based RSUs) during the year ending December 31, 2021, subject to the condition that

our stockholders approve an increase in our equity incentive plan share authorization limit at the annual meeting of our stockholders

to be held during 2021.

The provisions under the agreement with respect to the award of these RSUs would not be implemented if

such approval by stockholders is not obtained during 2021.

time to time, the Company may become involved in lawsuits and legal matters arising in the ordinary course of business.

the Company believes that, currently, it has no such matters that are material, there can be no assurance that existing or new

matters arising in the ordinary course of business will not have a material adverse effect on the Company’s business, financial

condition or results of operations.

operate both defined benefit and defined contribution pension schemes in the UK.

The defined contribution scheme assets are held

separately from those of the Company in an independently administered fund.

The pension cost charge represents contributions payable

by the Company and amounted to $2.3 million and $2.1 million for the year ended December 31, 2020 and 2019, respectively.

Contributions

totaling $0.3 million and $0.5 million were payable to the fund as at December 31, 2020 and 2019, respectively.

defined benefit scheme has been closed to new entrants since April 1, 1999 and closed to future accruals for services rendered

to the Company for the entire financial statement periods presented in these consolidated financial statements.

Retirement benefits

are generally based on a portion of an employee’s pensionable earnings during years prior to 2010.

While the Company

believes that, currently, it has no such matters that are material, there can be no assurance that existing or new matters arising in

the ordinary course of business will not have a material adverse effect on the Company’s business, financial condition or results

of operations.

operate a defined contribution plan in the US and both defined benefit and defined contribution pension schemes in the UK.

contribution scheme assets are held separately from those of the Company in an independently administered fund.

The defined contribution

pension cost charge represents contributions payable by the Company and amounted to $ 2.4 million, $ 2.3 million and $ 2.1 million for the

year ended December 31, 2021, 2020 and 2019, respectively.

Contributions totaling $ 0.8 million and $ 0.3 million were payable to the fund

as at December 31, 2021 and 2020, respectively.

defined benefit scheme has been closed to new entrants since April 1, 1999 and closed to future accruals for services rendered to the

Company for the entire financial statement periods presented in these consolidated financial statements.

Retirement benefits are generally

based on a portion of an employee’s pensionable earnings during years prior to 2010.

latest triennial actuarial valuation of the scheme as at March 31, 2018 was finalized in May 2019.

The actuarial valuation revealed

that the statutory funding objective was not met, i.e.

there were insufficient assets to cover the Scheme’s Technical Provisions

and there was a funding shortfall of £5.6 million ($7.6 million) at the valuation date.

Under the Recovery Plan and Schedule

of Contributions agreed between the Trustee and the Company, on March 15, 2019, it was agreed that no further deficit reduction

contributions shall be made to the scheme, except in the event that the scheme funding level does not progress as expected, in

which case contingent contributions would be made subject to an agreed maximum amount.

It was determined that contingent contributions

of $1.2 million and expense contributions of $0.4 million would be payable during the year ended December 31, 2020, with agreement

reached with the trustees of the scheme to defer $0.4 million of the contingent contributions into the year ending December 31,

In January 2021, the funding level of the scheme has been tested against the expected position at December 31, 2020 and

it has been determined that further contingent contributions of $1.2million and expense contributions of $0.4 million will be

payable during the year ending December 31, 2021.

The actuarial valuation revealed that

the statutory funding objective was not met, i.e.

there were insufficient assets to cover the Scheme’s Technical Provisions and

there was a funding shortfall of £ 5.6 million ($ 7.5 million) at the valuation date.

Under the Recovery Plan and Schedule of Contributions

agreed between the Trustee and the Company, on March 15, 2019, it was agreed that no further deficit reduction contributions shall be

made to the scheme, except in the event that the scheme funding level does not progress as expected, in which case contingent contributions

would be made subject to an agreed maximum amount.

It was determined that contingent contributions of $ 1.2 million and expense contributions

of $ 0.3 million would be payable during the year ended December 31, 2021, with an additional $ 0.4 million of contingent contributions

deferred from the year ended December 31, 2020 paid during the year ended December 31, 2021.

In January 2022, the funding level of the

scheme has been tested against the expected position at December 31, 2021 and it has been determined that further contingent contributions

of $ 1.2 million and expense contributions of $ 0.4 million will be payable during the year ending December 31, 2022.

ENTERTAINMENT, INC.

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TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

trustee has made an allowance for the pension scheme liability profile when deciding the investment strategy of the pension scheme.

Since the pension scheme is closed to new entrants and ceased future accrual with effect from March 31, 2010, it has continued

to mature gradually.

the pension scheme is closed to new entrants and ceased future accrual with effect from March 31, 2010, it has continued to mature gradually.

Therefore, the trustee reviews the investment strategy regularly to check whether any changes are needed.

When considering the investment strategy, the trustee has taken into account the effect of any possible increases in the deficit

reduction contributions on the financial position of the Company, and the extent to which the Company will be able to bear these

scheme’s investment policy is to maximize long-term financial return commensurate with security and minimizing risk.

is achieved by holding a portfolio of marketable investments that avoids over-concentration of investment and spreads assets both

over industries and geographies.

In setting investment strategy, the trustees considered the lowest risk strategy that they could

adopt in relation to the scheme’s liabilities and designed an asset allocation to achieve a higher return while maintaining

a cautious approach to meeting the scheme’s liabilities.

The trustees undertake periodic reviews of the investment strategy

and take advice from their investment advisors.

They consider a full range of asset classes, the risks and rewards of a range

of alternative asset allocation strategies, the suitability of each asset class and the need for appropriate diversification.

The current strategy is to hold 22% in a diversified growth fund, 12% in diversified credit, 15% in equity-linked bonds, 6% in

a liability-driven investment fund and 45% in a buy-in policy.

When considering the investment

strategy, the trustee has taken into account the effect of any possible increases in the deficit reduction contributions on the financial

position of the Company, and the extent to which the Company will be able to bear these changes.

scheme’s investment policy is to maximize long-term financial return commensurate with security and minimizing risk.

This is achieved

by holding a portfolio of marketable investments that avoids over-concentration of investment and spreads assets both over industries

and geographies.

In setting investment strategy, the trustees considered the lowest risk strategy that they could adopt in relation to

the scheme’s liabilities and designed an asset allocation to achieve a higher return while maintaining a cautious approach to meeting

the scheme’s liabilities.

The trustees undertake periodic reviews of the investment strategy and take advice from their investment

They consider a full range of asset classes, the risks and rewards of a range of alternative asset allocation strategies, the

suitability of each asset class and the need for appropriate diversification.

The current strategy is to hold 22% in a diversified growth

fund, 12% in diversified credit, 15% in equity-linked bonds, 6% in a liability-driven investment fund and 45% in a buy-in policy.

pension benefit costs are calculated using various actuarial assumptions and methodologies.

These assumptions include discount

rates, inflation, expected returns on plan assets, mortality rates and other factors.

The assumptions used in recording the obligations

under our plans represent our best estimates, and we believe that they are reasonable, based on information as to historical experience

and performance as well as other factors that might cause future expectations to differ from past trends.

Differences in actual

experience or changes in assumptions may affect our pension obligations and future expense.

The principal factors contributing

to actuarial gains and losses each year are (1) changes in the discount rate used to value pension benefit obligations as of the

measurement date and (2) differences between the expected and the actual return on plan assets.

These assumptions include discount rates,

inflation, expected returns on plan assets, mortality rates and other factors.

The assumptions used in recording the obligations under

our plans represent our best estimates, and we believe that they are reasonable, based on information as to historical experience and

performance as well as other factors that might cause future expectations to differ from past trends.

Differences in actual experience

or changes in assumptions may affect our pension obligations and future expense.

The principal factors contributing to actuarial gains

and losses each year are (1) changes in the discount rate used to value pension benefit obligations as of the measurement date and (2)

differences between the expected and the actual return on plan assets.

valuation methodologies used for pension assets measured at fair value are as follows.

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used at December 31, 2021 and December 31, 2020.

diversified fund is valued at fair value by using the net asset value (“NAV”) of shares held by the plan at the year

diversified fund is valued at fair value by using the net asset value (“NAV”) of shares held by the plan at the year end.

The NAV of the diversified fund is not publicly quoted.

The majority of the underlying securities have observable Level 1

or 2 pricing inputs, including quoted prices for similar assets in active or non-active markets.

ASC 820, Fair Value Measurements

and Disclosures, allows NAV per share to serve as a practical expedient to estimate the fair value of the diversified fund.

820 also states that where NAV is allowed to be used as an estimate of fair value, if the reporting entity has the ability to

redeem its investment at NAV as of the measurement date, that investment shall be categorized as a Level II fair value measurement.

If the investment cannot be redeemed at the measurement date, but may be redeemable in the future, but at an uncertain date, the

investment shall be categorized as a Level 3 fair value measurement.

of December 31, 2020 and December 31, 2019, the diversified fund was redeemable at NAV as of the measurement dates and, therefore,

classified as Level 2.

respect to the buy-in contract, it was agreed during the year ended September 27, 2014, that 281 pensioners of the plan would

be insured by means of a pensioner buy-in.

The liabilities and assets in respect of insured pensioners are assumed to match for

the purposes of ASC 715, Pensions - Retirement Benefits, disclosures (i.e.

The majority of the underlying securities have observable Level 1 or 2 pricing

inputs, including quoted prices for similar assets in active or non-active markets.

ASC 820, Fair Value Measurements and Disclosures,

allows NAV per share to serve as a practical expedient to estimate the fair value of the diversified fund.

ASC 820 also states that where

NAV is allowed to be used as an estimate of fair value, if the reporting entity has the ability to redeem its investment at NAV as of

the measurement date, that investment shall be categorized as a Level II fair value measurement.

If the investment cannot be redeemed

at the measurement date, but may be redeemable in the future, but at an uncertain date, the investment shall be categorized as a Level

3 fair value measurement.

of December 31, 2021 and December 31, 2020, the diversified fund was redeemable at NAV as of the measurement dates and, therefore, classified

respect to the buy-in contract, it was agreed during the year ended September 27, 2014, that 281 pensioners of the plan would be insured

by means of a pensioner buy-in.

The liabilities and assets in respect of insured pensioners are assumed to match for the purposes of

ASC 715, Pensions - Retirement Benefits, disclosures (i.e.

the full benefits have been insured).

adopted has therefore been to include within the total value of assets, an amount equal to the calculated total liability value

of the insured pensioners on the actuarial assumptions adopted for ASC 715 purposes.

The buy-in contract is, therefore, classified

The approach adopted has therefore been

to include within the total value of assets, an amount equal to the calculated total liability value of the insured pensioners on the

actuarial assumptions adopted for ASC 715 purposes.

The buy-in contract is, therefore, classified as Level 3.

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

1 unchanged sentence

in our consolidated financial statements at the respective measurement dates:

of Pension Plans and their Reconciliation

(in millions)

3 unchanged sentences

Prior service cost

Actuarial loss

Actuarial (gain) loss

Benefits paid

9 unchanged sentences

Amount recognized in the consolidated balance sheets:

Unfunded status (non-current)

Overfunded (Unfunded) status (non-current)

Net amount recognized

following table presents the components of our net periodic pension (benefit) cost:

of Periodic Pension (Benefit) Cost

(in millions)

4 unchanged sentences

Net periodic (benefit) cost

accumulated benefit obligation for all defined benefit pension plans was $127.8 million and $110.4 million as of December 31,

2020 and December 31, 2019, respectively.

The underfunded status of our defined benefit pension plans recorded as a liability

accumulated benefit obligation for all defined benefit pension plans was $ 114.7 million and $ 127.8 million as of December 31, 2021 and

December 31, 2020, respectively.

The overfunded (underfunded) status of our defined benefit pension plans recorded as an asset (liability)

in our consolidated balance sheets as of December 31, 2021 and December 31, 2020 was $ 3.0 million and $ ( 9.1 ) million, respectively.

estimated net loss, net transition asset (obligation) and prior service cost for the plan that will be amortized from accumulated

other comprehensive income into net periodic pension cost over the next fiscal year are $0.9 million, $nil and $nil, respectively.

estimated net loss, net transition asset (obligation) and prior service cost for the plan that will be amortized from accumulated other

comprehensive income into net periodic pension cost over the next fiscal year are $ 0.5 million, $ nil and $ nil , respectively.

fair value of the plan assets at December 31, 2021 by asset category is presented below:

of Fair Value of Plan Assets

(in millions)

5 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

3 unchanged sentences

Buy-in contract

table below presents the weighted-average actuarial assumptions used to determine the benefit obligation and net periodic benefit

cost for the Plan.

table below presents the weighted-average actuarial assumptions used to determine the benefit obligation and net periodic benefit cost

for the Plan.

of Benefit Obligation and Net Periodic Benefit Cost for Plan

Discount rate

1 unchanged sentence

RPI inflation

CPI inflation –

Pension increases –

pre-2006 service

Pension increases –

post-2006 service

CPI inflation – pre 2030

CPI inflation – post 2030

Pension increases – pre-2006 service

Pension increases – post-2006 service

Pension increases – post 1988 GMP – pre 2030

Pension increases – post 1988 GMP – post 2030

following benefit payments are expected to be paid:

of Benefit Payments are Expected to Be Paid

(in millions)

Segment Reporting

and Geographic Information

segments are identified as components of an enterprise for which separate and discrete financial information is available and

is used by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and

assess performance.

The Company’s chief decision-maker is the Office of the Executive Chairman.

Company’s chief decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated

information about revenue and operating profit by operating unit.

This information is used for purposes of allocating resources

and evaluating financial performance.

Company operates its business along four operating segments, which are segregated based on the basis of revenue stream:

Virtual Sports, Interactive and Leisure.

The Company believes this method of segment reporting reflects both the way its business

segments are managed and the way the performance of each segment is evaluated.

prior years, and up to and including the interim period nine months ended September 30, 2020, the Company operated its business

along three operating segments:

Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses.

the period subsequent to September 30, 2020, the Company has completed the process of changing its internal structure, which has

been ongoing since the NTG Acquisition, and as a result has changed the composition of its operating segments.

The Company now

operates its business along four operating segments, which are segregated based on the basis of revenue stream:

Gaming, Virtual

Sports, Interactive and Leisure.

The Company believes this method of segment reporting reflects both the way its business segments

are now managed and the way the performance of each segment is now evaluated.

accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies.”

Reporting and Geographic Information

segments are identified as components of an enterprise for which separate and discrete financial information is available and is used

by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance.

The Company’s chief decision-maker is the Office of the Executive Chairman.

Company’s chief decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information

about revenue and operating profit by reporting unit.

This information is used for purposes of allocating resources and evaluating financial

Company operates its business along four operating segments, which are segregated on the basis of revenue stream:

Gaming, Virtual Sports,

Interactive and Leisure.

The Company believes this method of segment reporting reflects both the way its business segments are managed

and the way the performance of each segment is evaluated.

accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies.”

ENTERTAINMENT, INC.

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

The following tables present revenue, cost of sales, excluding

depreciation and amortization, selling, general and administrative expenses, depreciation and amortization, stock-based compensation

expense and acquisition related transaction expenses, operating profit/(loss), total assets and total capital expenditures for

the years ended December 31, 2020 and December 31, 2019, respectively, by business segment.

Certain unallocated corporate function

costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to

do so would not be practical.

Corporate function costs consist primarily of selling, general and administrative expenses, depreciation

and amortization, capital expenditures, right of use assets, cash, prepaid expenses and property and equipment and software development

costs relating to corporate/shared functions.

All acquisition and integration related transaction expenses are allocated as corporate

function costs.

Amounts previously disclosed for the year ended December 31, 2019 have been recharacterized in line with the current

operating segments and categories.

addition, as part of the recharacterization exercise, certain items of Revenue, Cost of Sales and Selling and Administrative Expenses

have been recharacterized to ensure consistency with similar items across the Group.

The revenue recharacterizations are to ensure

spares and similar items are reflected with other items of hardware (Product Sales).

The resulting impact on previously reported

information for the year ended December 31, 2019 is as follows:

Service Revenue, previously reported $134.9 million, now $134.5

Product Sales Revenue, previously reported $18.5 million, now $18.9 million;

Cost of Service, previously reported $23.5

million, now $25.4 million;

Cost of Product Sales, previously reported $12.6 million, now $12.9 million;

Selling, General and

Administrative Expenses, previously reported $72.6 million, now $70.4 million.

The recharacterization has no impact on the previously

reported Net Operating Loss, Net Loss or Net Comprehensive Loss for the year ended December 31, 2019.

following tables present revenue, cost of sales, excluding depreciation and amortization, selling, general and administrative expenses,

depreciation and amortization, stock-based compensation expense and acquisition related transaction expenses, operating profit/(loss),

total assets and total capital expenditures for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively,

by business segment.

Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating

segments because these costs are not allocable and to do so would not be practical.

Corporate function costs consist primarily of selling,

general and administrative expenses, depreciation and amortization, capital expenditures, right of use assets, cash, prepaid expenses

and property and equipment and software development costs relating to corporate/shared functions.

All acquisition and integration related

transaction expenses are allocated as corporate function costs.

of Segment Reporting Information By Segment

Ended December 31, 2021

10 unchanged sentences

Segment operating income (loss)

Net operating loss

Total assets at December 31, 2021

Total goodwill at December 31, 2021

Total capital expenditures for the year ended December 31, 2021

Ended December 31, 2020

(in millions)

Product sales

Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of service

Cost of product sales

Selling, general and administrative expenses

Stock-based compensation expense

Acquisition and integration related transaction expenses

Depreciation and amortization

Segment operating income (loss)

Net operating income

5 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

12 unchanged sentences

Net operating loss

Total assets at December 31, 2019

Total goodwill at December 31, 2019

Total capital expenditures for the year ended December 31, 2019

information for revenue is set forth below:

Schedule of Geographic Information

(in millions)

1 unchanged sentence

Rest of world

Total revenue

information of our non-current assets excluding goodwill is set forth below:

1 unchanged sentence

Rest of world

Total non-current assets excluding goodwill

development costs are included as attributable to the market in which they are utilized.

2 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

OF AND FOR THE YEARS ENDED

OF DECEMBER 31, 2021 AND 2020, AND FOR THE YEARS ENDED

31, 2021, 2020 AND 2019

Customer Concentration

the year ended December 31, 2020, one customer represented at least 10% of revenues, accounting for 22% of the Company’s

This customer was served by the Gaming, Virtual Sports and Interactive segments.

During the year ended December 31,

2019, two customers represented at least 10% of revenues, accounting for 14% and 13% of the Company’s revenues.

customer was served by the Gaming, Virtual Sports and Interactive segments, the second customer was served by the Gaming and the

Virtual Sports segments.

December 31, 2020 and 2019, there were no customers that represented at least 10% of the Company’s accounts receivable.

Subsequent Events

Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial

statements were issued.

The Company did not identify subsequent events that would have required adjustment or disclosure in the

consolidated financial statements.

Sale Agreement, dated July 13, 2016, by and among Hydra Industries Acquisition Corp., the Vendors, Target Parent, DMWSL 632

Limited and Gaming Acquisitions Limited, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K

of the Company, filed with the SEC on July 19, 2016.

Concentration

the year ended December 31, 2021, no customers represented at least 10 % of revenues.

During the year ended December 31, 2020, one customer

represented at least 10% of revenues, accounting for 22 % of the Company’s revenues.

This customer was served by the Gaming, Virtual

Sports and Interactive segments.

During the year ended December 31, 2019, two customers represented at least 10% of revenues, accounting

for 14 % and 13 % of the Company’s revenues.

The first customer was served by the Gaming, Virtual Sports and Interactive segments,

the second customer was served by the Gaming and the Virtual Sports segments.

December 31, 2021 and 2020, there were no customers that represented at least 10 % of the Company’s accounts receivable.

Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements

Other than as described below, the Company did not identify subsequent events that would have required adjustment or disclosure

in the consolidated financial statements.

January 2022, the Company sold its Italian VLT business, including all terminal and other assets, staff costs and facilities and

contracts for total proceeds of € 1.2

million ($ 1.4

million), recognizing a profit on disposal of

million ($ 0.9

The Company continues to serve these

Italian markets in the form of the provision of platform and games.

Form 10-K Summary.

Sale Agreement, dated July 13, 2016, by and among Hydra Industries Acquisition Corp., the Vendors, Target Parent, DMWSL 632 Limited

and Gaming Acquisitions Limited (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the

Company, filed with the SEC on July 19, 2016).

Arrangements Agreement, dated December 23, 2016, between Hydra Industries Acquisition Corp.

and the Vendors listed in schedule 1

1 to the Share Sale Agreement, incorporated herein by reference to Exhibit 10.18 to the Current Report on Form 8-K of the

Company, filed with the SEC on December 30, 2016

to the Share Sale Agreement (incorporated herein by reference to Exhibit 10.18 to the Current Report on Form 8-K of the Company,

filed with the SEC on December 30, 2016).

Purchase Agreement, dated as of June 11, 2019, by and between Inspired Gaming (UK) Limited and Novomatic UK Ltd.

(incorporated

(incorporated herein

by reference to Exhibit 2.1 of the Current Report on Form 8-K of the Company, filed with the SEC on June 11, 2019).

Amended and Restated Certificate of Incorporation of Inspired Entertainment, Inc., incorporated herein by reference to Exhibit

Amended and Restated Certificate of Incorporation of Inspired Entertainment, Inc.

(incorporated herein by reference to Exhibit

3.1 to the Current Report on Form 8-K of the Company, filed with the SEC on December 30, 2016).

Certificate of Elimination of Series A Junior Participating Preferred Stock, dated August 13, 2020, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K of the Company, filed with the SEC on August 14, 2020.

and Restated Bylaws of Inspired Entertainment, Inc., incorporated herein by reference to Exhibit 3.1 to the Current Report

of Elimination of Series A Junior Participating Preferred Stock, dated August 13, 2020 (incorporated herein by reference

to Exhibit 3.1 of the Current Report on Form 8-K of the Company, filed with the SEC on August 14, 2020).

and Restated Bylaws of Inspired Entertainment, Inc.

(incorporated herein by reference to Exhibit 3.1 to the Current Report

on Form 8-K Company, filed with the SEC on November 11, 2019).

9 unchanged sentences

Description of Securities.

and Restatement Agreement, dated June 25, 2020, by and among Inspired Entertainment, Inc., certain direct and indirect subsidiaries

of Inspired Entertainment, Inc., Lucid Agency Services Limited and Lucid Trustee Services Limited (incorporated by reference

to Exhibit 10.3 to the Current Report on Form 8-K filed on June 25, 2020).

of Director and Officer Indemnity Agreement, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of

the Company, filed with the SEC on December 30, 2016.

Agreement, dated December 23, 2016, by and among the Company, Hydra Industries Sponsor LLC, Macquarie Sponsor and the Vendors,

incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company, filed with the SEC on December

Termination Agreement, dated December 23, 2020, by and between the Company and Landgame S.à

with respect to the Stockholders Agreement, dated 23, 2016, incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K of the Company, filed with the SEC on December 23, 2020.

Agreement dated as of December 23, 2020 by and between the Company and Evan Davis, as trustee, for the Landgame Trust,

incorporated herein by reference to Exhibit 99.2 to the Current Report on Form 8-K of the Company, filed with the SEC on December

Indenture, dated as of May 20, 2021, among Inspired Entertainment (Financing) PLC, as issuer, the Company, as a guarantor, the subsidiaries of the Company named therein, as additional guarantors, GLAS Trustees Limited, as trustee, GLAS Trust Corporation Limited as security agent and GLAS Trust Company LLC as paying agent, transfer agent and registrar (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of the Company, filed with the SEC on May 20, 2021).

Form of 7.875% Senior Secured Notes due 2026 (included in Exhibit 4.5).

Super Senior Revolving Credit Facilities Agreement, dated as of May 20, 2021, among the Company, Gaming Acquisition Limited, Inspired Entertainment (Financing) PLC and Inspired Gaming (UK) Limited as original borrowers, the subsidiaries of the Company named therein as original guarantors, Global Loan Agency Services Limited as agent, GLAS Trust Corporation Limited as security agent and Barclays Bank plc and Macquarie Corporate Holdings Pty Limited (UK Branch) as arrangers and original lenders (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on May 20, 2021).

of Director and Officer Indemnity Agreement (incorporated herein by reference to Exhibit 10.4 to the Current Report on Form

8-K of the Company, filed with the SEC on December 30, 2016).

Agreement, dated December 23, 2016, by and among the Company, Hydra Industries Sponsor LLC, Macquarie Sponsor and the Vendors (incorporated

herein by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company, filed with the SEC on December 30, 2016).

Entertainment, Inc.

4 unchanged sentences

Amendment to the Registration Statement on Form S-1 of the Company, filed with the SEC on December 29, 2017).

of Grant Agreements under the Inspired Entertainment, Inc.

2016 Long-Term Incentive Plan and Second Long-Term Incentive Plan,

incorporated herein by reference to Exhibit 10.17 to the Current Report on Form 8-K of the Company, filed with the SEC on

December 30, 2016.

of Grant Agreements for restricted stock units awards made to A.

Lorne Weil and Daniel B.

Silvers on December 21, 2017 under

the Inspired Entertainment, Inc.

Second Long-Term Incentive Plan, as amended as of December 13, 2017, incorporated herein

by reference to Exhibit 10.7 to the Post-Effective Amendment to the Registration Statement on Form S-1 of the Company, filed

with the SEC on December 29, 2017.

Entertainment, Inc.

2018 Omnibus Incentive Plan, incorporated herein by reference to Exhibit 10.6 to the Annual Report on

Form 10-K of the Company, filed with the SEC on December 10, 2018.

of Grant Agreements for fiscal year 2019 under the Inspired Entertainment, Inc.

2018 Omnibus Incentive Plan (Time-Based Form

of Agreement and Performance-Based Form of Agreement), incorporated herein by reference to Exhibit 10.3 to the Quarterly Report

on Form 10-Q of the Company, filed with the SEC on May 10, 2019.

Inspired Entertainment, Inc.

2018 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Annual Report on Form 10-K of the Company, filed with the SEC on December 10, 2018).

Inspired Entertainment, Inc.

2021 Omnibus Incentive Plan.

Forms of Grant Agreements for fiscal year 2019 under the Inspired Entertainment, Inc.

2018 Omnibus Incentive Plan (Time-Based Form of Agreement and Performance-Based Form of Agreement) (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of the Company, filed with the SEC on May 10, 2019).

Inspired Entertainment, Inc.

2021 Short-Term Incentive Bonus Plan.

Agreement, dated as of October 9, 2020, by and between the Company and A.

Lorne Weil (incorporated by reference to Exhibit

10.1 to the Company’s Current Report on Form 8-K, filed on October 13, 2020).

Agreement, dated March 27, 2020, between Inspired Entertainment, Inc.

Agreement, dated February 17, 2020, between Inspired Entertainment, Inc.

(incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of the Company, filed with the SEC on August 12, 2021)

Employment Agreement, dated as of October 9, 2020, by and between the Company and A.

Lorne Weil (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 13, 2020).

Letter Agreement, dated March 27, 2020, between the Company and A.

Lorne Weil (incorporated by reference herein to Exhibit 10.14 to the Annual Report on Form 10-K of the Company, filed with the SEC on March 30, 2020).

Letter, dated April 21, 2021, from the Company to A.

Lorne Weil (incorporated by reference herein to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company, filed with the SEC on May 14, 2021).

Addendum, effective June 21, 2021, to the Employment Agreement dated October, 9, 2020 by and between the Company and A.

Lorne Weil (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the Company on June 24, 2021).

Employment Agreement, dated February 17, 2020, between Inspired Entertainment, Inc.

and Brooks H.

Agreement, dated March 28, 2020, between Inspired Entertainment, Inc.

and Brooks H Pierce.

Agreement, dated December 14, 2016, between Hydra Industries Acquisition Corp.

Pierce (incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K of the Company, filed with the SEC on March 30, 2020).

Letter Agreement, dated March 28, 2020, between Inspired Entertainment, Inc.

and Brooks H Pierce (incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K of the Company, filed with the SEC on March 30, 2020).

Letter Agreement, dated July 21, 2021, by and between the Company and Brooks H.

Pierce (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on July 23, 2021).

Employment Agreement, dated December 14, 2016, between Hydra Industries Acquisition Corp.

and Daniel B.

Silvers, incorporated herein

by reference to Exhibit 10.3 to the Current Report on Form 8-K of the Company, filed with the SEC on December 30, 2016.

dated December 22, 2017, to the Employee Agreement, dated December 14, 2016, between Hydra Industries Acquisition Corp.

Silvers, incorporated herein by reference to Exhibit 10.13 to the Post-Effective Amendment to the Registration Statement

on Form S-1 of the Company, filed with the SEC on December 29, 2017.

effective January 31, 2020 to the Employment Agreement dated December 14, 2016 (as amended) by and between the Company and

Silvers, incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K of the Company, filed

with the SEC on February 6, 2020.

Agreement, dated March 28, 2020, between Inspired Entertainment, Inc.

Silvers (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K of the Company, filed with the SEC on December 30, 2016).

Amendment, dated December 22, 2017, to the Employee Agreement, dated December 14, 2016, between Hydra Industries Acquisition Corp.

and Daniel B.

Agreement, dated March 23, 2017, by and between Inspired Gaming (UK) Limited and Stewart Baker, incorporated herein by reference

to Exhibit 10.4 to the Quarterly Report on Form 10-Q of the Company, filed with the SEC on May 8, 2017.

dated October 25, 2017, to Service Agreement dated March 23, 2017, by and between Inspired Gaming (UK) Limited and Stewart

Baker, incorporated herein by reference to Exhibit 10.14 to the Annual Report on Form 10-K of the Company, filed with the

SEC on December 4, 2017.

Agreement, dated March 30, 2020, between Inspired Entertainment, Inc.

and Stewart Baker.

of Employment Agreement of Inspired Gaming (UK) Limited, entered into by Carys Damon on January 29, 2013, and term sheet setting

forth updated terms, incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of the Company,

filed with the SEC on November 12, 2019.

Agreement, dated March 30, 2020, between Inspired Entertainment, Inc.

and Carys Damon.

Entertainment, Inc.

Employee Stock Purchase Plan, incorporated herein by reference to Exhibit 4.1 to the Registration Statement

on Form S-8 of the Company, filed with the SEC on July 14, 2017.

Director Compensation Policy (updated effective January 1, 2019), incorporated herein by reference to Exhibit 10.1 to the

Quarterly Report on Form 10-Q of the Company, filed with the SEC on February 11, 2019.

Silvers (incorporated herein by reference to Exhibit 10.13 to the Post-Effective Amendment to the Registration Statement on Form S-1 of the Company, filed with the SEC on December 29, 2017).

Amendment effective January 31, 2020, to the Employment Agreement dated December 14, 2016 (as amended) by and between the Company and Daniel B.

Silvers (incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K of the Company, filed with the SEC on February 6, 2020).

Letter Agreement, dated March 28, 2020, between the Company and Daniel B.

Silvers (incorporated herein by reference to Exhibit 10.20 to the Annual Report on Form 10-K of the Company, filed with the SEC on March 30, 2020).

Employment Agreement, dated August 3, 2021, by and between IG UK and Stewart F.B.

Baker (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on August 5, 2021).

Letter Agreement, dated March 30, 2020, between the Company.

and Stewart Baker (incorporated herein by reference to Exhibit 10.23 to the Annual Report on Form 10-K of the Company, filed with the SEC on March 30, 2020).

Employment Agreement, dated August 3, 2021, by and between IG UK and Carys Damon (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company, filed with the SEC on August 5, 2021).

Letter Agreement, dated March 30, 2020, between Inspired Entertainment, Inc.

and Carys Damon (incorporated herein by reference to Exhibit 10.25 to the Annual Report on Form 10-K of the Company, filed with the SEC on March 30, 2020).

Inspired Entertainment, Inc.

Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-8 of the Company, filed with the SEC on July 14, 2017).

Non-Employee Director Compensation Policy (updated effective January 1, 2019) (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company, filed with the SEC on February 11, 2019).

Subsidiaries of the Company.

4 unchanged sentences

Section 906 Certification of Principal Financial Officer.

XBRL Instance Document

Instance Document

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Indicates management

contract or compensatory plan.

Filed herewith.

Furnished herewith.

FORM 10-K SUMMARY.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

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management contract or compensatory plan.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

ENTERTAINMENT, INC.

March 31, 2022

Executive Chairman

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

Executive Officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

March 31, 2022

Lorne Weil, Executive Chairman

Executive Officer)

March 31, 2022

Baker, Chief Financial Officer

Financial and Accounting Officer)

Principal Financial and Accounting Officer

March 31, 2022

3 unchanged sentences

March 31, 2022

Desirée G.

Desirée

Rogers, Director

1 unchanged sentence

Saferin, Director

March 31, 2022

Katja Tautscher

Tautscher, Director

2 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures