What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-26 compared with 2024-04-15 · 956 added, 915 removed, 1322 unchanged (59% of the section changed)

4 unchanged sentences

OF DECEMBER 31, 2024 AND 2023

of Independent Registered Public Accounting Firm PCAOB ID # 688

Balance Sheets

Statements of Operations and Comprehensive Income (Loss)

Statements of Stockholders’ Deficit

Statements of Cash Flows

to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm PCAOB ID # 688

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Deficit

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Shareholders and Board of Directors of

the Stockholders and Board of Directors of

Entertainment, Inc.

1 unchanged sentence

on the Financial Statements

We have audited the accompanying consolidated balance

sheets of Inspired Entertainment, Inc.

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

and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated

statements of operations and comprehensive loss (income), stockholders’ equity and cash flows for each of the three years in the

statements of operations and comprehensive income (loss), stockholders’ deficit and cash flows for each of the three years in the

period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022,

and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity

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

We also have audited, in accordance with the standards

of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial

reporting as of December 31, 2023, based on the criteria established in Internal Control - Integrated Framework issued by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 , and our report dated April 15, 2024 expressed an adverse

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

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

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

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

with the U.S.

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

We conducted our audits in accordance with the standards

of the PCAOB.

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

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

Our audits included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

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

subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements,

taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit

matters or on the accounts or disclosures to which they relate.

Revenue Recognition – Use of IT Systems to track and invoice

revenue and the determination of the various promises in the arrangement

Certain of the Company’s revenue contracts with

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

The Company is required to evaluate whether

each promise represents a performance obligation.

The evaluation of whether promises are both capable of being distinct in the context

of a contract (and thus constitute performance obligations) can require significant judgment and could change the amount of revenue recognized

in a given period.

We identified the determination of performance obligations

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

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

This required a high degree of

auditor judgment and an increased extent of testing.

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

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

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

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

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

also performed the following procedures:

contract terms and conditions,

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

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

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

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

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

specific contracts with third party customers to evaluate the contract terms associated with ASC 606 Revenue from Contracts with

Customers, Agent vs.

Principal literature.

Capitalization

of Developed Software for Internal or External Use

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

during preliminary project stages are expensed as incurred;

for external use software, direct costs incurred during the application

development stages are capitalized;

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

software is placed in operation, the Company amortizes the capitalized cost of the software over its economic useful life, which

ranges from two to five years.

During the year ended December 31, 2023, the Company capitalized $9,663,295 of software development

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

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

direct labor data.

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

to assess the sufficiency of the audit evidence obtained.

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

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

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

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

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

direct labor costs to capitalize.

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

the sufficiency of the audit evidence obtained, by:

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

generally accepted accounting

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

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

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

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

derive the labor rates to data from the source systems.

underlying verification over the timing a project was placed in service,

executives with day-to-day job responsibilities that impact the development of software costs,

with human resource personal regarding employee job descriptions and day-to-day job responsibilities, and

selected large projects at random to verify if any restatement adjustment should or should not apply.

based on our audit results, the financial statements present fairly, in all material respects, the financial position of the Company as

of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December

31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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

Company’s internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control –

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March

26, 2025, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of

the existence of material weaknesses.

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

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

financial statements based on our audits.

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

with respect to the Company in accordance with the U.S.

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

and Exchange Commission and the PCAOB.

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

Those standards require that we plan and perform the audits to

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

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

fraud, and performing procedures that respond to those risks.

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

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

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

We believe that our audits provide

a reasonable basis for our opinion.

Audit Matters

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

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

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

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

The communication of critical audit matters

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

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

described in Note 1 of the consolidated financial statements, the Company’s revenues are generated through four segments (Gaming,

Virtual, Interactive, and Leisure).

Each of the four segments provides different offerings to their customers.

Examples include:

Gaming revenue includes delivery of gaming terminals preloaded with proprietary gaming software, sever-based content, as well as services

such as terminal repairs, maintenance, software updates and upgrades, and content development;

(b) Virtual revenue includes packaged

products and services in either an on-premise solution or a hosted solution;

made available via third party aggregation platforms integrated with the Company’s remote gaming server or direct to operators

on the Company’s remote gaming servers platform, and services such as customer support, platform maintenance, updates and upgrades;

and (d) Leisure revenue is generated by jointly or wholly operating arcades, proving managed service solutions, and more.

recognized revenue of $297.1 million for the year ended December 31, 2024.

of the Company’s revenue contracts with customers include multiple promises, the nature of which can vary for each segment and

The Company is required to identify whether a performance obligation is a promise within a contract to transfer a distinct

good or service, or a series of distinct goods and services, to a customer.

The evaluation of whether promises are both capable of being

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

the amount of revenue recognized in a given period.

identified auditing the Company’s identification of the performance obligations as a critical audit matter because there is significant

judgment exercised by management when evaluating their customer contracts, which may include several promised goods and services, as

well as identifying the correct transaction price, all of which will impact the amount of revenue recognized in a given period.

required a high degree of auditor judgment in performing procedures and evaluating audit evidence.

primary audit procedures we performed to address this critical audit matter included:

obtained an understanding of management’s process for customer contracts in accordance with

the applicable accounting standards.

evaluated the terms and considerations of the customer contracts on a sample basis.

identified the promised goods and services within the customer contracts to ensure that these

promised goods and services were consistent with the standard offering by the Company.

assessed the transaction price per contract to ensure the pricing structure was consistent

with all other contracts.

tested certain contracts to ensure the lease and non-lease components of the contract are

recognized under the applicable accounting standards.

development costs

described in Note 1 to the consolidated financial statements, the Company develops software for internal use and capitalizes the software

development costs incurred during the application development stage.

Costs are capitalized when preliminary development efforts are successfully

completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software

will be used as intended.

The Company will stop capitalizing these costs when the software is substantially complete and ready for its

intended use, including the completion of all significant testing.

Costs are amortized on a straight-line basis over the estimated useful

life of the related asset, generally estimated to be two to five years.

Additionally,

the Company develops software for external use and capitalizes the software development costs incurred once technological feasibility

has been reached.

Technological feasibility is achieved when the entity has completed all planning, designing, coding, and testing activities

that are necessary to establish that the product can be produced to meet its design specifications including functions, features, and

technical performance requirements.

The Company will stop capitalizing these costs on the date that the software is available for general

release to the customers.

Costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally

estimated to be two to five years.

Company capitalized $11.8 million of software development costs, with the majority of the costs being employee wages, during the year

ended December 31, 2024.

Total capitalized software development costs are $22.4 million as of December 31, 2024.

identified software development costs as a critical audit matter because of the judgment exercised by management in determining whether

costs incurred on software development projects have met the capitalization criteria, which in turn, required a higher degree of auditor

judgment in performing procedures and evaluating audit evidence.

primary audit procedures we performed to address this critical audit matter include:

obtained an understanding of management’s process for evaluating software development costs

and the nature of software development costs capitalized.

assessed management’s methodology utilized in calculating capitalized software development

costs which is based on the allocation of capitalized labor costs.

We made certain inquiries

of project members to further assess the reasonableness of time allocated to the selected

inspected underlying documentation for a sample of projects to evaluate whether the costs

were capitalizable under the applicable accounting standards.

tested individual payroll-related costs, on a sample basis, and assessed whether such costs

were properly capitalized based upon the nature and stage of work performed and whether the

requisite capitalization criteria were met.

conducted corroborative interviews with Company personnel involved in software development

regarding the nature and functionality of costs incurred related to capitalized software

have served as the Company’s auditor since 2016.

April 15, 2024

ENTERTAINMENT, INC.

2 unchanged sentences

millions, except share data)

December 31, 2024

December 31, 2023

Accounts receivable, net

Inventory, net

Prepaid expenses and

other current assets

current assets

Prepaid expenses and other current assets

Corporate tax and other current taxes receivable

Total current assets

Property and equipment, net

Software development costs, net

Other acquired intangible assets subject to

amortization, net

Other acquired intangible assets subject to amortization, net

Finance lease right of use asset

Operating lease right of use asset

Costs of obtaining and fulfilling customer

contracts, net

Liabilities and Stockholders’

Costs of obtaining and fulfilling customer contracts, net

Liabilities and Stockholders’ Deficit

Current liabilities

4 unchanged sentences

Current portion of long-term debt

Current portion of finance lease liabilities

Other current liabilities

current liabilities

Total current liabilities

Long-term debt

3 unchanged sentences

Other long-term liabilities

Total liabilities

Commitments and contingencies

10 unchanged sentences

Accumulated deficit

stockholders’ deficit

liabilities and stockholders’ deficit

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

3 unchanged sentences

millions, except share and per share data)

December 31, 2023

December 31, 2022

December 31, 2021

Product sales

Total revenue

Cost of sales:

Cost of service (1)

product sales

Selling, general and administrative

Acquisition and integration

related transaction expenses

and amortization

operating income (loss)

Cost of product sales (1)

Cost of sales

Selling, general and administrative expenses

Acquisition and integration related transaction expenses

Depreciation and amortization

Net operating income

Other expense

Interest expense, net

Change in fair value of warrant

Gain on disposal of business

finance income

other expense, net

(loss) before income taxes

tax (expense) benefit

income (loss)

Other comprehensive

(loss) income:

Foreign currency translation

Change in fair value of hedging

Reclassification of loss on

hedging instrument to comprehensive income

(losses) gains on pension plan

comprehensive (loss) income

Other finance income

Total other expense, net

Net income before income taxes

Income tax benefit (expense)

Other comprehensive (loss) income:

Foreign currency translation gain (loss)

Deferred tax on foreign currency translation gain (loss)

Reclassification of loss on hedging instrument to comprehensive income

Actuarial gains (losses) on pension plan

Deferred tax on actuarial gains (losses) on pension plan

Other comprehensive income (loss)

Comprehensive

income (loss)

income (loss) per common share – basic

income (loss) per common share – diluted

average number of shares outstanding during the year – basic

average number of shares outstanding during the year – diluted

disclosure of stock-based compensation expense

Stock-based compensation included

Selling, general and administrative

Net income per common share – basic

Net income per common share – diluted

Weighted average number of shares outstanding during the year – basic

Weighted average number of shares outstanding during the year – diluted

Supplemental disclosure of stock-based compensation expense

Stock-based compensation included in:

Selling, general and administrative expenses

depreciation and amortization

7 unchanged sentences

Balance as of January 1, 2022

Foreign currency translation

Actuarial gains on pension

Change in fair value of

hedging instrument

Reclassification of loss

on hedging instrument to comprehensive income

Shares issued in settlement

Shares issued upon exercise of warrants

Stock-based compensation

Balance as of December 31, 2021

Foreign currency translation

Actuarial losses on pension

Reclassification of loss

on hedging instrument to comprehensive income

Shares issued in settlement

Foreign currency translation adjustments

Actuarial losses on pension plan

Reclassification of loss on hedging instrument to comprehensive income

Issuances under stock plans

Repurchases of common stock

( 1,067,340 )

Stock-based compensation

Stock-based compensation expense

Balance as of December 31, 2022

Foreign currency translation

Actuarial losses on pension

Reclassification of loss

on hedging instrument to comprehensive income

Shares issued in settlement

Foreign currency translation adjustments

Actuarial losses on pension plan

Reclassification of loss on hedging instrument to comprehensive income

Issuances under stock plans

Repurchases of common stock

Stock-based compensation

income (loss)

Stock-based compensation expense

Balance as of December 31, 2023

Foreign currency translation adjustments

Deferred tax on foreign currency translation adjustments

Actuarial gains on pension plan

Deferred tax on actuarial gains on pension plan

Issuances under stock plans

Stock-based compensation expense

Balance as of December 31, 2024

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

2 unchanged sentences

STATEMENTS OF CASH FLOWS

December 31, 2023

December 31, 2022

December 31, 2021

Cash flows from operating

Net income (loss)

Adjustments to reconcile net income (loss)

to net cash provided by operating activities:

Cash flows from operating activities:

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

Depreciation and amortization

Amortization of right of

Profit on disposal of trade

Stock-based compensation

Unrealized transactional

currency gain/loss on senior secured notes

Change in fair value of

warrant liability

Reclassification of loss

on hedging instrument to comprehensive income

Non-cash interest expense

relating to senior debt

Contract cost expense

Amortization of right of use asset

Profit on disposal of trade and assets

Stock-based compensation expense

Reclassification of loss on hedging instrument to comprehensive income

Amortization of deferred financing fees relating to senior debt

Changes in assets and liabilities:

Accounts receivable

Prepaid expenses and other

Corporate tax and other

current taxes payable

Accounts payable and accrued

Deferred revenue and customer

Prepaid expenses and other assets

Corporate tax and other current taxes payable

Accounts payable and accrued expenses

Deferred revenue and customer prepayment

Operating lease liabilities

long-term liabilities

cash provided by operating activities

Cash flows from investing

Pension contributions

Other long-term liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Acquisition of subsidiary company assets

Acquisition of third-party company trade and

Acquisition of third-party company trade and assets

Disposal of trade and assets

Purchases of capital

cash used in investing activities

Cash flows from financing

Proceeds from issuance of long-term debt

Purchases of capital software and internally developed costs

Contract cost expense

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of revolver

Repurchase of common stock

Proceeds from exercise of warrants

Repayments of revolver and long-term debt,

including exit premium

Payment of debt issuance costs

Cash paid in connection with terminated interest

Repayments of finance

cash (used in) provided by financing activities

of exchange rate changes on cash

Net increase (decrease)

Repayments of finance leases

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash

Net (decrease) increase in cash

Cash, beginning of period

4 unchanged sentences

Cash paid during the period for operating leases

Supplemental disclosure

of noncash investing and financing activities

Additional paid in capital from net settlement

Lease liabilities arising from obtaining right

of use assets

Adjustment to customer relationships intangible

asset arising from adjustment to fair value of assets acquired

Property and equipment acquired through finance

Supplemental disclosure of noncash investing and financing activities

Additional paid in capital from net settlement of RSUs

Lease liabilities arising from obtaining finance lease right of use assets

Lease liabilities arising from obtaining operating lease

right of use assets

Adjustment to customer relationships intangible asset arising from adjustment to fair value of assets acquired

Right of use property and equipment assets acquired through

finance lease

Property and equipment transferred to inventory

14 unchanged sentences

Liquidity Plans

of December 31, 2023, the Company’s cash on hand was $ 40.0 million, and the Company had working capital in addition to cash of

of December 31, 2024, the Company’s cash on hand was $ 29.3 million,

and the Company had working capital in addition to cash of $ 26.6 million.

The Company recorded net income of $ 64.8

million, $ 6.9 million

and $ 21.2 million

for the years ended December 31, 2024, 2023 and 2022, respectively.

Net income includes non-cash stock-based compensation of $ 7.6 million,

$ 11.2 million

The Company recorded net income of $ 7.6 million and $ 20.6 million and net losses of $ 40.6 million for the year ended December

and $ 10.8 million

for the years ended December 31, 2024, 2023 and 2022, respectively.

Historically,

the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by

operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations.

Cash flows provided by operations

amounted to $ 31.7

million, $ 54.7

million and $ 29.6

million for the years ended December 31, 2024,

2023 and 2022 respectively.

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

assets, over depreciation and amortization, of $ 7.9 million and $ 6.6 million for the years ended December 31, 2023 and 2022, respectively,

and excess depreciation and amortization over capital expenditure, excluding the acquisition of subsidiary assets, of $ 28.8 million for

the year ended December 31, 2021, non-cash stock-based compensation of $ 11.2 million, $ 10.8 million and $ 13.0 million for the year ended

December 31, 2023, 2022 and 2021, respectively, and non-cash changes in fair value of warrant liability of $ 0.9 million gain for the

year ended December 31, 2021.

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

Cash flows provided by operations amounted to $ 45.5 million, $ 24.7 million and $ 2.4 million for the year ended December

31, 2023, 2022 and 2021 respectively, with the changes year on year due primarily to 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.

Working capital of

$ 51.8 million includes a non-cash settled item of $ 5.6 million of deferred income.

Management currently believes that 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 April

currently believes that 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 2026.

ENTERTAINMENT, INC.

5 unchanged sentences

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

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

of Consolidation

11 unchanged sentences

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

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

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

foreign currency losses (gains) included in net income amounted to $ 1.1 million, $ 0.1 million and ($ 4.6 ) million for the years ended

December 31, 2023, December 31, 2022 and December 31, 2021, respectively.

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

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

Aggregate foreign currency losses

included in net income amounted to $ 2.4 million, $ 1.1 million and $ 0.1 million for the years ended December 31, 2024, December 31, 2023

and December 31, 2022, respectively.

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

4 unchanged sentences

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

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

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

liability, commitments and contingencies and litigation, among others.

Management bases its estimates on historical experience and on

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

We regularly evaluate these significant factors

and make adjustments when facts and circumstances dictate.

for credit losses, inventory reserve for net realizable value, currency swaps, goodwill and intangible

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

and contingencies and litigation, among others.

Management bases its estimates on historical experience and on various other assumptions

that are believed to be reasonable under the circumstances.

We regularly evaluate these significant factors and make adjustments when

facts and circumstances dictate.

Actual results may differ from these estimates.

11 unchanged sentences

Our standard credit terms are net 30 to 60 days.

The allowance

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

Changes in circumstances

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

in the future.

We determine the allowance using an aging method for credit losses by which receivable balances are

grouped based on an aging category.

The grouping is then adjusted to take account of the specific receivables and an appropriate default

rate then applied to receivables remaining that are overdue in excess of 90 days.

We also consider customer specific information based

on historical experience, current market trends, and our customers’ financial condition.

and provide for expected credit losses

on an individual debtor basis where appropriate.

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

for recovery is considered remote.

credit losses are estimated using the Aging Schedule method and are determined on the basis of the amount of time that a receivable has

remained outstanding.

In estimating

expected credit losses, management considers all available relevant information, including details about past events, current conditions,

and reasonable and supportable forecasts.

credit loss data is utilized as the basis of the estimation.

This is then adjusted to take account of conditions that may have existed

within the historical data which now differ from current expectations, and to recognize differences in asset-specific risk characteristics.

When assessing conditions over the contractual life of the asset, management will utilize historical credit loss experience for the period

beyond which it is possible to make reasonable and supportable forecasts.

receivables are pooled by segment and the probability of default of each pool is assessed and evaluated.

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

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

25 unchanged sentences

not be recoverable.

Where operating leases include an obligation

for repairs and dilapidations costs associated with the retirement of the right-of-use asset, amounts are capitalized at the point at

which a liability for an asset retirement obligation is recognized.

and maintenance costs are expensed as incurred.

6 unchanged sentences

31, 2024, 2023 AND 2022

Development Costs

Development and Research and Development Costs

and development costs, which primarily consist of employee compensation costs and exclude costs relating to non-project time, leave and

3 unchanged sentences

Software development costs amounting to $ 7.8 million, $ 7.5 million and $ 6.9 million were capitalized during

the year ended December 31, 2023, 2022 and 2021, respectively.

the years ended December 31, 2024, 2023 and 2022, respectively.

In addition, amounts relating to Costs of obtaining and fulfilling customer

contracts, net of $ 3.9 million, $ 2.9 million and $ 1.7 million were capitalized during the year ended December 31, 2023, 2022 and 2021,

contracts, net, of $ 4.2 million, $ 3.9 million and $ 2.9 million were capitalized during the years ended December 31, 2024, 2023 and 2022,

respectively.

We expensed $ 8.9 million, $ 8.5 million and $ 6.2 million during the year ended December 31, 2023, 2022 and 2021, respectively

We expensed $ 10.7 million, $ 8.9 million and $ 8.5 million during the years ended December 31, 2024, 2023 and 2022, respectively

as they related to maintenance, research or support costs.

24 unchanged sentences

and Other Acquired Intangible Assets

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

Goodwill represents the excess purchase

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

Trademarks and customer relationships were

originally recorded at their fair values in connection with business combinations.

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

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

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

Intellectual property

licenses are recorded at cost related to specific contracts.

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

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

and reviewed for impairment.

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

obsolescence, demand, competition and other economic factors.

Intangible assets with finite lives are amortized on a straight-line basis over eighteen months to thirteen years to their estimated

residual values and reviewed for impairment.

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

provisions, product obsolescence, demand, competition and other economic factors.

of Goodwill and Long-Lived Assets

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

that the carrying value may not be recoverable.

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

if goodwill is likely to be impaired.

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

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

Goodwill is carried, and therefore tested,

at the reporting unit level.

As of December 31, 2023 we have five reporting units, Virtual Sports, Interactive, Leisure, and two reporting

units within our Gaming segment.

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

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

as an impairment loss.

As of December 31, 2023, 2022, and 2021 management determined there were no indicators of impairment and concluded

that no impairment was required at any of these dates.

to 2024, we performed our annual goodwill impairment assessment as of December 31, the last day of our fiscal period, and whenever other

facts and circumstances indicate that the carrying value may not be recoverable.

During the fourth quarter of fiscal year 2024, we voluntarily

made the decision to change the date of our annual impairment assessment from December 31 to December 1.

The change was made to align

the annual goodwill impairment assessment date more closely with the timing of our annual and long-term budgeting cycles.

determined this change in accounting principle is preferable and will not affect our consolidated financial statements.

This change is

not applied retrospectively, as we believe the change in goodwill impairment testing date does not represent a material change to our

method of applying an accounting principle in light of our internal controls over financial reporting and requirements to assess goodwill

impairment upon certain triggering events, and does not delay, accelerate or avoid any impairment charges.

Accordingly, the change will

be applied prospectively.

fiscal year 2024, we performed our annual goodwill impairment assessment as of December 1, 2024 on each of our reporting units and as

of December 31, 2023 in fiscal year 2023.

As such, no more than 12 months will have elapsed between our previous assessment.

goodwill impairment evaluations, we first make a qualitative assessment to determine if goodwill is may be impaired.

If it is more-likely-than-not

that a reporting unit’s fair value is less than its carrying value, we then compare the fair value of the reporting unit to its

respective carrying amount.

Goodwill is carried, and therefore tested, at the reporting unit level.

As of December 31, 2024 we have five

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

If the fair value of the reporting

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

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

As of December 31, 2024, 2023, and 2022

management determined there were no indicators of impairment and concluded that no impairment was required at any of these dates.

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

15 unchanged sentences

31, 2024, 2023 AND 2022

Method Investment

investments in entities over which the Company exercises significant influence, but which do not meet the requirements for consolidation,

the Company uses the equity method of accounting.

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

amounts of such investment may not be recoverable.

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

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

Since April 2020, the

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

Revenue and Deferred Cost of Sales

21 unchanged sentences

of Operations and Comprehensive Income (Loss).

Stock Purchase Warrants and Derivative Financial Instruments

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

and classifies them on the consolidated balance sheet as:

Financial Instruments

Company reviews any freestanding derivative financial instruments at each balance sheet date and classifies them on the consolidated

balance sheet as:

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

9 unchanged sentences

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

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

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

of 9,049,230 Private Warrants.

There were no warrants outstanding as of December 31, 2023 or December 31, 2022, respectively.

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

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

Policy for Derivative Instruments and Hedging Activities

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

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

(a) how and why an entity uses derivative

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

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

Further, qualitative disclosures

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

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

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

The accounting for changes in the fair value

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

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

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

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

Derivatives designated and qualifying

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

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

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

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

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

The Company may enter into derivative contracts that are

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

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

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

on a net basis by counterparty portfolio.

Company evaluates the recognition of revenue and rental income based on the criteria set forth in ASC 606 or ASC 842, as appropriate.

54 unchanged sentences

that a significant reversal of any incremental revenue will not occur.

variable considerations relates to a performance obligation determined to be a series, variable consideration is not estimated upfront

Additionally, customers with volume discounts in contracts with functional IP are not considered to have material

rights as royalty revenue is recognized when usage occurs.

variable considerations relate to a performance obligation determined to be a series, variable consideration is not estimated upfront

in accordance with the exception allowed by ASC 606.

23 unchanged sentences

Where possible, the Company uses the price charged for the good

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

or service to other customers in similar circumstances as evidence of a standalone selling price.

Where this is not possible, the standalone

12 unchanged sentences

the customer obtains control of the good or service.

Company assesses usage-based fees it receives as consideration in contracts that contain licenses of its intellectual property to determine

if such fees constitute a sales- or usage-based royalty, in which case the usage-based fee is included in the contract’s transaction

price as and when the usage occurs, since by that time our licensing obligations have been (or are in process of being) fulfilled.

Company assesses usage-based royalties it receives as consideration in contracts that predominantly relate to licenses of its intellectual

property to determine if such royalties constitute a sales- or usage-based royalty, according to ASC 606-10-55-65, in which case the usage-based

royalties are recognized as revenue when the usage occurs, and is reported by the licensee.

as a Principal or an Agent

24 unchanged sentences

As the license of our intellectual property is the predominant item to which the royalty relates,

variable consideration related to sales- and usage-based royalty are recognized in the period the sale or usage occurs in accordance

with ASC 606-10-55-65(A).

Company also enters into arrangements that provide the customer with the right to use the terminals, wherein the Company operate as both

a lessor and a content and service provider.

ASC 842 provides a practical expedient that permits lessors to aggregate non-lease components

(sever-based content, terminal repairs, maintenance, software updates and upgrades and content development) and the associated lease

components (terminals) if certain conditions are met and account for the combined unit of accounting under either ASC 606 or ASC 842,

revenue is recognized in the period the sale or usage occurs, and is reported by the licensee.

Company also enters into arrangements that provide the customer with the right to use the terminals, wherein the Company operates as

both a lessor and a content and service provider.

ASC 842 provides a practical expedient that permits lessors to aggregate non-lease

components (sever-based content, terminal repairs, maintenance, software updates and upgrades and content development) and the associated

lease components (terminals) if certain conditions are met and account for the combined unit of accounting under either ASC 606 or ASC

842, based on the predominant characteristic in the arrangement.

In contracts where we provide content and services that are identified as

non-lease components as well as underlying assets that are identified as lease components and the lease is an operating lease, the content

and service provided to the customer represents the most critical element of the arrangement.

The Company has elected to combine the

non-lease component and the lease component and account for the entire arrangement under ASC 606 based on the consideration that the

content and service offering is the predominant and critical element of the contract.

In contracts where we provide content and services that are identified

as non-lease components as well as underlying assets that are identified as lease components and the lease is an operating lease, the

content and service provided to the customer represents the most critical element of the arrangement.

The Company has elected to combine

the non-lease component and the lease component and account for the entire arrangement under ASC 606 based on the consideration that

the content and service offering is the predominant and critical element of the contract.

ENTERTAINMENT, INC.

10 unchanged sentences

that is fully hosted and operated by Inspired.

the on-premise solution, contracts typically include multiple performance obligations such as delivery of the software license, games

and the content in addition to certain services such as software maintenance, support, updates, upgrades on an when and if available

basis and content development.

Consideration with respect to these performance obligations typically takes the form of a percentage of

net winnings billed in arrears (usually monthly).

As the license of intellectual property is the predominant item to which the royalty

relates, the sales- and usage-based royalty is recognized in the period the sale or usage occurs in accordance with ASC 606-10-55-65(A).

Services such as software maintenance, support, updates, upgrades on an when and if available basis and content development are considered

stand-ready obligations;

therefore, control transfers and revenue is recognized over time over the term of the service period.

the on-premise solution, contracts typically include multiple performance obligations such as delivery of the software license,

games and the content in addition to certain services such as software maintenance, support, updates, upgrades on an when and if

available basis and content development.

Consideration with respect to these performance obligations is a royalty that typically

takes the form of a percentage of net winnings billed in arrears (usually monthly).

As the license of intellectual property is the

predominant item to which the royalty relates, the sales- and usage-based royalty is recognized in the period the sale or usage

occurs, and is reported by the licensee.

Services such as software maintenance, support, updates, upgrades on an when and if

available basis and content development are considered stand-ready obligations;

therefore, control transfers and revenue is

recognized over time over the term of the service period.

Occasionally,

10 unchanged sentences

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

the hosted solution, the Company provides daily access to the gaming platform as well as a stand ready obligation to deliver customer

support, platform maintenance, updates and upgrades.

Such arrangements are accounted for as a single performance obligation composed

of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service).

Consideration with respect to these arrangements typically takes the form of usage based fees (percentage of net winnings) which is recognized

as usage is incurred.

These fees are billed in arrears (usually monthly) and due typically 30 days from the date of the invoice.

revenue is generated from 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.

The Company provides daily access to these platforms as well as a stand ready obligation to deliver

customer support, platform maintenance, updates and upgrades, as such arrangements are accounted for as a single performance obligation

the hosted solution, the Company provides daily access to the gaming platform as well as a stand ready obligation to deliver

customer support, platform maintenance, updates and upgrades.

Such arrangements are accounted for as a single performance obligation

composed of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days

Consideration with respect to these

arrangements typically takes the form of usage based fees (percentage of net winnings) which is recognized as usage is incurred.

These fees are billed in arrears (usually monthly) and due typically 30 days from the date of the invoice.

revenue is generated from various games content made available via third party aggregation platforms integrated with

Inspired’s remote gaming server or direct to operators on the Company’s remote gaming servers platform, and services

such as customer support, platform maintenance, updates and upgrades.

The Company provides daily access to these platforms as well

as a stand ready obligation to deliver customer support, platform maintenance, updates and upgrades, as such arrangements are

accounted for as a single performance obligation composed of a series of distinct services that are substantially the same and have

the same pattern of transfer (i.e., distinct days of service).

When required, revenue is estimated based upon the prior period

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

2 unchanged sentences

the date of the invoice.

Revenue from aggregators who function as an agent is recognized on a net basis while revenue from operators

where the Company is the principal is recognized on a gross basis.

Company jointly operate arcades within holiday resorts with the resort owners.

42 unchanged sentences

and Handling Costs

and handling costs for products sales and terminals related to subscription services are included in cost of sales, excluding depreciation

and amortization for all periods presented.

and handling costs for products sales and terminals related to subscription services are included in cost of sales for all periods presented.

Payment Arrangements

Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC

ASC 718 requires generally that all equity awards be accounted for at their “fair value.” This fair value is

measured on the grant date for stock-settled awards.

Fair value is equal to the underlying value of the stock for “full-value”

awards such as restricted stock and restricted stock units that have time and performance vesting conditions, restricted stock and restricted

stock units that have market conditions are valued using a Monte Carlo simulation model.

Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation”

ASC 718 requires generally that all equity awards be accounted for at their “fair value.” This

fair value is measured on the grant date for stock-settled awards.

Fair value is equal to the underlying value of the stock for

“full-value” awards such as restricted stock and restricted stock units that have time and performance vesting

conditions, restricted stock and restricted stock units that have market conditions are valued using a Monte Carlo simulation

The Company has elected to recognize stock-based compensation cost using

the graded vesting attribution method for each separately vesting tranche of the award from the grant date to the date that each tranche

vests over the requisite service period for the restricted stock and restricted stock units.

equal to these fair values are recognized ratably over the requisite service period based on the number of awards that are expected to

27 unchanged sentences

(Loss) Income

include and separately classify in comprehensive (loss) income unrealized gains and losses and hedges from our foreign currency translation

adjustments, gains or losses associated with pension or other post-retirement benefits, prior service costs or credits associated with

pension or other post-retirement benefits and transition assets or obligations associated with pension or other post-retirement benefits.

include and separately classify in comprehensive (loss) income unrealized gains and losses, gains or losses associated with pension or

other post-retirement benefits, prior service costs or credits associated with pension or other post-retirement benefits and transition

assets or obligations associated with pension or other post-retirement benefits.

ENTERTAINMENT, INC.

78 unchanged sentences

Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

If by June 30, 2027, the SEC has not removed the

applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification

and will not become effective.

The amendments in the Update should be applied prospectively.

The adoption of ASU 2023-06 is not expected to have a material impact on the Company’s financial statement presentation or disclosures.

November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”

(“ASU 2023-07”).

ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures

about significant segment expenses.

The amendments in the Update 1) Require that a public entity disclose, on an annual and interim basis,

significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported

measure of segment profit or loss (collectively referred to as the “significant expense principle”).

2) Require that a public

entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition.

The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant

expense principle and each reported measure of segment profit or loss.

3) Require that a public entity provide all annual disclosures

about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods.

4) Clarify that if the

CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources,

a public entity may report one or more of those additional measures of segment profit.

5) Require that a public entity disclose the title

and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment

performance and deciding how to allocate resources.

6) Require that a public entity that has a single reportable segment provide all

the disclosures required by the amendments in this Update and all existing segment disclosures in Topic 280.

The guidance will be effective

for annual periods beginning on January 1, 2024, and for interim periods beginning on January 1, 2025.

We are still evaluating the effect

of this guidance, however, the adoption of ASU 2023-07 is not expected to have a material impact on the Company’s financial statement

presentation or disclosures.

The adoption of ASU 2023-06 is not expected

to have a material impact on the Company’s financial statement presentation or disclosures.

December 2023, the FASB issued ASU No.

5 unchanged sentences

2025, with early adoption allowed.

We are still evaluating the effect of this guidance, however, the adoption of ASU 2023-09 is not expected

to have a material impact on the Company’s financial statement presentation or disclosures.

Adopted Accounting Standards

January 1, 2023, the Company adopted Topic 326 Financial Instruments – Credit Losses (“ASC 326”).

ASC 326 affects loans,

debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash.

It requires an entity

to recognize expected credit losses rather than incurred losses for financial assets and requires a modified retrospective transition

approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.

risk software is used to monitor credit risk, both for new and existing customers.

Monthly review meetings are held involving senior

management in which issues are raised and concerns discussed with respect to high-value debtors.

The main risk experienced by the Company

is that of changes of circumstances within a customer’s business that affect their ability to meet their liabilities.

of services can be effected to mitigate the risk of debtor default, and payment methods such as direct debit give early indications of

potential payment difficulties.

Company uses an aging method for developing its allowance for credit losses by which receivable balances are grouped based on an aging

The grouping is then adjusted to take account of the specific receivables and an appropriate default rate then applied to receivables

remaining that are overdue in excess of 90 days.

We also consider customer specific information and provide for expected credit losses

on an individual debtor basis where appropriate.

adoption of ASC 326 has no material effect on the beginning of the first period to which it affects.

Disclosures with respect to allowances

for credit losses are given in footnote 3 to these financial statements.

The Company is not early adopting ASU 2023-09 and will therefore adopt the standard in the 2025 financial

The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s financial statement presentation

or disclosures.

March 2024, the FASB issued ASU No.

2024-02, “Codification Improvements—Amendments to Remove References to the Concepts Statements”

(“ASU 2024-02”).

This Update contains amendments to the Codification that remove references to various FASB Concepts Statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

In other instances, the references

were used in prior Statements to provide guidance in certain topical areas.

ASU 2024-02 is effective for annual periods beginning after

December 15, 2024.

The adoption of ASU 2024-02 is not expected to have a material impact on the Company’s financial statement presentation

or disclosures.

November 2024, the FASB issued ASU No.

2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of income statement expenses” (“ASU 2024-03”).

The amendments in ASU

2024-03 require disclosure, in the notes to financial statements, of specified information about certain costs and expenses.

The amendments

require that at each interim and annual reporting period an entity:

1) Disclose the amounts of (a) purchases of inventory, (b) employee

compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part

of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption.

expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of

the expense categories listed in (a)–(e).

2) Include certain amounts that are already required to be disclosed under current generally

accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.

3) Disclose a qualitative description

of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

4) Disclose the total amount

of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The guidance will be effective

for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

adoption is permitted.

We are still evaluating the effect of this guidance.

ENTERTAINMENT, INC.

3 unchanged sentences

31, 2024, 2023 AND 2022

Adopted Accounting Standards

January 1, 2024, the Company adopted ASU No.

2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment

Disclosures” (“ASU 2023-07”).

ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced

disclosures about significant segment expenses.

The amendments in the Update 1) Require that a public entity disclose, on an annual and

interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within

each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”).

that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description

of its composition.

The other segment items category is the difference between segment revenue less the segment expenses disclosed under

the significant expense principle and each reported measure of segment profit or loss.

3) Require that a public entity provide all annual

disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods.

that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to

allocate resources, a public entity may report one or more of those additional measures of segment profit.

5) Require that a public entity

disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss

in assessing segment performance and deciding how to allocate resources.

6) Require that a public entity that has a single reportable

segment provide all the disclosures required by the amendments in this Update and all existing segment disclosures in Topic 280.

Company previously disclosed Cost of service, Cost of product sales, Selling, general and administrative expenses, Stock-based compensation

expense, Acquisition and integration related transaction expenses and Depreciation and amortization by reportable segment.

has reviewed its financial reporting for additional segment expenses not already disclosed that are regularly provided to the CODM, included

in reported segment profit and loss reporting and also which are quantitatively and qualitatively significant.

Three categories of expenses

met these criteria and have been broken out in segment disclosures.

The categories are 1) Staff-related selling, general and administrative

expenses, which includes compensation, benefits, bonus and contractor/temporary personnel expenses for each segment.

2) Non-staff related

selling, general and administrative expenses, composed of multiple categories across each segment.

3) Labor costs capitalized which include

software development costs, a primary business activity and expense for each of the segments.

The Company also discloses Other segment

items by reportable segment and a description of its composition, together with the title and position of the group that makes up the

CODM and how that group uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate

with respect to segment reporting are given in note 25 to these financial statements.

Acquisitions and Disposals

3 unchanged sentences

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

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

Entertainment Lotteries, LLC.

The Company concluded that Inspired Entertainment Lotteries, LLC’s contract with its only customer

represented substantially all of the fair value of the gross assets acquired and, in accordance with ASC 805, determined that the asset

set did not comprise a business.

The Company therefore applied asset acquisition accounting to the transaction and recorded the acquisition

of the customer contract as an intangible asset in the amount of $ 12.4 million.

The intangible asset will be amortized over its remaining

useful life of 13.2 years.

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

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

contract intangible asset accordingly.

ENTERTAINMENT, INC.

6 unchanged sentences

of Accounts Receivable

December 31, 2024

December 31, 2023

(in millions)

Trade receivables

long-term receivable recorded in other

long-term receivable recorded in other assets

Finance lease receivables

Allowance for credit losses

accounts receivable, net

Total accounts receivable, net

in the allowance for credit losses are as follows:

of Changes in Allowance for Credit Losses

December 31, 2024

December 31, 2023

(in millions)

Beginning balance

Additional allowance for credit losses

Foreign currency translation

Foreign currency translation adjustments

Ending balance

consists of the following:

December 31, 2024

December 31, 2023

(in millions)

Component parts

1 unchanged sentence

Finished goods

Total inventory

parts include parts for gaming terminals.

11 unchanged sentences

of Prepaid Expenses and Other Assets

December 31, 2024

December 31, 2023

(in millions)

Prepaid expenses and other assets

Unbilled accounts receivable

prepaid expenses and other assets

Total prepaid expenses and other assets

Property and Equipment, net

of Property and Equipment

December 31, 2024

December 31, 2023

(in millions)

Short-term leasehold property

3 unchanged sentences

Property and equipment, gross

accumulated depreciation

and amortization

accumulated depreciation and amortization

and equipment, net

3 unchanged sentences

of Software Development Costs

December 31, 2024

December 31, 2023

(in millions)

Software development costs

2 unchanged sentences

the years ended December 31, 2024 and 2023, the Company capitalized $ 12.0 million and $ 12.5 million of software development costs, respectively.

As of December 31, 2023 and 2022, approximately $ 1.3 million and $ 1.3 million of capitalized software development costs related to the

Company’s implementation of an enterprise resource planning system, respectively.

Other capitalized cloud-based implementation

costs were not material as of December 31, 2023 and 2022.

As of December 31, 2024 capitalized software development costs related to the Company’s implementation of an enterprise resource

planning system were not material.

As of December 31, 2023 approximately $ 1.3 million of capitalized software development costs related

to the Company’s implementation of an enterprise resource planning system.

Other capitalized cloud-based implementation costs were

not material as of December 31, 2024 and 2023.

total amount of software costs amortized was $ 10.7 million, $ 10.3 million and $ 9.7 million for the years ended December 31, 2024, 2023,

9 unchanged sentences

31, 2024, 2023 AND 2022

estimated software amortization expense for the years ending December 31, excluding costs that are yet to commence amortization, are as follows:

estimated software amortization expense for the years ending December 31, excluding costs that are yet to commence amortization, are

of Estimated Software Amortization Expense

ending December 31, (in millions)

Intangible Assets and Goodwil l

Intangible Assets and Goodwill

following tables present certain information regarding our intangible assets.

Amortizable intangible assets are being amortized on a

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

the expected pattern of use.

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

approximates the expected pattern of use.

of Intangible Assets and Goodwill

December 31, 2024

December 31, 2023

(in millions)

Customer relationships

Intellectual property licenses

Intangible assets, gross

3 unchanged sentences

estimated intangible asset amortization expense for the years ending December 31 are as follows:

of Estimated Intangible Asset Amortization Expense

ending December 31, (in millions)

of Estimated Intangible Assets Amortization Expense

Year ending December 31, (in millions)

is summarized as follows:

Balance at beginning of period,

Accumulated goodwill

impairment losses

December 31, 2024

December 31, 2023

(in millions)

Balance at beginning of period, gross

Accumulated goodwill impairment losses, recognized year ended December 31, 2020

Balance at beginning of period, net

Foreign currency translation

Foreign currency translation adjustments

Ending balance, net

6 unchanged sentences

of Other Assets

December 31, 2024

December 31, 2023

(in millions)

1 unchanged sentence

Long term receivables

Long term prepaid expenses

and other assets

Long term prepaid expenses and other assets

Pension surplus

Accounts Payable and Accrued Expenses

payable and accrued expenses consist of the following:

of Accounts Payable and Accrued Expense

of Accounts Payable and Accrued Expenses

December 31, 2024

December 31, 2023

(in millions)

3 unchanged sentences

Other creditors

Total accounts payable

and accrued expenses

Contract Related Disclosures

following table summarizes contract related balances:

Schedule of Contract Related Balances

At December 31, 2023

At December 31, 2022

of Contract Related Balances

December 31, 2024

December 31, 2023

accounts receivable are a form of contract asset and primarily result from revenue being recognized when or as control of a solution

11 unchanged sentences

$ 7.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

the year ended December 31, 2023 and 2022 there was no significant amounts of revenue recognized as a result of changes in contract transaction

price related to performance obligations that were satisfied in the respective prior periods.

the years ended December 31, 2024 and 2023 there was no significant amounts of revenue recognized as a result of changes in contract

transaction price related to performance obligations that were satisfied in the respective prior periods.

Company capitalizes certain costs incurred in obtaining or fulfilling a customer contract.

1 unchanged sentence

on the Consolidated Balance Sheets at December 31, 2024 and 2023, net of accumulated amortization.

Schedule of Customer Contract

of Customer Contact

December 31, 2024

December 31, 2023

(in millions)

Costs to obtain contracts with

customers, net

Customer contract fulfillment

Total costs of obtaining

and fulfilling customer contracts, net

Costs to obtain contracts with customers, net

Customer contract fulfillment costs, net

Total costs of obtaining and fulfilling customer contracts, net

of capitalized contract costs was $ 9.5 million, $ 8.5 million, and $ 7.0 million during the years ended December 31, 2024, 2023, and 2022,

15 unchanged sentences

liabilities consist of the following:

Schedule of Other Liabilities

of Other Liabilities

December 31, 2024

December 31, 2023

(in millions)

1 unchanged sentence

Foreign exchange contract liabilities

Current portion of finance

lease liabilities

other liabilities, current

Current portion of finance lease liabilities

Total other liabilities, current

Asset retirement obligations

1 unchanged sentence

Pension liability

other liabilities, long-term

Total other liabilities, long-term

Total other liabilities

44 unchanged sentences

These covenants are subject to exceptions and qualifications as set forth in the Indenture.

Entertainment (Financing) PLC may redeem the Senior Secured Notes, in whole or in part, at any time and from time to time on or after June 1, 2023, at the redemption prices set forth in the Indenture and form of the Senior Secured Notes, plus accrued and

unpaid interest, if any, to, but excluding, the redemption date.

Entertainment (Financing) PLC may redeem the Senior Secured Notes, in whole or in part, at any time and from time to time on or after

June 1, 2023, at the redemption prices set forth in the Indenture and form of the Senior Secured Notes, plus accrued and unpaid interest,

if any, to, but excluding, the redemption date.

Credit Facility

28 unchanged sentences

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

the relevant period ending June 30, 2021, stepping down to 6.0x on March 31, 2022, 5.75x on March 31, 2023 and 5.50x from March 31, 2024

the relevant period ended June 30, 2021, stepping down to 6.0x on March 31, 2022, 5.75x on March 31, 2023 and 5.50x from March 31, 2024

and thereafter (the “RCF Financial Covenant”).

4 unchanged sentences

Agreement does not include a minimum interest coverage ratio or other financial covenants.

Covenant testing at December 31, 2024 showed

covenant compliance with a net leverage of 3.1x.

outstanding principal amount of each advance under the RCF Loans is payable on the last day of the interest period relating to such advance,

3 unchanged sentences

Amounts due under the RCF Agreement at December 31, 2024

amounted to £ 15.0 million ($ 19.1 million).

Interest relating to amounts drawn under the RCF Agreement amounted to $ 0.2 million

and is recorded in Interest expense, net for the year ended December 31, 2023.

of Prior Financing

Company’s previous debt consisted of two tranches of senior secured term loans in a principal amount of £ 145.8 million ($ 185.9

million) with a cash interest rate of 8.25 % plus 3-month LIBOR and € 93.1 million ($ 102.8 million) with a cash interest rate of 7.75 %

plus 3-month EURIBOR, respectively and a secured revolving facility loan in a principal amount of £ 20.0 million ($ 25.5 million)

with a cash interest rate on any utilization of 6.50% plus 3-month LIBOR (the “Prior Financing”).

connection with the issuance of the Senior Secured Notes and the entry into the RCF Agreement, on May 20, 2021, the Prior Financing was

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

SFA) see below) relating to the Prior Financing was terminated.

No prepayment premium applied to the repayment (although customary break

cost provisions applied).

Debt fees of $ 14.4 million were expensed to the Consolidated Statements of Operations and Consolidated Income

(Loss) within Interest Expense as part of the repayment.

In addition, on May 19, 2021, we terminated the interest rate swaps relating

to the Prior Financing and applicable termination fees were settled on May 20, 2021 (see Note 14).

Facilities Agreement

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

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

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

term loans, in an original principal amount of £ 140.0 million ($ 178.5 million) and € 90.0 million ($ 99.4 million), respectively

and a secured revolving facility loan in an original principal amount of £ 20.0 million ($ 25.5 million).

The term loans, which were

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

prior indebtedness.

term loan for £ 140.0 million ($ 178.5 million) initially carried a cash interest rate of 7.25 % plus 3-month LIBOR, and the term

loan for € 90.0 million ($ 99.4 million) initially carried a cash interest rate of 6.75 % plus 3-month EURIBOR.

The £ 20.0 million

($ 25.5 million) revolving credit facility initially carried a cash interest rate on any utilization at 5.50 % plus 3-month LIBOR, with

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

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

OF DECEMBER 31, 2023 AND 2022, AND FOR THE YEARS ENDED

31, 2023, 2022 AND 2021

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

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

rating requirements, (iii) allowing the Company and its subsidiaries to incur additional indebtedness under the UK Coronavirus Large

Business Interruption Loan Scheme under a stand-alone facility, which may rank pari passu or junior to the facilities under the

Prior SFA, in an amount not exceeding £ 10.0 million ($ 12.7 million), (iv) removing certain applicable rating requirements, (v)

limiting the ability of the Company and its subsidiaries to incur additional indebtedness, including by reducing the amount of general

indebtedness the Company and its subsidiaries are permitted to incur and removing the ability to incur senior secured, second lien and

unsecured indebtedness in an amount not exceeding the aggregate of (A) an unlimited amount, as long as, pro forma for the utilization

of such indebtedness, the consolidated total net leverage ratio does not exceed the lower of 3.4:1 and the then applicable ratio with

respect to the consolidated total net leverage financial covenant summarized further below, plus (B) an amount equal to the greater of

£16.0 million ($20.4 million) and 25% of the consolidated pro forma EBITDA of the Company and its subsidiaries for the relevant

period (as defined, but disregarding, for the purposes of calculating the usage of such cap, any financial indebtedness applied to refinancing

other financial indebtedness, together with any related interest, fees, costs and expenses), (vi) increasing the margin applicable to

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

under Facility B (as defined in the Prior SFA) after September 24, 2021 (the “Relevant Date”), (vii) adding an exit fee payable

by the Company with respect to any repayment or prepayment of Facility B after the Relevant Date at the time of such repayment or prepayment

in an amount equal to 0.75 % of the principal amount of Facility B being repaid or prepaid, (viii) removing any ability to carry forward

or carry back any unused allowance under the applicable capital expenditure financial covenant and (ix) granting certain additional information

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

All other material terms of the SFA remained unchanged in all material respects.

consideration for the amendments listed above, the Company agreed to pay the lenders an amendment fee equal to 1 % of the Total Commitments

(as defined in the Prior SFA).

The amendment fee was payable to the lenders pro rata to their commitments under the Prior SFA.

and December 31, 2023 amounted to £ 15.0 million ($ 18.8 million).

Interest relating to amounts drawn under the RCF Agreement amounted

to $ 1.9 million and $ 0.2 million for the years ended December 31, 2024 and December 31, 2023, respectively, and is recorded in Interest

expense, net.

ENTERTAINMENT, INC.

5 unchanged sentences

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

Schedule of Outstanding Debt and Finance Leases

of Outstanding Debt and Finance Leases

December 31, 2024

(in millions)

2 unchanged sentences

Total long-term debt outstanding

current portion

of long-term debt

debt, excluding current portion

current portion of long-term debt

Long-term debt, excluding current portion

December 31, 2023

(in millions)

2 unchanged sentences

Total long-term debt outstanding

current portion

of long-term debt

debt, excluding current portion

current portion of long-term debt

Long-term debt, excluding current portion

Company is in compliance with all relevant financial covenants and the long-term debt portion is correctly classified as such in line

1 unchanged sentence

term debt as of December 31, 2024 matures as follows:

Schedule of Maturities of Long-term Debt

(in millions)

Derivatives and Hedging Activities

January 15, 2020, the Company entered into two interest rate swaps with UBS AG designed to protect the Company against adverse fluctuations

in interest rates by reducing its exposure to variability in cash flows on a portion of the previous floating rate debt facilities.

swaps fixed the variable interest rate of the debt facilities and provided protection over potential interest rate increases by providing

a fixed rate of interest payment in return.

The interest rate swaps were for £ 95.0 million ($ 121.1 million) at a fixed rate of

0.9255 % based on the 6-month LIBOR rate and for € 60.0 million ($ 66.3 million) at a fixed rate of 0.102 % based on the 6-month EURIBOR

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

its two interest rate swaps.

The termination fees were settled on May 20, 2021, for £ 1.3 million ($ 1.9 million) and € 0.1 million

($ 0.2 million), respectively.

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

OF DECEMBER 31, 2023 AND 2022, AND FOR THE YEARS ENDED

31, 2023, 2022 AND 2021

of Multiple Risks

Company’s objectives in using interest rate derivatives were to add stability to interest and to manage its exposure to interest

rate movements.

To accomplish this objective, the Company primarily used interest rate swaps as part of its interest rate risk management

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange

for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative was recorded in

Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged

transaction affects earnings.

Amounts reported in Accumulated Other Comprehensive Income related to derivatives have now all been reclassified

to interest expense as interest payments were made on the Company’s variable-rate debt.

of December 31, 2023 and 2022, the Company did not have any derivatives.

Losses reclassified from accumulated other comprehensive income

into interest expense in the consolidated statements of operations and income (loss) for the years ended December 31, 2023 and December

31, 2022 amounted to $ 0.3 million and $ 0.7 million, respectively.

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

OF DECEMBER 31, 2023 AND 2022, AND FOR THE YEARS ENDED

31, 2023, 2022 AND 2021

table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended

December 31, 2021.

Schedule of Accumulated Other Comprehensive Income

Comprehensive

on Derivative

Comprehensive

(in millions)

Rate Products

table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations

for the year ended December 31, 2021.

Schedule of Consolidated Statements of Operations

of Maturities of Long-term Debt

Fiscal period:

(in millions)

Total amounts

of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value

or cash flow hedges are recorded

Gain/(loss) on cash

flow hedging relationships in Subtopic 815-20

ENTERTAINMENT, INC.

44 unchanged sentences

stock are entitled to one vote for each common share.

of December 31, 2020, the Company had 19,079,130 outstanding warrants to purchase an aggregate of 9,539,565 shares of the Company’s

common stock, which included 7,999,900 warrants originally issued as part of the initial public offering (the “IPO”) (the

“Public Warrants”) and 11,079,230 warrants issued in private placements in connection with the IPO and the Merger (the “Private

Placement Warrants”).

The warrants became exercisable 30 days after the closing of the Merger and had an expiration date of December

Each warrant entitled its holder to purchase one-half of one share of the Company’s common stock at an exercise price

of $ 11.50 per whole share.

The warrants were able to be exercised only for a whole number of shares of common stock.

of December 31, 2020, the warrants met the definition of a derivative under ASC 815 and were classified as a liability measured at fair

value, with changes in fair value each period reported in earnings.

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

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

of 9,049,230 Private Warrants.

There were no warrants outstanding as of December 31, 2023 or 2022.

Stock-Based Compensation

13 unchanged sentences

to performance-based target awards, 93,750 shares subject to market-price vesting conditions and 136,135 shares subject to awards as

to which the applicable vesting conditions have been met which remain subject to deferred settlement , (ii) 2,433,225 shares subject to

outstanding awards under the Prior Plans, including 358,506 shares subject to performance-based target awards, 97,500 shares subject

to market-price vesting conditions, 190,586 shares subject to awards that were previously subject to performance criteria that were determined

to have been met for the applicable performance year which awards continue to remain subject to a time-based vesting schedule and 1,225,300

shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement;

(iii) 1,168,686 shares subject to outstanding awards under the Terminated Plans as to which the applicable vesting conditions have been

met which remain subject to deferred settlement.

As of December 31, 2023, there were 2,881,460 shares available for new awards under

the 2023 Plan (which includes shares rolled over from the Prior Plans) and no shares available for new awards under the Prior Plans.

All awards outstanding as of December 31, 2023 consisted of RSUs (including time-based RSUs, performance-based RSUs and stock price based

to which the applicable vesting conditions have been met which remain subject to deferred settlement (a portion of which settled in January

(ii) 1,646,807 shares subject to outstanding awards under the Prior Plans, including 62,500 shares subject to performance-based

target awards, 97,500 shares subject to market-price vesting conditions, 77,949 shares subject to awards that were previously subject

to performance criteria that were determined to have been met which continue to remain subject to a time-based vesting schedule and 1,340,445

shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement (a portion

of which settled in January 2025);

and (iii) 1,168,686 shares subject to outstanding awards under the Terminated Plans as to which the

applicable vesting conditions have been met which remain subject to deferred settlement.

As of December 31, 2024, there were 2,562,170

shares available for new awards under the 2023 Plan (which includes shares rolled over from the Prior Plans) and no shares available

for new awards under the Prior Plans.

All awards outstanding as of December 31, 2024 consisted of RSUs (including time-based RSUs, performance-based

RSUs and stock price based RSUs).

ENTERTAINMENT, INC.

19 unchanged sentences

receive a refund.

of December 31, 2023, a total of 463,671 shares remained available for purchase under the ESPP.

No shares were issued under the ESPP

in 2021 or 2022 and a total of 4,080 shares were purchased in 2023 (at a purchase price of $ 8.483 per share) and such shares were issued

Based on enrollments in the ESPP (including the Subplan), an aggregate of approximately 105,000 shares were subject to outstanding

purchase rights thereunder as of December 31, 2023.

of December 31, 2024, a total of 460,001 shares remained available for purchase under the ESPP (including in connection with outstanding

purchase rights under the Company’s ongoing offering periods).

No shares were purchased under the ESPP in 2022, a total of 4,080

shares were purchased in 2023 (at a purchase price of $ 8.483 per share) and a total of 3,670 shares were purchased in 2024 (at a purchase

price of $ 8.109 per share).

Such shares (from the 2023 and 2024 purchases) were issued in 2024.

Based on enrollments in the ESPP (including

the Subplan), an aggregate of approximately 125,000 shares were subject to outstanding purchase rights thereunder as of December 31,

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

Schedule of Restricted Stock Unit Activity

of Restricted Stock Unit Activity

Unvested Outstanding at January 1, 2024 (1)

Unvested Outstanding at December 31, 2024

amount shown as granted in the table includes 219,213 performance-based target RSUs as to which the number eligible to vest ranged

from 0 % to 200 % of the target amount of RSUs (a maximum of 438,426 RSUs based on attainment of Adjusted EBITDA targets for 2023 and

criteria previously set by the Compensation Committee).

Following the year ended December 31, 2023, the Committee determined that

the performance level attained would equate to approximately 47 % of the target amount of RSUs.

The amount shown in the table includes

additional performance-based RSUs, awarded as sign-on grants to our Executive Chairman and our CEO (comprising tranches covering

an aggregate of 250,000 Adjusted EBITDA RSUs (with targets for 2025, 2026 and 2027) and 125,000 stock-price based RSUs) which can

be earned at up to 100 % of the target amount of RSUs.

amount shown as “unvested outstanding at January 1, 2024” does not include certain tranches of Adjusted EBITDA RSUs that

have performance criteria for annual periods later than 2023 (an aggregate of 312,500 RSUs, including 62,500 subject

to 2024 criteria), which were part of sign-on tranches approved for our Executive Chairman and our Chief Executive Officer during

the years 2021 and 2023, as the applicable performance targets were not set by January 1, 2024 (and, accordingly, the accounting

grant dates had not yet occurred for the tranches).

Such tranches had previously been included in the amounts shown in 2023 as unvested

outstanding since the initial approval date for the tranches.

The targets for the 2024 period were set in February 2024 and the remaining

targets (for each of 2025, 2026 and 2027) are anticipated to be set in February of the performance year.

amount shown as “granted” includes 245,694 performance-based target RSUs as to which the number eligible to

vest ranged from 0 % to 200 % of the target amount of RSUs (a maximum of 491,388 RSUs based on attainment of Adjusted

EBITDA targets for 2024 and criteria previously set by the Compensation Committee).

RSUs that vested during the year ended December 31, 2024 included:

1 unchanged sentence

are subject to deferred settlement terms;

and (b) approximately 546,000 RSUs that vested on the last day of the year and will

be settled on a net share basis in 2024.

Company issued a total of 435,283 shares during the year ended December 31, 2023 in net settlement of RSUs which included an aggregate

of 332,227 shares in settlement of RSUs that vested during the prior year on December 30, 2022.

and (b) approximately 481,600 RSUs that vested on the last day of the year and were

settled on a net share basis in January 2025.

Company issued a total of 362,951 shares during the year ended December 31, 2024, in connection with the Company’s equity-based

plans, which included an aggregate of 333,161 shares issued in connection with the net settlement of RSUs that vested during the prior

year (primarily on December 29, 2023).

weighted average grant date fair value of awards granted for years ended December 31, 2024, December 31, 2023 and December 31, 2022 amounted

5 unchanged sentences

million, respectively.

was no income tax benefit recognized related to awards that vested during the years ended December 31, 2023, 2022, and 2021 , respectively

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

tax deductions from stock options and awards are less than the cumulative book compensation expense, the tax effect of the resulting

differences is a shortfall.

For the year ended December 31, 2024 an income tax expense of $ 0.5 million was recorded for shortfalls generated

from stock options and awards exercised in 2024.

There was no income tax benefit recognized related

to awards that vested during the years ended December 31, 2023, and 2022 , as there was a full valuation allowance in place against

the RSU scheme ’s deferred tax asset.

compensation is recognized as an expense over the requisite service period, which is generally the vesting period.

18 unchanged sentences

Company recognized stock-based compensation expense as follows:

Schedule of Stock Based Compensation Expense

of Stock Based Compensation Expenses

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

Restricted Stock and RSUs

Payroll taxes on vesting

Payroll taxes on vesting of RSUs

Stock-based compensation

unrecognized compensation expense related to unvested stock awards and unvested RSUs at December 31, 2024 amounts to $ 2.4 million and

2 unchanged sentences

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

Schedule of Accumulated Other Comprehensive Loss (Income)

Schedule of Accumulated Other Comprehensive

Loss (Income)

Benefit Costs

Comprehensive

6 unchanged sentences

Change during the period

Deferred tax on change during the period

Balance at December 31, 2024

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

all of its interest rate swaps.

Accordingly, hedge accounting is no longer applicable.

The amounts previously recorded in Accumulated

Other Comprehensive Income were amortized into Interest expense over the terms of the hedged forecasted interest payments.

Losses reclassified

from Accumulated Other Comprehensive Income into Interest expense in the Consolidated Statements of Operations and Income for the year

ended December 31, 2024, December 31, 2023 and December 31, 2022 amounted to $ 0.0 million, $ 0.3 million and $ 0.7 million, respectively.

Net Income (Loss) per Share

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

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

EPS gives effect to all dilutive potential shares of common stock outstanding during the period, including stock options, restricted

stock, RSUs and warrants, using the treasury stock method, unless the inclusion would be anti-dilutive.

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

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

Diluted EPS gives

effect to all dilutive potential shares of common stock outstanding during the period, including stock options and RSUs, unless the inclusion

would be anti-dilutive.

computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because they were either

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

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

Anti-dilutive

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

2023 and December 31, 2022, respectively.

There were no reconciling items for the year ended December 31, 2021.

Schedule of Numerators and Denominators of the Basic and Diluted EPS Computations

(Denominator)

of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

December 31, 2024

December 31, 2023

December 31, 2022

The following table reconciles the numerators and denominators of the basic and diluted EPS computations for the years ended

December 31, 2024, December 31, 2023 and December 31, 2022, respectively.

of Numerators and Denominators of the Basic and Diluted EPS Computations

(in millions)

(Denominator)

Per-Share Amount,

December 31, 2024

Income available to common stockholders

Effect of Dilutive Securities

Income available to

common stockholders

Income available to common stockholders

(in millions)

(Denominator)

Per-Share Amount,

December 31, 2023

Income available to common stockholders

Effect of Dilutive Securities

Income available to common stockholders

(in millions)

(Denominator)

Per-Share Amount,

December 31, 2022

Income available to common stockholders

Effect of Dilutive Securities

Income available to

common stockholders

calculation of Basic EPS includes the effects of 2,425,236 , 1,703,142 and 1,583,650 shares for the years ended December 31 2023, 2022 and 2021,

respectively, with respect to RSU awards that have vested but have not yet been issued.

Income available to common stockholders

calculation of Basic EPS includes the effects of 2,091,536 , 2,425,236 and 1,703,142 shares for the years ended December 31 2024, 2023

and 2022, respectively, with respect to RSU awards that have vested but have not yet been issued.

ENTERTAINMENT, INC.

3 unchanged sentences

31, 2024, 2023 AND 2022

Repurchase of Common Stock

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

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

Repurchase Program”).

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

the year ended December 31, 2023, the Company repurchased 125,778 shares under the Share Repurchase Program for gross payments of approximately

$ 1.6 million, which were canceled and retired during the year ended December 31, 2023.

As of December 31, 2023, approximately $ 13.0 million

remained available for future repurchases under the Share Repurchase Program.

Other Finance Income

finance income consisted of the following:

Schedule of Other Finance Income

of Other Finance Income

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

1 unchanged sentence

Expected return on pension plan assets

Foreign currency translation

on senior bank debt

Other finance income

effective tax rates for the years ended December 31, 2023, 2022 and 2021 were 39.7 % , 9.2 %

respectively.

For the year ended December 31, 2023 and 2022, the Company’s effective tax rate differs from the federal

statutory rate primarily due to losses in certain jurisdictions where the Company presently has recorded a valuation allowance

against the related tax benefit as well as an inclusion for global intangible low-taxed income.

For the year ended December 31,

2021, the Company’s effective tax rate differs from the federal statutory rate primarily due to losses in certain

jurisdictions where the Company presently has recorded a valuation allowance against the related tax benefit and non-deductible

officer’s compensation.

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

foreign jurisdictions were as follows:

Schedule of Earnings (Loss) Before Income Tax

effective tax rates for the years ended December 31, 2024, 2023 and 2022 were ( 3,466.2 ) %, 42.1 % and 8.9 % respectively.

For the year ended December 31, 2024, the Company’s effective tax rate differs from the federal statutory rate

primarily due to the reversal of a majority of the Company’s valuation allowance on its deferred tax assets in various jurisdictions

as well as an inclusion for global low-taxed income.

For the year ended December 2023 and 2022, the Company’s effective tax rate

differs from the federal statutory rate primarily due to losses in certain jurisdictions where the Company presently has recorded a valuation

allowance against the related tax benefit as well as an inclusion for global intangible low-taxed income.

components of earnings before income taxes on the Company’s consolidated statement of operations by the U.S.

jurisdictions were as follows:

of Earnings (Loss) Before Income Tax

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

2 unchanged sentences

Total earnings (loss) before income taxes

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

Schedule of Provision for Income Taxes

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

of Provision for Income Taxes

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

Current provision (benefit)

Total current

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

Deferred provision (benefit)

Total deferred

Total provision

ENTERTAINMENT, INC.

5 unchanged sentences

31, 2024, 2023 and 2022:

Schedule of Differences Between the Federal Statutory Tax Rate and our Effective Rate

of Differences Between the Federal Statutory Tax Rate and our Effective Rate

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

9 unchanged sentences

Research and development tax credits

Change in valuation

income tax rate

Change in valuation allowance

Effective income tax rate

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

Schedule of Deferred Tax Assets and Liabilities

of Deferred Tax Assets and Liabilities

December 31, 2024

December 31, 2023

(in millions)

2 unchanged sentences

Intangible Assets

Right of Use Asset

Right of Use liability

Total gross deferred tax assets

Valuation allowance

Valuation allowance balance

Gross deferred tax assets

1 unchanged sentence

Other temporary differences

Right of Use Liability

Right of Use asset

Gross deferred tax liabilities

deferred tax assets

Net deferred tax assets

in the valuation allowance are as follows:

Schedule of Changes in the Valuation Allowance

of Changes in the Valuation Allowance

December 31, 2024

December 31, 2023

(in millions)

3 unchanged sentences

Ending balance

of December 31, 2023 and 2022, the Company has $ 0.0 million and $ 3.8 million, respectively, of gross federal net operating loss carry

forwards, these losses have an unlimited carry forward.

The cumulative state net operating losses as of December 31, 2023 are $ 39.7 million,

which begin to expire in 2026.

The utilization of the Company’s state net operating losses may be subject to a

limitation in the future due to the “change of ownership provisions” under Section 382 of the Internal Revenue Code.

December 31, 2023, the Company has not had an ownership change under Section 382.

of December 31, 2023 and 2022, the Company also has gross net operating losses in foreign jurisdictions, primarily the UK,

totaling $ 80.7 million and $ 82.2 million, respectively.

of December 31, 2024 the Company’s cumulative state net operating losses are $ 44.5 million, which begin to expire in 2026.

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

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

As of December 31, 2024, the Company is not aware of an ownership

change under Section 382.

of December 31, 2024 and 2023, the Company also has gross net operating losses in foreign jurisdictions, primarily the UK, totaling $ 66.8

million and $ 80.7 million, respectively.

The majority of these net operating losses have an unlimited carry forward period.

Company recorded a valuation allowance against all of our deferred tax assets as of both December 31, 2023, and December 31, 2022.

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

reversal of all or some portion of these allowances.

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

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

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

Release of the valuation allowance

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

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

that we are able to actually achieve.

The valuation allowance we recorded as of December 31, 2023 and December 31, 2022 was $ 81.2 million

and $ 83.1 million, respectively.

evaluates both positive and negative evidence to estimate whether sufficient future taxable income will be available to utilize

existing deferred tax assets.

A key piece of objective positive evidence considered is the cumulative income generated over a

three-year period.

In the fourth quarter of 2024, the Company determined that, due to positive income generation in the United

Kingdom in recent years leading to a cumulative income position, and based on forecasted future taxable income, while considering

expected permanent and temporary timing tax differences, a significant portion of the valuation allowance against its deferred tax

assets was no longer necessary.

As of December 31, 2024, the Company maintains a valuation allowance of $ 6.4

million in the United States and $ 2.1

million in the United Kingdom.

The remaining valuation allowance relates to capital loss carryovers in the United Kingdom, state net operating losses

unable to be utilized in the United States and United States interest expected to be limited under Section 163(j).

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

18 unchanged sentences

Related Parties

Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”), (an arranger and lending party under our RCF Agreement), and

Macquarie Capital (Europe) Limited (“Macquarie EUR”), (an arranger and initial purchaser of our Senior Secured Notes), are

affiliates of MIHI LLC, which beneficially owned approximately 11.5 % of our common stock as of December 31, 2023, and 11.7 % of our common

Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”) (an arranger and lending party under our RCF Agreement) is an

affiliate of MIHI LLC, which beneficially owned approximately 11.4 % of our common stock as of December 31, 2024, and 11.5 % of our common

stock as of December 31, 2023.

Macquarie UK was also one of the lending parties with respect to the Prior Financing and its associated

revolving credit facility.

Macquarie UK held $ 2.1 million of the total $ 19.1 million of RCF drawn at December 31, 2023.

Macquarie UK did

not hold any of the Company’s aggregate senior debt at December 31, 2023 or December 31, 2022.

Interest expense payable to Macquarie

UK amounted to $ 0.0 million for each of the years ended December 31, 2023, 2022 and 2021, respectively.

In addition, Macquarie EUR received

$ 0.6 million of $ 5.5 million of fees paid in connection with the issuance of the Senior Secured Notes and the RCF in the year ended December

MIHI LLC is also a party to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant

to which, subject to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors

to be nominated for election as directors of the Company at any annual or special meeting of stockholders at which directors are to be

elected, until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold less than 5 % of the outstanding shares of

Vora Special Opportunities Master Fund Limited (“HG Vora”) (a purchaser of our Senior Secured Notes issued on May 20, 2021)

was a significant stockholder until October 12, 2021.

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

31, 2021 amounted to $ 1.7 million.

December 31, 2021, the Company entered into a consultancy agreement with Richard Weil, the brother of A.

Lorne Weil, our Executive

Chairman, under which he received a success fee in the amount of $ 130,000

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

The success fee was paid during the year

ended December 31, 2022.

Under the agreement, as extended in November 2022 and in July 2023 and December 2023, he will provide consulting services to

the Company relating to the lottery in the Dominican Republic through December 31, 2024, for which he was compensated at a rate of

per month in consulting fees through to June 30, 2023, and at a rate of $ 12,500

per month for the remainder of the term of the agreement.

The aggregate amount incurred by the Company in consulting fees was $ 0.1

million and $ 0.1

million for the years ended December 31, 2023 and December 31, 2022, respectively.

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

Landgame Trust, which closed on June 1, 2021, as to which our expenses were reimbursed by the stockholder.

For the year ended December

31, 2021, the aggregate amount invoiced for reimbursement was $ 0.2 million.

The stockholder sold an aggregate of 6,217,628 shares in

the offering (including 810,995 shares subject to an over-allotment option that was exercised in full) at an offering price of $ 9.25

per share, less underwriting discounts and commissions of $ 0.4625 per share.

One of the participating underwriters in the offering was

Macquarie Capital (USA) Inc., an affiliate of MIHI LLC (see paragraph above), pursuant to which it purchased 870,468 of the shares including

113,539 shares subject to the over-allotment option.

Macquarie UK held $ 2.1 million of the total $ 18.8 million of RCF drawn at December 31, 2024, and $ 2.1

million of the total $ 19.1 million of RCF drawn at December 31, 2023.

Interest expense payable to Macquarie UK for the RCF for the years

ended December 31, 2024, 2023 and 2022 (including non-utilization fees) amounted to $ 0.2 million, $ 0.0 million and $ 0.0 million, respectively.

Macquarie UK did not hold any of the Company’s senior notes at December 31, 2024 or December 31, 2023.

MIHI LLC is also a party

to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant to which, subject to certain conditions,

MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors to be nominated for election as directors

of the Company at any annual or special meeting of stockholders at which directors are to be elected, until such time as MIHI LLC and

Hydra Industries Sponsor LLC in the aggregate hold less than 5 % of the outstanding shares of the Company.

Weil, the brother of A.

Lorne Weil, our Executive Chairman, provides consulting services to the Company relating to our lottery operations

in the Dominican Republic under a consultancy agreement dated December 31, 2021, as amended.

The aggregate amount incurred by the Company

in consulting fees was $ 0.2 million, $ 0.1 million and $ 0.1 million for the years ended December 31, 2024, December 31, 2023 and December

31, 2022, respectively.

Company as Lessee

19 unchanged sentences

The operating leases have remaining terms of 1 to 11 years.

the year to December 31, 2021, certain concessions were granted with respect to the Company’s operating leases in light of Covid-19.

These took the form of lease extensions, where nothing was paid for a period of time with that same period of time and payments added

onto the lease at the end, payment holidays, where payments were deferred until a later date, but with no lease extension, and discounted

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

The Company elected to use the

practical expedient granted by the FASB and account for the concessions as if they were part of the enforceable rights and obligations

of the parties under the existing lease contract for all affected operating leases.

Lease extensions and discounted payments were accounted

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

were still being made under the original terms of the lease.

Payment holidays were accounted for using the ‘remeasurement consistent

with resolving a contingency’ approach, which involved remeasuring the liability and the right-of-use asset and continuing to recognize

the total cost of the lease on a straight line basis over the period to which it relates.

ENTERTAINMENT, INC.

4 unchanged sentences

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

The leases have remaining terms of between

18 and 43 months.

Payment terms and interest rates are fixed

at lease inception.

Minimum amounts of cash are required to be maintained in the Company’s bank accounts with respect to the finance

The leases have remaining terms of between 6 months and 4.5 years.

components of lease expense were as follows:

of Lease Expense

Ended December 31, 2022

Ended December 31, 2021

December 31, 2024

Year Ended December 31, 2023

Year Ended December 31, 2022

(in millions)

3 unchanged sentences

Variable lease costs

Weighted average remaining lease term –

finance leases

Weighted average remaining lease term –

operating leases

Weighted average discount rate

– finance leases

Weighted average discount

rate – operating leases

December 31, 2024

Weighted average remaining lease term – finance leases

Weighted average remaining lease term – operating leases

Weighted average discount rate – finance leases

Weighted average discount rate – operating leases

leased under finance leases had a cost of $ 21.4 million and $ 3.6 million at December 31, 2024 and 2023, respectively, and accumulated

2 unchanged sentences

of Future Minimum Finance Lease Payments

ending December 31, (in millions)

Total future minimum lease

Year ending December 31, (in millions)

Total future minimum lease payments

imputed interest

1 unchanged sentence

of Future Minimum Operating Lease Payments

ending December 31, (in millions)

Total future minimum lease

Year ending December 31, (in millions)

Total future minimum lease payments

imputed interest

21 unchanged sentences

of Future Minimum Sales Type Lease Receivables

ending December 31, (in millions)

Total future minimum lease

Year ending December 31, (in millions)

Total future minimum lease receivables

imputed interest

7 unchanged sentences

among other terms, provisions relating to severance and notice requirements.

Arrangements with Daniel

with Daniel B.

Silvers, former Executive Vice President and Chief Strategy Officer

Effective January 10, 2023, Mr.

January 10, 2023, Mr.

Silvers stepped down from his position as Executive Vice President and Chief Strategy Officer of the Company.

Pursuant to Mr.

employment agreement dated December 14, 2016, as amended, Mr.

Silvers was entitled to receive a base salary at a rate of $ 385,000 per

year, a target annual bonus of not less than 100 % of his base salary and a maximum annual bonus of 200 % of his base salary.

entitled to reimbursement for private medical insurance and to certain severance benefits.

Silvers’ employment agreement dated December 14, 2016, as amended, Mr.

Silvers was entitled to receive a base salary at

a rate of $ 385,000 per year, a target annual bonus of not less than 100 % of his base salary and a maximum annual bonus of 200 % of his

He was also entitled to reimbursement for private medical insurance and to severance benefits over a period of two years

which were accrued in 2023.

time to time, the Company may become involved in lawsuits and legal matters arising in the ordinary course of business.

14 unchanged sentences

based on a portion of an employee’s pensionable earnings during years prior to 2010.

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

The actuarial valuation revealed

that the statutory funding objective was not met, i.e.

there were insufficient assets to cover the Scheme’s Technical Provisions

and there was a funding shortfall of £ 8.2 million ($ 10.5 million) at the valuation date.

Under the Recovery Plan and Schedule of

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

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

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

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

and Schedule of Contributions.

The latest triennial actuarial

valuation of the scheme as at March 31, 2024 was finalized in March 2025.

The actuarial valuation revealed that the statutory funding

objective was not met, i.e.

there were insufficient assets to cover the Scheme’s Technical Provisions and there was a funding shortfall

of £ 2.0 million ($ 2.5 million) at the valuation date.

Under the Recovery Plan and Schedule of Contributions agreed between the

Trustee and the Company on March 5, 2025, it was agreed that the shortfall will be met by contributions of £ 0.6 million ($ 0.8 million)

for the period April 1, 2024 to December 31, 2024 and £ 0.7 million ($ 0.9 million) for the year ended December 31, 2025.

Actuary will assess the funding position of the Scheme at March 31, 2026 and if the funding level at that point is less than 100% the

Company will pay a single lump sum contingent contribution calculated as the lower of the deficit calculated by the Scheme Actuary at

March 31, 2026 and £ 0.5 million ($ 0.6 million).

This contingent contribution will be payable by October 31, 2026.

The Company will

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

of Contributions.

ENTERTAINMENT, INC.

20 unchanged sentences

for appropriate diversification.

The current strategy is to hold 12% in a diversified growth fund, 24% in diversified credit, 18% in

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

The current strategy is to hold 14.9% in a diversified growth fund, 15.5% in diversified credit, 6.8%

in synthetic equity, 2.5% in synthetic credit, 22.3% in core liability driven investment funds and 38% in a buy-in policy.

Company recognizes gains or losses on pension settlements if the cost of the settlements exceeds the sum of service and interest cost

35 unchanged sentences

the full benefits,

have been insured).

The approach adopted has therefore been to include within the total value of assets, an amount equal to the fair

value of the buy-in assets and to set the buy-in portion of the total liability (pension benefit obligation) equal to the fair value

of the buy-in based on the actuarial assumptions adopted for ASC 715 purposes at each measurement date.

The buy-in contract is valued

on an insurer pricing basis, reflecting assumptions on the purchase price adjusted for changes in discount rates and other actuarial

assumptions, which approximates fair value and is, therefore, classified as Level 3.

excluding the cost of equalization for Guaranteed Minimum Pensions, have been insured).

The approach adopted has therefore been to include

within the total value of assets, an amount equal to the fair value of the buy-in assets and to set the buy-in portion of the total liability

(pension benefit obligation) equal to the fair value of the buy-in based on the actuarial assumptions adopted for ASC 715 purposes at

each measurement date.

The buy-in contract is valued on an insurer pricing basis, reflecting assumptions on the purchase price adjusted

for changes in discount rates and other actuarial assumptions, which approximates fair value and is, therefore, classified as Level 3.

ENTERTAINMENT, INC.

5 unchanged sentences

in our consolidated financial statements at the respective measurement dates:

Schedule of Pension Plans and their Reconciliation

of Pension Plans and their Reconciliation

December 31, 2024

December 31, 2023

(in millions)

Change in benefit obligation:

Benefit obligation at beginning

Benefit obligation at beginning of period

Interest cost

Actuarial loss (gain)

Actuarial (gain) loss

Benefits paid

Foreign currency translation

Benefit obligation at

end of period

Foreign currency translation adjustments

Benefit obligation at end of period

Change in plan assets:

Fair value of plan assets at beginning of period

Actual gain (loss) on plan assets

Actual (loss) gain on plan assets

Employer contributions

Benefits paid

Foreign currency translation

Foreign currency translation adjustments

Fair value of assets at end of period

Amount recognized in the

consolidated balance sheets:

Unfunded status (non-current)

Amount recognized in the consolidated balance sheets:

Overfunded (Unfunded) status (non-current)

Net amount recognized

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

Schedule of Defined Benefit Plans

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

of Defined Benefit Plans

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

Components of net periodic pension (benefit)

Components of net periodic pension (benefit) cost:

Interest cost

Expected return on plan assets

Amortization of net

Amortization of net loss

Net periodic cost (benefit)

1 unchanged sentence

December 31, 2023, respectively.

The underfunded status of our defined benefit pension plans recorded as a liability in our consolidated

balance sheets as of December 31, 2023 and December 31, 2022 was $ 2.0 million and $ 2.1 million, respectively.

The overfunded status of our defined benefit pension plan recorded as an asset in our consolidated balance

sheets as of December 31, 2024 was $ 3.5 million.

The underfunded status of our defined benefit pension plans recorded as a liability

in our consolidated balance sheets as of December 31, 2023 was $ 2.0 million

estimated net loss, net transition asset (obligation) and prior service cost for the plan that will be amortized from accumulated other

1 unchanged sentence

fair value of the plan assets at December 31, 2024 by asset category is presented below:

of Fair Value of Plan Assets

Schedule of Fair Value of Plan Assets

(in millions)

1 unchanged sentence

Buy-in contract

Cash and other current

Cash and other current assets

ENTERTAINMENT, INC.

7 unchanged sentences

Buy-in contract

Changes in the value of Level

3 assets are as follows:

December 31, 2024

(in millions)

Beginning balance

Actual return on plan assets still held

Transfer of payments to the Plan in respect of insured pensioner members

Foreign currency translation adjustments

Ending balance

table below presents the weighted-average actuarial assumptions used to determine the benefit obligation and net periodic benefit cost

for the Plan.

of Benefit Obligation and Net Periodic Benefit Cost for Plan

Schedule of Benefit Obligation and Net

Periodic Benefit Cost for Plan

December 31, 2024

December 31, 2023

Discount rate – non-insureds

6 unchanged sentences

Pension increases – post-2006 service

Pension increases – post 1988 GMP –

Pension increases – post 1988 GMP – pre 2030

Pension increases – post 1988 GMP – post 2030

following benefit payments are expected to be paid:

of Benefit Payments are Expected to be Paid

(in millions)

Segment Reporting and Geographic Information

1 unchanged sentence

by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance.

The Company’s chief decision-maker is the Office of the Executive Chairman.

Company’s chief decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information

about revenue and operating profit by reporting unit.

This information is used for purposes of allocating resources and evaluating financial

The Company’s chief decision-making group consists of the Executive Chairman, the Chief Executive Officer and the Chief Financial

Company’s chief decision-making group uses measures of segment profit and loss to evaluate the performance areas of 1) Achievement

of revenue and gross margin;

2) Level of staff and non-staff expenses against budget;

3) Investment in capitalized software development;

and 4) Additional cash expenditures impacting working capital.

The decision-making group uses the information to allocate financial resources

and drive operation decisions such as investing in new customers, products, geographies and refocusing commercial teams to drive new

sales, accelerating or delaying staffing or other selling, general and administrative expenditures and ensuring technology staff utilization

on new product development.

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

3 unchanged sentences

and the way the performance of each segment is evaluated.

segment items consist of costs incurred in restructuring activities.

accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies.”

4 unchanged sentences

31, 2024, 2023 AND 2022

following tables present revenue, cost of sales, excluding depreciation and amortization, selling, general and administrative expenses,

depreciation and amortization, stock-based compensation expense and acquisition related transaction expenses, operating profit/(loss),

total assets and total capital expenditures for the years ended December 31, 2023, December 31, 2022 and December 31, 2021, respectively,

following tables present revenue, cost of sales, excluding depreciation and amortization, staff-related selling, general and administrative

expenses, non-staff related selling, general and administrative expenses, labor costs capitalized, depreciation and amortization, stock-based

compensation expense, acquisition related transaction expenses, other segment items, operating profit/(loss), total assets and total

capital and other long-lived asset expenditures for the years ended December 31, 2024, December 31, 2023 and December 31, 2022, respectively,

by business segment.

6 unchanged sentences

transaction expenses are allocated as corporate function costs.

Schedule of Segment Reporting Information by Segment

of Segment Reporting Information by Segment

Ended December 31, 2024

Corporate Functions

(in millions)

Product sales

Total revenue

Cost of sales, excluding depreciation and amortization:

1 unchanged sentence

Cost of product sales

Selling, general and administrative expenses

Staff-related selling, general and administrative expenses

Non-staff related selling, general and administrative expenses

Labor costs capitalized

Acquisition and integration related transaction expenses

Stock-based compensation expense

Acquisition and integration related transaction

Depreciation and amortization

operating income (loss)

operating income

Other segment items

Segment operating income (loss)

Net operating income

Total assets at December 31, 2024

Total goodwill at beginning

of period (1)

goodwill impairment losses (2)

Total goodwill at beginning of period

Accumulated goodwill impairment losses

Total goodwill at beginning of period, net

Foreign currency translation

goodwill at December 31, 2023, net

capital expenditures for the year ended December 31, 2023

Foreign currency translation adjustments

Total goodwill at December 31, 2024, net

Total capital and other long-lived asset expenditures for the year ended December 31, 2024

Ended December 31, 2023

(in millions)

Product sales

Total segment revenue

Cost of sales, excluding depreciation and amortization:

1 unchanged sentence

Cost of product sales

Selling, general and administrative expenses

Staff-related selling, general and administrative expenses

Non-staff related selling, general and administrative expenses

Labor costs capitalized

Stock-based compensation expense

Acquisition and integration related transaction

and amortization

operating income (loss)

operating income

Depreciation and amortization

Other segment items

Segment operating income (loss)

Net operating income

Total assets at December 31, 2023

Total goodwill at beginning

of period (1)

goodwill impairment losses (2)

Total goodwill at beginning of period

Accumulated goodwill impairment losses

Total goodwill at beginning of period, net

Foreign currency translation

goodwill at December 31, 2022, net

capital expenditures for the year ended December 31, 2022

Foreign currency translation adjustments

Total goodwill at December 31, 2023, net

Total capital and other long-lived asset expenditures for the year ended December 31, 2023

ENTERTAINMENT, INC.

5 unchanged sentences

(in millions)

Product sales

Total revenue

Cost of sales, excluding depreciation and amortization:

1 unchanged sentence

Cost of product sales

Selling, general and administrative

Staff-related selling, general and administrative expenses

Non-staff related selling, general and administrative expenses

Labor costs capitalized

Stock-based compensation expense

Acquisition and integration related transaction

Acquisition and integration related transaction expenses

Depreciation and amortization

operating income (loss)

operating loss

capital expenditures for the year ended December 31, 2021

a result of the October 1, 2019 acquisition of the Acquired Businesses, the Company recognized £ 26.1 million of Goodwill from

the completion of the acquisition.

In accordance with ASC 350-20, Intangibles—Goodwill and Other—Goodwill , we

assessed the synergies that were expected at the time of acquisition and reallocated £ 9.6 million and £ 1.4 million of

goodwill from the Acquired Businesses reporting unit to Server Based Gaming and Interactive reporting units, respectively.

the first quarter of 2020, as a result of a triggering event caused by the impacts of the COVID-19 pandemic, we completed a qualitative

and quantitative impairment analysis and determined that goodwill within the Acquired Businesses (now Leisure) reporting unit was

fully impaired.

Other segment items

Segment operating income (loss)

Net operating income

Total capital and other long-lived asset expenditures for the year ended December 31, 2022

information for revenue is set forth below:

Schedule of Geographic Information

December 31, 2024

December 31, 2023

December 31, 2022

(in millions)

1 unchanged sentence

Rest of world

Total revenue

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

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

December 31, 2024

December 31, 2023

(in millions)

8 unchanged sentences

Customer Concentration

the year ended December 31, 2023 two customers represented at least 10% of revenue, accounting for 12 % and 11 % of the Company’s

revenue, respectively.

The customers were served by the Gaming, Virtual Sports and Interactive segments, and by the Virtual Sports and

Interactive segments, respectively.

During the year ended December 31, 2022, one customer represented at least 10% of revenue, accounting

for 13 % of the Company’s revenue.

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

During the year ended

December 31, 2021, no customers represented at least 10 % of revenue.

the year ended December 31, 2024 no customers represented at least 10% of revenue.

During the year ended December 31, 2023 two customers

represented at least 10% of revenue, accounting for 12 % and 11 % of the Company’s revenue, respectively.

The customers were served

by the Gaming, Virtual Sports and Interactive segments, and by the Virtual Sports and Interactive segments, respectively.

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

customer was served by the Virtual Sports and Interactive segments.

December 31, 2024 there was one customer that represented at least 10% of the Company’s accounts receivable, accounting for 16 %

2 unchanged sentences

accounts receivable, accounting for 12 % of the Company’s accounts receivable.

Revision of Previously Reported Informatio n

the current year, the Company identified immaterial errors in its previously reported financial statements for the year ended December 31,

2023, and December 31, 2022 relating to the classification of leases between operating and sales type and immaterial errors relating to

capitalization of software project content costs.

accordance with Staff Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements

when Quantifying Misstatements in the Current Year Financial Statements, the Company evaluated the materiality of the errors from qualitative

and quantitative perspectives, and concluded that the errors were immaterial to any prior annual or interim financial statements.

Notwithstanding

this conclusion, management has revised the accompanying consolidated financial statements for 2023 and 2022, and related notes included

herein to correct the errors.

following tables present the effect of correcting this error on the Company’s previously issued financial statements.

of Effect of Correcting this Error on Previously Issued Financial Statements

of December 31, 2022

As previously reported

(in millions)

Consolidated Balance Sheet

Accounts receivable

Total current assets

Property and equipment

Software development

the year ended December 31, 2022

As previously reported

(in millions, except per share data)

Consolidated Statement of Operations

Cost of sales

Selling, general and administrative expenses

Depreciation and amortization

Net operating income

Interest expense, net

Total other expense, net

Net income before income taxes

Comprehensive income

Net income per common share - basic

Net income per common share - diluted

the year ended December 31, 2022

As previously reported

(in millions)

Consolidated Statement of Cashflows

Depreciation and amortization

Accounts receivable

Prepaid expenses and other assets

Net cash provided by operating activities

Purchases of property and equipment

Purchases of capital software and internally developed costs

Net cash used in investing activities

ENTERTAINMENT, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

OF DECEMBER 31, 2024 AND 2023, AND FOR THE YEARS ENDED

31, 2024, 2023 AND 2022

the year ended December 31, 2022

As previously reported

(in millions)

Consolidated Statement of Shareholders’ Deficit

Accumulated deficit – January 1, 2022

Accumulated deficit – December 31, 2022

of December 31, 2023

As previously reported

(in millions)

Consolidated Balance Sheet

Accounts receivable

Total current assets

Property and equipment

Software development

the year ended December 31, 2023

As previously reported

(in millions, except per share data)

Consolidated Statement of Operations

Cost of sales

Selling, general and administrative expenses

Depreciation and amortization

Net operating income

Interest expense, net

Total other expense, net

Net income before income taxes

Comprehensive income

Net income per common share - basic

Net income per common share - diluted

the year ended December 31, 2023

As previously reported

(in millions)

Consolidated Statement of Cashflows

Depreciation and amortization

Accounts receivable

Prepaid expenses and other assets

Net cash provided by operating activities

Purchases of property and equipment

Purchases of capital software and internally developed costs

Net cash used in investing activities

the year ended December 31, 2023

As previously reported

(in millions)

Consolidated Statement of Shareholders’ Deficit

Accumulated deficit – January 1, 2023

Accumulated deficit – December 31, 2023

Subsequent Events

3 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data