What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2024-02-27 compared with 2021-05-10 · 21 added, 1881 removed, 2 unchanged (100% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

common stock is listed and traded on the Nasdaq Capital Market under the symbol “INSE”.

Our public warrants trade

on the over-the-counter markets operated by OTC Markets Group under the symbol “INSEW”.

of March 25, 2020, there were 64 holders of record of our common stock and 11 holders of record of our warrants.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

common stock is listed and traded on the Nasdaq Capital Market under the symbol “INSE”.

of March 13, 2023, there were 35 holders of record of our common stock.

This does not include the number of stockholders who hold shares

of our common stock through banks, brokers or other financial institutions.

Sales of Unregistered Securities

of Equity Securities by the Issuer and Affiliated Purchasers

SELECTED FINANCIAL DATA.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the

financial statements and related notes thereto included elsewhere in this report.

This discussion contains forward-looking statements

that involve risks and uncertainties.

Our actual future results could differ materially from the historical results discussed

Factors that could cause or contribute to such differences include, but are not limited to, those identified below and

those discussed in the section titled “Risk Factors”

included elsewhere in this report.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations”

has been amended and restated

to give effect to the restatement of our financial statements, as more fully described in “Restatement of Previously Reported Information”

within Note 1 to our financial statements.

For further detail regarding the restatement, see “Explanatory Note”

and “Item

Controls and Procedures.”

Forward-Looking

make forward-looking statements in this Annual Report on Form 10-K.

These forward-looking statements relate to expectations for

future financial performance, business strategies or expectations for our business, and the timing and ability for us to complete

currently contemplated or future acquisitions.

Specifically, forward-looking statements may include statements relating to:

future financial performance of the Company;

market for the Company’s products and services;

plans and opportunities, including currently contemplated or future acquisitions or additional business combinations;

statements preceded by, followed by or that include words such as “anticipate”, “believe”, “can”,

“continue”, “could”, “estimate”, “expect”, “forecast”, “intend”,

“may”, “might”, “plan”, “possible”, “potential”, “predict”,

“project”, “proposed”, “scheduled”, “seek”, “should”, “target”,

“would”

or similar expressions, among others.

forward-looking statements are based on information available as of the date hereof, and current expectations, forecasts and assumptions

that involve a number of judgments, risks and uncertainties.

Accordingly, forward-looking statements should not be relied upon

as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements

to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise,

except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties,

our actual results or performance may be materially different from those expressed or implied by these forward-looking statements.

Some factors that could cause our actual results or performance to differ include:

effect and impact of the ongoing global coronavirus (COVID-19) pandemic on our business with respect to the potential duration

of the pandemic, the various Government-ordered emergency measures including travel restrictions, social distancing and/or shelter

in place orders and closure of retail venues and the remediation plans put in place by each Government to potentially mitigate

these effects, the detail, scope and application of which are still largely unknown;

ability to compete effectively in our industries;

effect of evolving technology on our business;

ability to renew long-term contracts and retain customers, and secure new contracts and customers;

ability to maintain relationships with suppliers;

ability to protect our intellectual property;

regulation of our industries;

trends with respect to B2/B3 gaming machines in the United Kingdom (“UK”) following a substantial reduction of

maximum permitted bets, which came into effect on April 1, 2019;

ability to successfully grow by acquisition as well as organically;

ability to attract and retain key members of our management team;

need for working capital;

ability to secure capital for growth and expansion;

consumer, technology and other trends in our industries;

our ability to successfully operate across multiple jurisdictions and sectors around the world;

in local, regional and global economic and political conditions;

ability to effectively integrate the operations of businesses we acquire, and to grow and expand such operations;

Subsequent Events

Investors and potential investors are advised

to review this annual report on Form 10-K in light of ongoing events.

As with other businesses worldwide, we are experiencing

severe disruption to our business as a result of the COVID-19 pandemic and the far-reaching actions of the governments of various

countries where we do, and hope to do, business, as well as countries sourcing our supply chain.

The World Health Organization has declared

COVID-19 to be a global pandemic.

There have been a number of government-imposed emergency measures in many of the jurisdictions

in which we operate in response to the pandemic.

The duration of these measures are unknown, but include the closure of all retail

venues (including pubs, bookmakers, holiday parks, and adult gaming centers), restrictions on all non-essential travel, social

distancing, bans on public mobility and shelter in place measures.

Retail operations of our customers in Italy, Greece, the U.S

and the UK have closed and are no longer generating revenues for us.

Our Interactive business, which includes Virtual Sports products,

to the extent delivered online, remain operational.

Although there have been a number of government-supported

initiatives (across our various geographies) proposed to ease the burden on businesses and employees, including employee retention

schemes, credit relief and tax deferrals, there is still much uncertainty regarding the scope of these initiatives or their respective

impact on our business.

While the situation is fluid, we have

already experienced adverse effects on our business, which we are currently working to mitigate.

Since mid-March, we have drawn

down the full amount of GBP20.0 million (equivalent to $24.8 million at current exchange rates) on our revolving credit facility

to provide additional near-term liquidity and cancelled or delayed material capital expenditures.

Most recently, we implemented

furloughs, reduced work hours and compensation levels, as well as additional measures across our entire business.

The objective

of these actions has been to lower our future cash expenditures for the period in which these initiatives remain in place.

Additionally, the Board has determined to

(i) indefinitely delay the payment of accrued executive bonuses for the year ended December 31, 2019 and (ii) waive cash payments

of Board retainers due to be disbursed during the second quarter of 2020.

The Executive Chairman has also voluntarily withdrawn

his Employment Agreement from consideration at our upcoming annual meeting of stockholders and we are examining arrangements with

In addition, the Office of the Executive Chairman have consented to temporary reductions in base pay, as described

in Item 9B below.

Though we have seen an increase in our virtual/interactive business

since the government-mandated closures, depending on the duration of the pandemic and government-mandated restrictions, as well

as government-sponsored remediation regimes, the effects of these events are potentially catastrophic for the worldwide economy,

including our business.

However, the dynamic nature of the pandemic and government restrictions, as well as evolving potential

for relevant, government sponsored business stimuli and creditor relief plans are neither quantifiable nor predictable as of this

are a global business-to-business gaming technology company, supplying Server Based Gaming (“SBG”) and Virtual Sports

(which includes Interactive) systems to regulated lottery, betting and gaming operators worldwide through an “omni-channel”

distribution strategy.

We provide end-to-end digital gaming solutions on our proprietary and secure network, which accommodates

a wide range of devices, including land-based gaming machine terminals, mobile devices such as smartphones and tablets and online

computer and social applications.

key strategic priorities are to:

our strong positions in each of Virtual Sports, Interactive and SBG by developing new omni-channel products;

to invest in games and technology in order to grow our existing customers’

Add new customers by expanding into underpenetrated sectors and newly regulated jurisdictions;

targeted mergers and acquisitions to expand our product portfolio and/or distribution footprint.

most recent fiscal year ended on December 31, 2019.

On September 24, 2018, our Board of Directors determined, in accordance with

our bylaws and the recommendation of the Audit Committee of our Board of Directors, to change our financial year, so that it begins

on January 1 and ends on December 31 of each year, commencing on January 1, 2019.

Subsequent to this change in financial year,

we filed a transition report on Form 10-Q, covering the transition period of October 1, 2018 to December 31, 2018.

this Form 10-K covers our financial year as amended, being the period from January 1, 2019 to December 31, 2019.

are shown for the calendar year period from January 1, 2018 to December 31, 2018, as shown in the accompanying reconciliation

October 1, 2019, the Company completed the acquisition of the Gaming Technology Group (“NTG”) of Novomatic UK Ltd.,

a division of Novomatic Group, a leading international supplier of gaming equipment and solutions.

Our business is being and

will continue to be adversely affected by the rapidly expanding nature of the coronavirus (COVID-19) pandemic.

All venues offering

land-based gaming, including our products, are closed for an indeterminate period of time in the jurisdictions in which we operate

through governmental mandate.

In addition, the extent of a significant economic impact from the pandemic may result in a decrease

in the willingness or ability of consumers to engage in gambling activities.

Land-based customers globally, and the United States,

United Kingdom, Greece and Italy specifically, are impacted by the COVID-19 pandemic due to the closure of venues.

There is also

a possibility that player behavior may change following any resolution of the pandemic, including that consumers may spend less

time or wager smaller amounts at gambling facilities.

The pandemic is adversely affecting a broad range of our operations, including

our ability to obtain and ship our products, our ability to continue to develop new products and services and the ability of

our customers to pay outstanding amounts due to us.

As a result of the significant reductions in revenue and other changes to

our business, at least in the short term (which also affects other companies in our industry), we are working to protect our existing

available liquidity by pro-actively managing capital expenditures and working capital as well as identifying both immediate and

longer term opportunities for cost savings.

expect, due to closures of land-based venues, that there could be a meaningful increase in our online revenues from slots and

virtual sports but it is not possible to quantify any potential impact at this time.

Prior to any COVID-19 impact, we would have

expected this part of our business to account for approximately 10% of Company revenue during 2020.

As part of these efforts to preserve liquidity,

the Company drew all remaining availability (£18.0 million ($23.8 million using rates prevailing at December 31, 2019)) under

its £20 million ($26.4 million using rates prevailing at December 31, 2019) revolving credit facility on March 13, 2020.

report our operations in three business segments, SBG, Virtual Sports (which includes Interactive, an operating segment which

does not exceed the quantitative thresholds in Accounting Standards Committee (“ASC”

280-10-50-12), and Acquired Businesses

(which is comprised of the aforementioned NTG business, acquired on October 1, 2019), representing our different products and

We evaluate our business performance, resource allocation and capital spending on an operating segment level, where

We use our operating results and identified assets of each of our operating segments in order to make prospective operating

Although our revenue and cost of sales (excluding depreciation and amortization) are reported exclusively by segment,

we do include unallocated items in our consolidated financial statements for certain expenses including depreciation and amortization

as well as selling, general and administrative expenses.

Unallocated balance sheet line items include items that are a shared

resource and therefore not allocated between operating segments.

this report, we have changed how certain selling, general and administrative expenses are split between segments, reducing the

allocation of costs within “Corporate Functions”, which management believes provides a more informed allocation.

such, we have restated the segment splits for the comparative prior periods in line with the revised allocations, to give a clear

comparison with the current period.

Commentary within this section refers to changes from the restated segment numbers.

SBG business segment designs, develops, markets and distributes a broad portfolio of games through our digital network architecture.

Our SBG customers include UK licensed betting offices (“LBOs”), casinos, gaming hall operators, bingo operators and

regulated operators of lotteries, as well as government-affiliated operators.

Virtual Sports business segment designs, develops, markets and distributes ultra-high-definition games that create an always-on

sports wagering experience.

Our Virtual Sports customers include virtual sports retail and digital operators, including regulated

betting operators, lotteries, casinos, online operators and other gaming and lottery operators in the UK, continental Europe,

Africa, Asia and North America.

Our Interactive business segment (reported as part of Virtual Sports) comprises the offering of

our SBG and Virtual Sports content via our remote gaming servers.

Acquired Businesses design, develop, market and distribute a broad portfolio of games through our digital network architecture.

In addition, it operates analog gaming and amusement machines for certain customers, including UK pubs, adult gaming centers,

motorway service stations and holiday resorts.

generate revenue in three principal ways:

on a participation basis, on a fixed rental fee basis and through product sales and

software license fees.

Participation revenue includes a right to receive a share of revenue generated from (i) our Virtual Sports

products placed with operators;

(ii) our SBG terminals placed in gaming and lottery venues;

(iii) licensing our game content and

intellectual property to third parties;

and (iv) our games on third-party online gaming platforms that are interoperable with

our game servers.

revenue recognition processes we 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.

from SBG terminals, access to our content and SBG platform, including electronic table gaming products is recognized based upon

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

Where this is not the case,

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

We recognize revenue from these arrangements in accordance with the series

guidance in ASC 606 over time on a daily basis over the term of the arrangement, or when not specified over the expected customer

relationship period.

Hardware sales take the form of a transfer of ownership of our developed gaming terminals, and are recognized

at a point in time upon delivery.

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

sports online and mobile revenue, which includes the provision of virtual sports content and services to mobile and online operators,

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

We recognize revenue for these

fees over time on a daily or weekly basis in accordance with the series guidance in ASC 606 over the term of the arrangement.

These arrangements also typically include a perpetual license billed up front, granted to the customer for access to our gaming

platform and content.

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

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

Revenue from the development

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

acceptance by the customer.

Revenue from gaming and amusement terminals,

access to our content and SBG platform, including electronic table gaming products is recognized based upon a contracted percentage

of the operator’s net winnings from the terminals’

Where this is not the case, particularly in the pub rental

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

We recognize revenue from these arrangements in accordance with

the series guidance in ASC 606 over time on a daily basis over the term of the arrangement, or when not specified over the expected

customer relationship period.

Hardware sales take the form of a transfer of ownership of our developed gaming terminals, and are

recognized at a point in time upon delivery.

Geographically,

more than half of our revenue is derived from, and more than half of our non-current assets are attributed to, our UK operations,

with the remainder of our revenue derived from, and non-current assets attributed to, Italy, Greece and the rest of the world.

the twelve months ended December 31, 2019, we earned approximately 68% of our revenue in the UK, 13% in Greece, 11% in Italy and

the remaining 8% across the rest of the world.

During the twelve months ended December 31, 2018, we earned approximately 63%,

17%, 13% and 7% of our revenue in those regions, respectively.

results are affected by changes in foreign currency exchange rates as a result of the translation of foreign functional currencies

into our reporting currency and the re-measurement of foreign currency transactions and balances.

The impact of foreign currency

exchange rate fluctuations represents the difference between current rates and prior-period rates applied to current activity.

The largest geographic region in which we operate is the UK and the British pound (“GBP”) is considered to be our

functional currency.

Our reporting currency is the U.S.

dollar (“USD”).

Our results are translated from our functional

currency of GBP into the reporting currency of USD using average rates for profit and loss transactions and applicable spot rates

for period-end balances.

The effect of translating our functional currency into our reporting currency, as well as translating

the results of foreign subsidiaries that have a different functional currency into our functional currency, is reported separately

in Accumulated Other Comprehensive Income.

the twelve months ended December 31, 2019, we derived approximately 32% of our revenue from sales to customers outside the UK,

compared to 37% during the twelve months ended December 31, 2018.

the section “Results of Operations”

below, currency impacts shown have been calculated as the current-period average

GBP:USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency

The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional

currency, multiplied by the prior-period average GBP:USD rate.

This is not a U.S.

GAAP measure, but is one which management believes

gives a clearer indication of results.

In the tables below, variances in particular line items from period to period exclude currency

translation movements, and currency translation impacts are shown independently.

Financial Measures

use certain financial measures that are not compliant with U.S.

GAAP (“Non-GAAP financial measures”), including EBITDA

and Adjusted EBITDA, to analyze our operating performance.

In this discussion and analysis, we present certain non-GAAP financial

measures, define and explain these measures and provide reconciliations to the most comparable U.S.

GAAP measures.

See “Non-GAAP

Financial Measures”

of Operations

following discussion and analysis of our results of operations has been organized in the following manner:

discussion and analysis of the Company’s results of operations for the year ended December 31, 2019, compared to the

twelve-month period ended December 31, 2018;

discussion and analysis of the results of operations of our SBG and Virtual Sports business segments for the twelve-month

period ended December 31, 2019, compared to the year ended December 31, 2018, including KPI analysis;

a discussion and analysis of the results

of operations of our Acquired Business segments for the period commencing with the consummation of the acquisition on October

1, 2019 and ended December 31, 2019.

a discussion and analysis of the Company’s results of operations for the three-month period ended December 31, 2018, compared to the same period in 2017;

a discussion and analysis of the results of operations of our SBG and Virtual Sports business segments for the three-month period ended December 31, 2018, compared to the same period in 2017, including KPI analysis.

We changed our financial year-end from September

30 to December 31, effective for the fiscal year ended December 31, 2019, with our previous fiscal year-end was September 30, 2018.

Subsequent to this change in financial year, we filed a transition report on Form 10-Q, covering the transition period of October

1, 2018 to December 31, 2018.

As a result, we have provided results for the twelve-month period ended December 31, 2018 for comparative

The results for the twelve months ended December 31, 2018 are unaudited.

The three-month financial periods presented

consist of a 92-day period for each of 2018 and 2017.

The balance sheet date for both 2018 and 2017 is December 31.

foregoing periods is herein referred to as a “three-month period.”

Our results are affected by changes in foreign

currency exchange rates, primarily between our functional currency (GBP) and our reporting currency (USD).

In the twelve-month

periods ended December 31, 2019 and 2018, the average GBP:USD rates were 1.28 and 1.34, respectively.

In the three-month periods

ended December 31, 2018 and 2017, the average GBP:

USD rate was 1.29 and 1.34, respectively.

In the discussion and analysis below, certain

data may vary from the amounts presented in our consolidated financial statements due to rounding.

Months ended December 31, 2019 compared to Twelve Months ended December 31, 2018

the Twelve-Month

(In millions)

of sales, excluding depreciation and amortization:

Cost of service

Cost of hardware

general and administrative expenses

Stock-based compensation

and integration related transaction expenses

and amortization

operating Income (Loss)

Other income (expense)

Interest income

Interest expense

Change in fair value of earnout liability

Change in fair value of derivative liability

Change in fair value of warrant liability

Loss from equity method investee

Other finance

income (expense)

other income (expense), net

(loss) income from continuing operations before income taxes

(loss) income

Exchange Rate

- $ to £

change is not meaningful

reported revenue for the twelve months ended December 31, 2019 increased by $12.7 million, or 9.0%, to $153.4 million on a reported

Adverse currency movements accounted for $6.8 million.

On a functional currency at constant rate basis, revenue increased

by $19.4 million, or 13.8%, with service revenue increasing by $10.2 million and hardware revenue increasing by $9.2 million.

The change in total reported revenue was comprised of a decrease of $18.8 million in SBG revenue, a decrease of $0.4 million in

Virtual Sports revenue, offset by an increase in revenue of $32.9 million from the new Acquired Businesses segment.

This was offset

by $1.0 million in intercompany eliminations.

revenue, which is included in total reported revenue, above, decreased by $15.0 million on a functional currency at constant rate

basis, or 14.5%, comprised of a reduction in service revenue of $19.0 million and a $4.0 million increase in hardware sales.

SBG service revenue decreased by $22.1

million on a reported basis, of which $3.1 million was attributable to adverse currency movements.

On a functional currency at

constant rate basis, SBG service revenue decreased by $19.0 million, or 20.4%, to $71.0 million.

This was primarily due to a decrease

in revenue in the UK LBO sector of $16.2 million, of which $15.6 million was driven by the Triennial Implementation and $0.5 million

due to the expiry of a service contract.

Additionally, there was a revenue reduction in the Greek sector of $0.9 million driven

by a reduction in software license sales of $6.0 million, partly offset by the continued terminal rollout which drove additional

income of $5.1 million.

Revenue in the Italian sector decreased by $2.2 million due mainly to a 1.7% tax rate increase on gross

stakes driving a $2.9 million reduction as well as a decline in gross win per unit per day that resulted in a $0.2 million revenue

This was partly offset by $0.5 million from additional unit volume, $0.3 million from an increase in license sales and

$0.2 million from a full year of revenue share terms changes with two major customers.

SBG hardware revenue increased by $3.4

million to $13.5 million, on a reported basis, despite adverse currency movements of $0.7 million.

On a functional currency at

constant rate basis, SBG hardware revenue increased by $4.0 million.

The increase in hardware revenue was driven by 328 “Flex”

cabinet sales to two major customers in the UK Bingo & AGC sectors of $2.5 million, the sale of 116 Valor TM terminals

in the North American sector of $1.7 million, additional sales of 467 SSBTs in the UK LBO sector of $2.0 million, the sale of

32 Flex terminals to a UK LBO customer of $0.3 million and 75 Sabre Hydra TM sales to a major customer in the UK ETG

sector of $1.3 million.

These were partly offset by nil margin sales of 600 “Flex”

cabinet sales to a major UK LBO

customer of $4.0 million.

Sports reported revenue decreased by $0.4 million.

A $1.7 million decrease occurred due to adverse currency movements.

On a constant

currency basis, Virtual Sports revenue increased by $1.3 million, or 3.5%, of which $2.1 million was driven by an increase in

Virtual Sports land-based and Scheduled Online Virtual recurring revenue and $0.4 million was driven by an increase in Interactive

recurring revenue.

There was an additional $0.9 million increase from non-recurring revenue.

This was partly offset by $1.3 million

from a major customer that experienced a decline in retail venues, the rephasing of an annual contract and a decline in general

trading as well as $0.8 million due to a reduction in revenue from long-term Virtual Sports licenses that have now come to an

Businesses revenue accounted for $27.6 million of service revenue and $5.3 million of hardware revenue, reflecting its ownership

by the Company for the period from October 1, 2019 through December 31, 2019.

$8.6 million was generated from rental fees from

Category C gaming machines within the Pub business in the UK, which includes 8,590 Category C digital and analog gaming machines.

An additional $5.6 million in revenue was generated through the UK leisure parks business and $6.2 million generated from machine

rentals to UK MSAs and AGCs.

of sales, excluding depreciation and amortization

of sales, excluding depreciation and amortization, which includes machine cost of sales, consumables, content royalties and connectivity

costs, increased by $4.8 million, or 15.4%, on a reported basis, to $36.1 million.

On a functional currency at constant rate basis,

cost of sales increased by $6.5 million, or 20.9%.

Of this increase, $1.5 million was attributable to an increase in SBG hardware;

gross margin for SBG hardware increased from 22.3% to 32.5% in the period, primarily due to sales of the Valor TM cabinet

and additional ETGs, which yield higher gross profits per machine, $7.3 million was attributable to the acquisition of the Acquired

Businesses (comprised of $3.5 million in service costs and $3.8 million in hardware costs), offset by a decrease in cost of service

for Virtual Sports of $1.3 million.

This was partly offset by favorable currency movements of $1.7 million.

general and administrative expenses

expenses increased by $13.6 million, or 23.0%, on a reported basis, to $72.6 million, This included $3.2 million of favorable

currency movements.

On a functional currency at constant rate basis, SG&A increased by $16.8 million, or 28.4%.

This increase

was driven by incremental selling, general and administrative expenses of $20.1 million from Acquired Businesses.

This was partly

offset by labor savings of $4.0 million (of which $4.9 million was made in conjunction with Post Triennial Implementation), facilities

cost savings of $1.1 million, IT-related cost savings of $0.5 million and other cost savings of $0.2 million.

This was partly

offset by an increase in the costs of group restructure of $0.5 million (removed from Adjusted EBITDA) and a decrease in net labor

capitalization and manufacturing recoveries of $1.7 million due to mix of projects and lower factory throughput as a result of

fewer machines being built.

the year ended December 31, 2019, the Company recorded an expense of $9.0 million with respect to outstanding awards.

expense, $6.0 million related to costs from awards made under the 2016 Long Term Incentive Plan, $2.8 million from awards made

under the 2018 Plan and $0.3 million related to costs from the vesting of awards in December 2019.

The entirety of this cost related

to recurring costs, with the 2018 Plan awards impacted by movements in the stock price between the award granting date and May

14, 2019, the date the scheme was formally approved by stockholders.

Following approval, the cost was no longer impacted by stock

price movements being charged by the same method as all other award plans.

During the year ended December 31, 2018, the charge

for stock-based compensation was $5.8 million.

Of this expense, $5.6 million related to costs from awards made under the 2016

Long Term Incentive Plan and $0.2 million from awards made under the 2018 Plan.

The entirety of this cost is related to recurring

and integration related transaction expenses

related transaction expenses increased by $6.4 million, on a reported basis, to $6.7 million.

The entirety of the 2019 and 2018

period expenses were related to work in respect of potential acquisitions, with the 2019 expenses relating to the acquisition

and third-party integration fees linked exclusively to the acquisition and integration of NTG.

expense decreased by $7.7 million as there was no charge in the current period, but a $7.7 million expense in the prior period.

This expense in the prior period was considered to be outside the normal course of business.

Following a review of key strategic

plans and therefore future priority areas by the Office of the Executive Chairman, the carrying value of these assets were deemed

to be in excess of their current fair value.

and amortization

and amortization increased by $0.1 million, or 0.3%, on a reported basis, to $42.0 million.

This included the impact of favorable

currency movements of $1.9 million.

On a functional currency at constant rate

basis, depreciation and amortization increased by $2.0 million, or 4.8%.

This increase was driven by incremental depreciation and

amortization of $5.9 million from Acquired Businesses.

This was partially offset by a $4.2 million decrease of depreciation and

amortization in SBG and Virtual Sports.

This was driven by lower machine and machine-related depreciation of $3.8 million and lower

amortization of $0.4 million, driven by lower amortization of platforms and games.

The machine and machine-related depreciation

decrease was driven by lower depreciation in the UK ($4.3 million) and Italy ($1.2 million) due to machines being fully depreciated,

which was partly offset by additional depreciation in Greece of $1.7 million due to the additional volume of machines.

operating loss

the period, net operating loss increased by $7.7 million from a loss of $5.3 million to a loss of $13.0 million on a reported

On a functional currency at constant rate basis, net operating loss increased by $8.6 million, mainly due to the increase

in revenue, more than offset by increases in cost of sales and SG&A expenses, including a $0.9 million favorable currency

The net impact of the Triennial Implementation in the UK for the period (included in the above) was $8.7 million.

expense increased by $8.1 million in the year, to $27.8 million, on a reported basis.

Of the $27.8 million, $16.4 million related

to debt interest and $9.4 million related to the amortization of capitalized debt fees.

$5.4 million of the $16.4 million and

$0.8 million of the $9.4 million related to the new debt with the remaining amounts relating to the previous debt including a

$7.3 million expense writing off the remainder of the debt fees capitalized under the previous debt.

Of the $8.1 million increase

in the current year, $1.3 million was due to a favorable currency movement.

On a functional currency at a constant rate basis,

interest expense increased $9.3 million, or 47.0%, compared to the prior year.

This was due to higher amortization of capitalized

debt fees of $9.0 million (including the expense of $7.3 million as a result of the debt refinancing in connection with the acquisition

of the Acquired Businesses in the year), higher debt interest costs of $4.3 million and favorable bank currency movements of $0.5

million were offset by savings of $4.8 million of PIK interest (no longer incurred following the debt refinancing in August 2018).

in fair value of earnout liability

Due solely to changes in the share price

($6.51 at March 25, 2019 and $4.80 at December 31, 2018) the charge in the year ended December 31, 2019 from a change in the fair

value of earnout liability was $2.3 million.

On March 25, 2019, the shares relating to the earnout liability were issued.

prior year, due to changes in share price, the corresponding figure was a $5.7 million gain.

in fair value of derivative liability

in fair value of derivative liability decreased by $7.9 million, on a reported basis, to a $3.0 million credit for the year ended

December 31, 2019, arising from the fair valuing of the cross-currency swaps executed in August 2018 in connection with the debt

refinancing of the Company.

This represents the unhedged amount of the cross-currency swap.

For the year ended December 31, 2018,

the change in fair value of derivative liability was a $4.9 million charge.

Of this, $6.5 million represented the unhedged amount

of the cross-currency swap with a $1.6 million gain for derivative awards which were converted to stock-based compensation awards

in March 2018.

On October 1, 2019 as part of the refinancing of the group, the cross-currency swaps were terminated.

in fair value of warrant liability

to changes in the valuation of the warrant liability, the expense recorded in the year increased from $20.7 million income to $4.1 million

finance income

finance income for the year ended December 31, 2019 was a credit of $3.2 million, unchanged from the prior year.

Changes in exchange

rates resulted in a loss of $3.3 million in retranslating the debt balance.

This was offset by a $3.2 million gain from the GBP:USD

cross-currency swap entered into to mitigate this impact, accounted for under hedge accounting, and a $0.1 million higher pension

interest gain.

effective tax rate for the period ended December 31, 2019 was 0.2%, and our effective tax rate for the period ended December 31,

2018 was 1.0%.

a reported basis, net loss was $41.1 million compared to a net loss of $0.4 million in the prior period.

This was mainly due to the decrease in operating income driven by the increase in acquisition and integration related transaction

expenses, plus increases in interest expense, change in fair value of earnout liability and change in fair value of warrant

This was partly offset by a $7.9 million positive change in fair value of derivative liabilities.

Months ended December 31, 2019 compared to Twelve Months ended December 31, 2018 (unaudited) –

Server Based Gaming Segment

generate revenue from our SBG business segment through product sales (both hardware and software) and long-term participation

agreements, which include access to our SBG platform and selection of game titles, usually over a term of between three and five

years but longer in certain territories.

Our participation contracts are typically structured to pay us a percentage of net win

(defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and any relevant regulatory

levies) from SBG terminals placed in our customers’

facilities, which include retail outlets, casinos and other gaming operations,

or from SBG gaming software used by customers’

players through mobile or online devices.

Typically, we recognize revenue

from these arrangements on a daily basis over the term of the contract.

growth for our SBG business is principally driven by the number of operator customers we have, the number of SBG machines in operation,

the net win performance of the machines and the net win percentage that we receive pursuant to our contracts with our customers.

Segment, Key Performance Indicators

the Twelve-Month Period ended

End of period installed base (# of terminals) (1)

Average installed base (# of terminals) (2)

Customer Gross Win per unit per day (3)

Customer Net Win per unit per day (3)

Inspired Blended Participation Rate

Includes 1,341 machines operated by the Acquired Businesses in twelve-month period ended December 31 st , 2019 and 2,001 machines in twelve-month period ended December 31 st , 2018.

Post acquisition of NTG, the revenue generated from these machines became intercompany and is thus eliminated on consolidation.

Includes 1,848 machines operated by the Acquired Businesses in twelve-month period ended December 31 st , 2019 and 1,937 machines in twelve-month period ended December 31 st , 2018.

Post acquisition of NTG, the revenue generated from these machines became intercompany and is thus eliminated on consolidation.

Includes all SBG terminals in which the company takes a participation revenue share across all territories

the table above:

of Period Installed Base”

is equal to the number of deployed SBG terminals at the end of each period that have been placed

on a participation basis.

SBG participation revenue, which comprises the majority of SBG service revenue, is directly related

to the terminal installed base.

This is the medium by which customers generate revenue and distribute a revenue share to the Company.

To the extent all other “KPI “and certain other factors”

being equal”

remain constant, the larger the

installed base, the higher the Company’s revenue will be for that period.

Management gives careful consideration to this

KPI in terms of driving growth across the segment.

is derived from the performance of the installed base as described by the Gross and Net Win KPIs.

the End of Period Installed Base is materially different from the Average Installed Base (described below), we believe this gives

an indication as to potential future performance.

The End of Period Installed Base is particularly useful for assessing new customers

or sectors, to indicate the progress being made with respect to entering new territories or jurisdictions.

“Average

Installed Base”

is the average number of deployed SBG terminals during the period.

Therefore, it is more closely aligned

to revenue in the period.

This measure is particularly useful for assessing existing customers or sectors to provide comparisons

of historical size and performance.

“Customer

Gross Win per unit per day”

is a KPI used by our internal decision makers to (i) assess impact on the Company’s revenue,

(ii) determine changes in the strength of the overall market and (iii) evaluate the impacts of regulatory change and our new content

releases on our customers.

Customer Gross Win per unit per day is the average per unit cash generated across all SBG terminals

in which the Company takes a participation revenue share across all territories in the period, defined as the difference between

the amounts staked less winnings to players divided by the Average Installed Base in the period, then divided by the number of

days in the period.

revenue share income accrued in the period is derived from Customer Gross Win accrued in the period after deducting gaming taxes

(defined as a regulatory levy paid by the Customer to government bodies) and applying the Company’s contractual revenue

share percentage.

Our internal decision makers believe Customer

Gross Win measures are meaningful because they represent a view of customer operating performance that is unaffected by our revenue

share percentage and allow management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking

between customers and (3) identify strategies to improve operating performance in the different sectors in which we operate.

“Customer

Net Win per unit per day”

is Customer Gross Win per unit per day after giving effect to the deduction of gaming taxes.

“Inspired

Blended Participation Rate”

is the Company’s average revenue share percentage across all terminals where revenue is

earned on a participation basis, weighted by Customer Net Win per unit per day.

overall SBG revenue from terminals placed on a participation basis can therefore be described as the product of the Average Installed

Base, the Customer Net Win per unit per day, the number of days in the period, and the Inspired Blended Participation Rate, to

give “participation revenue”.

Segment, key events that affected results for the Twelve Months ended December 31, 2019

During the period Customer Gross Win per

unit per day in the total UK sector (including non-LBO UK sectors) decreased by 24.9%.

This was due mainly to the Triennial Implementation

The revenue impact of this regulatory change was in line with our expectations.

During the period, an additional 1,152

SSBTs were sold and deployed in the UK LBO sector, of which 526 were sold in the fourth quarter.

In addition to hardware sales

margin, these terminals also generate a recurring service fee.

During the third quarter of 2019, the Company

secured an extension to supply hardware, platform, content and service into the UK LBO sector with our largest customer for an

additional three years.

This agreement runs to the end of 2022 and includes minimal capital expenditure in exchange for a slight

reduction in revenue share versus current terms.

In the UK Casino sector, we sold 278 “Flex”

B3 terminals split between two major customers.

These terminals will also generate a recurring software rental fee and content

revenue share to the Company in future periods.

In the UK Electronic Table Games (ETG)

sector, we sold 205 Sabre Hydra TM terminals to a major Casino customer with a further 150 on the order book for the

second part of 2020.

During the period, first time sales were

recorded in the North American sector.

Hardware sales of 116 Valor TM terminals were made in Illinois.

We were awarded a further 580 contracted

terminals in Greece, 380 of which are our new “Valor VIP”

cabinet bringing the total number of our contracted terminals

in Greece to 8,940.

Our SBG rollout into the Greek sector continued with a further 2,106 terminals being deployed on site..

increased density, the performance of our Greek terminals continues to be strong relative to our competitors.

In Italy, customer Net Win per unit per

day (in EUR) decreased by €13, or 29.3%, primarily due to an increase in the average revenue tax of 1.7% from 6.9% in 2018

to 8.6% in 2019 as well as a decline in Gross Win per unit per day (EUR).

Our end of period Installed Base of terminals

showed a decrease of 1,879, or 5.4%, to 32,698.

This was due to 700 shop closures (representing a decrease of 2,800 terminals)

by a major customer in the UK LBO sector resulting from the Triennial Implementation, however this happened in the third and fourth

quarters and therefore had less of an impact on the average installed base.

Growth of over 2,100 VLT’s in the Greek sector

partly offset the decline in the UK.

Customer Gross Win per unit per day (in

our functional currency, GBP) decreased by 24.5% across the entire estate, driven mainly by the reduction in maximum permitted

bets on B2 gaming machines in the UK and the impact of our SBG installations in Greece, as our Greek machines return a lower daily

Customer Gross Win compared to our UK machines.

These impacts, along with a 1.7% average increase in the Italian revenue tax rate,

partly offset by reduced tax in the UK LBO sector post triennial, led to a Net Win per unit per day decrease on total SBG of 24.7%.

Our blended participation rate increased by 0.1% to 6.2% in 2019.

Segment, Twelve Months ended December 31, 2019 compared to Twelve Months ended December 31, 2018

the Twelve-Month

of sales, excluding depreciation and amortization:

cost of sales

general and administrative expenses

Impairment expense

Stock-based compensation

and amortization

operating Income (Loss)

Rate - $ to £

segment revenue

the period revenue decreased by $18.8 million, to $84.5 million, on a reported basis.

Adverse currency movements accounted for

$3.8 million.

On a functional currency at constant rate basis, SBG revenue decreased by $15.0 million, or 14.5%.

Service revenue decreased by $22.1 million

on a reported basis, of which $3.1 million was attributable to adverse currency movements.

On a functional currency at constant

rate basis, SBG service revenue decreased by $19.0 million, or 20.4%, to $71.0 million.

This was primarily due to a decrease in

revenue in the UK LBO sector of $16.2 million, of which $15.6 million was driven by the Triennial Implementation and $0.5 million

due to the expiring of a service contract.

Additionally, there was a reduction in

the Greek sector of $0.9 million driven by a reduction in software license sales of $6.0 million, partly offset by the continued

terminal rollout which drove additional income of $5.2 million.

Revenue in the Italian sector decreased

by $2.2 million on a functional currency at constant rate basis due mainly to a 1.7% tax rate increase on gross stakes driving

a $2.9 million reduction as well as a decline in gross win per unit per day that resulted in a $0.2 million revenue decline.

was partly offset by $0.5 million from additional unit volume, $0.3 million from an increase in license sales and $0.2 million

from a full year of revenue share terms changes with two major customers.

Revenue in UK Other increased by $0.5 million due to

a one-off contract sale during the period of $0.7 million and additional revenue of $0.2 million driven by terminal upgrades with

one customer, partly offset by an expiry of a service contract of $0.2 million and lower ETG software sales of $0.2 million.

UK LBO Customer Gross Win per unit per

day decreased by 24.9% due to the Triennial Implementation.

The revenue impact of this regulatory change was in line with our expectations,

improving consecutively each quarter since the Triennial Implementation launched on April 1, 2019.

The decline in Gross Win for

the fourth quarter was 21.1%, a significant improvement over the third quarter impact of 37.5% and the second quarter impact of

The vast improvement in the fourth quarter is a result of 700 closures of the lower end shops in our largest customer and

new game content going live across the full UK LBO estate.

Hardware revenue increased by $3.4 million

to $13.5 million, on a reported basis, despite adverse currency movements of $0.7 million.

On a functional currency at constant

rate basis, SBG hardware revenue increased by $4.0 million.

The increase in hardware revenue was driven by 328 “Flex”

cabinet sales to two major customers in the UK Bingo & AGC sectors of $2.5 million, our first 116 terminal sale of the Valor TM

cabinet in the North American sector of $1.7 million, additional sales of 467 SSBTs in the UK LBO sector of $2.0 million, the sale

of 32 Flex terminals to a UK LBO customer of $0.3 million and 75 “Sabre Hydra”

sales to a major customer in the UK

ETG sector of $1.3 million.

These are partly offset by nil margin sales of 600 “Flex”

cabinet sales to a major UK LBO

of $4.0 million.

segment operating income.

Cost of sales (excluding depreciation and amortization) remained flat, on a reported basis.

Favorable currency movements of $1.3 million offset a $1.3 million increase in cost of sales on a functional currency at constant

The above was driven by an increase in

hardware cost of sales of $1.5 million due to Flex sales in the UK Bingo & AGC sectors of $2.2 million, SSBT & Flex sales

in the UK LBO sector of $1.9 million, Valor TM sales in North America of $0.9 million and Sabre Hydra TM sales

in the ETG sector of $0.6 million.

These were partly offset by nil margin Flex sales in the UK LBO sector of $4.0 million from

the previous period that did not recur in 2019.

costs decreased by $0.1 million on a functional currency at constant rate basis.

This was driven by a reduction in UK consumables

of $1.0 million due to the Triennial Implementation and lower spares costs and content costs in Italy of $0.6 million, mostly

offset by an increase in Greek SBG service costs of $1.0 million driven by the increase in terminals as the Greece rollout continued

and increased UK LBO content costs of $0.5 million.

expenses decreased by $7.2 million to $23.6 million, on a reported basis.

This included $1.1 million of favorable currency movements.

This resulted in a functional currency at constant rate decrease of $6.0 million attributable to staff-related cost savings of

$5.8 million (of which approximately $4.4 million was made in conjunction with the Triennial Implementation), facilities cost

savings of $0.5 million, lower IT-related costs of $0.4 million driven by lower headcount, lower costs of group restructure of

$0.2 million and other cost savings of $0.8 million.

This was partly offset by $1.9 million lower labor capitalization and manufacturing

recoveries due to lower headcount, mix of projects and lower factory throughput as a result of fewer machines being built in the

impairment expense in the prior period, considered to be outside of the normal course of business, amounted to $4.7 million, due

to the review of key strategic areas by the Office of the Executive Chairman.

This resulted in a functional currency at constant

rate decrease of $4.7 million.

Depreciation and amortization decreased

by $5.2 million, to $29.1 million on a reported basis.

Of this amount, $1.3 million was due to favorable currency movements.

a functional currency at constant rate basis, the decrease was $3.8 million, from lower machine and machine-related depreciation.

The lower machine and machine-related depreciation was driven by lower depreciation in the UK ($4.3 million) and Italy ($1.2 million)

due to machines being fully depreciated, partly offset by the additional machine and machine-related depreciation in Greece of

$1.7 million due to the additional terminals in the Greek sector.

income decreased by $2.3 million, to $3.4 million, on a reported basis.

On a functional currency at constant rate basis, SBG operating

income increased by $2.3 million.

This was primarily due to the decrease in revenue, partly offset by lower SG&A expenses,

impairment expense and depreciation and amortization.

Segment, Recurring Revenue

forth below is a breakdown of our SBG recurring revenue.

SBG recurring revenue consists principally of SBG participation revenue.

For the Twelve-Month Period ended

SBG Recurring Revenue

Total SBG Revenue

SBG Participation Revenue

SBG Other Fixed Fee Recurring Revenue

Total SBG Recurring Revenue

SBG Recurring Revenue as a Percentage of Total SBG Revenue

the table above:

Participation Revenue”

includes our share of revenue generated from (i) our SBG terminals placed in gaming and lottery venues;

and (ii) licensing of our game content and intellectual property to third parties.

Other Fixed Fee Recurring Revenue”

includes service revenue in which the Company earns a periodic fixed fee on a contracted

SBG Recurring Revenue”

is equal to SBG Participation Revenue plus SBG Other Fixed Fee Recurring Revenue.

Segment, Service Revenue by Region

forth below is a breakdown of our SBG service revenue by geographic region.

SBG service revenue consists principally of SBG participation

the Twelve-Month

Based Gaming Service Revenue by Region

(In millions)

Service Revenue:

Rest of the World

service revenue

Exchange Rate - $ to £

of Operations –

Months ended December 31, 2018 compared to Twelve Months ended December 31, 2019 –

Sports Segment

Virtual Sports products create a form of simulated sports betting in both a streaming and on-demand environment, overcoming the

relative infrequency of live sporting events on which players can wager.

We generate revenue from our Virtual Sports segment by

licensing to our operator customers the software related to our Virtual Sports products, which consists of a complex graphics

and networking software package that provides fixed-odds wagering on an ultra-high definition computer rendering of a virtual

sporting event, such as soccer or boxing.

Our customers pay us for the use of this software through either a fixed license fee

per period, or on a participation basis based on the volume of customer net win.

We also generate revenue by providing upfront

services to our customers.

Revenue growth for our Virtual Sports segment is driven by the number of customers, the number of player

end-points and the customer net win attributable to our products.

customers for Virtual Sports include regulated betting operators, lotteries, casinos, online operators and other gaming and lottery

operators in the UK, continental Europe, Asia, Africa and North America.

Virtual Sports can be adapted to function in a sports

betting, lottery, or gaming environment and is therefore available to a wide range of customers in both public and private implementations.

Sports Segment, Key Performance Indicators

For the Twelve-Month Period ended

of Live Customers at the end of the period

of Live Customers

Total Revenue (£'m)

Total Virtual Sports Recurring Revenue (£'m)

Total Revenue £'m - Retail

Total Revenue £'m - Scheduled Online Virtuals

Total Revenue £'m - Interactive

Average Revenue Per Customer per day (£)

the table above:

of Live Customers at the end of the period”

and “Average No.

of Live Customers”

represent the number of customers

from which there is Virtual Sports revenue at the end of the period and the average number of customers from which there is Virtual

Sports revenue during the period, respectively.

“Total Revenue (£000)”

represents total revenue for the Virtual Sports segment, including recurring and upfront service revenue.

Total revenue is also

divided between “Total Revenue (£000) –

Retail,”

which consists of revenue earned through players wagering

at Virtual Sports venues, “Total Revenue (£000) –

Scheduled Virtuals,”

which consists of revenue earned

through players wagering on Virtual Sports online, and “Total Revenue (£000) –

Mobile RGS,”

which consists

of revenue earned through our Mobile RGS product.

“Average

Revenue per Customer per day”

represents total revenue for the Virtual Sports segment in the period, divided by the Average

of Live Customers, divided by the number of days in the period.

Sports Segment, Recurring Revenue

For the Twelve-Month Period ended

Virtual Sports Recurring Revenue

Total Virtual Sports Revenue

Recurring Revenue - Retail and Scheduled Online Virtuals

Recurring Revenue - Interactive

Total Virtual Sports Recurring Revenue

Virtual Sports Recurring Revenue as a Percentage of Total Virtual Sports Revenue

definitions of the terms used in the table above, see the definitions provided above.

Sports segment, key events that affected results for the Twelve Months ended December 31, 2019

the second phase of our Pennsylvania strategy we launched our proprietary Derby Cash TM Horse Racing product in over

8,500 venues in November.

This has shown significant year on year growth since launch.

the period we signed a new contract with British Columbia Lottery Corporation to supply Virtuals on demand, slots and table content

via our proprietary Virgo platform.

have signed an exclusive worldwide license deal with the NFL Alumni to utilize the name, brand, image, persona and likeness of

the NFLA members to be commercially used in virtual football games

our Virtual Interactive division, we launched with Bet365 in New Jersey, a key launch for our US strategy.

the Interactive division we have deployed our proprietary V-Play On-Demand and slot content to Caesars and Golden Nugget, New

Jersey and Lotto Quebec, Canada.

Performance has been strong since launch.

the year we renewed our contract with Bet365 for a further three years to provide scheduled Virtuals online with the world’s

largest online sports betting company with over 35 million customers worldwide.

UK Retail, we deployed our Rush Bingo product on a dedicated channel to the Betfred estate of approximately 1,600 venues, which

has seen significant growth throughout the year.

Ireland Retail we deployed a fourth channel of Horse Racing with Boylesports across the full estate, this is driving year on year

the UK and Ireland, we launched our Quick 6 Bingo and two-minute Power Spin Roulette products across the full Paddy Power estate

of over 750 venues We also renewed the Flutter Group contract for a further three years including Paddy Power and Betfair brands.

Virtual Interactive division launched our proprietary V-Play Basketball TM product with Bet Victor which has become

very popular.

We also deployed our proprietary 1 st Down TM and Head 2 Head Football TM products

with Bet365 on two additional channels and launched two streams of our V Play Football TM product with The Stars Group

brand Betstars.

the second quarter, our Interactive division launched new content, including Bear Money TM and Book of the Irish TM ,

across the estate, which have performed strongly.

In the third quarter we launched new content, Rainbow Cashpots TM and

Mighty Hot Wilds TM , which have both performed well.

In the final quarter we launched our first product under the licensing

deal with Jaromir Jagr, Jagr’s Super Slot TM and three additional key titles, Book of Christmas TM ,

Desperado’s Wild TM and Mega Cherry TM that have all performed well.

launched Rush Football 2 TM with the Moroccan Lottery via the Intralot platform in approximately 200 venues and increased

to 400 venues by the end of the year.

The Moroccan venues are amongst our most successful worldwide and the addition of these

extra venues has driven growth in the quarter and is expected to drive growth through 2020.

February, the Gaming International Awards were held at ICE 2019 and Inspired was named Virtual Supplier of the Year.

EGR B2B awards were held in June where Inspired was awarded Virtual Sports Supplier of the Year.

Average Number of Live Customers during the twelve-month period increased by twelve overall, from 93 to 105, including 17 new

Interactive customers.

Sports segment, Twelve Months ended December 31, 2019 compared to Twelve Months ended December 31, 2018

Virtual Sports

For the Twelve-Month

(In millions)

Service Revenue

Cost of Service

Selling, general and administrative expenses

Impairment expense

Stock-based compensation

Depreciation and amortization

Net operating Income (Loss)

Exchange Rate - $ to £

Sports segment revenue.

In the period, on a reported revenue basis, revenue decreased by $0.4 million with a $1.7 million

decrease from adverse currency movement.

On a functional currency at constant rate basis, Virtual Sports revenue increased by

$1.3 million, or 3.5%, driven by a $2.1 increase in Virtual Sports land-based and Schedule Online Virtual recurring revenue.

consisted of growth in Scheduled Online Virtuals of $1.1 million, followed by UK and Ireland retail increasing $0.9 million, $0.3

million from Belgium and Denmark retail and $0.4 million from new business in Morocco.

This was offset by a $0.4 million decline

in Italy and a $0.2 million decline in Finland from the changing of a fixed price contract.

revenue in the period increased by $0.4 million due to new customers and content launches.

This was offset by adverse results

from the point of consumption tax increase in the UK, regulatory changes in Sweden and uncontrollable external delays in new territories

from longer than expected regulatory requirements and testing processes.

further $0.9 million of Virtual Sports growth in the year was driven by non-recurring revenue consisting of $0.7 million from

the recognition of historical revenues previously unreported from a major customer and $0.2 million from an increase in one-time

This was partly offset by $1.3 million from a major customer that experienced a decline in retail venues, the rephasing

of an annual contract and a decline in trading as well as $0.8 million due to a reduction in revenue from long-term Virtual Sports

licenses that have now come to an end.

Sports segment operating income.

Cost of service decreased by $1.4 million to $3.2 million on a reported basis.

this decrease, $0.2 million arose from favorable currency movements.

On a functional currency at constant rate basis, cost of

service decreased by $1.3 million, due to lower third party royalty payments primarily driven by lower revenues in the year from

a major customer and a decline in royalties.

expenses decreased by $2.6 million, on a reported basis.

Of this decrease, $0.3 million arose from favorable currency movements.

This resulted in a functional currency at constant rate decrease of $2.3 million in the period largely driven by staff-related

cost savings of $0.7 million and lower Italian tax-related costs of $0.5 million.

and amortization decreased by $0.7 million to $5.5 million, on a reported basis.

Of this increase, 0.3 million arose from favorable

currency movements.

This resulted in a functional currency at constant rate decrease of $0.4 million, driven by additional depreciation

of platforms and games going live including Tyson, World Leaders and Rush Bingo.

profit increased by $6.8 million on a reported basis to $18.2 million.

On a functional currency at constant rate basis, operating

profit increased by $7.8 million driven by an increase in revenue, a decrease in cost of service, lower SG&A expenses and

lower impairment expense.

This was partly offset by a $1.0 million decrease from adverse currency movements.

Businesses segment, key events that affected results for the Three Months ended December 31, 2019 (since consummation of acquisition)

generate revenue from our Acquired Businesses segment through the manufacturing, marketing, and rental of our gaming machines

and gaming software.

We manufacture gaming machines for rental to UK pubs, adult gaming centers, bowling alleys, motorway service

stations, and UK leisure parks, as well as for sale.

We receive rental fees for machines, typically on a long-term contract basis,

on both a participation and fixed fee basis, with our digital Category C pub machines typically contracted on a fixed fee basis.

Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator

customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed

in our customers’

Typically, we recognize revenue from these arrangements on a daily basis over the term of

the contract.

Acquired Businesses also generate revenue from UK leisure parks, where we supply gaming arcades, as well as non-gaming amusement

In addition, we also supply non-gaming amusement machines in pubs and other facilities on a fixed rental basis.

growth for our Acquired Businesses is principally driven by the number of operator customers we have, the number of gaming machines

in operation, and the increase in weekly rental income that we receive pursuant to our contracts with our customers.

Businesses segment, Key Performance Indicators

For the Three-Month Period ended

Acquired Business

Pub Digital Cat C Gaming Machines - Average installed base (# of terminals)

Inspired Pubs Revenue per Digital Cat C Gaming Machine per week

Pub Analogue Digital Cat C Gaming Machines - Average installed base (# of terminals)

Inspired Pubs Revenue per Analogue Cat C Gaming Machine per week

End of Period % of Digital Cat C Gaming Machines in Pub Market

Total Leisure Parks Revenue (Gaming and Non Gaming) (£'m)

AGC and MSA Gaming Machines - Average installed base (# of terminals) (1)

Inspired AGC and MSA Revenue per Gaming Machine per week

(1) Adult Gaming Centers and Motorway Service

Area machines

the table above:

of period installed base and Average installed base represent the number of gaming machines installed from which there is participation

or rental revenue at the end of the period or as an average over the period

per machine unit per week represents the average weekly participation or rental revenue recognized by Inspired during the period.

% Digital Cat C represents the percentage of the Company’s UK pub gaming machine estate located with that is digital.

Businesses segment, key events that affected results for the Twelve Months ended December 31, 2019

October 1, 2019, the Company completed the acquisition of the Gaming Technology Group (“NTG”) of Novomatic UK Ltd.,

a division of Novomatic Group, a leading international supplier of gaming equipment and solutions.

As per ASC 280, the Company

reports the results of this acquisition as a business segment denoted as “Acquired Businesses.”

Because the Company

completed the transaction on October 1, 2019, it can only report the results since that date, which comprises the three months

ended December 31, 2019.

Businesses segment, Three Months ended December 31, 2019

Acquired Business

For the Three-

(In millions)

Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of service

Cost of hardware

Total cost of sales

Total gross profit

Selling, general and administrative expenses

Stock-based compensation

Depreciation and amortization

Net operating Income (Loss)

Exchange Rate - $ to £

Businesses Segment Revenue

the fourth quarter, revenue was $32.9 million, of which $27.6 million was service revenue and $5.3 million was hardware revenue

stemming from growth in the digital pub conversion and the strong fourth quarter in the leisure parks.

Businesses Service Revenue was $27.6 million in the fourth quarter, of which approximately $8.6 million was generated from Category

C gaming machines within the Pub business.

The Company’s average installed base within the Pub business included 8,590 Category

C gaming machines.

Digital gaming machines accounted for 66.2% of the total Category C gaming machines at the end of the quarter,

which was an increase from 60.8% at the beginning of the quarter.

This reflects the continued conversion of Category C gaming

machines from analogue to digital in the UK Pub estate.

The increase in the Company’s digital machine base continues to

drive revenue per gaming machine per week, which has demonstrated sequential growth on a quarterly basis and averaged £59.63

in the quarter, an increase of approximately 13.0% over the prior year comparable period.

Leisure business includes Leisure Parks, MSAs, Adult Gaming Centers (“AGCs”) and Bowling Alleys as well as software

license fees associated with one-time hardware sales.

Leisure parks contributed approximately $5.6 million in revenue, which was

strong for the fourth quarter, typically a weaker quarter as the summer holiday park season ends.

Revenue from MSAs and AGCs was

$6.2 million in the quarter and included 4,948 machines on a rental basis, generating an average of £75.09 per gaming machine

This represented an increase of approximately 22.6% over the prior year comparable period.

Software license fees associated

with hardware sales was $1.6 million in the quarter.

Businesses Hardware Revenue was $5.3 million and includes the sale of 673 machines, primarily in the digital sector with the Prismatic

Businesses segment operating income.

Operating income reflects cost of goods of $7.3 million (comprised of manufacturing

costs, content royalties, spare parts, distribution costs, and certain gaming taxes), SG&A expenses of $20.1 million which

includes service network costs, facilities, and staffing, and depreciation and amortization of $5.9 million, reflecting capitalized

game development and machine deployment levels.

expenditures for the period totaled $5.1 million, comprised primarily of approximately $2.3 million from the continuing digitization

of the UK pub estate, $0.9 million in new machines for the MSA and AGC estates and $1.0 million of capitalized software development

Financial Measures

use certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to analyze our operating performance.

financial measures to manage our business on a day-to-day basis.

We believe that these measures are also commonly used in our

industry to measure performance.

For these reasons, we believe that these non-GAAP financial measures provide expanded insight

into our business, in addition to standard U.S.

GAAP financial measures.

There are no specific rules or regulations for defining

and using non-GAAP financial measures, and as a result the measures we use may not be comparable to measures used by other companies,

even if they have similar labels.

The presentation of non-GAAP financial information should not be considered in isolation from,

or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S.

consider our non-GAAP financial measures in conjunction with our U.S.

GAAP financial measures.

define our non-GAAP financial measures as follows:

is defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense.

EBITDA is defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax

expense, and other additional exclusions and adjustments .

Such additional excluded amounts include stock-based compensation

GAAP charges where the associated liability is expected to be settled in stock, and changes in the value of warrant or

earnout liabilities and income and expenditure in relation to legacy portions of the business (being those portions where

trading no longer occurs) including closed defined benefit pension schemes.

Additional adjustments are made for items considered

outside the normal course of business, including (1) restructuring costs, which include charges attributable to employee severance,

management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and

acquisition costs and (3) gains or losses not in the ordinary course of business.

believe Adjusted EBITDA, when considered along with other performance measures, is a particularly useful performance measure,

because it focuses on certain operating drivers of the business, including sales growth, operating costs, selling and administrative

expense and other operating income and expense.

We believe Adjusted EBITDA can provide a more complete understanding of our operating

results and the trends to which we are subject, and an enhanced overall understanding of our financial performance and prospects

for the future.

Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable

to net income or loss, because it does not take into account certain aspects of our operating performance (for example, it excludes

non-recurring gains and losses which are not deemed to be a normal part of underlying business activities) .

Adjusted EBITDA may not be comparable to the use by other companies of similarly termed measures.

Management compensates for these

limitations by using Adjusted EBITDA as only one of several measures for evaluating our operating performance.

In addition, capital

expenditures, which affect depreciation and amortization, interest expense, and income tax benefit (expense), are evaluated separately

by management.

Revenue (Revenue Excluding Nil Margin Hardware Sales) is defined as revenue excluding hardware sales that are sold at

nil margin with the intention of securing longer term recurring revenue streams.

Currency at Constant rate.

Currency impacts shown have been calculated as the current-period average GBP:

USD rate less

the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP).

remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency,

multiplied by the prior-period average GBP:

USD rate, as a proxy for functional currency at constant rate movement.

Movement represents the difference between the results in our reporting currency (USD) and the results on a functional

currency at constant rate basis.

Reconciliations

from net loss, as shown in our Consolidated Statements of Operations and Comprehensive Loss, to Adjusted EBITDA are shown below.

Reconciliation

to Adjusted EBITDA

For the Twelve-Month

(In millions)

Items Relating to Legacy Activities:

Pension charges (1)

Costs relating to former operations (2)

Litigation Settlement

Items outside the normal course of business:

Costs of group restructure (3)

Acquisition and integration related transaction expenses (4)

Italian tax related costs relating to prior years

Stock-based compensation expense

Impairment expense

Depreciation and amortization

Total other expense (income), net

Adjusted EBITDA

Exchange Rate - $ to £

(1) “Pension

charges”

are profit and loss charges included within selling, general and administrative expenses, relating to a defined

benefit scheme which was closed to new entrants in 1999 and to future accrual in 2010.

As well as the amortization of net loss,

the figure also includes charges relating to the Pension Protection Fund (which were historically borne by the pension scheme)

and a small amount of associated professional services expenses.

These costs are included within Central Functions.

(2) “Litigation

Settlement”

refers to settlement of an employment related litigation with the former general counsel of Hydra Industries

Acquisition Corp.

(3) “Costs

of group restructure”

include redundancy costs, Payments In Lieu of Notice costs, any associated employer taxes and costs

associated with onerous property leases.

To qualify as being an adjusting item, costs must be part of a large restructuring project,

which will net save ongoing future costs.

These costs were primarily incurred in connection with the property consolidation.

(4) Acquisition

and integration related transaction expenses, Stock-based compensation expense, Depreciation

and amortization, Total other expense (income), net and Income tax are as described

above in the Results of Operations line item discussions.

Total expense, net includes interest

income, interest expense, change in fair value of earnout liability, change in fair value

of derivative liability and other finance income.

rate in the table is calculated by dividing the USD Adjusted EBITDA by the GBP Adjusted EBITDA, therefore this could be slightly

different from the average rate during the period depending on timing of transactions.

Reconciliation to Adjusted Revenue

For the Twelve-Month Period ended

(In millions)

Less Nil Margin Sales

Adjusted Revenue

Exchange Rate - $ to £

We believe that accounting for nil margin

hardware sales in conformance with U.S.

GAAP can result in a distorted presentation of our revenue and growth.

Therefore, we use

Revenue Excluding Nil Margin Sales, or Adjusted Revenue, to internally analyze our operating performance.

and Capital Resources

ended December 31, 2019 compared to Year ended December 31, 2018

(in millions)

Net (loss) income

Non-cash interest expense including amortization of fees

Change in fair value of derivative, warrant and

earnout liabilities and stock-based compensation expense

Impairment expense

Foreign currency translation on senior bank debt and cross currency swaps

Depreciation and amortization (incl RoU assets)

Other net cash generated/(utilized) by operating activities

Net cash provided by operating activities

Net cash used in investing activites

Net cash generated by financing activities

Effect of exchange rates on cash

Net increase in cash and cash equivalents

cash provided by operating activities.

In the year, net cash inflow provided by operating activities was $30.7 million,

compared to $35.2 million inflow in the prior year, representing a $4.5 million decrease in cash generation.

interest expense increased by $3.6 million to $9.0 million.

The current period’s non-cash interest expense related to amortization

of debt fees incurred in relation to the business refinancing in August 2018 and in October 2019 with the subsequent extinguishment

of all unamortized fees from August 2018 following the October 2019 refinancing.

The prior year’s expense related to PIK

interest charged on the debt held prior to the refinancing in August 2018 with amortization of debt fees only from the point of

the business refinancing in August 2018.

in fair value of derivative, warrant and earnout liabilities and stock-based compensation expense increased by $28.0 million,

from an outflow of $15.6 million to an inflow of $12.4 million.

Movements in the market value of the stock price

resulted in an $8.0 million higher earnout inflow in the current period, a $3.2 million higher inflow relating to stock-based compensation

expense and a $1.6 million higher inflow relating to derivative liabilities.

These were offset by a $9.5 million higher outflow relating

to cross currency swaps.

The expense relating to the change in the fair value of the warrant liability increased by $24.8 million

in the year from income of $20.7 million to an expense of $4.1 million.

currency translation on our senior bank debt and cross currency swaps following the refinancing on October 1, 2019 resulted in a loss

in the year of $2.8 million as a result of the movement in exchange rates during the current period, compared to a loss of $2.7

million in the prior year.

Depreciation,

amortization and impairment increased by $1.1 million to a charge of $43.0 million due to a $1.0 million amortization charge on

operating lease liabilities with small increases in machine and intangible asset charges largely offset by lower amortization

on development costs and licenses.

The operating lease liability amortization relates to the application of ASC842 and was not

applied to the prior year.

net cash generated by operating activities increased by $11.1 million, to a $10.2 million inflow.

The strong performance

compared to the prior year was driven by several factors.

Lower capital spending, partly as a result of the Triennial Implementation

and favorable timing of supplier payments improved cash inflow by $6.6 million whilst lower inventory levels contributed $3.3 million.

Improved collection of accounts receivable in the current year benefitted cash inflow by $3.8 million along with favorable movements

in accruals of $8.3m (including timing on the debt interest payments of $6.1 million).

This was partly offset by an expected reversal

of the deferred revenue creditor $12.7 million with the prior year benefitting from the build and roll out of the second phase of Greece

within net cash provided by operating activities were $6.1 million of payments relating to the transaction expenses and $3.3 million

of payments relating to restructuring costs.

This compares to $0.7 million of payments relating to transaction expenses in the

cash used in investing activities.

Net cash used in investing activities increased by $90.6 million to $133.4 million.

The increase was due to the acquisition of NTG in October 2019 for $105.9 million including cash acquired, which was offset by

a $14.8 million reduction in the level of spend on property and equipment versus the prior year, which included the Greece roll

out and Flex 4k terminal build.

cash generated by financing activities.

Net cash generated by financing activities was $113.5 million in 2019, compared

to $12.4 million in the prior year.

The refinancing in the current year produced an inflow of $255.3 million after associated

debt fees with repayment of the previous debt of $144.2 million.

Movements in the level of revolver drawn resulted in a $2.8 million

inflow and a finance lease payment resulted in a $0.4 million outflow.

The prior year refinancing generated an inflow of $135.0

million after associated debt fees with a $109.3 million repayment of the previous debt.

Revolver repayments led to a $12.8 million

outflow with finance leases being a $0.5 million outflow.

Needs and Sources

of December 31, 2019, the Company’s cash on hand was $29.1 million and the Company had working capital of $15.7

As of December 31, 2019, $5.0 million of our cash on hand had arisen from our operations in Greece and was being

held in local accounts.

In the ordinary course of business, we seek, from time to time, to transfer funds earned in Greece to

our accounts outside of Greece.

However, Greece imposes capital controls that can delay or prevent the flow of capital out of

The Company recorded net losses of $37.0 million, $4.7 million and $20.6 million for the year ended December 31,

2019, the three months ended December 31, 2018 and the year ended September 30, 2019, respectively.

Net losses include

non-cash stock-based compensation of $9.0 million, $1.6 million and $7.4 million for the year ended December 31, 2019, the

three months ended December 31, 2018 and the year ended September 30, 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.

Working capital of

$15.7 million includes a non-cash settled item of $10.1 million of deferred income.

Management currently believes that,

absent any long term COVID-19 impact, 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 2021.

outbreak of COVID-19 adds uncertainty that may ultimately impact on the Company’s ability to meet its covenant compliance

and its ability to carry on as a going concern.

Management believes that the going concern basis of preparation remains appropriate

given the mitigating effect of liquidity preservation actions taken in light of the current COVID-19 control measures which are

fund our obligations, we have historically relied on a combination of cash flows provided by operations and the incurrence of

additional debt or the refinancing of existing debt.

As of December 31, 2019, we had liquidity of $29.1 million in cash and cash

equivalents, plus a further $23.8 million of an undrawn revolver facility.

This compares to $16.0 million of cash and cash equivalents

plus a further $9.3 million of an undrawn revolver facility at the end of the prior year.

We had a working capital inflow of $8.7

million in 2019, compared to a $0.9 million outflow in the prior period.

The level of our working capital surplus or deficit varies

with the level of machine production we are undertaking and our capitalization.

In periods with minimal machine volumes and capital

spend, our working capital is more stable.

In periods where significant numbers of machines are being produced, the levels of

inventory and creditors are higher than typical and there is a natural timing difference between converting the stock into sellable

or capitalized plant and settling payments to suppliers.

These factors, along with movements in trading activity levels, can result

in significant working capital volatility.

In periods of low activity, our working capital volatility is reduced.

Working capital

is reviewed and managed with the aim of ensuring that current liabilities are covered by the level of cash held and the expected

level of short-term receipts.

amounts of our cash flows from operations arise from our operations in Greece.

As of December 31, 2019, $5.0 million of our $29.1

million of cash and cash equivalents had arisen in Greece and was being held in our Greek bank accounts.

In the ordinary course

of business, we seek from time to time to transfer funds earned in Greece to accounts of ours outside Greece.

However, up until

September 1, 2019, Greece imposed capital controls that sometimes complicated, delayed or prevented the flow of capital out of

that country.

Historically, we have always been able to complete such transfers.

Since September 1, 2019, capital controls are

no longer in place.

Company has undertaken a review of its operations in order to enable it to reduce its global costs and to more effectively align

its resources with its business priorities.

In connection with this review, the Company is in the process of consolidating and

relocating certain of its operations in the UK and has implemented, and expects to continue to implement, a related reduction

in headcount.

These changes continue the Company’s prior cost control efforts.

Office consolidation expenses are expected

to amount to approximately $8.7 million in total, as we expect to incur approximately $3.0 million of capital investment for the

new office, and approximately $5.7 million of one-time costs to exit offices.

These figures include costs relating to staff redundancy,

relocation allowances, travel supplements, dual running costs, recruitment fees of replacement hires and dilapidating old facilities.

We expect the majority of these costs to be incurred by the end of the first quarter next year.

Term and Other Debt

(In millions)

December 31, 2019

December 31, 2018

Revolver drawn

Original principal senior debt

Cash interest accrued

Finance lease creditors

October 1, 2019, pursuant to the Share Purchase Agreement, dated as of June 11, 2019 (the “SPA”), by and between Inspired

Gaming (UK) Limited, a subsidiary of the Company (the “Buyer”), and Novomatic UK Ltd., (the “Seller”),

the Buyer completed its acquisition from the Seller of (i) all of the outstanding equity interests of each of (a) Astra Games

Ltd, (b) Bell-Fruit Group Limited, (c) Gamestec Leisure Limited, (d) Harlequin Gaming Limited, and (e) Playnation Limited, and

(ii) 40% of the outstanding equity interests of Innov8 Gaming Limited (“Innov8”, and the entities described in clauses

(i) and (ii), together with certain of their subsidiaries, the “Acquired Companies”

and the transactions contemplated

by the SPA, the “Acquisition”).

The Acquired Companies comprised the Seller’s Gaming Technology Group.

The consideration for the Acquisition totaled approximately €104.6 million (USD $120.0 million) in cash.

connection with the Acquisition, on September 27, 2019, Gaming Acquisitions Limited, together with Inspired Entertainment, Inc.

(“Inspired”), and certain other direct and indirect wholly-owned subsidiaries of Inspired, 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 and €90.0 million, respectively and a secured revolving facility loan

in an original principal amount of £20.0 million.

Proceeds from the Term Loans were used, among other things, to pay the

purchase price of the Acquisition and to refinance existing indebtedness of the Company.

new term loans have a 5-year duration and are repayable in full on October 1, 2024.

The £140.0 million loan carries a cash

interest rate of 7.25% plus 3-month LIBOR, the €90.0 million loan carries a cash interest rate of 6.75% plus a 3-month EUROLIBOR.

The £20.0 million revolving credit facility is available until September 1, 2024 and carries a cash interest rate on any

utilization at 5.50% plus 3-month LIBOR, with any unutilized amount carrying a cash interest cost at 30% of the applicable margin

on the revolving credit facility loan.

connection with the refinancing on October 1, 2019, the existing three-year, fixed-rate, cross-currency swaps were terminated

and the remaining capitalized debt fees totaling $7.3 million expensed.

Debt fees of approximately $16.1 million were incurred

and capitalized as part of the refinancing as relating to the costs incurred in obtaining the new term loan facilities.

fees will be amortized over the length of the new term loans.

Company’s previous debt which had been in place since the refinancing in August 2018 provided the business with debt facilities

of senior notes of $140.0 million and a revolving credit facility of £7.5 million (equivalent to approximately $9.9 million).

The senior notes had a 5-year duration, carrying a cash interest rate of 9% plus 3-month LIBOR, and the revolving credit facility

had a 3-year duration carrying a cash interest rate on any utilization at 4% plus 3-month LIBOR.

Any unutilized amount carried

a 1.4% cash interest cost.

In connection with this refinancing, the Company entered into a three-year, fixed-rate, cross-currency

All the Company’s previous debt and cross-currency swaps were terminated and repaid on October 1, 2019 when the new

debt was put in place.

For further information regarding the new external borrowings and the swap, see Note 12 to the Consolidated

Financial Statements, “Long Term and Other Debt”.

of December 31, 2019, the Company had bank facilities of £160.0 million and €90.0 million (equivalent to approximately

$312.4 million), consisting of senior term loan facilities of £140.0 million and €90.0 million (equivalent to $184.9

million and $101.1 million respectively) and a revolving credit facility of £20.0 million (equivalent to approximately $26.4

As of December 31, 2019, the £140.0 million term loan facility had a cash interest rate on outstanding borrowings

equal to the base rate margin of 7.25% per annum, plus 3-month LIBOR which at December 31, 2019 was the equivalent of 8.08% per

The €90.0 million term loan facility had a cash interest rate on outstanding borrowings equal to the base rate margin

of 6.75% per annum, plus 3-month EUROLIBOR which at December 31, 2019 was the equivalent of 6.75% per annum.

Both term loan facilities

are scheduled to mature on October 1, 2024.

of December 31, 2018, the Company had bank facilities of £117.1 million (equivalent to approximately $149.6 million), consisting

of a senior term loan facility of £109.6 million (equivalent to $140.0 million) and a revolving credit facility of £7.5

million (equivalent to approximately $9.6 million).

As of December 31, 2018, the term loan facility imposed a cash interest rate

on outstanding borrowings equal to the base rate margin of 9.00% per annum, plus 3-month LIBOR which at December 31, 2018 was

the equivalent of 11.39% per annum which under the cross-currency swaps executed was reduced to a rate of 10.87%.

of December 31, 2019, the Company had aggregate borrowings under the revolving credit facility of £2.0 million (equivalent

to $2.6 million).

As of December 31, 2019, the revolving credit facility imposed a cash interest rate on outstanding borrowings

equal to the base rate margin of 5.50% per annum, plus LIBOR, and the current rate at which cash interest accrued was 6.21% per

In addition, a commitment fee was payable with respect to unutilized borrowing capacity at a rate of 1.65% per annum.

revolving credit facility is scheduled to mature on September 1, 2024.

of December 31, 2018, the Company had no aggregate borrowings under the revolving credit facility, which at this date carried

a cash interest rate on any utilization at 4% plus 3-month LIBOR, with any unutilized amount carrying a 1.4% cash interest cost.

This facility was terminated at the time of the refinancing on October 1, 2019.

addition to the revolving credit facility borrowings described above, as of December 31, 2018 further amounts under the facility

have been used for the Company’s VAT Duty Deferment guarantee and the Company’s credit card program.

The amount used

as of December 31, 2018 was $0.2 million.

There was no use of the facility at December 31, 2019 for the Company’s VAT Duty

Deferment guarantee or credit card program.

issuance fees were capitalized at the time the debt was issued.

As of December 31, 2019, the amount of debt issuance fees capitalized

was $16.3 million, including $12.2 million of original issue discount and $2.3 million of structuring fees with the remainder

being professional fees incurred from the refinancing.

Of the total debt issuance fees capitalized, $0.8 million had been charged

by December 31, 2019.

our debt facilities in place as of December 31, 2019 we are subject to covenant testing at quarterly intervals.

The covenant testing

is set at the level of Inspired Entertainment Inc., the ultimate holding company, and consists of a test on Leverage (Consolidated

Total Net Debt/Consolidated Pro Forma EBITDA) and a test on the level of capital expenditure.

These are measured under U.S.

Leverage is tested at quarterly intervals commencing on the period ending June 30, 2020 and capital expenditure is tested annually

commencing on December 31, 2019.

our debt facilities in place as of December 31, 2018, we were subject to covenant testing at quarterly intervals.

testing is set at the level of Inspired Entertainment Inc., the ultimate holding company, and consists of a test on Leverage (Consolidated

Total Debt/Consolidated Adjusted EBITDA) and a test of the Fixed Charge Coverage Ratio (Net Cash Provided by Operating Activities/Calculation

of Consolidated Fixed Charges).

These are measured under U.S.

In addition to the quarterly tests, there was the requirement

that the minimum liquidity not be less than $5.0 million.

With the refinancing of the Company on October 1, 2019, these tests

were replaced by a revised set of covenant tests and for the period ending 30 September, 2019 these tests were not required to

be performed.

were no breaches of the debt covenants in the periods ended December 31, 2019 and December 31, 2018.

and Encumbrances

of December 31, 2019, our senior bank debt was secured by the imposition of a fixed and floating charge in favor of the lender

over all the assets of the Company and certain of the Company’s subsidiaries.

of December 31, 2019, our contractual obligations were as follows:

Contractual Obligations (in millions)

Operating activities

Interest on long term debt

Financing activities

Revolver repayment

Senior bank debt - principal repayment

Finance lease payments

Operating lease payments

Interest on non-utilisation fees

US Tax Law Changes

light of the recent US tax reforms and specifically those around GILTI (Global Intangible Low Taxed Income), we may be required

to pay additional US corporate income tax beginning in the year ending December 31, 2021 due to the location of assets and tax

losses brought forward in the UK.

Sheet Arrangements

As of December 31, 2019, there were no off-balance

sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, promulgated by the U.S.

Securities and Exchange Commission.

Three Months ended December 31, 2018 compared to Three Months

ended December 31, 2017

For the Three-Month Period

(In thousands)

at Constant rate

Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of service

Cost of hardware

Selling, general and administrative expenses

Stock-based compensation

Acquisition related transaction expenses

Depreciation and amortization

Net operating Income (Loss)

Other income (expense)

Interest income

Interest expense

Change in fair value of earnout liability

Change in fair value of derivative liability

fair value of warrant liability

Other finance income (costs)

Total other income

(expense), net

Net income (loss) from continuing

operations before income taxes

Income tax expense

Net income (loss)

Rate - $ to £

Effective Tax Rate

Total revenue for the period ended December 31, 2018 decreased by

$0.7 million, or 2.1%, to $30.7 million.

Adverse currency movements accounted for $1.4 million of the decrease.

On a functional

currency at constant rate basis, revenue increased by $0.7 million, or 2.3% on a functional currency basis, with service revenue

increasing $1.0 million and hardware revenue decreasing by $0.3 million.

SBG revenue, which is included in total revenue, above, increased

by $0.7 million on a functional currency at constant rate basis, or 3.0% on a functional currency basis, comprised of growth in

service revenue of $1.0 million offset by a reduction in hardware sales of $0.3 million.

On a functional currency at constant rate basis SBG service

revenue increased by $1.0 million, or 4.5% on a functional currency basis, due to growth in the Italian sector of $0.9 million.

In addition, growth in Greece drove revenue increases of $0.6 million, due to the continued rollout into the Greek sector which

drove additional participation revenue of $1.2 million and other recurring revenue of $0.6 million.

This was partly offset by a

$1.2 million reduction in software license sales compared to the prior period.

The decrease in hardware revenue was driven by lower hardware

sales in the UK sector of $0.3 million.

Virtual Sports revenue remained unchanged on a functional currency

at constant rate basis, due to growth in Finland and Italy of $0.2 million and $0.2 million, respectively.

Growth was negatively

affected by $0.2 million due to a reduction in revenue from long-term Virtual Sports licenses that have now expired and $0.1 million

from lower interactive game sales.

Cost of sales, excluding depreciation and amortization

Cost of sales, excluding depreciation and amortization, which includes

machine cost of sales, consumables, content royalties and connectivity costs, increased by $0.5 million, or 7.7%, on a reported

basis, to $6.6 million.

Of this increase, $0.3 million arose from favorable currency movements.

On a functional currency at constant

rate basis, cost of sales increased by $0.8 million, or 12.7% on a functional currency basis.

On a functional currency at constant rate basis cost of service

increased by $1.1 million, or 20.2% on a functional currency basis, due to increasing SBG costs.

This was driven by an increase

in Greece SBG service costs of $0.8 million and an increase in Italy SBG service costs of $0.3 million.

On a functional currency at constant rate basis cost of hardware

decreased by $0.3 million, or 30.7% on a functional currency basis, due to lower hardware sales in the UK sector.

Selling, general and administrative expenses

SG&A expenses decreased by $1.1 million, or 6.8%, on a reported

basis, to $15.3 million.

Of this decrease, $0.7 million arose from favorable currency movements.

On a functional currency at constant

rate basis, SG&A expenses decreased by $0.4 million, or 2.6% on a functional currency basis.

This decrease was driven by staff

related cost savings of $1.8 million, facilities and insurance cost savings of $0.1 million and legal cost savings of $0.1 million.

These savings were offset by an increase in Italian tax related costs relating to prior years invoicing of $0.9 million (removed

from Adjusted EBITDA) and a decrease in net labor capitalization and manufacturing recoveries of $0.8 million due to mix of projects

and lower factory throughput as a result of fewer machines being built in the quarter.

Stock-based compensation

During the three months ended December 31, 2018, the Company recorded

an expense of $1.6 million with respect to outstanding awards.

Of this cost, $1.7 million related to recurring costs and a $0.1

million credit was due to changes in the stock price from $6.10 at September 30, 2018 to $4.80 at December 31, 2018.

three months ended December 31, 2017, there was a $3.2 million charge for stock-based compensation which included a $2.1 million

charge relating to the cancellation of awards under the Company’s First Incentive Plan covering 1,076,272 shares.

Acquisition related transaction expenses

Acquisition related transaction expenses decreased by $0.5 million

in the period to $0.1 million.

All of the 2018 and 2017 period expenses were related to work with respect to potential acquisitions.

Depreciation and amortization

Depreciation and amortization remained unchanged in the period at

$9.6 million.

This was impacted by favorable currency movements of $0.4 million.

On a functional currency at constant rate basis, depreciation

and amortization increased by $0.4 million, or 4.7% on a functional currency basis.

This increase was driven by additional amortization

in connection with new platforms and games going live on SBG of $0.4 million.

The additional machine depreciation was driven by

the continued terminal rollout in the Greek sector of $0.9 million, partly offset by lower depreciation in the UK ($0.6 million)

and Italy ($0.1 million) due to machines being fully depreciated.

Net operating loss

During the period on a reported basis, net operating loss improved

from a loss of $4.4 million to a loss of $2.4 million.

This improvement was partly driven by a $0.1 million favorable currency

On a functional currency at constant rate basis, net operating loss decreased by $1.9 million, mainly due to an increase

in revenue, a reduction in stock-based compensation, acquisition related transaction and SG&A expenses, partly offset by higher

cost of sales and depreciation and amortization.

Interest expense

Interest expense decreased by $0.8 million in the period, to $4.1

million, on a reported basis.

Of this variance, $1.0 million was due to lower interest charges on the new debt funding following

the refinancing in August 2018 and a further $0.3 million arose from currency retranslations of bank accounts.

These were partly

offset by a $0.5 million charge in the current period relating to amortization of debt fees following the refinancing.

Change in fair value of earnout liability

Due solely to changes in the share price ($4.80 at December 31,

2018 and $6.10 at September 30, 2018) the credit in the three months ended December 31, 2018 from a change in the fair value of

earnout liability was $1.7 million.

In the prior period, due to changes in share price and as a result of changes relating to six

specific countries (China, Colombia, Greece, Norway, Spain and Ukraine) the corresponding figure was a $4.7 million credit.

Change in fair value of derivative liability

Change in fair value of derivative liability increased by $0.5 million,

to a $0.9 million credit for the three months ended December 31, 2018 arising from the fair valuing of the cross-currency swaps

executed in August 2018 on the refinancing of the company.

For the three months ended December 31, 2017 the change in fair value

of derivative liability was a $0.3 million credit for derivative awards which were converted to stock-based compensation awards

in March 2018.

in fair value of warrant liability

to changes in the valuation of the warrant liability, the income recorded in the period decreased from $19.5 million to $6.3 million.

Other finance costs

Other finance costs for the period ended December 31, 2018 were

$0.7 million, $0.9 million higher than the previous period.

Changes in exchange rates resulted in a charge of $2.9 million in retranslating

the debt balance.

This was offset by a $1.9 million credit from the GBP:

USD cross currency swap entered into to mitigate this

impact, accounted for under hedge accounting, and a $0.2 million pension interest credit which was in line with the previous period.

Income tax expense

Our effective tax rate for the period ending December 31, 2018 was

(1.2)%, and our effective tax rate for the period ending December 31, 2017 was (0.8)%.

On a reported basis, net income decreased by $13.7 million

from net income of $15.3 million to net income of $1.6 million in the period ended December 31, 2018.

variance was partly due to an adverse currency movement of $0.4 million.

On a functional currency at constant rate basis

net income decreased by $13.4 million, mainly due to the change in fair value of warrant liability, increase in

other finance costs and the change in fair value of earnout liability.

This was offset by the improvement in net operating loss, the

change in fair value of derivative liability and the decrease in interest expense.

Three Months ended December 31, 2018 compared to Three Months

ended December 31, 2017 –

Server Based Gaming Segment

SBG segment, Key Performance Indicators

For the Three-Month Period ended

End of period installed base (# of terminals)

Average installed base (# of terminals)

Customer Gross Win per unit per day (1)

Customer Net Win per unit per day (1)

Inspired Blended Participation Rate

(1) Includes all SBG terminals in which the company takes

a participation revenue share across all territories

SBG segment, key events that affected results for the Three

Months ended December 31, 2018

Our SBG rollout into the Greek sector continued during the period

with a further 1,300 being deployed on site and live.

The total installed base of our contracted 8,360 terminals in Greece is now

over 6,800 as of December 31, 2018.

The performance of our Greek terminals continues to be strong against our competitors.

In Italy, customer Gross Win per unit per day (in EUR) increased

by 16.9% across all customers compared to the same period last year due to new content releases.

This was partly offset by a tax

that reduced Net Win per unit per day growth to 14.6%.

During the period, an additional 125 Self Service Betting Terminals

(“SSBTs”) were sold and deployed in the UK sector.

In addition to the hardware sale margin these terminals also generate

an ongoing recurring service fee.

In the UK Casino sector, we secured an agreement for the sale

of 158 “Flex”

B3 terminals to a major customer.

In the UK Electronic Table Games (ETG) sector, we secured an

agreement for the sale of 108 “Sabre Hydra”

terminals to a major Casino customer.

Overall, the size of our Average Installed Base increased 15.4%,

to 33,811, due to our continued terminal rollout in Greece and growth from new contract awards in the UK LBO estate.

Customer Gross

Win per unit per day (in our functional currency, GBP) decreased by 5.4% across the entire estate, driven by the impact of our

SBG installations in Greece, as our Greek machines return a lower daily Customer Gross Win compared to our UK machines.

participation rate increased 0.1% to 6.2% due to an increased proportion of Greece installed base.

SBG segment, key events that affected results for the Three

Months ended December 31, 2017

Our SBG rollout into the Greek sector continued during this

period, with approximately 3,400 terminals installed as of December 31, 2017.

During the period, we launched our new SBG cabinet the “Flex

with trials in two of our major UK LBO customers and contracted for the hardware sale of a further 600 Flex 4K terminals

to our second largest UK LBO customer.

In addition to the comparable period in 2016, 223 SSBTs were

sold and deployed in the UK sector.

These provide recurring service revenue.

SBG Segment, Three Months ended December 31, 2018 compared

to Three Months ended December 31, 2017

Server Based Gaming

For the Three-Month Period ended

(In thousands)

Currency at Constant rate

Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of service

Cost of hardware

Total cost of sales

Selling, general and administrative expenses

Stock-based compensation

Depreciation and amortization

Net operating profit

Exchange Rate - $ to £

SBG segment revenue.

In the period revenue decreased

by $0.3 million, to $22.5 million, on a reported basis.

This decrease was due to adverse currency movements of $1.0 million.

a functional currency at constant rate basis, SBG revenue increased by $0.7 million, or 3.0% on a functional currency basis.

Service revenue remained consistent, on a reported basis.

is due to adverse currency movements of $1.0 million.

On a functional currency at constant rate basis, SBG service revenue increased

by $1.0 million, or 4.5% on a functional currency basis, to $21.8 million.

This was due to an increase in the Italian sector of

$0.9 million due to the growth in both Gross and Net Wins and the Greek sector of $0.6 million, driven by the continued rollout

This was partly offset by a decrease in service revenue in UK LBO of $0.4 million primarily due to the expiry of a customer

service contract.

The continued rollout into the Greek sector drove additional

participation revenue of $1.2 million and other recurring revenue of $0.6 million.

This was partly offset by a $1.2 million reduction

in software license sales compared to the prior period.

During the period there was a small reduction in UK LBO Customer

Gross Win per unit per day due to the rollout of 1,200 additional terminals.

These machines were placed into lower performing sites,

therefore reducing the average Customer Gross Win per unit per day but driving additional revenue.

Hardware revenue decreased by $0.3 million to $0.7 million,

on a reported basis.

On a functional currency at constant rate basis, SBG hardware revenue decreased by $0.3 million, principally

due to lower SSBTs terminal sales in the UK sector of $0.3 million.

SBG segment operating income.

Cost of sales (excluding

depreciation and amortization) increased by $0.5 million to $5.5 million, on a reported basis.

This variance was impacted by favorable

currency movements of $0.3 million.

On a functional currency at constant rate basis, cost of sales increased by $0.8 million.

was principally due to an increase in service costs of $1.1 million due to Greek SBG service costs of $0.8 million, driven by the

increase in terminals as the Greece rollout continues, and an increase in cost of service in Italy of $0.3 million.

SG&A expenses decreased by $1.2 million to $6.9 million,

on a reported basis.

Of this variance, $0.3 million arose from favorable currency movements.

This resulted in a functional currency

at constant rate decrease of $0.9 million driven by staff related cost savings of $1.1 million, offset by $0.3 million driven by

lower manufacturing recoveries due to lower factory throughput.

Depreciation and amortization increased by $0.2 million to $7.8

million on a reported basis.

Of this amount, $0.4 million arose due to favorable currency movements.

On a functional currency at

constant rate basis, the increase was $0.5 million, driven by $0.3 million from additional amortization and $0.1 million of additional

machine and machine related depreciation.

The additional amortization was driven by new projects going live in the UK and Greek

The additional machine and machine related depreciation was driven by the continued terminal rollout in the Greek sector

of $0.9 million, partly offset by lower depreciation in the UK ($0.6 million) and Italy ($0.1 million) due to machines being fully

SBG operating profit increased by $0.1 million to $2.2 million,

on a reported basis.

Of this variance, $0.1 million arose from adverse currency movements.

On a functional currency at constant

rate basis, SBG operating profit increased by $0.3 million.

This was primarily due to the increase in revenue and decrease in SG&A,

partly offset by higher cost of sales and additional depreciation and amortization.

SBG segment, Recurring Revenue

Set forth below is a breakdown of our SBG recurring revenue.

recurring revenue consists principally of SBG participation revenue.

For the Three-Month Period ended

SBG Recurring Revenue

Total SBG Revenue

SBG Participation Revenue (£’000)

SBG Other Fixed Fee Recurring Revenue (£’000)

Total SBG Recurring Revenue (£’000)

SBG Recurring Revenue as a Percentage of Total SBG Revenue

SBG segment, Service Revenue by Region

Set forth below is a breakdown of our SBG service revenue by geographic

SBG service revenue consists principally of SBG participation revenue.

Server Based Gaming Service Revenue by Region

For the Three-Month Period ended

(In thousands)

Constant rate

Service Revenue:

Rest of the World

Total service revenue

Exchange Rate - $ to £

Virtual Sports Segment , Three Months ended December

31, 2018 compared to Three Months ended December 31, 2017

Virtual Sports segment, Key Performance Indicators

For the Three-Month Period ended

of Live Customers at the end of the period

of Live Customers

Total Revenue (£’000)

Total Revenue £’000 - Retail

Total Revenue £’000 - Scheduled Online Virtuals

Total Revenue £’000 - Interactive

Average Revenue Per Customer per day (£)

For the Three-Month Period ended

Virtual Sports Recurring Revenue

Total Virtual Sports Revenue (£'000)

Recurring Revenue (£'000) - Retail and Scheduled Online Virtuals

Recurring Revenue (£'000) - Interactive

Total Virtual Sports Recurring Revenue (£'000)

Virtual Sports Recurring Revenue as a Percentage of Total Virtual Sports Revenue

Virtual Sports segment, key events that affected results for

the Three Months ended December 31, 2018

In Greece we deployed our latest Football product, Matchday, across

the full estate of over 3,400 venues.

Our largest customer in Italy launched our latest Football product

Matchday Gold designed specifically for the territory on both retail and online platforms.

The Average Number of Live Customers during the period increased

by 13, from 83 to 96.

Including the launch of eight new Interactive customers, five of which were launched via the NYX platform

and three via the Playtech platform including BGO, Buzz Bingo and Sun Bingo, taking our Average Number of Live Interactive Customers

for the period to 31.

Overall revenue per customer has decreased during the period, this

is due to a sharp increase in customers in the quarter with revenues expected to increase throughout 2019.

Virtual Sports segment, key events that affected results for

the Three Months ended December 31, 2017

As of December 31, 2017, OPAP offered our Virtual Sports product

in over 4,000 retail venues following launch in April 2017.

During the 2017 quarterly period, our Virtual Sports products continued

to grow in Poland through the retail venues and online channels of Fortuna, Central Europe’s largest betting operator.

By the end of the 2017 quarterly period, our Interactive business

was live with 16 customers, having launched ten new customers since December 31, 2016, including Betfair, Grosvenor Casino (part

of the Rank Group), Bwin, Sportingbet, VideoSlots, and a variety of Betsson brands.

Virtual Sports segment, Three Months ended December 31, 2018

compared to Three Months ended December 31, 2017

Virtual Sports

For the Three-Month Period ended

(In thousands)

Functional Currency at Constant rate

Functional Currency

Currency Movement

Service Revenue

Cost of Service

Selling, general and administrative expenses

Stock-based compensation

Depreciation and amortization

Net operating profit

Exchange Rate - $ to £

Virtual Sports segment revenue.

In the period revenue

decreased by $0.3 million on a reported basis.

Of this decrease, $0.4 million arose from adverse currency movements.

On a functional

currency at constant rate basis, Virtual Sports revenue remained unchanged at $8.2 million.

While revenue remained unchanged, $0.4 million was driven by an

increase in Virtual Sports land-based and online recurring revenue, due to new customer revenue in Finland of $0.2 million as well

as continued growth in Italy of $0.2 million.

Total revenue growth was negatively affected by $0.2 million due to a reduction in

revenue from long-term Virtual Sports licenses that have now come to an end and lower Interactive revenue due to lower one-off

game sales of $0.1 million.

Virtual Sports segment operating income.

Cost of service

decreased by $0.1 million to $1.1 million, on a reported basis.

Of this decrease, $0.1 million arose from favorable currency movements.

On a functional currency at constant rate basis, cost of service remained the same as prior period.

SG&A expenses increased by $0.6 million, on a reported basis.

Of this increase, $0.2 million arose from favorable currency movements.

This resulted in a functional currency at constant rate

increase of $0.7 million, which was primarily due to $0.9 million higher Italian tax related costs relating to prior years (removed

from Adjusted EBITDA).

This was partly offset by staff related savings of $0.3 million.

Depreciation and amortization decreased by $0.2 million to $1.4

million, on a reported basis.

Of this decrease, $0.1 million arose from favorable currency movements.

This resulted in a functional

currency at constant rate decrease of $0.2 million, driven by lower depreciation of platforms and games due to fully depreciated

games, including Rush Football.

Operating profit decreased by $0.6 million on a reported basis to

$2.4 million.

Of this decrease, $0.1 million arose from adverse currency movements.

On a functional currency at constant rate basis,

this represented a decrease of $0.5 million.

This was primarily due to additional SG&A expenses, offset by lower depreciation

and amortization.

Reconciliations from net loss, as shown in our Consolidated Statements

of Operations and Comprehensive Loss, to Adjusted EBITDA are shown below.

Reconciliation to Adjusted EBITDA

For the Three-Month Period ended

(In thousands)

Items Relating to Legacy Activities:

Pension charges

Costs relating to former operations

Items outside the normal course of business:

Costs of group restructure

Transaction fees

Italian tax related costs relating to prior year

Stock-based compensation expense

Depreciation and amortization

Total other income, net

Adjusted EBITDA

Exchange Rate - $ to £

Notes to table:

(1) “Pension charges”

are profit and loss charges included

within selling, general and administrative expenses, relating to a defined benefit scheme which was closed to new entrants in 1999

and to future accrual in 2010.

As well as the amortization of net loss, the figure also includes charges relating to the Pension

Protection Fund (which were historically borne by the pension scheme) and a small amount of associated professional services expenses.

These costs are included within Central Functions.

(2) “Costs relating to former operations”

gains and losses from our Mexican SBG division, which ceased trading prior to the years shown in the consolidated financial statements

included in this report.

This affects Server Based Gaming results.

(3) “Costs of group restructure”

include redundancy

costs, Payments In Lieu of Notice costs and any associated employer taxes.

To qualify as being an adjusting item, costs must be

part of a large restructuring project, which will net save ongoing future costs.

(4) “Italian tax related costs relating to prior years invoicing”

relate to VAT charges and associated costs, relating to prior years, imposed on our Virtual Sports segment following changes in

interpretation of legislation and an ongoing VAT audit.

(5) Transaction fees, Stock-based compensation expense, Depreciation and

amortization, Total other income, net and Income tax are as described above in the Results of Operations line item discussions.

(6) Exchange rate in the table is calculated by dividing the USD

Adjusted EBITDA by the GBP Adjusted EBITDA, therefore this could be slightly different from the average rate during the period

depending on timing of transactions

Reconciliation to Adjusted Revenue

For the Three-Month Period ended

(In thousands)

Less Nil Margin Sales

Adjusted Revenue

Exchange Rate - $ to £

We believe that accounting for nil margin hardware sales in conformance

GAAP can result in a distorted presentation of our revenue and growth.

Therefore, we use Revenue Excluding Nil Margin

Sales, or Adjusted Revenue, to internally analyze our operating performance.

A reconciliation from revenue, as shown in our Consolidated

Statements of Operations and Comprehensive Loss included elsewhere in this report, to Adjusted Revenue is shown above.

Liquidity and Capital Resources

Three Months ended December 31, 2018 compared to Three Months

ended December 31, 2017

(in thousands)

Non-cash interest expense including amortization of fees

Change in fair value of derivative, warrant and earnout liabilities and

stock-based compensation expense

Foreign currency translation on senior bank debt and cross currency swaps

Depreciation and amortization

Other net cash utilized by operating activities

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Effect of exchange rates on cash

Net (decrease)/increase in cash and cash equivalents

Net cash provided by operating activities.

period, net cash inflow generated by operating activities was $0.9 million, compared to a $0.1 million outflow in the prior period,

representing a $1.0 million improvement in cash generation.

Non-cash interest expense decreased by $1.4 million, to $0.5 million.

The current period’s non-cash interest expense related to amortization of debt fees incurred in relation to the business

refinancing in August 2018 whereas the prior period’s expense related to PIK interest charged on the debt held prior to the

Change in fair value of derivative, warrant and earnout liabilities

and stock-based compensation expense decreased by $14.4 million from an outflow of $21.6 million to an outflow of $7.2

Movements in the market value of the stock price resulted in a $3.0 million lower earnout outflow in the current period

which was partly offset by a $1.3 million movement in stock-based compensation expense and a $0.9 million movement in the fair valuation

of the cross-currency swaps executed in August 2018 on the new debt.

The income relating to the change in the fair value of the warrant

liability reduced by $13.2 million in the period to $6.3 million.

Foreign currency translation on senior bank debt and cross currency

swaps following the refinancing of the Group on August 14, 2018 resulted in a charge in the period of $0.7 million as a result

of the movement in exchange rates during the current period.

Depreciation, amortization and impairment remained constant at $9.6

Other net cash utilized by operating activities decreased by $1.1

million, to a $4.3 million outflow.

This decrease was largely due to movements in income accruals of $2.0 million and other creditors

of $3.2 million which were partly offset by movements in deferred revenue creditor levels of $3.5 million.

The movement in income

accruals related to a one-off increase at the end of the prior period and the movement in other creditors relates to the unwind

in the debt interest accrual in the prior period reflecting the timing of interest payments under the previous debt financing structure.

The prior year also showed an increase in deferred revenue creditor levels due to the roll out of machines into Greece, whereas

in the current period it has reduced as it is recognized through the profit and loss account.

The current period’s outflow contains an additional UK payroll

payment of $1.9 million as compared to the previous period due to timing.

This is expected to reverse in the next period.

payment of $0.8 million was also made in the current period.

The prior year’s quarter had the normal level of payroll runs

and no bonus payment.

Net cash used in investing activities.

Net cash used

in investing activities decreased by approximately $0.2 million, to $6.6 million.

The decrease was attributable to lower levels

of spending on capital software compared to the prior year.

Net cash used by financing activities.

In the current

period, net cash used by financing activities decreased by $1.2 million, to a $0.6 million outflow.

This was due to the prior period

making a debt repayment of $7.7 million but also increasing the level of revolver utilization by $6.0 million.

The current period

has incurred $0.5 million of debt fee payments relating to the refinancing in August 2018.

Long Term and Other Debt

(In thousands)

December 31, 2018

December 31, 2017

Revolver drawn

Original principal senior debt

Compounded PIK interest

PIK interest accrued

Cash interest accrued

Finance lease creditors

Off-Balance Sheet Arrangements

As of December 31, 2018, there were no off-balance sheet arrangements,

as defined in Item 303(a)(4)(ii) of Regulation S-K.

Accounting Policies

preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted

in the United States (“U.S.

GAAP”) requires management to make estimates and assumptions.

We exercise considerable

judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported

amounts of our assets and liabilities, our recognition of revenue and expenses, and our disclosure of commitments and contingencies

at the date of the consolidated financial statements.

On an on-going basis, we evaluate our estimates and judgments.

estimates and judgments on a variety of factors, including our historical experience, knowledge of our business and industry and

current and expected economic conditions, that are believed to be reasonable under the circumstances, the results of which form

the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances

indicate that modifications are necessary.

While we believe that the factors we evaluate provide us with a meaningful basis for

establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate.

Since the determination

of these estimates requires the exercise of judgment, actual results could differ from such estimates.

a discussion of other recently issued accounting standards, and assessments as to their impacts on the Company, see Nature of

Operations, Management’s Plans and Summary of Significant Accounting Policies, Note 1 to the consolidated financial statements

included elsewhere in this report.

Company’s share repurchase activities for the three months ended December 31, 2022 were as follows (1) :

per share (2)

Total number of

October 1, 2022 to October 31, 2022

November 1, 2022 to November 30, 2022

December 1, 2022 to December 31, 2022

May 10, 2022, the Company announced that its Board of Directors authorized the Company to repurchase up to $25.0 million of shares

of the Company’s common stock (the “Share Repurchase Program”), exclusive of any fees, commissions or other expenses

related to such repurchases, on or prior to May 10, 2025.

The first repurchases under the Share Repurchase Program were made on May

average price paid per share includes commissions related to the repurchases.

do not currently expect to pay cash dividends on our common stock and have not paid cash dividends on our common stock to date.

dividend payments are within the absolute discretion of our board of directors and will depend upon, among other things, our results

of operations, working capital requirements, capital expenditure requirements, financial condition, level of indebtedness, contractual

restrictions with respect to payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law and other

factors that our board of directors may deem relevant.

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/A

Item 5. Market for Registrant’s Common Equity