What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-15 compared with 2023-03-16 · 550 added, 486 removed, 442 unchanged (70% of the section changed)

10 unchanged sentences

For definitions of the term Forward-Looking Statements, see the definitions provided in the Cautionary Note Regarding Forward-Looking

Statements at the start of this Annual Report on Form 10-K for the year ended December 31, 2022.

Statements at the start of this Annual Report on Form 10-K for the twelve month period ended December 31, 2023.

results of operations can fluctuate due to seasonal trends and other factors.

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been impacted by COVID-19 business disruptions and could continue to be impacted in future periods.

the twelve-month period ended December 31, 2021, all land-based operations were either subject to lockdown or had social distancing restriction

These social distancing measures continued throughout Greece and Italy until the second quarter of 2022, however, were no longer

in place in the United Kingdom from July 2021, and therefore year on year comparisons may not be meaningful due to the COVID-19 impacts.

generate revenue in four principal ways:

i) on a participation basis, ii) on a fixed rental fee basis, iii) through product sales and

iv) through software license fees.

Participation revenue generally includes a right to receive a share of our customers’ gaming

revenue, typically as a share of net win but sometimes as a share of the handle or “coin in” which represents the total amount

generate revenue in five principal ways:

i) on a participation basis, ii) on a fixed rental fee basis, iii) through product sales, iv)

through software license fees and v) managed service provision.

Participation revenue generally includes a right to receive a share of

our customers’ gaming revenue, typically as a share of net win but sometimes as a share of the handle or “coin in”

which represents the total amount wagered.

Geographically,

the majority of our revenue is derived from, and the majority of our non-current assets are attributable to, our UK operations.

remainder of our revenue is derived from, and non-current assets attributable to, Greece and the rest of the world (including North

The remainder

of our revenue is derived from, and non-current assets attributable to, Greece and the rest of the world (including North America).

the twelve months ended December 31, 2023, we derived approximately 78% of our revenue from the UK (including customers headquartered

in the UK but whose revenue is generated globally), 8% from Greece, and the remaining 14% across the rest of the world.

During the twelve

months ended December 31, 2021, we derived approximately 71%, 9% and 20% of our revenue from those regions, respectively.

The UK percentage

was impacted by specific Hardware sales, which generally result in a lower margin (“Low Margin sales”), this increased UK

revenue for the twelve-month period by 13%.

During the twelve months ended December 31, 2022, we derived approximately 74%, 8% and 18%

of our revenue from those regions, respectively.

of December 31, 2023, our non-current assets (excluding goodwill) were attributable as follows:

78% to the UK, 6% to Greece and 16% across

the rest of the world.

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

71% to the UK, 12% to Greece and 17%

across the rest of the world.

As of as of December 31, 2022, our non-current assets (excluding goodwill) were attributable as follows:

79% to the UK, 6% to Greece and 15% across the rest of the world.

results are affected by changes in foreign currency exchange rates because of the translation of foreign functional currencies into

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

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The geographic

region in which the largest portion of our business is operated is the UK and the British pound (“GBP”) is considered to

be our functional currency.

region in which the largest portion of our business is operated is the UK and GBP is our functional currency.

Our reporting currency is the U.S.

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to 26% during the twelve months ended December 31, 2022.

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 (GBP).

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.

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 (GBP).

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 measure used in generally accepted

accounting principles in the United States (“U.S.

GAAP” or “GAAP”), 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.

the twelve-month period in the Gaming segment, we completed the full rollout of 6,300 “Vantage” terminals into two major

customers, the majority of which are “Low Margin sales” resulting in $30.6m of revenue in the year, in addition to refreshing the Greek

estate with the delivery of 2,000 new “Valor” and 500 new “Vantage” terminals.

Inspired announced the launch

of a new VLT system for Codere in partnership with Cristaltec and went live with a third North American territory with the commencement

of a six-month trial of “Valor” terminals.

Virtual Sports segment announced a new partnership with Aristocrat Gaming™ to bring a new virtual sports experience to football

fans worldwide through their global licensing agreement with the NFL.

Interactive segment went live with thirty new operators including 32Red, AGLC, the Score, PlanetWin 365 (Italy), ATG (Sweden), Crowd

Entertainment, Hard Rock, Holland Casino and ESPN.

Leisure segment commenced operations at a new Holiday Park location with operator Butlins and successfully concluded the technical

trial of our new “Vantage” Category C cabinet with the commercial trial commencing in the final quarter.

signed in the year include a new four-year agreement with BoyleSports (Gaming Segment).

Long-term contract extensions with SNAITech and

bet365 and a new contract, which resulted in the live launch with Mozzartbet for V-Play Plug & Play™ in three new African territories

(Virtual Sports segment).

A new four-year agreement with Stonegate Group, one of the largest UK operators of Pubs in the managed, leased

and tenanted sectors, a three-year agreement with Whitbread and a five-year contract renewal with JD Wetherspoon for the supply of over

2,000 Category C gaming machines (for use in Pubs and other Alcohol licensed venues, plus Bingo halls) strengthening our position in

the Pubs sector with a new agreement signed with Verdant and a contract extension with Center Parcs (Leisure segment).

Financial Measures

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

a discussion and analysis

of the Company’s results of operations for the twelve-month period ended December 31, 2022, compared to the same period in

a discussion and analysis

of the results of operations for each of the Company’s segments (Gaming, Virtual Sports, Interactive and Leisure) for the twelve-month

periods ended December 31, 2022, compared to the same period in 2021, including KPI analysis.

discussion and analysis of the Company’s results of operations for the twelve-month period ended December 31, 2023, compared

to the same period in 2022;

discussion and analysis of the results of operations for each of the Company’s segments (Gaming, Virtual Sports, Interactive

and Leisure) for the twelve-month periods ended December 31, 2023, compared to the same period in 2022, including KPI analysis.

discussion and analysis of the Company’s consolidated results of operation and results of operations for each of the Company’s

segments for the twelve-month period ended December 31, 2022, compared to the same period in 2021, can be found in “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Form 10-K/A for the fiscal

year ended December 31, 2022 filed with the SEC on February 27, 2024.

There were no significant changes in the trends, discussions and analyses included therein.

Refer to Note 2, “Restatement

of Previously Issued Consolidated Financial Statements,” of the accompanying audited financial statements for further details related

to the Restatement and correction of errors and the impact on our consolidated financial statements and underlying financial data.

the discussion and analysis below, certain data may vary from the amounts presented in our consolidated financial statements due to rounding.

Year-on-year comparisons may not be meaningful due to COVID-19 impacts in prior period, as noted above.

all reported variances, refer to the overall company and segment tables shown below.

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For the Twelve-Month

31, 2023 vs December 31, 2022

(In millions)

Variance Attributable to Currency Movement

Variance on a Functional currency basis

Total Functional Currency Variance %

Total Reported Variance %

Total revenue

Attributable to Currency Movement

on a Functional currency basis

Functional Currency Variance %

Reported Variance %

Cost of Sales, excluding depreciation and amortization:

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Stock-based compensation

Acquisition and integration related transaction expenses

Acquisition and integration related transaction

Depreciation and amortization

Net operating Income (Loss)

operating Income (Loss)

Other income (expense)

Interest expense, net

Change in fair value of warrant liability

Profit on disposal of trade & assets

Other finance income (expense)

Total other income (expense), net

Net Income (loss) from continuing operations before income taxes

Total other income (expense),

Income (loss) before income taxes

Income tax expense

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Reported Revenue by Segment

VAT-related revenue for

the twelve-months ended December 31, 2022 was $1.0 million, and for the twelve-months ended December 31, 2021 was $3.1 million.

revenue” are payments from UK customers related to our contractual revenue share of their value-added tax rebate.

the twelve months ended December 31, 2022, revenue on a functional currency (at constant rate) basis increased by $109.8 million, or

the twelve-month period, Leisure and Gaming service revenue grew by $38.4 million and $30.4 million, respectively, predominately due

to COVID-19 related closures and restrictions in the first six months of the prior year.

Virtual Sports and Interactive grew by $25.7

million and $3.0 million, respectively, with $22.6 million of the Virtuals Sports increase from Online and $3.1 million from Retail.

were no Low Margin sales for the twelve-month period ended December 31, 2022.

For the twelve-month period ended December 31, 2023 Low

margin-related revenue was $30.6 million.

the twelve month period ended December 31, 2022, revenue on a functional currency (at constant rate) basis increased by $36.9

million, or 13.1%.

the twelve-month period ended December 31, 2023 Leisure revenue reduced by $0.5 million, Gaming service revenue grew by $2.0

million, Virtual Sports grew by $1.5 million mainly due to Retail and Interactive grew by $1.5 million.

of Sales, excluding depreciation and amortization

of sales, excluding depreciation and amortization, for the twelve months ended December 31, 2022, increased by $30.2 million, or 60%.

The increase was driven by Cost of Service of $21.0 million due to COVID-19 related closures in the prior period, and a $9.2 million

increase in Cost of Product.

of sales, excluding depreciation and amortization, for the twelve-month period ended December 31, 2023, increased by $32.1 million,

or 34% over the twelve-month period ended December 31, 2022.

The increase was driven by Cost of Service of $2.4 million and a $29.7

million increase in Cost of Product inclusive of Low Margin sales activity.

general and administrative expenses

general and administrative (“SG&A”) expenses for the twelve months ended December 31, 2022 increased by $32.0 million,

increase was driven primarily by the increase in staff cost of $29.2 million, due to the return of furloughed staff and return to full

pay for the current period as well as wage inflation particularly increases in the ‘UK’s national living wage’ of

6.6% (The National Living Wage is an obligatory minimum wage payable to workers in the United Kingdom).

the twelve months ended December 31, 2022, the Company recorded expenses of $10.8 million, compared to expenses of $13.0 million, for

the twelve months ended December 31, 2021.

All expenses related to outstanding awards, but the twelve months ended December 31, 2021,

included $1.4 million of shares that fully vested on the date of grant.

general and administrative (“SG&A”) expenses for the twelve-month period ended December 31, 2023 increased by $12.5

million, or 13.7% over the twelve-month period ended December 31, 2022.

increase in the twelve-month period ended December 31, 2023 was mainly driven by the below Adjusted EBITDA costs inclusive of group

restructure costs $3.1 million and restatement of previously issued financial statements $5.0 million in 2023 partially offset by

group simplification activity in 2022 of $0.7 million with the remaining $5.1 million relating to Non-Staff costs of which the

largest increases were for Professional fees due to the change in Audit provider during the year $1.7 million and Exhibition costs

$1.2 million not incurred in the previous year.

the twelve-month period ended December 31, 2023, the Company recorded expenses of $11.2 million, compared to expenses of $10.8

million, for the twelve month period ended December 31, 2022.

All expenses related to outstanding awards, but the twelve months

ended December 31, 2023, included $0.4 million of shares that fully vested on the date of grant.

and integration related transaction expenses

the twelve months ended December 31, 2022, the Company recorded an expense of $0.5 million, compared to an expense of $1.6 million, for

the twelve months ended December 31, 2021.

in both years related to integration costs for the Company’s acquisition of both Gaming Technology Group of Novomatic

UK Ltd., and acquisition costs of Sportech Lotteries, LLC as well as costs relating to potential acquisitions.

the twelve months ended December 31, 2023 there were no cost was recorded for acquisition and integration whereas during the twelve months

ended December 31, 2022, the Company recorded an expense of $0.5 million related to integration costs for the Company’s acquisition

of both Gaming Technology Group of Novomatic UK Ltd., and acquisition costs of Sportech Lotteries, LLC as well as costs relating to potential

acquisitions.

and amortization

and amortization decreased for the twelve-month period by $5.2 million.

This was mostly driven by Gaming and Leisure with reductions

of $4.0 million and $1.0 million.

The decrease in Gaming was due to a decrease in software amortization as software becomes fully amortized

and machine depreciation as machines in Greece become fully depreciated.

operating income/(loss)

the twelve-month period, net operating income was $48.9 million, an increase of $54.9 million.

These increases were attributable primarily

to the increases in revenue driven by the COVID-19 closures and restrictions in 2021, as well as growth in online revenue and the decrease

in depreciation, partly offset by an increase in Cost of sales and SG&A expenses.

expense, net decreased by $15.7 million in the twelve-month period ended December 31, 2022, which was due to the refinancing in the previous

year with savings due to lower debt interest of $0.6 million, lower debt fee amortization of $0.9 million and the $14.1 million write-off

of debt fees relating to the previous debt.

in fair value of warrant liability

the expiration of the warrants on December 23, 2021, the liability and the requirement to restate to fair value ceased to exist.

the twelve months ended December 31, 2021, the change in fair value of the warrant liability resulted in a gain of $0.9 million.

on disposal of business

the twelve-months ended December 31, 2022, gain on disposal of business was $0.9 million due to the sale of part of our Italian Gaming

operations (see Gaming key events for more information).

finance income

finance income for the twelve months ended December 31, 2022, was a $1.1 million gain.

This compares to a $5.7 million gain for the twelve

months ended December 31, 2021.

The year-on-year movements relate solely to the retranslation of the principal balance of our senior

debt facilities in place in the previous year.

effective tax rate for the twelve months ended December 31, 2022 was (12.9%), compared to 4.2% for the twelve months ended December

We recorded a valuation allowance against all of our deferred tax assets

as of both December 31, 2022, and December 31, 2021.

We intend to continue maintaining a full valuation allowance on our deferred tax

assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

However, given our current

earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient

positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no

longer be needed.

Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to

income tax expense for the period the release is recorded.

However, the exact timing and amount of the valuation allowance release are

subject to change on the basis of the level of profitability that we are able to actually achieve.

Income/ (loss)

During the twelve-month period, net income was $22.3

million, an increase of $60.9 million year-over-year, primarily due to an increase in net operating income $54.9 million, a decrease in

interest expense, net $15.7 million, a decrease in other finance income ($4.5 million) and increase in income tax expense of ($5.3 million).

a reported basis depreciation and amortization were flat for the twelve-month period ended December 31, 2023 with a decrease on a

functional currency basis of $0.5 million.

operating income / Net Income

the twelve-month period ended December 31, 2023 net operating income was $39.9 million, a decrease of $7.0 million over the twelve-month period ended December 31, 2022.

This decrease

was attributable primarily to the increase in SG&A cost of $12.5 million which was predominantly driven by below Adjusted EBITDA

costs inclusive of group restructure costs $3.1 million and restatement of previously issued financial statements $5.0 million in

2023 partially offset by group simplification activity in 2022 of $0.7 million partially offset by the gain in gross margin of $4.8

expense increased by $2.0 million mainly due to the increase in foreign exchange movements on bank accounts.

plus the termination of

swaps and the draw on the revolver in 2023.

on disposal of trade and assets had a decrease of $0.9 million as the prior-year included the sale of Italian trading assets.

finance income decreased by $0.7 million to $0.4 million.

tax expense increased by $2.9 million relating to the impact of US losses brought forward not being sufficient to offset the 2023 taxable

deferred tax we recorded a valuation allowance against all our deferred tax assets as of both December 31, 2023, and December 31,

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

the reversal of all or some portion of these allowances.

However, given our current earnings and anticipated future earnings, we believe there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us

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

Release of the valuation allowance

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

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

that we are able to actually achieve.

the twelve-month period ended December 31, 2023 net income was $7.6 million, an decrease of $13.2 million year-over-year, primarily due to the decrease in

net operating income $7.0 million, an increase in interest expense, net $2.0 million, a decrease in profit on disposal $0.9 million,

a decrease in other finance income $0.7 million and an increase in income tax expense of $2.8 million.

Results ( for the twelve months ended December 31, 2023, compared to the twelve months ended December 31, 2022)

generate revenue from our Gaming segment through the sales and rentals of our gaming machines.

We receive rental fees for machines, typically

in conjunction with long-term contracts, on both a participation and 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’ facilities.

Typically, we recognize revenue

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

generate revenue from our Gaming segment through the delivery of our gaming terminals preloaded with proprietary gaming software, server-based

content, as well as services such as terminal repairs, maintenance, software updates and upgrades on an when and if available basis and

content development.

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’ facilities.

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

the contract.

growth for our Gaming business is principally driven by changes in (i) the number of operator customers we have, (ii) the number of Gaming

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For the Twelve-Month

End of period installed base (# of terminals) (3)

Total Gaming - Average installed base (# of terminals) (3)

Participation

- Average installed base (# of terminals) (3)

Fixed Rental - Average installed base (# of terminals)

Service Only - Average installed base (# of terminals)

Customer Gross Win per unit per day (1) (2) (3)

Customer Net Win per unit per day (1) (2) (3)

December 31, 2023 vs December 31, 2022

End of period installed base (#

of terminals) (2)

Total Gaming - Average installed

base (# of terminals) (2)

Participation - Average installed

base (# of terminals) (2)

Fixed Rental - Average installed base (# of

Service Only - Average installed base (# of

Customer Gross Win per unit

per day (1) (2)

Customer Net Win per unit

per day (1) (2)

Inspired Blended Participation Rate

Inspired Fixed Rental Revenue per Gaming Machine per week (2)

Inspired Service Rental Revenue per Gaming Machine per week (2)

Inspired Fixed Rental Revenue per Gaming Machine

Inspired Service Rental Revenue per Gaming

Machine per week

Gaming Long term license amortization (£’m)

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Average selling price per terminal

Includes all SBG terminals

in which the Company takes a participation revenue share across all territories.

Includes all days of the

year, including the days during which the Gaming terminals were not operating due to COVID-19 closures.

Includes circa 2,500 of

lottery terminals (zero in the prior year) where the share is on handle instead of net win.

all SBG terminals in which the Company takes a participation revenue share across all territories.

circa 2,500 of lottery terminals where the share is on handle instead of net win.

the table above:

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Gross Win per unit per day” is a KPI used by our management to (i) assess impact on the Company’s revenue, (ii) determine

changes in the performance of the overall market and (iii) evaluate the impacts of regulatory change and our new content releases on

changes in the performance of the overall market and (iii) evaluate the impact of regulatory change and our new content releases on

our customers.

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and fixed rental revenue.

For the Twelve-Month

(In £ millions)

the Twelve-Month

December 31, 2023 vs

December 31, 2022

Gaming Recurring Revenue

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Gaming Participation Revenue

Gaming Project Recurring Revenue

Gaming Other Fixed Fee Recurring Revenue

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Total Gaming Recurring Revenue *

Gaming Recurring Revenue as a % of Total Gaming Revenue †

Gaming Recurring Revenue as a % of Total Gaming

Total Gaming excluding VAT -related revenue

Gaming Recurring Revenue as a % of Total Gaming Revenue (excluding VAT-related revenue)

Does not reflect VAT-related

Total Gaming Revenue for

the twelve-month period ended December 31, 2022 and 2021, includes £0.8 million and £2.3 million, respectively of VAT-related

revenue, which is not reflected in Gaming Recurring Revenue for that period.

Excluding VAT-related revenue, Gaming Recurring Revenue

was 67% and 70%, respectively of Total Gaming Revenue for such period.

Note – For the twelve-months

ending December 31, 2022, there has been some recharacterization between Gaming Participation Revenue and Other Fixed fee revenue

to ensure consistency with similar items across the Group.

No changes to prior year.

Gaming Recurring Revenue as a % of Total Gaming

Revenue (excluding VAT-related revenue)

Gaming Recurring Revenue as a % of Total Gaming

Revenue (excluding Low Margin Sales) †

not reflect Low Margin-related revenue.

Gaming Revenue for the twelve-month period ended December 31, 2023 has no VAT-related revenue, the twelve-month period ended December

31, 2022, includes £0.8 million of VAT-related revenue, which is not reflected in Gaming Recurring Revenue for that period.

Excluding VAT-related revenue, Gaming Recurring Revenue was 53% and 67%%, respectively of Total Gaming Revenue for such period.

Gaming Revenue for the twelve-month period ended December 31, 2023 includes £24.8 million of Low Margin sales.

For the twelve-month

period ended December 31, 2022 there are no Low Margin sales.

Excluding Low Margin sales, Gaming Recurring Revenue was 68% of Total

Gaming Revenue.

the table above:

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

“Gaming Project Recurring Revenue” relates specifically to a single customer for machine estate upgrades

and distribution.

Other Fixed Fee Recurring Revenue” includes service revenue in which the Company earns a periodic fixed fee on a contracted basis.

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See “Gaming Segment Revenue” below for a discussion of gaming service revenue between the periods under review.

For the Twelve-Month

(In millions)

Total Functional Currency %

the Twelve-Month

December 31, 2022

Service Revenue:

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Rest of the World

Total Service revenue

Service revenue

Exchange Rate - $ to £

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

Gaming Customer Gross Win per unit per day (in our functional currency, GBP) for the twelve-months ended December 31, 2022, increased

by £40.4, or 80%, to £91.0.

Much of the increase is driven by retail venues being closed during the first quarter of 2021

and part of the second quarter as a result of COVID-19 restrictions.

Another factor was our first year recognizing the newly

acquired Lottery business, which includes just under 2,500 lottery terminals (zero in the prior year) where the share is on handle instead

of net win and achieves Gross Win per unit per day figures above the average of the remaining Gaming sector.

overall participation rate for our installed base decreased from 6.4% for the twelve months ended December 31, 2021, to 5.7% in 2022.

The decrease was due mainly to the new Lottery business, which delivers high gross win values at lower participation terms than the average

of the remaining Gaming sector.

The Lottery business operates close to 2,500 terminals in various locations in the Dominican Republic

and has an agreement for the supply of these terminals until March 9, 2035.

The twelve months of trading delivered $5.1 million

of participation revenue.

rolled out new content across the UK LBO estate during the months of April and May 2022, which resulted in Gaming Customer Gross Win

per unit per day increasing by 4.8% from the second half of 2021 to the second half of 2022 (This comparison is used rather than full

year to help separate the impact of Covid closure in the first half of 2021).

the twelve-months ended December 31, 2022, Inspired recognized contractual performance bonuses of $2.0 million within UK

The bonus payments were triggered by strong year-on-year growth in Gaming Customer Gross Win per shop.

the end of the second quarter of 2022, Inspired secured a five-year contract extension for service and content fees with

one of its largest UK LBO customers.

Over 400 “Vantage” terminals will go on trial during the first quarter of 2023 with

the full roll out plan expected to commence in the fourth quarter of 2023, expecting to be complete by the end of first quarter of 2024.

the fourth quarter of 2022, Inspired’s two other major UK LBO customers signed up for new five-year and four-year contracts

respectively.

Both customers will refresh their estate with the new “Vantage” terminal on their own capital expenditure,

all installations are expected to be complete by the end of 2023.

the twelve-month period, Inspired upgraded its Non-LBO UK gaming estate with the installation of 460 “Flex” and 700 “Prismatic”

terminals through a combination of outright sales and lease agreements.

In the Dutch gaming market, Inspired continued its

strong relationship with a major customer, delivering outright sales of over 360 digital terminals, which included 100 in the third quarter

and 160 in the fourth quarter.

the UK Casino market, Inspired installed 183 “Sabre Hydra” terminals into venues which completed the full machine order of

over 200 machines with a major customer.

the North America market, Inspired sold 186 “Valor” terminals across a number of customers in Illinois.

The total sales since

launch in December 2019 are now over 880 terminals.

delivered its second machine order to Western Canada Lottery Corporation (WCLC), our second jurisdiction in North America.

Inspired completed

the outright sale of 820 “Valor Clamshell” terminals in the fourth quarter 2022 which represents the highest single machine

As part of the agreement, Inspired will take back the original 100 “Valor” terminals in the second quarter of 2023,

these terminals will either redeployed in North America or converted for another market.

2022, Inspired delivered the final 308 “Valor” terminals of a total 500-terminal award to OPAP (Greece) which include an

upfront license fee, this takes Inspired’s contracted volumes to 9,440.

Inspired rolled out new content during the third quarter,

which has resulted in double-digit growth in Gaming Customer Gross Win per unit per day when compared to the second quarter.

the Italian market, Inspired has transitioned to a content and platform supplier only model beginning January 1, 2022, driving significant

operating expense savings.

Inspired sold a large portion of its business to a major machine operator, including customer contracts and

“in country” staff.

Results of Operations

For the Twelve-Month

(In millions)

Variance Attributable to Currency Movement

Variance on a Functional currency basis

Total Functional Currency Variance %

Total Reported Variance %

the Twelve-Month

31, 2023 vs December 31, 2022

December 31, 2023

December 31, 2022

on a Functional

Total revenue

Cost of Sales, excluding depreciation and amortization:

Cost of Sales, excluding

depreciation and amortization:

Cost of Service

4 unchanged sentences

Depreciation and amortization

Net operating Income (Loss)

Profit on disposal of trade & assets

Net Income (Loss)

operating Income (Loss)

Profit on disposal of

trade & assets

Income (Loss)

Exchange Rate - $ to £

5 unchanged sentences

and $27.2 million increase in Product revenue.

increase in Gaming Service revenue was driven by $20.4 million from the UK market, $5.2 million from the Greek market and $0.9 million

from the Italian market, as all venues were open for the entire period compared to the prior period when the majority of the UK estate,

all Greece retail venues and all Italy retail venues were shut for some of the period and had restrictions for the remaining.

of the increase was due to the addition of the new Lotteries market and $0.4 million from the rest of the world.

This was offset by lower

VAT-related revenue of $2.1 million.

revenue increase was primarily driven by higher Product sales of $9.3 million in North America, $3.3 million of UK sales and $2.0 million

of higher spare sales, partly offset by lower sales of $2.1 million in Italy.

Operating Income

income increased for the twelve-month period by $23.4 million.

This increase was primarily due to the increase in revenues of $43.1 million

and decrease in depreciation of $4.0 million, primarily due to the decrease in software amortization as software became fully amortized

and due to a decrease in machine depreciation, as machines in Greece become fully depreciated.

This was partially offset by an increase

of Cost of sales of $18.1 million and increase of $5.6 million in SG&A, as staff returned from furlough or to full salary.

the twelve-month period, Net income increased by $24.3 million, from an income of $1.8 million to an income of $24.0 million.

due to the increase in Operating income and a $0.9 million profit from the disposal of trade and assets from the sale of part of the

Italian VLT operations (see Gaming key events for more information).

generate revenue from our Virtual Sports segment through the licensing of our products.

We receive fees in exchange for the licensing

of our products, typically on a long-term contract basis, on a participation 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 other promotional costs and any relevant regulatory levies) from Virtual Sports content placed on our customers’ websites or

in our customers’ facilities.

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

increase in Gaming Service revenue was driven by $1.4 million for North America, $1.1 million in the UK, $0.3 million in Greece and $0.1

million for Lotteries offset by no VAT-related revenue in 2023 of $1.0 million.

revenue increase was primarily driven by higher Product sales of $38.2 million in the UK inclusive of $30.0 million relating to Low Margin

activity and $2.2 million higher sales in Europe offset by $13.8 million lower sales in North America compared to prior year.

Operating / Net Income

income was flat year-on-year on a functional currency basis with a decrease in gross margin of $1.5 million (mainly due to the expiration

of software licenses for terminals installed in Greece in 2018 and the reduction in VAT-related revenue of $1.0 million) offsetting

against the favorable SG&A, depreciation and amortization movements to arrive at a net operating income of $0.8 million offset by

the decrease in profit on disposal of $0.8 million.

generate revenue from our Virtual Sports segment through the on premise licensing solution and hosting of our products.

receive fees on a participation 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 other promotional costs and any relevant

regulatory levies) from Virtual Sports content placed on our customers’ websites or in our customers’ facilities.

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

growth for our Virtual Sports segment is principally driven by the number of customers we have, the net win performance of the games

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Sports, Key Performance Indicators

For the Twelve-Month

of Live Customers at the end of the period

the Twelve-Month

December 31,2022

of Live Customers at the end

of the period

of Live Customers

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revenue during the period, respectively.

During 2023 a number of smaller customers were turned off driving the reduction.

Revenue (£m)” represents total revenue for the Virtual Sports segment, including recurring and upfront service revenue.

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Service revenue between the periods under review.

For the Twelve-Month Period ended

(In £ millions)

Virtual Sports Recurring Revenue

the Twelve-Month

December 31,2022

Virtual Sports Recurring

Total Virtual Sports Revenue

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Recurring Revenue - Online Virtuals

Total Virtual Sports Long-term license amortization

Total Virtual Sports

Long-term license amortization

Total Virtual Sports Recurring Revenue

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

Virtual Sports Recurring Revenue as a Percentage

of Total Virtual Sports Revenue

Revenue” includes our share of revenue generated from (i) our Virtual Sports products placed with operators;

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Sports Long term license amortization” is the upfront license fee which is typically spread over the life of the contract.

Sports, key events

the period, we launched Virtual Horse racing with the DC Lottery into their lottery locations.

contracts were signed with Scientific Games for Virtual Sports content to be sold to Netherlands Lottery (NLO), Goldbet covering the

provision of Virtual Sports into both their retail and online channels in Italy and a contract for Class 4 VLT games in Ladbrokes Belgium

signed a long-term extension to our contract with Betfred covering the provision of Virtual Sports into their retail LBO

estate in the UK.

In addition, we signed contract term extensions with Bet Victor, Sisal (Italy), Niké, spol.

s r.o (Slovakia)

and additional territories were added to our contract with Kaizen Gaming.

new Virtuals Plug and Play contract was signed with Morocco Lottery and launched, plus an extension to the retail contract.

launched Virtuals Women’s Soccer to coincide with UEFA Women’s Euro 2022.

We also launched Matchday multi-stream with one

of our biggest online customers and Matchday Ultra 2 and Soccer Ultra 2 with SNAI (Italy) retail and online, and optimized OPAP retail

schedule increasing the frequency of events and added product enhancements.

also signed a long-term extension to our contract with 49’s .

Sports, Results of Operations

For the Twelve-Month

(In millions)

Variance Attributable to Currency Movement

Variance on a Functional currency basis

Total Functional Currency Variance %

Total Reported Variance %

the Twelve-Month

31, 2023 vs December 31, 2022

Service Revenue

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Depreciation and amortization

Net operating Income (Loss)

operating Income (Loss)

Exchange Rate - $ to £

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Sports revenue

the twelve-month period, revenue increased by $25.7 million, or 71%.

This increase was driven by $22.6 million increase in

Online Virtuals, primarily driven by the growth from our existing online customers along with expanding jurisdictions, as well as increases

in Retail Virtuals of $3.1 million, due to retail venues being open for the whole of the period compared to the prior period.

the twelve-month period ended December 31, 2023 revenue increased by $1.5 million, or 2.8% driven by Retail Virtual Sports mainly for Greece where we have

increased content and game scheduling frequency.

Sports operating income

income increased by $25.3 million in the twelve-month period.

This increase was primarily due to the increase in revenue of $25.7 million

and a decrease in depreciation and amortization of $0.5 million, partly offset by an increase of $0.8 million of cost of sales.

generate revenue from our Interactive segment through the licensing of our products.

Typically, we receive fees in exchange for the licensing

of our products, on a long-term contract basis, on a participation basis.

Our participation contracts are usually 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 other

promotional costs and any relevant regulatory levies) from Interactive content placed on our customers’ websites.

Typically, we

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

income increased by $2.5 million in the twelve-month period ended December 31, 2023.

This increase was primarily due to the increase in gross margin of

$1.9 million, a decrease in SG&A expenses of $1.0 million and in Stock-based compensation of $0.3 million offset by an increase

in depreciation and amortization of $0.7 million.

generate revenue from our Interactive segment through various games content made available via third party aggregation platforms integrated

with Inspired’s remote gaming server or directly on the Company’s remote gaming servers platform, and services such as customer

support, platform maintenance, updates and upgrades.

Typically, we receive fees on a participation basis.

participation contracts are usually 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 other promotional costs and any relevant regulatory levies) from Interactive content

placed on our customers’ websites.

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

growth for our Interactive segment is principally driven by the number of customers we have, the number of live games, the net win performance

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Key Performance Indicators

For the Twelve-Month

of Live Customers at the end of the period

the Twelve-Month

December 31, 2022

of Live Customers at the end

of the period

of Live Customers

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Interactive revenue in both years was recurring.

the period ended December 31, 2022, we undertook 49 new brand launches, 24 during the first half of 2022 and 25 during the second half

We expanded territories with Bet365, BetMGM and Gamesys in Ontario, along with DraftKings in New Jersey, Connecticut and Pennsylvania

and Rush Street Interactive in Michigan and Pennsylvania.

We also expanded into Pennsylvania with BetMGM.

deployed 34 new games in the year, 20 new games in the first half of the year, including Big Egyptian Fortune TM and Big Wheel Bonus TM and

14 new games in the second half, including Cops N Robbers Big Money TM and Santa Linking TM .

launched our first iLottery title with Pharaon Reaction TM in the first half of 2022 and followed up with a second title in

the second half of 2022.

Results of Operations

For the Twelve-Month Period ended

(In millions)

Variance Attributable to Currency Movement

Variance on a Functional currency basis

Total Functional Currency Variance %

Total Reported Variance %

the Twelve-Month

December 31, 2023 vs December 31, 2022

Service Revenue

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Depreciation and amortization

Net operating Income (Loss)

operating Income (Loss)

Exchange Rate - $ to £

3 unchanged sentences

of any changes in foreign currency exchange rates.

twelve-month period, revenue increased by $3.0 million, primarily driven by recurring revenue growth due to the consistent launch of

new content across the estate, growth in the customer base in new, emerging and core markets and increased promotional activity through

twelve-month period ended December 31, 2023 revenue increased by $6.9 million, driven by recurring revenue growth due to the launch of new

content across the estate, growth in the customer base in new, emerging and core markets and increased promotional activity through

exclusive deals with tier-one customers.

operating income

income for the twelve-month period increased by $0.5 million.

This increase was driven by the increase in revenue, partially offset by

a $1.9 million increase in SG&A expenses driven by the investment in the segment to help drive revenues and for staff returning from

furlough and to full pay.

income for the twelve-month period ended December 31, 2023 increased by $2.2 million.

This increase was driven by the increase in

gross margin of $6.5 million, partially offset by a $2.8 million increase in SG&A expenses driven by the investment in staff and

IT in the segment to help drive revenue and higher depreciation and amortization reflecting the heightened investment in this

typically generate revenue from our Leisure segment through the supply of our gaming and amusement machines.

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Key Performance Indicators

For the Twelve-Month

End of period installed base Gaming machines (# of terminals)

Average installed base Gaming machines (# of terminals)

the Twelve-Month

December 31, 2022

End of period installed base Gaming

machines (# of terminals)

Average installed base Gaming machines (# of

End of period installed base Other (# of terminals)

Average installed base Other (# of terminals)

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

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

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

Inspired Leisure Revenue per Gaming Machine per week

Inspired Pub Digital Revenue per Gaming Machine per week

Inspired Pub Analogue Revenue per Gaming Machine per week

Inspired MSA and Bingo Revenue per Gaming Machine per week

Pub Digital Gaming Machines - Average installed

base (# of terminals)

Pub Analogue Gaming Machines - Average installed

base (# of terminals)

MSA and Bingo Gaming Machines

- Average installed base (# of terminals) (1)

Inspired Leisure Revenue per Gaming Machine

Inspired Pub Digital Revenue per Gaming Machine

Inspired Pub Analogue Revenue per Gaming Machine

Inspired MSA and Bingo Revenue per Gaming Machine

Inspired Other Revenue per Machine per week

Total Holiday Parks Revenue (Gaming and Non Gaming) (£’m)

Total Holiday Parks Revenue (Gaming and Non

Gaming) (£’m)

Service Area machines

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See “Leisure Segment Revenue” below for a discussion of leisure service revenue between the periods under

For the Twelve-Month

(In £ millions)

the Twelve-Month

December 31, 2022

Leisure Recurring Revenue

Total Leisure Revenue

Total Leisure

Total Leisure Recurring Revenue

Leisure Recurring Revenue as a Percentage of Total Leisure Revenue

the twelve-month period ended December 31, 2022 the holiday parks business delivered record sales and we successfully contracted another

Butlins site, which started earning income in January 2023 making Inspired the sole supplier of amusement

and gaming machines for Butlins for the next seven years, and we secured a new five-year deal with Haven.

the Pubs sector we successfully renewed our contract with Greene King for a further three years and increased our share of the estate

from 36% to 42%.

We signed a three-year extension with Mitchells and Butler and were reappointed as a supplier to Marstons for a further

We also divested our prize vend assets in the estate to allow focus on core gaming products with increased margins, which

is the reason for the decline in Other installed base year on year.

the year we have deployed several new titles across the pubs estate, including ‘Cops n Robbers Bank Buster’, Space Invaders,

‘Centurion’ ‘Gold Cash Freespins’ and “Party Time Pub Addition’ demonstrating our commitment to leveraging

Inspired’s successful game portfolio for the pub sector.

Leisure Recurring Revenue as a Percentage of

Total Leisure Revenue

Results of Operations

For the Twelve-Month

(In millions)

Variance Attributable to Currency Movement

Variance on a Functional currency basis

Total Functional Currency Variance %

Total Reported Variance %

the Twelve-Month

31, 2023 vs December 31, 2022

Total revenue

Cost of Sales, excluding depreciation and amortization:

Cost of Sales, excluding

depreciation and amortization:

Cost of Service

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Depreciation and amortization

Net operating Income (Loss)

operating Income (Loss)

Exchange Rate - $ to £

3 unchanged sentences

any changes in foreign currency exchange rates.

the twelve-month period, revenue increased by $38.0 million, or 55%, respectively, as our business benefitted from no COVID-19 closures

and fewer social distancing restrictions and growth in Service revenue.

revenue increased by $38.4 million, driven by all markets being open for the whole of the period, particularly Pubs ($14.1 million),

Holiday parks ($12.3 million), Motorway service areas ($8.1 million) and Bingo Halls ($2.3 million).

the twelve-month period ended December 31, 2023 revenue decreased by $0.5 million, or 0.8%.

revenue decreased by $0.5 million, the increase in Holiday Parks of $2.0 million due to new locations and higher bookings was offset

by decrease in Pubs $1.9 million due to the reduction in the estate size and sale of prize vend assets in 2022, decrease in Bingo $0.2

million and decrease in other Leisure activities of $0.4 million.

Operating Income/ (Loss)

income for the twelve-month period improved by $12.3 million, from a loss of $1.0 million to income of $10.0 million.

This was primarily

due to the increase in revenue as venues reopened and COVID-19 restrictions were removed, as well as a reduction in depreciation and

amortization of $1.0 million.

This was partially offset by increases in Cost of sales ($10.8 million) and SG&A expenses ($15.9 million),

due to staff returning from furlough and to full pay and in the later months from the increase in the UK national living wage.

income for the twelve-month period ended December 31, 2023 reduced by $3.4 million, from income of $9.9 million to income of $6.8

This was primarily due to the decrease in revenue of $0.5 million with increases in cost of sales of $1.5 million mainly

due to seasonal staff increases inclusive of additional heads in the new locations plus higher UK national living wage and salary

increases and increased SG&A cost $2.9 million which mainly relates to staff cost driven by the investment in staff to help to

drive revenue and improve processes.

Financial Measures

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

We use these 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

For these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in addition

to standard U.S.

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

We use these 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.

these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in addition to standard

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.

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.

You should consider our non-GAAP financial measures in conjunction with

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.

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

GAAP financial measures.

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EBITDA is defined as net income (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 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.

This does not include any adjustments related to COVID-19.

tax expense, and other additional exclusions and adjustments (see Adjusted EBITDA reconciliation table).

Such additional excluded amounts

include stock-based compensation U.S.

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

the value of 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 but not limited to (1) restructuring costs, which include charges attributable to employee severance,

impairments, 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.

This does not include any adjustments related to

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

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amortization, interest expense, and income tax benefit (expense), are evaluated separately by management.

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

at Low Margin with the intention of securing longer term recurring revenue streams.

Currency at Constant rate.

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Reconciliations

from net loss, as shown in our Consolidated Statements of Operations and Comprehensive Income (Loss), to Adjusted EBITDA are shown

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

Reconciliation

to Adjusted EBITDA by segment for the Twelve Months ended December 31, 2023

For the Twelve-Month Period ended

(In millions)

Virtual Sports

the Twelve-Month Period ended December 31, 2023

Net Income/ (loss)

Items Relating to Legacy Activities:

Pension charges (1)

Items outside the normal course of business:

Acquisition and integration related transaction expenses (2)

Litigation Settlement (3)

Cost of Group Restructure (2)

Cost of Group Restatement (3)

Stock-based compensation expense (4)

4 unchanged sentences

Interest expense net

Profit on disposal of trade & assets (5)

Profit on disposal of trade & assets

Other finance expenses / (income) (4)

9 unchanged sentences

to Adjusted EBITDA by segment for the Twelve Months ended December 31, 2022

For the Twelve-Month Period ended Dec 31,2021

(In millions)

Virtual Sports

the Twelve-Month Period ended December 31, 2022

Net Income/ (loss)

Items Relating to Legacy Activities:

Pension charges (1)

Items outside the normal course of business:

Acquisition and integration related transaction expenses (2)

Refinancing of Company Debt (7)

Italian tax related costs relating to prior years (8)

Acquisition and integration

related transaction expenses (7)

Acquisition and integration

related transaction expenses (7)

Litigation Settlement(8)

Stock-based compensation expense (4)

1 unchanged sentence

Depreciation and amortization (4)

Depreciation and amortization

Stock-based compensation expense

Interest expense net (4)

Interest expense net

Change in fair value of warrant liability (4)

Change in fair value of warrant liability

Profit on disposal of trade & assets (5)

Profit on disposal of trade & assets

Other finance expenses / (income) (4)

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These costs are included within Corporate Functions.

and integration related transaction expenses, are as described above in the Results of Operations line item discussions.

For 2022 this includes a write-off of inventory items related to the integration of Gaming Technology Group of Novomatic UK Ltd.

Settlement” refers to full and final settlement of a contractual dispute relating to a Development Services and Management

of Group Restructure” include redundancy costs, payment in lieu of notice costs and any associated employer taxes.

as being an adjusting item, costs must be part of a large restructuring project, which will net save ongoing future costs or be in

relation to the exit of an Executive.

of Group Restatement” includes accounting advice associated with the restatement of the 2020, 2021 and 2022 annual

accounts and the 2023 Q1 and Q2 interim accounts.

To qualify as being an adjusting item, costs must be specific

to the event and be neither normal nor recurring in nature.

compensation expense, Depreciation and amortization, Total other expense, net and Income tax are as described above in the Results

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

May 2021, the Company refinanced its debt.

These are outside of the write off of old debt fees recognized in the interest line.

tax related costs relating to prior years invoicing” relate to a settlement with the Italian Tax Authorities in respect of

an audit for the period 2015-2017 in respect of the historic VAT treatment of supplies.

and integration related transaction expenses, are as described above in the Results of Operations line item discussions.

this includes a write-off of inventory items related to the integration of Gaming Technology Group of Novomatic UK Ltd

Settlement” refers to full and final settlement of a contractual dispute relating to a Development Services and Management

Reconciliation

to Adjusted Revenue

believe that accounting for Low Margin hardware sales in conformance with U.S.

GAAP can result in a distorted presentation of our revenue

Therefore, we use Revenue Excluding Low 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 below.

the Twelve-Month

December 31, 2023

December 31 2022

Less Low Margin Gaming

Adjusted Revenue

Exchange Rate - $ to £

and Capital Resources

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Flow Summary - A Two Year Comparative

Twelve Months ended

(in millions)

Net profit/(loss)

Amortization of debt fees

Change in fair value of derivative and warrant liabilities and stock-based compensation expense

Foreign currency translation on senior bank debt and cross currency swaps

Depreciation and amortization (incl RoU assets)

Other net cash utilized by operating activities

Net cash provided by operating activities

Net cash used in investing activities

Net cash used/(generated) by financing activities

Effect of exchange rates on cash

Net decrease in cash and cash equivalents

Non-cash interest expense relating to senior debt

fair value of derivative liabilities and stock-based compensation expense

sale of Gaming business

cost additions

and amortization (incl RoU assets)

cash utilized by operating activities

provided by operating activities

used in investing activities

generated/(used) by financing activities

exchange rates on cash

Net increase/(decrease)

in cash and cash equivalents

cash provided by operating activities

2 unchanged sentences

This increase was driven

primarily by trading levels through increases in our online businesses and the worldwide trading restrictions in the previous year resulting

from the COVID-19 pandemic.

of debt fees decreased by $15.4 million, to $1.8 million, due to the reduction in the level of capitalized debt fees after May 2021 following

the Company’s refinancing of its debt and the $14.4 million write off of the remaining debt fees from the previous financing arrangement.

in the fair value of derivative and warrant liabilities and stock-based compensation expense decreased by $2.1 million, from $13.6 million

to $11.5 million.

A lower stock-based compensation expense ($2.2 million) and a lower gain relating to terminated cross currency swaps

($0.8 million) was partly offset by movements in the fair value of warrant liabilities in the prior year ($0.9 million).

the refinancing in May 2021, there has been no foreign currency translation on senior bank debt and cross currency swaps.

In the twelve

months ended December 31, 2021, the foreign currency translation on senior bank debt and cross currency swaps resulted in a loss of $4.6

million as a result of the movement in exchange rates during the period.

and amortization decreased by $10.3 million, to $40.0 million, with reductions of $4.4 million in machine depreciation, $5.0 million

in amortization of intangible assets and $1.0 million in amortization of right of use assets.

net cash utilized by operating activities increased by $7.3 million, to a $40.9 million outflow.

The relative movements between the

twelve months ended December 31, 2022 and the twelve months ended December 31, 2021 resulted in a $17.6 million outflow through

increased inventory holding as Inspired made the strategic decision to secure components and protect sales in a challenging global

supply chain market and a $7.0 million increase in receivables due to timing of sales.

These were offset by relative

favorable movements between the twelve months ended December 31, 2022 and the twelve months ended December 31, 2021 for prepayments

and accrued income of $10.2 million due to lower trading levels at the start of the previous year, interest accruals of $5.0 million

following the debt refinancing in May 2021 and trade payables and accruals of $1.9 million.

primarily by an improved working capital position with favorable movements in inventory which was expanded in the twelve months ended

December 31, 2022 to safeguard future supply for production after the COVID-19 pandemic.

Favorable movements were also seen in accounts

receivable and accounts payable due to timing and varying levels of production activity including the installation of 2,500 machines

into Greece during the last few months of 2023.

of debt fees increased by $0.2 million, to $2.0 million, due to the marking to market for short term currency contracts held at the end

in the fair value of derivative and warrant liabilities and stock-based compensation expense was unchanged at $11.5 million.

A higher stock-based compensation expense ($0.2 million) was partly offset by a lower gain relating to terminated cross

currency swaps ($0.2 million) as these terminated at the end of September 2023.

twelve-months ended December 31, 2022, included a $0.9 million gain on disposal of business due to the sale of part of our Italian Gaming

cost additions increased by $3.1 million to $10.3 million for the twelve months ended December 31, 2023 as compared to the twelve months

ended December 31, 2022.

and amortization increased by $0.3 million, to $43.7 million, with increases of $2.0 million in amortization of intangible assets and

$0.3 million in amortization of right of use assets offset by a $2.0 million decrease in machine depreciation.

net cash utilized by operating activities improved by $35.5 million, to an outflow of $9.0 million.

The relative movements between

the twelve months ended December 31, 2023 and the twelve months ended December 31, 2022 resulted in a $16.3 million inventory

improvement following Inspired making the strategic decision to secure components to protect future sales resulting in inventory

levels increasing during the prior year.

Accounts receivable saw a $13.8 million improvement due to the timing of machine sales resulting

in a high balance at the end of the twelve months ended December 31, 2022.

Another area that showed improvement in cash utilization

for the twelve months ended December 31, 2023 was deferred revenue creditors, $9.1 million.

These were partly offset by a relative outflow in prepayments and accrued income, $4.3

cash used in investing activities

cash utilized in investing activities increased by $15.8 million, to $48.4 million in the twelve months ended December 31, 2023.

was driven by higher spend on plant, property and equipment (an $9.6 million increase compared to 2021) and capitalized software (a $4.8

million increase compared to 2021) due to spending in the previous year being low as a result of the pandemic.

These were largely offset

by the $12.5 million acquisition of Sportech Lotteries, LLC on December 31, 2021 for which the twelve months ended December 31, 2022

included the final payment of $0.6 million.

was driven by higher spend on plant, property and equipment (a $10.6 million increase compared to 2022 driven by the updating of machines

in Greece with 2,500 terminals installed) and capitalized software (a $3.9 million increase compared to 2022).

The twelve months ended

December 31, 2022 included a $1.3 million disposal relating to assets sold as part of the sale of our Italina Gaming operations.

cash (used)/generated by financing activities

the twelve months ended December 31, 2022, net cash utilized by financing activities was $11.0 million, $10.4 million of which related

to the Company’s repurchase of its common shares under the Share Repurchase Program and $0.6 million of which related to finance

During the twelve months ended December 31, 2021, financing activities generated $31.2 million of cash following the receipt

of $30.5 million proceeds from the warrant exercise and a net $1.3 million from the refinancing in May 2021 after payment of associated

fees less a spend of $0.6 million on finance leases.

the twelve months ended December 31, 2023, net cash generated by financing activities was $16.2 million due to the draw down of £15.0

million ($18.9 million) of the Company’s revolving facility.

This was offset by the Company’s repurchase of its

common shares under the Share Repurchase Program, $1.6 million, and finance lease spend of $1.1 million.

During the twelve months ended

December 31, 2022, financing activities utilized $11.0 million of cash due to the Company’s repurchase of its common shares under

the Share Repurchase Program, $10.4 million, and finance lease spend of $0.6 million.

Needs and Sources

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debt or the refinancing of existing debt.

As of December 31, 2022, we had liquidity consisting of $25.0 million in cash and cash equivalents

and a further $24.1 million of undrawn revolver facility.

This compares to $47.8 million of cash and cash equivalents as of December

31, 2021, with a further $27.0 million of revolver facilities undrawn.

We had a working capital outflow of $40.9 million for the twelve

months ended December 31, 2022, compared to a $33.6 million outflow for the twelve months ended December 31, 2021.

As of December 31, 2023, we had liquidity consisting of $40.0 million in cash and a further

$6.4 million of undrawn revolver facility.

This compares to $25.0 million of cash as of December 31, 2022, with a further $24.1 million

of revolver facilities undrawn.

We had a working capital outflow of $9.0 million for the twelve months ended December 31, 2023, compared

to a $44.5 million outflow for the twelve months ended December 31, 2022.

level of our working capital surplus or deficit varies with the level of machine production we are undertaking and our capitalization

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payments to suppliers.

These factors, along with movements in trading activity levels which were seen during 2021 following

the COVID-19 closures, can result in significant working capital volatility.

In periods of low activity, our working capital volatility

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.

These factors 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.

of our business operations require cash to be held within the machines.

As of December 31, 2023, $3.1 million of our $40.0 million of

cash and cash equivalents were held as operational floats within the machines.

At December 31, 2021, $2.7 million of

our $47.8 million of cash and cash equivalents were held as operational floats within the machines

cash were held as operational floats within the machines.

At December 31, 2022, $2.5 million of our $25.0 million of cash

were held as operational floats within the machines

currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, and the ability

to control and defer capital projects will be sufficient to fund the Company’s net cash requirements through March 2024.

to control and defer capital projects will be sufficient to fund the Company’s net cash requirements through April 2025.

Term and Other Debt

(In millions)

December 31, 2022

December 31, 2021

Original principal senior debt

Revolver drawn

Original principal senior

Cash interest accrued

Finance lease creditors

lease creditors

our debt facilities in place as of December 31, 2023, we are not subject to covenant testing on the Senior Secured Notes.

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2023 showed covenant compliance.

were no breaches of the debt covenants in the periods ended December 31, 2022 or December 31, 2021.

Indenture contains covenants and certain reporting requirements including the requirement to provide the Lender, within 60 days after

the close of the quarter, unaudited quarterly financial statements with footnote disclosures.

The Company was unable to comply with this

requirement as of September 30, 2023 due to the requirement to restate previously reported financial statements as reported in a Current

Report on Form 8-K filed with the SEC on November 8, 2023.

The debt agreement allows the Company a 30-day grace period to provide such

financial information once they receive any notice of non-compliance.

No such notice was received and concurrent with the filing

of the September 30,2023 10Q with the SEC on February 27, 2024, the reporting requirement was met.

were no other breaches of the debt covenants in the periods ended December 31, 2023 or December 31, 2022.

and Encumbrances

of December 31, 2022, our senior bank debt was secured by the imposition of a fixed and floating charge in favor of the lender over all

of December 31, 2023, our senior secured notes were 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.

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of December 31, 2023, our contractual obligations were as follows:

Contractual Obligations (in millions)

Obligations (in millions)

Operating activities

Interest on long term debt

Purchase of Vantage machines

Financing activities

Senior bank debt - principal repayment

Revolver repayment

Senior secured notes - principal repayment

Finance lease payments

Operating lease payments

Interest on non-utilization fees

Interest on non-utilization

Sheet Arrangements

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Accounting Policies and Accounting Estimates

preparation of our audited consolidated financial statements in conformity with accounting principles generally accepted

in the United States (“U.S.

preparation of our audited consolidated financial statements in conformity with 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.

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.

We base our 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.

We base our 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 Note 1 “Nature

of Operations, Management’s Plans and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial

Statements included in Part II, Item 8 of this report.

of GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates.

Specifically, complex arrangements

with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting.

often enters into contracts with customers that consist of a combination of services and products that are accounted for as one or more

distinct performance obligations.

Management applies judgment in evaluating the contractual terms and conditions that impact the identification

of performance obligations and the pattern of revenue recognition.

For these arrangements that contain multiple promises, judgement is

also required to determine the stand-alone selling price (“SSP”) for each distinct performance obligation.

In instances where

SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information

that may include market conditions, size of the customer, geography and other observable inputs or, as necessary, unobservable considerations

such as historical experience, knowledge of our business and industry and our current or expected selling practices.

recognition is also impacted by our ability to estimate variable consideration, including, for example, rebates, service-level penalties,

and other incentive payments.

We consider various factors when making these judgments, including a review of specific transactions, historical

experience and market and economic conditions.

Evaluations are conducted each quarter to assess the adequacy of the estimates.

significant judgments include determining whether the Company is acting as the principal or the agent in a transaction.

Company recognized service and product revenue of $261.2 million and $61.8 million, respectively, for the year ended December 31,2023.

The Company’s revenue recognition policy, which requires significant judgments and estimates, is fully described in Note 1 “Nature

of Operations, Management’s Plans and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial

Statements included in Part II, Item 8 of this report.

Impairment Assessment

accordance with ASC 350, Intangibles—Goodwill and Other, we allocate goodwill to reporting units based on the reporting unit expected

to benefit from the business combination.

We evaluate our reporting units on at least an annual basis and, if necessary, reassign goodwill

upon reorganization using a relative fair value allocation approach.

We determined that we have five reporting units:

Virtual Sports,

Interactive, Leisure, and two reporting units within our Gaming segment.

As of December 31, 2023, total goodwill with the Virtual Sports,

Interactive, and two Gaming reporting units is $44.8 million, $1.8 million, $9.3 million, and $2.9 million, respectively.

remaining goodwill within the Leisure reporting unit.

Goodwill is tested for impairment at the reporting unit level (operating segment

or one level below an operating segment) annually on the last day of our fiscal period or between annual tests if an event occurs or

circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition,

or sale or disposition of a significant portion of a reporting unit.

is reviewed for impairment using either a qualitative assessment or a quantitative one-step process.

If we perform a qualitative assessment

and determine that the fair value of a reporting unit more likely than not exceeds the carrying value, no further evaluation is necessary.

For reporting units where we perform the quantitative test, we are required to compare the fair value of each reporting unit, which we

primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which

includes goodwill.

If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired.

carrying value is higher than the fair value, we recognize an impairment charge for the amount by which the carrying value exceeds the

reporting unit’s estimated fair value.

of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities

to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit.

of the qualitative goodwill assessment requires judgment in identifying and considering the significance of relevant key factors, events

and circumstances that affect the fair value or carrying amount of the reporting units.

Such events and circumstances that we have considered

include macroeconomic conditions, industry specific and market considerations, and reporting unit-specific factors such as overall actual

and projected financial performance, among other factors.

We also considered the results from the most recent date that a fair value

measurement was performed as a part of a quantitative goodwill assessment and specifically the cushion between each reporting unit’s

fair value and carrying value.

The estimates used to calculate the fair value of a reporting unit as a part of a quantitative goodwill

assessment change from year to year based on operating results, market conditions, and other factors.

Changes in these estimates and

assumptions could materially affect the determination of fair value and goodwill impairment, if any, for each reporting unit.

performed our annual goodwill impairment test as of December 31, 2023 using a qualitative assessment for all of our reporting units.

Based on the results of our qualitative impairment assessments, we concluded that it is more likely than not that the fair values of

each of our reporting units substantially exceeded their respective carrying values and there were no reporting units requiring further

Assets and Finite-lived Intangible Assets

evaluate the recoverability of intangible assets and other long-lived assets with finite useful lives by comparing the carrying value

of the asset group to the estimated undiscounted future cash flows that we expect the asset to generate if events or changes in circumstances

indicate that these assets are not recoverable.

If the asset group fails the recoverability test, an impairment loss is measured as the

amount by which the carrying amount of the asset group exceeds its fair value.

The fair value is determined using a discounted cash flow

approach where projections of future cash flows generated by those assets are discounted using an estimated discount rate.

judgment is required to estimate the amount and timing of future cash flows and the relative risk of achieving those cash flows.

make judgments about the remaining useful lives of intangible assets and other long-lived assets that have finite lives.

While we believe

our estimates of future operating results and projected cash flows are reasonable, any significant adverse changes in key assumptions

(i.e., adverse change in the extent or manner in which an asset or asset group is being used or expectation that, more likely than not,

an asset or asset group will be sold or otherwise disposed of before the end of its useful life) or adverse changes in economic and market

conditions may cause a change in our evaluation of recoverability or our estimation of fair value and could result in an impairment charge

that could be material to our financial statements.

Any impairment loss shall be allocated to the long-lived assets of the group on a

pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset

of the group shall not reduce the carrying amount of that asset below its fair value.

determined that there were no new indicators of impairment for the years ended December 31, 2023 and 2022 and the Company concluded that

there was no impairment of the Company’s intangible and long-lived assets as of December 31, 2023 and 2022.

Development Costs

development costs represent costs incurred to develop internal-use software, including software developed to deliver our cloud-based

offerings to customers, as well as external-use software to be used in the products we sell, lease or license to customers.

primarily consist of salaries and payroll related costs for employees and external contractors directly involved in the corresponding

software development efforts.

We determine the appropriate guidance to apply to software development costs on a project-by-project basis,

based on the nature of the underlying software.

direct costs incurred to develop new internal-use software, as well as certain software enhancements that provide new functionality,

are capitalized once the project has been approved by management and is in the application development stage.

Costs incurred in the preliminary

planning stage and the post implementation operational stage are expensed as incurred.

incurred in developing external-use software are expensed as incurred until technological feasibility has been established, after which

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

Technological feasibility is established

upon completion of a detailed program design or, in its absence, upon completion of a working model.

Company must apply judgement in determining the amount of software development costs that should be capitalized.

Specifically, we must

evaluate, on a project by project basis, whether the resultant product or platform will be completed and generate ongoing economic benefits,

principally through revenue from our customers, which is subject to uncertainties.

the software is substantially complete or available for general release, capitalized internal-use and external-use software costs are

amortized on a straight-line basis over the estimated economic useful life of the software, which ranges from two to five years.

is judgement involved in estimating the useful life of developed software and the two-to-five-year period was determined based on factors

such as the continuous development in the technology, obsolescence, and anticipated life of the service offering before significant upgrades.

Management evaluates the useful lives of these assets on a recurring basis and tests for impairment whenever events or changes in circumstances

occur that could impact the recoverability of these assets.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis