What changed in this filing

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Item 9A. Controls and Procedures

2023-03-16 compared with 2022-03-31 · 888 added, 1063 removed, 1543 unchanged (56% of the section changed)

1 unchanged sentence

of Disclosure Controls and Procedures.

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 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

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.

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.

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 at December 31,

2022 were not effective, due to the material weaknesses described below.

In light of these material weaknesses, we performed additional analyses

as deemed necessary to ensure that our financial statements were prepared in accordance with U.S.

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

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;

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.

Management’s Report on Internal Control

Over Financial Reporting as Part of Section 404 of the Sarbanes-Oxley Act 2002 (“SOX”)

Our management is responsible for establishing

and maintaining adequate internal control over financial reporting.

Insofar as the Company is subject to Section 404(b) of SOX, this Annual

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

at December 31, 2022 in addition to management’s assessment of the effectiveness of internal control over financial reporting under

the requirements of Section 404(a) of SOX.

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

(2) provide reasonable assurance

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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.

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, 2022 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, our internal control over financial reporting at December 31, 2022 was not effective, based upon

the material weaknesses discussed below.

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.

of Previously Reported Material Weakness

As previously disclosed in Item 9A of our Annual

Report on Form10-K for the year ended December 31, 2021, management identified a material weakness in internal control over financial

reporting relating to an ineffective risk assessment and response process (the “Risk Assessment and Response Material Weakness”).

Namely, the Company had 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 represented material weaknesses in the Company’s

internal control over financial reporting as there was a reasonable possibility that a material misstatement with respect to certain of

the Company’s significant accounts and disclosures would 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.

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 had 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.

We have remediated this previously

reported Risk Assessment and Response Material Weakness by (1) establishing an executive steering committee to monitor the remediation

of the underlying control deficiencies, (2) hiring an additional SOX specialist in June 2022 to support the Chief Financial Officer and

Director of Finance, (3) increasing the use our outsourced SOX service provider to assist in all aspects of our SOX program, (4) providing

one-on-one training to control owners who are part of our broader accounting and operations teams on control execution and related documentation

and evidence, (5) re-mapping internal control over financial reporting to risks and financial statement assertions, (6) remediating previously

identified control gaps or deficient controls by implementing newly designed controls and/or enhancing the operation and/or underlying

evidence of existing controls, (7) expanding business process narratives with enhanced details of process flows and controls, and (8)

enhancing the documentation of the execution of management review controls.

The Company completed its testing of the effectiveness of

the remediated, newly designed, and re-designed controls and, other than those relating to the material weaknesses identified below, noted

no material control deficiencies.

As a result, management concluded that the Risk Assessment and Response Material Weakness was remediated

as of December 31, 2022.

Material Weaknesses and Remediation

has identified internal control deficiencies due to IT program and data changes affecting the Company’s financial IT applications

and underlying accounting records, not being identified, tested, authorized, and implemented appropriately to validate that data produced

by its relevant IT system(s) was complete and accurate.

Automated process-level controls and manual controls that are dependent upon

the information derived from such financially relevant systems were also determined to be ineffective as a result of such deficiency

and there was not appropriate segregation of duties that would adequately restrict user and privileged access to the financially relevant

systems and data to the appropriate Company personnel.

Management has concluded that the likelihood that these deficient controls would

fail to prevent or detect a material misstatement is a reasonable possibility and rise to a material weakness in the aggregate.

is planning to remediate the design of segregation of duties incompatibilities during 2023 by changing access levels, and reviewers,

and updating policies.

Despite this deficiency, Management is not aware of any resulting financial statement misstatements and,

additionally, management has undertaken a retrospective analysis of 2022 transactions of individuals with such incompatibilities and

our analysis indicates that none of the changes made was incorrect or inappropriate.

Park Cash Collections

has identified a deficiency in one aspect of our cash collection process related to the completeness and accuracy (risk of understatement)

of our recording of cash collection amounts relating to our holiday park business in that the process for reviewing and approving cash

receipts was not consistently documented or implemented.

this deficiency, management is not aware of any resulting financial statement misstatements or cash count discrepancies and management

is planning to remediate the material weakness during 2023 by implementing new or enhanced controls around cash collections at holiday

has identified a deficiency related to the design and operation of the Company’s contract review and approval process in relation

to certain contract amendments.

this deficiency, Management is not aware of any resulting financial statement misstatements or inappropriate contract terms and management

is planning to remediate the material weakness during 2023 by implementing new or enhanced controls around contracting with customers,

specifically as it relates to contract amendments.

respect to each of the above, management has begun the remediation process, however the material weaknesses cannot be considered fully

remediated until it is demonstrated that the new or enhanced controls and other impacted or dependent controls have 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.

for the changes noted above in connection with the initiatives to remediate material weaknesses, 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

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

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have audited Inspired Entertainment, Inc.

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

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

as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee

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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.

Company did not design and/or implement program change management and user access controls to ensure:

program and data changes affecting the Company’s financial IT applications & underlying accounting records, are identified,

tested, authorized and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate.

Automated process-level controls and manual controls that are dependent upon the information derived from such financially relevant systems

were also determined to be ineffective as a result of such deficiency and appropriate segregation of duties that would adequately restrict

user and privileged access to the financially relevant systems and data to the appropriate Company personnel.

Company has not designed an effective control related to the completeness and accuracy of cash collection amounts input to the Company’s

records in the Leisure Segment.

Company has not designed effective controls over the contract approval process relating to revenue contracts, including contracts involving

royalty rates.

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 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.

31, 2022 consolidated financial statements, and this report does not affect our report dated March 16, 2023 on those financial statements.

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

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and our report dated March 16, 2023 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.

The 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.

We 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.

Our audit 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.

We believe 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.

A 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 principles.

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.

Because 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.

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Directors, Executive Officers and Corporate Governance.

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.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2023 Annual

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

If such proxy statement is not filed on or before May 1, 2023, 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.

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.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2023 Annual

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

If such proxy statement is not filed on or before May 1, 2023, 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.

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.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2023 Annual

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

If such proxy statement is not filed on or before May 1, 2023, 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.

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.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2023 Annual

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

If such proxy statement is not filed on or before May 1, 2023, 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.

information called for by this item is incorporated herein by reference to our definitive proxy statement relating to our 2023 Annual

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

If such proxy statement is not filed on or before May 1, 2023, 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.

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OF DECEMBER 31, 2022 AND 2021

of Independent Registered Public Accounting Firm PCAOB ID # 688

Report of Independent Registered Public Accounting Firm PCAOB ID # 688

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive (Loss) Income

Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Deficit

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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.

as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss (income), stockholders’

equity and cash flows for each of the three years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of

the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States

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

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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

of the Company’s management.

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

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.

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

material weaknesses.

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

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

financial statements based on our audits.

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 audits in accordance with the standards of the PCAOB.

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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

the matter involved performing procedures and evaluation of audit evidence that included, among others

contract terms and conditions,

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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;

The 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.

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, 2022, the Company capitalized approximately $18,438,000

of software development costs.

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

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Prepaid expenses and other current assets

Corporate tax and other current taxes receivable

Total current assets

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Other current liabilities

Warrant liability

Current portion of finance lease liabilities

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Deferred revenue, net of current portion

Derivative liability

Operating lease liabilities

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AND SUBSIDIARIES

STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

millions, except share and per share data)

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Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of sales:

Cost of service (1)

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Depreciation and amortization

Net operating (loss) income

Net operating income (loss)

Other 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

Gain on disposal of business

Loss from equity method investee

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Total other expense, net

Loss before income taxes

Income tax benefit (expense)

Income (loss) before income taxes

Income tax (expense) benefit

Net income (loss)

Other comprehensive income (loss):

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

Actuarial gains (losses) on pension plan

Actuarial (losses) gains 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

Comprehensive income (loss)

Net income (loss) per common share – basic

Net income (loss) per common share – diluted

Weighted average number of shares outstanding during the year – basic

Weighted average number of shares outstanding during the year – diluted

Supplemental disclosure of stock-based compensation expense

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Selling, general and administrative expenses

Excluding depreciation and amortization

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

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stockholders’

Balance as of January 1, 2019

Foreign currency translation adjustments

Actuarial losses on pension plan

Change in fair value of hedging instrument

Reclassification of gain on hedging instrument to comprehensive income

Conversion of awards previously classified as derivatives

Shares issued in earnout

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

Balance as of December 31, 2019

Foreign currency translation adjustments

Actuarial losses on pension plan

Change in fair value of hedging instrument

Reclassification of loss on hedging instrument to comprehensive income

Shares issued upon net settlement of RSUs

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

as of January 1, 2020

currency translation adjustments

losses on pension plan

in fair value of hedging instrument

Reclassification

of loss on hedging instrument to comprehensive income

issued in settlement of RSUs

issued under ESPP

compensation expense

as of December 31, 2020

currency translation adjustments

gains on pension plan

in fair value of hedging instrument

Reclassification

of loss on hedging instrument to comprehensive income

issued in settlement of RSUs

issued upon exercise of warrants

compensation expense

as of December 31, 2021

currency translation adjustments

losses on pension plan

Reclassification

of loss on hedging instrument to comprehensive income

issued in settlement of RSUs

of common stock

compensation expense

income (loss)

as of December 31, 2022

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

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

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Stock-based compensation expense

Change in fair value of derivative liability

Change in fair value of earnout liability

Impairment of investment in equity method investee

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

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Acquisition of subsidiary company assets

Cash paid for NTG Acquisition

Software development expenditure

Purchases of capital software

Net cash used in investing activities

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Proceeds from issuance of long-term debt

Proceeds from issuance of revolver

Repurchase of common stock

Proceeds from exercise of warrants

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

Payment of financing costs

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

Cash paid in connection with terminated interest rate swaps

Repayments of finance leases

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash

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Lease liabilities arising from obtaining right of use assets

Adjustment to customer relationships intangible asset arising from adjustment

to fair value of assets acquired

Adjustment to goodwill arising from adjustment to fair value of assets acquired

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Assets arising from asset retirement obligations

Additional paid in capital reclassified from derivative liability

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

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Description and Nature of Operations

are a global gaming technology company, supplying content, platform and other products and services to online and land-based regulated

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

are a global gaming technology company, supplying content, platform, gaming terminals and other products and services to online and land-based

regulated 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

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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.

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, 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

of December 31, 2022, the Company’s cash on hand was $ 25.0 million, and the Company had working capital in addition to cash of

$ 28.9 million.

million and $ 30.7

million for the year ended December 31, 2021,

The Company recorded net income of $ 22.3 million and net losses of $ 36.7 million and $ 32.4 million for the year ended December

31, 2022, 2021 and 2020, 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 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.

Net income/losses include excess capital expenditure, excluding the acquisition of subsidiary

assets, over depreciation and amortization, of $ 2.2 million for the year ended December 31, 2022, and excess depreciation and amortization

over capital expenditure, excluding the acquisition of subsidiary assets, of $ 21.4 million and $ 22.4 million for the year ended December

31, 2021 and 2020, respectively, non-cash stock-based compensation of $ 10.8 million, $ 13.0 million and $ 4.8 million for the year ended

December 31, 2022, 2021 and 2020, respectively, and non-cash changes in fair value of warrant liability of $ 0.0 million, $ 0.9 million

gain and $ 3.2 million losses for the year ended December 31, 2022, 2021, and 2020, 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 $ 34.7 million,

$ 6.2 million and $ 52.9 million for the year ended December 31, 2022, 2021 and 2020 respectively, with the change year on year due to

land based operations being subject to lockdown restrictions for part of the year ended December 31, 2021.

Working capital of $ 53.9 million

includes a non-cash settled item of $ 4.8 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 2024.

have been no COVID-19 restrictions in the United Kingdom since July 2021 and social distancing measures throughout Greece and Italy are

no longer in force as of the second quarter of 2022.

ENTERTAINMENT, INC.

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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 intercompany

balances and transactions have been eliminated in consolidation.

Currency Translation

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Gains or losses resulting from translating

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

the foreign currency financial statements are recorded as a separate component of accumulated other comprehensive income 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.

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

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

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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.

Substantially all of the

Company’s cash is held outside of the U.S.

Included within the cash balance of $ 25.0 million is $ 2.5 million of cash floats

held on site at holiday parks.

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

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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

Computer equipment

of the useful life or the life of the lease

based gaming terminals

and machinery and fixtures and fittings

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

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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 $ 3.1 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 development costs are expensed as incurred, with the exception of research and development related primarily to software product

development costs, which is expensed until technological feasibility has been established.

Total research and development costs

amounted to $ 16.1

million, $ 13.8

million and $ 15.0

million in the years ended December 31, 2022, 2021 and 2020, respectively.

Research and development costs amounting to $ 1.5

million, $ 3.1

million and $ 3.9

million were expensed to Selling, general and administrative expenses during the year ended December 31, 2022, 2021 and 2020,

respectively.

Research and development costs amounting to $ 14.6

million, $ 10.7

million and $ 11.1

million were capitalized during the year ended December 31, 2022, 2021 and 2020, 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 Income (Loss).

and Other Acquired Intangible Assets

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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).

price over the fair value of the identifiable net assets acquired in a business combination.

Trademarks and customer relationships were

originally recorded at their fair values in connection with business combinations, and increased in 2021 due to the acquisition of 100 %

of the membership interests of Sportech Lotteries, LLC (see Note 2).

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

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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.

We have four segments which are considered to represent reporting units, Gaming, Virtual Sports, Interactive

and Leisure, as detailed in Note 27.

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, 2022 and 2021 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

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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.

Consolidated Statement of Operations and Comprehensive Income (Loss).

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

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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

Since April 2020, the

Company has had no equity method investments and has therefore recognized no impairments.

Revenue and Deferred Cost of Sales

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

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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.

Deferred cost of sales, 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

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

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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.

Any other costs are expensed to the Consolidated

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

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

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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.

of Operations and Comprehensive Income (Loss).

Stock Purchase Warrants and Derivative Financial Instruments

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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

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

or physical settlement in its own shares (full or net shares), 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).

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

ENTERTAINMENT, INC.

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31, 2022, 2021 AND 2020

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

each reporting date, the Company determines whether a change in classification between assets and liabilities is required.

the year 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.

There were no warrants outstanding as of December 31, 2021 or December 31, 2022.

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

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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.

the Consolidated Statements of Operations and Comprehensive Income (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

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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

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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.

upon such time as control passes to the customer as they are considered to meet the required criteria to be considered distinct.

Payment for terminal sales is typically

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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.

Sports arrangements may 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

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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

also provide terminal and spares management services to third parties, including customers.

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 is invoiced in arrears and settled within 30 days.

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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.

measured on the grant date for stock-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.

The Company accounts for forfeitures as they occur.

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.

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31, 2022, 2021 AND 2020

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 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.

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.

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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.

on the date that we adopted Topic 842, 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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Lease income is recognized on a straight-line basis over the lease term.

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

OF DECEMBER 31, 2022 AND 2021, AND FOR THE YEARS ENDED

31, 2022, 2021 AND 2020

Issued Accounting Standards

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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”), 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 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.

We have evaluated the effect of this guidance and the adoption of ASU

2016-13 is not expected to have a material impact on the Company’s financial statement presentation or disclosures.

October 2021, the FASB issued ASU No.

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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.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

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

31, 2021, 2020 AND 2019

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.

The adoption of ASU 2021-08 will not have a material impact on the Company’s financial statement

presentation or disclosures.

ENTERTAINMENT, INC.

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31, 2021, 2020 AND 2019

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.

Schedule of Pro Forma Information

Net operating loss

Loss per share:

Basic and diluted

Weighted average shares outstanding:

Basic and diluted

and Disposals

January 2022, the Company sold its Italian VLT business, including all terminal and other assets, staff costs and facilities and contracts,

to a non-connected party for total proceeds of € 1.1 million ($ 1.2 million), recognizing a profit on disposal of € 0.8 million

($ 0.9 million).

The Company continues to serve these Italian markets in the form of the provision of platform and games.

December 31, 2021, the Company acquired 100 % of the membership interests of Sportech Lotteries, LLC, which has since been renamed Inspired

Entertainment Lotteries, LLC.

The Company concluded that Inspired Entertainment 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.

The Company therefore applied asset acquisition accounting to the transaction, and 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.

the year ended December 31, 2022, as a result of revisions made to management’s preliminary assessments, the Company recognized

an additional $ 0.9 million long-term receivable related to Inspired Entertainment Lotteries, LLC, and reduced the value of the customer

contract intangible asset accordingly.

ENTERTAINMENT, INC.

7 unchanged sentences

Trade receivables

long-term receivable recorded in other assets

long-term receivable recorded in other

Finance lease receivables

Other receivables

Allowance for doubtful accounts

Total accounts receivable, net

Allowance for doubtful

accounts receivable, net

in the allowance for doubtful accounts are as follows:

3 unchanged sentences

Additional provision for doubtful accounts

Foreign currency translation adjustments

Foreign currency translation

Ending balance

4 unchanged sentences

Finished goods

Total inventories

parts include parts for gaming terminals.

14 unchanged sentences

Unbilled accounts receivable

Total prepaid expenses and other assets

Corporate tax and other current taxes receivable

prepaid expenses and other assets

and Equipment, net

6 unchanged sentences

Property and equipment, gross

accumulated depreciation and amortization

Property and equipment, net

accumulated depreciation

and amortization

Property and equipment,

expense amounted to $ 21.6 million, $ 25.9 million and $ 29.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

21 unchanged sentences

of Estimated Software Amortization Expense

Year ending December 31, (in millions)

ending December 31, (in millions)

Assets and Goodwill

1 unchanged sentence

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.

straight-line basis over their estimated useful lives of ten to thirteen years with no estimated residual values, which materially approximates

the expected pattern of use.

of Intangible Assets

8 unchanged sentences

of Estimated Intangible Asset Amortization Expense

Year ending December 31, (in millions)

ending December 31, (in millions)

is summarized as follows:

2 unchanged sentences

Foreign currency translation adjustments

Acquisition of NTG

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.

ENTERTAINMENT, INC.

9 unchanged sentences

Long term receivables

Long term prepaid expenses and other assets

Long term prepaid expenses

and other assets

expenses consist of the following:

1 unchanged sentence

(in millions)

Direct costs of sales

Payroll and related costs

Accrued corporate cost expenses

Cost of sales including inventory

Non-current asset costs

Interest payable - cash

Asset retirement obligations

Acquisition consideration

Contract termination costs

Selling, general and administrative costs

Tax and professional fees

Asset retirement obligations and other property

related costs

Other creditors

Accrued expenses, net

analysis of the prior year expenses has been recharacterized to ensure consistency with the current year categorization.

The recharacterization

has no impact on the previously reported total accrued expenses as of December 31, 2021.

Liabilities and Other Disclosures

16 unchanged sentences

Customer prepayments and deposits

Fair value of hedging instrument

Total other liabilities, current

Foreign exchange contract

other liabilities, current

Asset retirement obligations

1 unchanged sentence

Pension liability

Total other liabilities, long-term

other liabilities

other liabilities, long-term

Total other liabilities

Term and Other Debt

18 unchanged sentences

wholly-owned subsidiary of the Company (“GAL”), of the proceeds of the offering of the Senior Secured Notes.

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

OF DECEMBER 31, 2022 AND 2021, AND FOR THE YEARS ENDED

31, 2022, 2021 AND 2020

Indenture contains incurrence covenants that limit the ability of the Company and the Company’s restricted subsidiaries to, among

56 unchanged sentences

enforce the transaction security and/or (iii) exercise any other remedies available to the Lenders.

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

OF DECEMBER 31, 2022 AND 2021, AND FOR THE YEARS ENDED

31, 2022, 2021 AND 2020

RCF Agreement requires that the Company maintain a maximum consolidated senior secured net leverage ratio of 6.25x on the test date for

15 unchanged sentences

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).

repaid in full and the senior facilities agreement (dated September 27, 2019, as amended and restated on June 25, 2020, (the “Prior

SFA) 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 Income (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 ($ 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 ($ 27.0 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

carrying a cash interest cost at 30 % of the applicable margin on the revolving credit facility loan.

Company’s Prior SFA (which was with Lucid Agency Services Limited, as agent, Nomura International plc and Macquarie Corporate Holdings

Pty Limited (UK Branch) as arrangers and/or bookrunners) was entered into in connection with the Company’s acquisition of the Gaming

Technology Group of Novomatic UK Ltd on October 1, 2019, and, provided for, subject to certain conditions, two tranches of senior secured

term loans, in an original principal amount of £ 140.0 million ($ 168.6 million) and € 90.0 million ($ 96.1 million), respectively

and a secured revolving facility loan in an original principal amount of £ 20.0 million ($ 24.1 million).

The term loans, which were

funded on October 1, 2019, were used to, among other things, pay the purchase price of the NTG Acquisition and refinance the Company’s

prior indebtedness.

term loan for £ 140.0 million ($ 168.6 million) initially carried a cash interest rate of 7.25 % plus 3-month LIBOR, and the term

loan for € 90.0 million ($ 96.1 million) initially carried a cash interest rate of 6.75 % plus 3-month EURIBOR.

The £ 20.0 million

($ 24.1 million) revolving credit facility initially carried a cash interest rate on any utilization at 5.50 % plus 3-month LIBOR, with

any unutilized amount initially carrying a cash interest cost at 30 % of the applicable margin on the revolving credit facility loan.

ENTERTAINMENT, INC.

3 unchanged sentences

31, 2022, 2021 AND 2020

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.

provisions from the June 2020 amendments to the Prior SFA included, among other things, (i) capitalizing certain interest payments that

fell due on April 1, 2020, (ii) resetting the applicable leverage and capital expenditure financial covenants, removing certain applicable

rating requirements, (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

Prior SFA, in an amount not exceeding £ 10.0 million ($ 12.0 million), (iv) removing certain applicable rating requirements, (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 ($19.2 million) and 25% of the consolidated pro forma EBITDA of the Company and its subsidiaries for the relevant

period (as defined, 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) by 1 % , and adding an additional payment-in-kind margin of 0.75 % payable on any principal amounts outstanding

under Facility B (as defined in the Prior 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 applicable capital expenditure financial covenant and (ix) granting certain additional information

rights to the lenders under the Prior SFA, including the provision of a budget, and certain board observation rights until December 31,

All other material terms of the SFA remained 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 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.

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.

(as defined in the Prior SFA).The amendment fee was payable to the lenders pro rata to their commitments under the Prior SFA.

modification to the Prior 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.

ENTERTAINMENT, INC.

5 unchanged sentences

following reflects outstanding debt and finance leases as of the dates indicated below:

Schedule of Outstanding Debt and Capital Leases

of Outstanding Debt and Finance Leases

(in millions)

2 unchanged sentences

Total long-term debt outstanding

current portion of long-term debt

Long-term debt, excluding current portion

current portion

of long-term debt

debt, excluding current portion

(in millions)

2 unchanged sentences

Total long-term debt outstanding

current portion of long-term debt

Long-term debt, excluding current portion

current portion

of long-term debt

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

2 unchanged sentences

Schedule of Maturities of Long-term Debt

Fiscal period:

(in millions)

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 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 .

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.

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 million ($ 114.4 million) at a fixed rate of

0.9255 % based on the 6-month LIBOR rate and for € 60.0 million ($ 64.1 million) at a fixed rate of 0.102 % based on the 6-month EURIBOR

connection with the issuance of the Senior Secured Notes and the entry into the RCF Agreement, on May 19, 2021, the Company terminated

7 unchanged sentences

31, 2022, 2021 AND 2020

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

4 unchanged sentences

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

5 unchanged sentences

estimates that an additional $ 0.3 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:

of December 31, 2022 and 2021, the Company did not have any derivatives.

Losses reclassified from accumulated other comprehensive

income into interest expense in the consolidated statements of operations and income (loss) for the year ended December 31, 2022

amounted to $ 0.7

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

Interest rate swaps

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.

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.

Rate Derivative

million ($ 114.4 million) at a fixed rate of 0.9255 % based on the 6-month LIBOR rate and € 60.0 million ($ 64.1 million) at a fixed

rate of 0.102 % based on the 6 month EURIBOR rate

ENTERTAINMENT, INC.

3 unchanged sentences

31, 2022, 2021 AND 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

(in millions)

Derivatives designated as hedging instruments:

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

1 unchanged sentence

Schedule of Accumulated Other Comprehensive Income

Amount of Gain/(Loss)

Recognized in

1 unchanged sentence

Income on Derivative

Location of Gain/(Loss)

Reclassified from

2 unchanged sentences

Income into Income

(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

Comprehensive

Income on Derivative

Location of Gain/(Loss)

Reclassified from

Accumulated Other

Comprehensive

Income into Income

(in millions)

Interest Rate Products

Interest Expense

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, 2020.

Amount of Gain/(Loss)

Recognized in

1 unchanged sentence

Income on Derivative

Location of Gain/(Loss)

Reclassified from

2 unchanged sentences

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

Gain/(loss) on cash flow hedging relationships in Subtopic 815-20

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

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

31, 2021, 2020 AND 2019

Rate Products

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.

(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

Schedule of Consolidated Statements of Operations

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, 2020.

Remeasurement

(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 that are not designated as hedging instruments

in the consolidated statements of operations for the year ended December 31, 2019.

Schedule of Financial Instruments Not Designated as Hedging Instruments

Derivatives Not Designated as Hedging Instruments under Subtopic 815-20

Recognized in

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.

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

Amounts Not Offset in the

Statement of Financial Position

value of hedging instrument

of Derivative Liabilities

December 31, 2020

Offset in the

of Liabilities

Amounts Not Offset in the

Statement of Financial Position

of hedging instrument

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

ENTERTAINMENT, INC.

22 unchanged sentences

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)

Long term receivable (included

in other assets)

ENTERTAINMENT, INC.

12 unchanged sentences

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.

December 31, 2022 and December 31, 2021, there were no Level 3 inputs, and no transfers in or out of Level 3 from other levels in the

fair value hierarchy.

Stockholders’

17 unchanged sentences

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

the year 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.

There were no warrants outstanding as of December 31, 2022 or 2021.

Company’s stock-based compensation plans authorize awards of restricted stock units (“RSUs”), stock options and other

11 unchanged sentences

of December 31, 2022, there were (i) 1,857,036 shares subject to outstanding awards under the 2021 Plan, including 341,647 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).

to performance-based target awards, 232,500 shares subject to market-price vesting conditions, 311,558 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 259,492 shares subject to awards as to which the applicable vesting conditions

have been met which remain subject to deferred settlement ;

(ii) 174,964 shares subject to outstanding awards under the 2018 Plan, including

25,000 shares subject to performance-based target awards and 124,964 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.

As of December 31, 2022, there

were 1,002,805 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, 2022 consisted of RSUs (including time-based

RSUs, performance-based RSUs and stock price based RSUs).

ENTERTAINMENT, INC.

7 unchanged sentences

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.

Offerings may also be under the ESPP’s subplan for UK-based employees (the “Subplan”) which was adopted

in June 2022 and is designed to meet the requirements of a sharesave scheme under UK law.

The terms applicable to the offerings approved

in 2022 under the ESPP and Subplan are described below.

Based on enrollments in these offerings, the Company estimates that approximately

76,000 shares will be purchased ( 4,000 shares under the ESPP and 72,000 under the Subplan).

offering period approved in 2022 for the ESPP is for a period of twelve months (ending in October 2023), eligible employees may contribute

up to 10 % of base compensation, a maximum of 1,000 shares may be purchased per participant, the purchase price will be equal to 85 % of

the lower of the closing price of the common stock at the beginning of the offering period (the applicable closing price was $ 10.20 )

and the end of the offering period and shares will be purchased on the last day of the offering period.

Under the offering approved for

the Subplan, eligible employees may contribute a maximum amount of £ 350 per month through payroll deductions over a period of three

years (through October 2025), the purchase price will be equal to 85 % of the closing price of the common stock on the day prior to commencement

of the enrollment window for the offering (the applicable closing price was $ 11.53 ), and participants have a period of six months following

the end of the offering to elect to purchase shares or receive a refund.

of December 31, 2022, a total of 467,751 shares remained available for purchase under the ESPP.

A total of 7,649 shares were issued under

the ESPP in 2020 (at a purchase price of $ 3.2215 per share) and no shares were issued under the ESPP in 2021 or 2022.

summary of the Company’s RSU activity is as follows:

of Restricted Stock Unit Activity

Schedule of Restricted Stock Unit Activity

Unvested Outstanding at January 1, 2022

Forfeited (2)

( 1,317,873 )

Unvested Outstanding at December 31, 2022

1 unchanged sentence

(a) 48,716 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.

for non-employee directors which vest during the year of grant and, at the election of the participant, may remain unsettled until

the director leaves the Company;

and (b) 450,882 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 2022

and subject to a time-based service period through December 31, 2024 and the other one-half vests in installments through December

RSUs that vested during the year ended December 31, 2022 included:

(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.

(a) 119,492 RSUs that are

subject to deferred settlement terms;

and (b) 682,474 RSUs that were settled on a net share basis on or about December 30,

2022, resulting in 374,546 shares being issued in and 307,928 withheld for taxes (the processing of the issuance and delivery of

such 374,546 shares occurred partially in December 2022 (as to 42,319 shares) and partially in January 2023 (as to 332,227 shares)).

Company issued a total of 543,294 shares during the year ended December 31, 2022 in net settlement of RSUs which included an aggregate

of 442,817 shares in settlement of RSUs that vested during the prior year on December 31, 2021.

weighted average grant date fair value of awards granted for years ended December 31, 2022, December 31, 2021 and December 31, 2020 amounted

respectively.

The vesting date value of RSUs vesting for years ended December 31, 2022, December 31, 2021 and December 31, 2020 amounted

million, $ 16.1

million and $ 2.5

million, respectively.

was no income tax benefit recognized related to awards that vested during the years ended December 31, 2022, 2021, and 2020 ,

respectively as there is a full valuation allowance in place against the RSU scheme ’s deferred tax asset .

compensation is recognized as an expense 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 be met.

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.

The requisite service period for awards to employees is generally satisfied

over a vesting period of three years (and one year for non-employee directors).

The Company accounts for forfeitures as they occur.

stock purchase rights under the Company’s ESPP (including its subplan), the Company estimates fair value using the Black-Scholes

option pricing model on the dates of grant, with the compensation expense recognized over the requisite service period.

ENTERTAINMENT, INC.

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Restricted Stock and RSUs

Payroll taxes on vesting of RSUs

Payroll taxes on vesting

unrecognized compensation expense related to unvested stock awards and unvested RSUs at December 31, 2022 amounts to $ 8.8 million and

2 unchanged sentences

accumulated balances for each classification of comprehensive loss (income) are presented below:

of Accumulated Other Comprehensive (Loss) Income

Fair Value of

Benefit Costs

Comprehensive

Schedule of Accumulated Other Comprehensive Loss (Income)

Currency Translation Adjustments

in Fair Value of Hedging Instrument

Pension Benefit Costs

Other Comprehensive (Income)

(in millions)

8 unchanged sentences

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

Income (Loss) per Share

income/loss per share (“EPS”) is computed by dividing net income/loss attributable to common stockholders by the weighted

average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities.

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 they were either

contingently issuable shares or because their inclusion would be anti-dilutive:

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share

Unvested Restricted Stock

1 unchanged sentence

Anti-dilutive

securities excluded from computation of earnings per share

following table reconciles the numerators and denominators of the basic and diluted EPS computations for the year ended December 31,

There were no reconciling items for the years ended December 31, 2021 or December 31, 2020, respectively.

of Numerators and Denominators of the Basic and Diluted EPS Computations

Income (Numerator)

Shares (Denominator)

Per-Share Amount, Year Ended December 31, 2022

(in millions)

Income available to common stockholders

Effect of Dilutive Securities

Income available to common stockholders

ENTERTAINMENT, INC.

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31, 2022, 2021 AND 2020

of Common Stock

May 10, 2022, the Board of Directors authorized the Company to use up to $ 25.0 million to repurchase Inspired common shares (such amount

being exclusive of any fees, commissions or other expenses), subject to repurchases being effected on or before May 10, 2025 (the “Share

Repurchase Program”).

Management has discretion as to whether to repurchase shares of the Company.

the year ended December 31, 2022, the Company repurchased 1,067,340 shares under the Share Repurchase Program for gross payments of approximately

$ 10.5 million, which were canceled and retired during the year ended December 31, 2022.

As of December 31, 2022, approximately $ 14.6

million remained available for future repurchases under the Share Repurchase Program.

Part II, Item 5 of this report for further details regarding shares repurchased during the three months ended December 31, 2022.

Finance (Expense) Income

finance (expense) income consisted of the following:

of Other Finance Income (Costs)

Schedule of Other Finance Income (expense)

(in millions)

1 unchanged sentence

Expected return on pension plan assets

Foreign currency translation on senior bank debt

Foreign currency remeasurement on hedging instrument

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.

Foreign currency translation

on senior bank debt

Other finance income (Costs)

The effective tax rates for the years ended December 31, 2022 and 2021

were 12.6 % and 4.2 % respectively.

For the year ended December 31, 2022, 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 as well as an inclusion for global intangible low-taxed income.

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.

components of earnings (loss) before income taxes on the Company’s consolidated statement of operations by the United States and

1 unchanged sentence

of Earnings (Loss) Before Income Tax

Year Ended December 31,

(in millions)

United States

Foreign jurisdictions

Total loss before income taxes

jurisdictions

earnings (loss) before income taxes

tax provision (benefit), as reflected in the Company’s consolidated statement of operations, consists of the following:

of Provision for Income Taxes

(in millions)

Current (benefit) provision

Total current

(in millions)

Deferred (benefit) provision

Total current

provision (benefit)

ENTERTAINMENT, INC.

9 unchanged sentences

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

Non-deductible officers’ compensation

Global intangible low-taxed income

Other permanent differences

Effect of rates different than statutory

Non-creditable withholding taxes

Research and development tax credits

in valuation allowance

income tax rate

net deferred tax assets and liabilities arising from temporary differences are as follows:

3 unchanged sentences

Other temporary differences

Intangible Assets

Right of Use Liability

Total gross deferred tax assets

Valuation allowance balance

Valuation allowance

Gross deferred tax assets

1 unchanged sentence

Other temporary differences

Right of Use Asset

Gross deferred tax liabilities

Net deferred tax assets

deferred tax assets

in the valuation allowance are as follows:

Schedule of Changes in the Valuation Allowance

(in millions)

Beginning balance

Increase (decrease)

(Decrease) increase

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.

As of December 31, 2022 and 2021, the Company has

$ 9.0 million and $ 39.5 million, respectively, of gross federal net operating loss carry forwards, these losses have an unlimited carry

The cumulative state net operating losses as of December 31, 2022 are $ 58.4 million, which begin to expire in 2026.

The utilization

of both the Company’s federal and state net operating losses may be subject to a limitation in the future due to the “change

of ownership provisions” under Section 382 of the Internal Revenue Code.

As of December 31, 2022, the Company has not had an ownership

change under Section 382.

As of December 31, 2022 and 2021, the Company also

has gross net operating losses in foreign jurisdictions, primarily the United Kingdom, totalling $ 74.5 million and $ 83.2 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 recorded a valuation allowance against all of our deferred tax assets as of both December 31, 2022, and December 31, 2021.

intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the

reversal of all or some portion of these allowances.

However, given our current earnings and anticipated future earnings, we believe

that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us

to reach a conclusion that a significant portion of the valuation allowance will no longer be needed.

Release of the valuation allowance

would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability

that we are able to actually achieve.

The valuation allowance we recorded as of December 31, 2022 and December 31, 2021 was $ 79.1

million and $ 104.5 million, respectively.

Company has not recognized deferred tax liabilities in respect of unremitted earnings that are considered indefinitely reinvested in

2 unchanged sentences

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.

Currently, there are no federal, state or foreign jurisdiction tax audits

The Company’s corporate federal and state tax returns from 2019 to 2021 remain subject to examination by tax authorities

and the Company’s foreign tax returns from 2014 to 2021 remain subject to examination by tax authorities.

In accordance with ASC 740, the Company has evaluated

its tax positions to determine if there are any uncertain tax positions.

As of December 31, 2021 and 2022, the Company has no unrecognized

tax benefits for uncertain tax positions and has no accrued interest or penalties related to uncertain tax positions.

The Company does

not anticipate any material change in the total amount of unrecognized tax benefits will occur within the next twelve months.

ENTERTAINMENT, INC.

3 unchanged sentences

31, 2022, 2021 AND 2020

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 11.7 % of our common stock as of December 31, 2022, and 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.

Macquarie UK did not hold any of the Company’s aggregate senior debt at December 31, 2022 or December

Interest expense payable to Macquarie UK for the years ended December 31, 2022, 2021 and 2020 amounted to $ 0.0 million, $ 0.9

million and $ 2.2 million, respectively.

In addition, 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 ended December 31, 2021, and Macquarie UK received $ 0.3 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.

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 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.

Interest expense payable to HG Vora while a related party for the year ended December

31, 2021 amounted to $ 1.7 million.

On December 31, 2021, the Company entered into a consultancy agreement

with Richard Weil, the brother of A.

Lorne Weil, our Executive Chairman, under which he received a success fee in the amount of $ 0.1 million

for services he provided in connection with our acquisition of Sportech Lotteries, LLC.

The success fee was paid during the year ended

December 31, 2022.

Under the agreement, as extended in November 2022, he will provide consulting services relating to the lottery in the

Dominican Republic through to June 30, 2023 at a rate of $ 10,000 per month and, with respect to such services, the aggregate amount incurred

by the Company in consulting fees for the year ended December 31, 2022 was $ 0.1 million.

incurred certain offering expenses in connection with an underwritten public offering of shares held by a significant stockholder, the

10 unchanged sentences

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

The value of the investment was impaired by $ 0.7 million to $ Nil in March 2020 prior to disposal.

Revenue earned from Innov8 while a related party for the year ended December 31, 2020 amounted

to $ 0.6 million and purchases from Innov8 while a related party for the year ended December 31, 2020 amounted to $ 0.2 million.

of the investment was impaired by $ 0.7 million to $ Nil in March 2020 prior to disposal.

Company as Lessee

12 unchanged sentences

leases have remaining terms of 1 to 10 years.

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.

the years to December 31, 2021 and 2020, certain concessions were granted with respect to the Company’s operating leases in light

These took the form of lease extensions, where nothing was 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 were deferred until a later date, but with no lease extension, and

discounted payments, where payments were reduced and not repaid either at a later date or through lease extensions.

The Company 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

were accounted using the ‘cash basis’ approach, with the lease liability and right-of-use asset continuing to be accounted

for as if payments were still being made under the original terms of the lease.

Payment holidays were accounted for using the ‘remeasurement

consistent with resolving a contingency’ approach, which involved 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.

3 unchanged sentences

31, 2022, 2021 AND 2020

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.

The leases have remaining terms of between 4 and 36 months.

Company is also party to finance leases with third parties with respect to gaming machines.

The leases have remaining terms of between

24 and 36 months.

components of lease expense were as follows:

of Lease Expenses

of Lease Expense

(in millions)

3 unchanged sentences

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 $ 2.3 million and $ 4.2 million at December 31, 2022 and 2021, respectively, and accumulated

2 unchanged sentences

of Future Minimum Finance Lease Payments

Year ending December 31, (in millions)

Total future minimum lease payments

ending December 31, (in millions)

Total future minimum lease

imputed interest

1 unchanged sentence

of Future Minimum Operating Lease Payments

Year ending December 31, (in millions)

Total future minimum lease payments

ending December 31, (in millions)

future minimum lease payments

imputed interest

7 unchanged sentences

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, 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.

(of the machine) and a non-lease (provision of software services) component, both of which are included in the amounts disclosed.

leases have remaining terms of 3 to 36 months.

the years 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 was paid during the concession period, with that same period of time and payments added onto the lease

The Company 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 $ 5.3 million and $ 6.8 million at December 31, 2022 and 2021, respectively, and accumulated

depreciation associated with these assets was $ 3.6 million and $ 2.8 million at December 31, 2022 and 2021, respectively.

expense for the year ended December 31, 2022, 2021 and 2020 amounted to $ 1.5 million, $ 1.4 million and $ 1.5 million, respectively.

components of lease income were as follows:

of Lease Income

Schedule of Lease Income

(in millions)

Interest receivable from sales type leases

Interest receivable from sales

Operating lease income

Variable income from sales type leases

Profit recognized at commencement date of sales

Variable income from

sales type leases

minimum sales type lease receivables as of December 31, 2022 were as follows:

of Future Minimum Sales Type Lease Receivables

Year ending December 31, (in millions)

Total future minimum lease receivables

ending December 31, (in millions)

Total future minimum lease

imputed interest

1 unchanged sentence

of Future Minimum Operating Type Lease Receivables

Year ending December 31, (in millions)

Total future minimum lease receivables

ending December 31, (in millions)

future minimum lease receivables

ENTERTAINMENT, INC.

22 unchanged sentences

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 ($ 7.5 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.

latest triennial actuarial valuation of the scheme as at March 31, 2021 was finalized in June 2022.

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 £ 8.2 million ($ 9.9 million) at the valuation date.

Under the Recovery Plan and Schedule of

Contributions agreed between the Trustee and the Company on June 28, 2022, it was agreed that the shortfall will be met by contributions

of £0.9 million ($1.1 million) for each the years ended December 31 2021, 2022, 2023 and 2024, of £0.7 million ($0.8 million)

for the year ended December 31, 2025 and of £0.5 million ($0.6 million) for the period January 1, 2026 to October 31, 2026 .

Company will also make expense contributions of £ 0.3 million ($ 0.4 million) per annum for the period covered by the Recovery Plan

and Schedule of Contributions.

ENTERTAINMENT, INC.

9 unchanged sentences

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.

scheme’s investment policy is to maximize long-term financial return commensurate with security and minimizing risk, with an objective

of achieving a return of around 3% per annum above the return on UK Government bonds.

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.

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 12% in a diversified growth fund, 24% in diversified credit, 18% in

a equity-linked liability-driven investment funds, 6% in credit-linked liability-driven investment funds and 40% in a buy-in policy.

pension benefit costs are calculated using various actuarial assumptions and methodologies.

41 unchanged sentences

in our consolidated financial statements at the respective measurement dates:

of Pension Plans and their Reconciliation

Schedule of Pension Plans and their Reconciliation

(in millions)

Change in benefit obligation:

Benefit obligation at beginning of period

Benefit obligation at beginning

Interest cost

Prior service cost

Actuarial (gain) loss

Benefits paid

Foreign currency translation adjustments

Benefit obligation at end of period

Foreign currency translation

Benefit obligation at

end of period

Change in plan assets:

Fair value of plan assets at beginning of period

Actual gain on plan assets

Actual (loss) gain on plan assets

Employer contributions

Benefits paid

Foreign currency translation adjustments

Foreign currency translation

Fair value of assets at end of period

Amount recognized in the consolidated balance sheets:

Overfunded (Unfunded) status (non-current)

Amount recognized in the

consolidated balance sheets:

(Unfunded) Overfunded

status (non-current)

Net amount recognized

following table presents the components of our net periodic pension (benefit) cost:

of Periodic Pension (Benefit) Cost

Schedule of Defined Benefit Plans

(in millions)

Components of net periodic pension (benefit) cost:

Components of net periodic pension (benefit)

Interest cost

Expected return on plan assets

Amortization of net loss

Net periodic (benefit) cost

Amortization of net

Net periodic (benefit)

accumulated benefit obligation for all defined benefit pension plans was $ 67.4 million and $ 114.7 million as of December 31, 2022 and

December 31, 2021, respectively.

The overfunded (underfunded) status of our defined benefit pension plans recorded as an asset (liability)

The (underfunded) overfunded status of our defined benefit pension plans recorded as a (liability) asset

in our consolidated balance sheets as of December 31, 2022 and December 31, 2021 was $ ( 2.1 ) million and $ 3.0 million, respectively.

6 unchanged sentences

Buy-in contract

Cash and other current assets

Cash and other current

ENTERTAINMENT, INC.

17 unchanged sentences

Pension increases – post-2006 service

Pension increases – post 1988 GMP – pre 2030

Pension increases – post 1988 GMP – post 2030

Pension increases – post 1988 GMP –

following benefit payments are expected to be paid:

of Benefit Payments are Expected to Be Paid

(in millions)

Reporting and Geographic Information

27 unchanged sentences

transaction expenses are allocated as corporate function costs.

of Segment Reporting Information By Segment

Schedule of Segment Reporting Information by Segment

Ended December 31, 2022

(in millions)

Product sales

Total revenue

Cost of sales, excluding depreciation and amortization:

3 unchanged sentences

Stock-based compensation expense

Acquisition and integration related transaction expenses

Acquisition and integration related transaction

Depreciation and amortization

Segment operating income (loss)

Net operating loss

operating income (loss)

operating income

Total assets at December

Total goodwill at December

Total capital expenditures for the year ended December 31, 2021

capital expenditures for the year ended December 31, 2022

Ended December 31, 2021

(in millions)

Product sales

Total revenue

Cost of sales, excluding depreciation and amortization:

3 unchanged sentences

Stock-based compensation expense

Acquisition and integration related transaction expenses

Acquisition and integration related transaction

Depreciation and amortization

Segment operating income (loss)

Net operating income

operating income (loss)

operating loss

Total assets at December

Total goodwill at December

Total capital expenditures for the year ended December 31, 2020

capital expenditures for the year ended December 31, 2021

ENTERTAINMENT, INC.

5 unchanged sentences

(in millions)

Product sales

Total revenue

Cost of sales, excluding depreciation and amortization:

3 unchanged sentences

Stock-based compensation expense

Acquisition and integration related transaction expenses

Acquisition and integration related transaction

Depreciation and amortization

Segment operating income (loss)

Net operating loss

Total capital expenditures for the year ended December 31, 2019

operating income (loss)

operating loss

capital expenditures for the year ended December 31, 2020

information for revenue is set forth below:

3 unchanged sentences

Rest of world

Total revenue

revenue includes revenue from customers headquartered in the UK, but whose revenue is generated globally.

information of our non-current assets excluding goodwill is set forth below:

1 unchanged sentence

Rest of world

Total non-current assets excluding goodwill

non- current assets excluding goodwill

development costs are included as attributable to the market in which they are utilized.

5 unchanged sentences

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.

the year ended December 31, 2022, one customer represented at least 10% of revenues, accounting for 13 % of the Company’s revenues.

This customer was served by the Virtual Sports and Interactive segments.

During 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.

December 31, 2022, there was one customer that represented at least 10% of the Company’s accounts receivable, accounting for 24 %

of the Company’s accounts receivable.

At December, 2021, 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.

The Company did not identify subsequent events that would have required adjustment

or disclosure in the consolidated financial statements.

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).

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.

8 unchanged sentences

to the Current Report on Form 8-K of the Company, filed with the SEC on December 30, 2016).

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).

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).

Amended 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).

Rights Agreement, dated October 24, 2014, between Hydra Industries Acquisition Corp.

and certain security holders (incorporated

herein by reference to Exhibit 10.5 to the Current Report on Form 8-K of the Company, filed with the SEC on October 29, 2014).

Agreement, dated October 24, 2014, between Hydra Industries Acquisition Corp.

and Continental Stock Transfer & Trust Company

(incorporated herein by reference to Exhibit 4.6 to the Current Report on Form 8-K of the Company, filed with the SEC on October

and certain security holders (incorporated herein

by reference to Exhibit 10.5 to the Current Report on Form 8-K of the Company, filed with the SEC on October 29, 2014).

Rights Agreement, dated December 23, 2016, by and among Hydra Industries Acquisition Corp.

and the Vendors (incorporated herein

by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on December 30, 2016).

Description of Securities.

and the Vendors (incorporated herein by

reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company, filed with the SEC on December 30, 2016).

Description of Securities (incorporated herein by reference to Exhibit 4.4 to the Annual Report on Form 10-K of the Company, filed with the SEC on March 31, 2022.

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).

of 7.875% Senior Secured Notes due 2026 (included in Exhibit 4.5).

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

1 unchanged sentence

Entertainment, Inc.

2016 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the Annual Report on

Form 10-K of the Company, filed with the SEC on December 4, 2017).

2016 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the Annual Report on Form

10-K of the Company, filed with the SEC on December 4, 2017).

Entertainment, Inc.

1 unchanged sentence

Amendment to the Registration Statement on Form S-1 of the Company, filed with the SEC on December 29, 2017).

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.

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).

Entertainment, Inc.

2021 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Annual Report on Form 10-K

of the Company, filed with the SEC on March 31, 2022).

Forms of Grant Agreements for fiscal year 2022 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).

2021 Omnibus Incentive Plan (Time-Based Form of Agreement and Performance-Based Form of Agreement).

Inspired Entertainment, Inc.

2022 Short-Term Incentive Bonus Plan.

(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).

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, 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).

Lorne Weil (incorporated herein by reference 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.

Second Addendum, effective January 1, 2023, to the Employment Agreement dated October 9, 2020, as amended, by and between the Company and A.

Lorne Weil (incorporated herein by reference to Exhibit 10.2 to the Current Report on form 8-K of the Company, filed with the SEC on January 17, 2023).

Agreement, dated February 17, 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 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).

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).

Amendment, dated December 22, 2017, to the Employee Agreement, dated December 14, 2016, between Hydra Industries Acquisition Corp.

Second Addendum, effective January 1, 2023, to the Employment Agreement dated February 17, 2020, as amended, 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 January 17, 2023.

Agreement, dated December 14, 2016, between Hydra Industries Acquisition Corp.

and Daniel B.

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).

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 Daniel

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).

Separation and Release Agreement, dated January 10, 2023, between the Company and Daniel B.

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).

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.

Inspired Entertainment Sharesave Plan (U.K.

Appendix) (adopted as a subplan to the Inspired Entertainment Employee Stock Purchase Plan) (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company, filed with the SEC on November 9, 2022).

Non-Employee Director Compensation Policy (as amended and restated) (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company, filed with the SEC on May 10, 2022).

of the Company.

Consent of Marcum LLP.

3 unchanged sentences

Section 906 Certification of Principal Financial Officer.

Instance Document

XBRL Instance Document

XBRL Taxonomy Schema

14 unchanged sentences

March 16, 2023

Baker, Chief Financial Officer

(Principal Financial and Accounting Officer)

13 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