What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-10 compared with 2022-03-03 · 378 added, 272 removed, 768 unchanged (46% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Accounting Firm (PCAOB ID 34 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 34 )

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Stockholders' Equity

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of PLAYSTUDIOS, Inc.

and subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

28 unchanged sentences

Property and equipment, net 17,532 5,289

Operating lease right-of-use assets 15,562 —

Internal-use software, net 36,118 43,267

9 unchanged sentences

Warrant liabilities 3,682 6,521

Operating lease liabilities, current 4,571 —

Accrued liabilities 21,473 15,599

1 unchanged sentence

Minimum guarantee liability 1,500 —

Deferred income taxes — 2,970

Operating lease liabilities, non-current 11,660 —

Other long-term liabilities 2,385 1,464

4 unchanged sentences

Preferred stock, $ 0.0001 par value ( 100,000 shares authorized, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021)

Class A common stock, $ 0.0001 par value ( 2,000,000 shares authorized, 110,066 and 74,421 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively)

Class A common stock, $ 0.0001 par value ( 2,000,000 shares authorized, 116,756 and 110,066 shares issued, and 115,635 and 110,066 shares outstanding as of December 31, 2022 and December 31, 2021, respectively)

Class B common stock, $ 0.0001 par value ( 25,000 shares authorized, 16,457 and 16,130 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively).

1 unchanged sentence

Retained earnings 16,756 34,539

Accumulated other comprehensive income 393 481

Accumulated other comprehensive (loss) income ( 151 ) 393

Treasury stock, at cost, 1,166 and 0 shares at December 31, 2022 and December 31, 2021, respectively

Total stockholders’ equity 302,313 303,467

16 unchanged sentences

Total operating costs and expenses 318,390 290,409 259,533

Income (loss) from operations ( 2,990 ) 10,349 17,137

(Loss) Income from operations ( 28,081 ) ( 2,990 ) 10,349

Other income (expense), net:

3 unchanged sentences

Total other income, net 4,463 13,469 787

Income before income taxes 10,479 11,136 17,589

Income tax benefit (expense) 258 1,671 ( 3,975 )

Net income $ 10,737 $ 12,807 $ 13,614

Net income per share attributable to Class A and Class B common stockholders:

(Loss) Income before income taxes ( 23,618 ) 10,479 11,136

Income tax benefit 5,835 258 1,671

Net (loss) income $ ( 17,783 ) $ 10,737 $ 12,807

Net (loss) income per share attributable to Class A and Class B common stockholders:

Basic $ ( 0.14 ) $ 0.10 $ 0.14

6 unchanged sentences

PLAYSTUDIOS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

1 unchanged sentence

2022 2021 2020

Net income $ 10,737 $ 12,807 $ 13,614

Other comprehensive income (loss):

Net (loss) income $ ( 17,783 ) $ 10,737 $ 12,807

Other comprehensive (loss) income:

Change in foreign currency translation adjustment (1)

1 unchanged sentence

Total other comprehensive (loss) income ( 544 ) ( 88 ) 383

Comprehensive income $ 10,649 $ 13,190 $ 13,793

Comprehensive (loss) income $ ( 18,327 ) $ 10,649 $ 13,190

(1) These amounts are presented gross of the effect of income taxes.

5 unchanged sentences

Preferred Stock Common Stock Class A Common Stock Class B Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Retained

Capital Accumulated Other Comprehensive Income Retained

Earnings Total

22 unchanged sentences

Net income — — — — — — — — — — 10,737 10,737

Acies Merger and PIPE Financing — — — — 32,969 3 ( 2,847 ) — 189,212 — — 189,215

Exercise of stock options — — — — 2,676 — — — 2,412 — — 2,412

Stock-based compensation — — — — — — — — 5,112 — — 5,112

Repurchase and retirement of common stock — — — — ( 843 ) — — — — — ( 2,540 ) ( 2,540 )

Other comprehensive income — — — — — — — — — 383 — 383

Other comprehensive loss — — — — — — — — — ( 88 ) — ( 88 )

Balance as of December 31, 2021 — $ — — $ — 110,066 $ 11 16,130 $ 2 $ 268,522 $ 393 $ 34,539 $ 303,467

2 unchanged sentences

(in thousands)

Preferred Stock Common Stock Class A Common Stock Class B Common Stock Additional

Capital Accumulated Other Comprehensive Income Total

Common Stock Class B

Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Retained

Earnings Treasury Stock Total

Stockholders'

Shares Amount Shares Amount Shares Amount Shares Amount Retained

Shares Amount Shares Amount

Balance as of December 31, 2021 110,066 $ 11 16,130 $ 2 $ 268,522 $ 393 $ 34,539 — 303,467

Retroactive application of reverse recapitalization ( 162,596 ) ( 8 ) ( 238,186 ) ( 12 ) 74,421 8 18,977 2 10 — — —

Adjusted balance as of December 31, 2020 — $ — — $ — 74,421 $ 8 18,977 $ 2 $ 71,786 $ 481 $ 23,802 96,079

Net income — — — — — — — — — — 10,737 10,737

Business Combination and PIPE Financing — — — — 32,969 3 ( 2,847 ) — 189,212 — — 189,215

Net loss — — — — — — ( 17,783 ) — ( 17,783 )

Exercise of stock options 4,851 1 327 — 1,558 — — — 1,559

Issuance of shares upon vesting of restricted stock units 1,884 — — — — — — — —

Stock-based compensation — — — — 20,257 — — — 20,257

Repurchase of common stock ( 1,166 ) ( 1 ) — — — — — ( 4,642 ) ( 4,643 )

Other comprehensive loss — — — — — ( 544 ) — — ( 544 )

7 unchanged sentences

Cash flows from operating activities:

Net income $ 10,737 $ 12,807 $ 13,614

Net (loss) income $ ( 17,783 ) $ 10,737 $ 12,807

Depreciation and amortization 35,562 27,398 22,192

2 unchanged sentences

Change in fair value of warrant liabilities ( 1,047 ) ( 13,933 ) —

Deferred income tax (benefit) expense ( 2,286 ) ( 3,568 ) 2,456

Change in fair value of contingent consideration ( 2,411 ) — —

Asset impairments 8,353 — —

Deferred income tax benefit ( 7,791 ) ( 2,286 ) ( 3,568 )

Other 490 1,545 ( 467 )

7 unchanged sentences

Cash flows from investing activities:

Acquisition of subsidiary, net of cash ( 70,365 ) — —

Purchase of property and equipment ( 11,979 ) ( 2,010 ) ( 1,847 )

7 unchanged sentences

Proceeds from stock option exercises 1,493 2,412 992

Repurchases of treasury stock ( 4,272 ) — —

Payment for tender offer of warrants ( 1,792 ) — —

Payment for minimum guarantee obligations ( 5,000 ) — —

Repurchases of common stock for retirement — — ( 2,540 )

Net proceeds from Business Combination 185,170 — —

Net proceeds from Acies Merger — 185,170 —

Other — ( 690 ) ( 2,087 )

7 unchanged sentences

Income taxes paid, net of (refunds) $ 1,884 $ ( 4,321 ) $ 7,015

Years Ended December 31,

2022 2021 2020

Non-cash investing and financing activities:

Capitalization of stock-based compensation $ 2,530 $ 657 $ 605

Noncash additions to intangible assets related to license agreements 5,000 — $ —

Increase in property and equipment included in accounts payable and other long-term liabilities $ 888 $ — $ —

Right-of-use assets acquired under operating leases $ 14,638 $ — $ —

Additions to intangible assets related to minimum guarantee obligations $ 3,000 $ 5,000 $ —

Exchange of notes receivable as consideration for business combinations $ 1,055 $ — $ —

Contingent consideration related to business combinations $ 3,361 $ — $ —

Reduction of notes receivable in exchange for internal-use software $ — $ 1,754 $ —

9 unchanged sentences

The Company's legal name became PLAYSTUDIOS, Inc.

following the closing of the business combination discussed in Note 3— Business Combination .

The prior period financial information represents the financial results and conditions of Old PLAYSTUDIOS (as defined in Note 3— Business Combination ).

The Company develops and operates online and mobile social gaming applications (“games” or “game”) each of which incorporate a unique loyalty program offering “real world” rewards provided by a collection of awards partners.

following the closing of the Acies Merger discussed in Note 3— Business Combinations .

The prior period financial information represents the financial results and conditions of Old PLAYSTUDIOS (as defined in Note 3— Business Combinations ).

The Company develops and operates online and mobile social gaming applications (“games” or “game”), many of which incorporate a unique loyalty program offering “real world” rewards provided by a collection of awards partners.

The Company’s games are free-to-play and available via the Apple App Store, Google Play Store, Amazon Appstore, and Facebook (collectively, “platforms” or “platform operators”).

1 unchanged sentence

The Company generates revenue through the in-game sale of virtual currency and through advertising.

We have one operating segment with one business activity, developing and monetizing social games.

Unless the context indicates otherwise, all references herein to “PLAYSTUDIOS,” the “Company,” “we,” “us,” and “our” are used to refer collectively to PLAYSTUDIOS, Inc.

6 unchanged sentences

In the opinion of management, all adjustments considered necessary for a fair presentation have been recorded within the accompanying financial statements, and all intercompany balances and transactions have been eliminated upon consolidation.

Certain reclassifications in these financial statements have been made to comply with U.S.

Certain reclassifications in these consolidated financial statements have been made to comply with U.S.

GAAP applicable to public companies and SEC Regulation S-X.

Pursuant to the Business Combination as discussed in Note 3— Business Combination , the Business Combination was accounted for as a reverse recapitalization in accordance with U.S.

Pursuant to the Acies Merger as discussed in Note 3— Business Combinations , the Acies Merger was accounted for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, Acies was treated as the “acquired” company for financial reporting purposes and the consolidated financial statements represent the accounts of Old PLAYSTUDIOS “as if” Old PLAYSTUDIOS is the predecessor to the Company.

5 unchanged sentences

Due to the inherent uncertainties in making these estimates, actual amounts could differ materially.

Operating segments are defined as components of an entity for which discrete financial information is available, and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance.

The CODM, the Company’s Chief Executive Officer, reviews financial information on a consolidated basis for purposes of evaluating performance and allocating resources.

As such, the Company has one operating and reportable segment.

Emerging Growth Company

At December 31, 2021, the Company qualified as an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and the Company has taken and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

At December 31, 2022, the Company qualified as an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and the Company has taken and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of

holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised standards.

30 unchanged sentences

Furniture and fixtures 3 - 7 years

Building 39 years

Building improvements 15 years

Land improvements 5 years

Leasehold improvements Lesser of 10 years or remaining lease term

13 unchanged sentences

The Company evaluates the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Business Combinations

The Company applies the provisions of ASC 805, Business Combination and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives and discount rates.

Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

In accordance with Accounting Standards Update (ASU) No.

3 unchanged sentences

If a triggering event occurs, qualitative factors are first assessed to determine whether a quantitative impairment test is required.

If a quantitative test is required, the fair value of the asset is compared to the asset's carrying amount.

Any impairment would be recognized for the difference between the fair value and the carrying amount limited to the carrying amount of goodwill.

11 unchanged sentences

Trade names 5 - 10 years

Acquired technology 5 years

Customer relationships 5 years

When factors indicate that a definite-lived intangible asset should be evaluated for possible impairment, the Company reviews intangible assets to assess recoverability from future operations using undiscounted cash flows.

8 unchanged sentences

The classification of instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

Issuance costs incurred with the Business Combination that are attributable to liability classified warrants are expensed as incurred.

Issuance costs incurred with the Acies Merger that are attributable to liability classified warrants are expensed as incurred.

Fair Value Measurements

12 unchanged sentences

The Company classifies minimum royalty payment obligations as current liabilities to the extent they are contractually due within the next 12 months.

The long-term portion of the liability related to the minimum guaranteed obligations is reduced as royalty payments are made as required under the license agreement.

The long-term portion of the liability related to the minimum guaranteed

obligations is reduced as royalty payments are made as required under the license agreement.

The Company assesses the recoverability of license agreements whenever events arise or circumstances change that indicate the carrying value of the licensed asset may not be recoverable.

Recoverability of the licensed asset and the amount of impairment, if any, are determined using the Company’s policy for intangible assets with finite useful lives.

The Company is the lessee primarily under non-cancelable office real estate and data center leases.

The Company accounts for its leases under ASU No.

2016-02, Leases (Topic 842).

Operating lease right-of-use ("ROU") assets and liabilities are recognized at the commencement date and initially measured based on the present value of lease payments and lease incentives received over the defined lease term.

The Company’s lease terms may include options to extend or terminate the lease.

The Company assesses these options using a threshold of whether the Company is reasonably certain to exercise the option to extend or terminate the lease.

For leases the Company is reasonably certain to renew, those option periods are included within the lease term and, therefore, the measurement of the right-of-use asset and lease liability.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company’s real estate lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The Company’s lease agreements with lease and non-lease components are accounted for separately.

As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate is estimated based upon the capital structure of the Company and upon the other information available at the lease commencement date in determining the present value of lease payments.

The implicit rate will be used when readily determinable.

The operating lease ROU assets also include any prepaid lease payments made and are net of lease incentives.

The Company does not record an asset or liability for operating leases with a term of 12 months or less.

Revenue Recognition

15 unchanged sentences

Players may also purchase additional virtual currency through accepted payment methods offered by the respective platform.

Once a purchase is completed, the virtual currency is deposited into the player’s account and are not separately identifiable from previously purchased virtual currency obtained by the player for free.

Once a purchase is completed, the virtual currency is deposited into the player’s account and are not separately identifiable from previously purchased virtual currency or virtual currency obtained by the player for free.

Once obtained, virtual currency (either free or purchased) cannot be redeemed for cash nor exchanged for anything other than gameplay.

10 unchanged sentences

Depending on the tier, players are granted access to special benefits at the Company’s discretion.

Similar to loyalty points that are redeemable into real-world rewards, the tier points are not awarded as a result of a contract with a customer since both paying and non-paying players can earn these tier points.

Similar to loyalty points that are redeemable for real-world rewards, the tier points are not awarded as a result of a contract with a customer since both paying and non-paying players can earn these tier points.

As a result, the tier points earned by players do not provide players with material rights and do not require any allocation to the transaction price of virtual currency.

37 unchanged sentences

Research and development costs consist primarily of payroll and related personnel costs, stock-based compensation, and consulting fees.

The Company evaluates research and development costs

incurred to determine whether the costs relate to the development of software and are, therefore, qualified to be capitalized under ASC 350-40, Internal-Use Software .

The Company evaluates research and development costs incurred to determine whether the costs relate to the development of software and are, therefore, qualified to be capitalized under ASC 350-40, Internal-Use Software .

All other research and development costs are expensed as incurred.

Advertising expense was $ 70.3 million, $ 49.3 million and $ 53.8 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Advertising expense is included in “Selling and marketing” expenses in the Consolidated Statements of Operations.

Advertising expenses for our games was $ 69.1 million, $ 70.3 million and $ 49.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Advertising expenses are included in “Selling and marketing” expenses in the Consolidated Statements of Operations.

Share-Based Compensation

8 unchanged sentences

The weighted-average expected life of the option awards is estimated based on our historical exercise data.

The Company's dual class structure was created upon the Domestication (as defined in Note 3— Business Combination ).

The Class B common stock including Class B common stock underlying vested stock options, held by Mr.

The Company's dual class structure was created upon the Domestication (as defined in Note 3— Business Combinations ).

The Class B common stock, including Class B common stock underlying stock options, held by Mr.

Andrew Pascal, the Company's Chairman and Chief Executive Officer, or his affiliates (the "Founder Group") carry a super vote premium.

As the Founder Group did not have control of Old PLAYSTUDIOS prior to the Business Combination, and Mr.

As the Founder Group did not have control of Old PLAYSTUDIOS prior to the Acies Merger, and Mr.

Pascal is an employee of the Company, the incremental value resulting from the super vote premium is accounted for as incremental compensation costs.

4 unchanged sentences

The translation of foreign currencies into U.S.

dollars is performed for assets and liabilities using current foreign currency exchange rates in effect at the consolidated balance sheet date and for revenue and expense accounts using average foreign currency exchange rates during the year.

dollars is performed for assets and liabilities using current foreign

currency exchange rates in effect at the consolidated balance sheet date and for revenue and expense accounts using average foreign currency exchange rates during the year.

Capital accounts are translated at historical foreign currency exchange rates.

15 unchanged sentences

Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

EPS calculations for all periods prior to the Business Combination have been retrospectively adjusted for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization.

Subsequent to the Business Combination, net income per share was calculated based on the weighted average number of common stock then outstanding .

EPS calculations for all periods prior to the Acies Merger have been retrospectively adjusted for the equivalent number of shares outstanding immediately after the Acies Merger to effect the reverse recapitalization.

Subsequent to the Acies Merger, net income per share was calculated based on the weighted average number of common stock then outstanding .

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842) .

The amended guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the Consolidated Balance Sheets and disclosing key information about leasing arrangements.

The adoption of this guidance is expected to result in a significant portion of the Company’s operating leases, where the Company is the lessee, to be recognized in the Company’s Consolidated Balance Sheets.

The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.

This guidance is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with earlier adoption permitted.

The Company is currently evaluating the impact of adopting this guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326).

3 unchanged sentences

The Company is currently evaluating the impact of adopting this guidance.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842) .

The adoption of this guidance resulted in a significant portion of the Company’s operating leases, where the Company is the lessee, to be recognized in the Company’s Consolidated Balance Sheets.

The guidance requires lessees and lessors to

recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.

The Company adopted this guidance on January 1, 2022 and the adoption of this guidance is disclosed in Note 12— Leases .

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The new guidance removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.

The new guidance removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods.

It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

This guidance is effective for the Company for fiscal years beginning after December 15, 2021, including interim periods within that annual reporting period, with early adoption permitted with simultaneous adoption of all provisions of the new standard.

The Company is currently evaluating the impact of adopting this guidance.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

Under the new amendment, the Company is required to perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The guidance is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within that annual period, with early adoption permitted.

The Company early adopted this guidance prospectively on January 1, 2021, and it did not have any impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation costs Incurred in a Cloud Computing Arrangement that is a Service Contract , that requires implementation costs incurred by customers in cloud

computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement under the internal-use software guidance in ASC Topic 350, Intangibles—Goodwill and Other .

This guidance is effective for the Company for fiscal years beginning after December 15, 2020, including interim periods within that annual reporting period, with early adoption permitted.

The Company early adopted this guidance prospectively on January 1, 2020, and it did not have a material impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

This temporary guidance provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

ASU 2020-04 is effective as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 and may be applied prospectively through December 31, 2022.

The Company adopted this guidance prospectively on January 1, 2021, and it did not have any impact on the Company’s consolidated financial statements.

NOTE 3— BUSINESS COMBINATION

Business Combination

On June 21, 2021 (the “Closing Date”), Acies Acquisition Corp., a Cayman Islands exempted company (prior to the Closing Date, “Acies”), consummated the previously announced business combination (“Business Combination”) with PlayStudios, Inc., a Delaware corporation (“Old PLAYSTUDIOS”) pursuant to the Agreement and Plan of Merger, dated as of February 1, 2021 (the “Merger Agreement”), by and among Acies, Catalyst Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of Acies (“First Merger Sub”), Catalyst Merger Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Acies (“Second Merger Sub”), and Old PLAYSTUDIOS.

In connection with the closing of the Business Combination, Acies filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation (the “Certificate of Incorporation”) and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which Acies was domesticated and continues as a Delaware corporation, changing its name to PLAYSTUDIOS, Inc.

(the “Domestication”).

The Company adopted this guidance prospectively on January 1, 2022 and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

NOTE 3— BUSINESS COMBINATIONS

WonderBlocks Acquisition

On August 2, 2022, playBLOCKS, Inc., a newly formed wholly-owned subsidiary of the Company ("playBLOCKS") entered into an agreement with WonderBlocks Labs, Inc.

(“WonderBlocks"), which provides tools for the development of a play-to-earn loyalty platform for digital entertainment on the Ethereum blockchain, pursuant to which playBLOCKS acquired substantially all of the assets of WonderBlocks.

playBLOCKS paid WonderBlocks $ 2.0 million less Indebtedness (borrowed money and accrued interest, including debt to the Company) at closing and agreed to pay between zero and $ 3 million subject to the satisfaction of certain product and financial milestones.

We believe this acquisition will allow us to enhance our playAWARDS model with new Web3 features and capabilities.

The Company recorded the excess of the fair value of the consideration transferred in the acquisition over the fair value of net assets acquired as goodwill.

The goodwill reflects our expectations of favorable future growth opportunities and anticipated synergies through the scale of our operations.

The Company expects that none of the goodwill will be deductible for federal income tax purposes.

The following table summarizes the consideration paid for WonderBlocks and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

Consideration:

Cash consideration $ 945

Note receivable plus accrued interest conversion 1,055

Contingent consideration 1,564

Total consideration transferred $ 3,564

Identifiable assets acquired and liabilities assumed:

Developed technology (weighted-average useful life of 5 years)

Liabilities assumed $ ( 15 )

Total identifiable net assets $ 2,388

Goodwill $ 1,176

Brainium Studios Acquisition

On October 7, 2022, PLAYSTUDIOS US, LLC, a direct wholly-owned subsidiary of the Company entered into a membership interest purchase agreement with Brainium Studios LLC (“Brainium"), a mobile game publisher, Farhad Shakiba, and Jake Brownson (together, the "Seller Members"), and Farhad Shakiba as the Sellers' Representative, pursuant to which PLAYSTUDIOS US, LLC acquired all of the issued and outstanding membership interests in Brainium from the Seller Members.

The closing of the acquisition occurred on October 12, 2022, and Brainium became an indirect wholly-owned subsidiary of the Company.

The purchase price for the membership interests was $ 70.0 million at closing, as adjusted for cash, indebtedness, and working capital, and between zero and $ 27.3 million following the closing subject to the satisfaction of certain financial milestones for the fiscal year ended December 31, 2022.

The Company recorded the excess of the fair value of the consideration transferred in the acquisition over the fair value of net assets acquired as goodwill.

The goodwill reflects our expectations of favorable future growth opportunities and anticipated synergies through the scale of our operations.

The Company expects that substantially all of the goodwill will be

deductible for federal income tax purposes.

The following table summarizes the consideration paid for Brainium and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

Consideration:

Cash consideration $ 73,457

Contingent consideration 1,797

Total consideration transferred $ 75,254

Identifiable assets acquired and liabilities assumed:

Cash and cash equivalents $ 3,738

Accounts receivable 3,190

Property and equipment 4,042

Operating lease assets 4,195

Trade names (weighted-average useful life of 10 years)

Developed technology (weighted-average useful life of 5 years)

Customer relationships (weighted-average useful life of 5 years)

Other assets 740

Liabilities assumed ( 7,649 )

Total identifiable net assets $ 34,356

Goodwill $ 40,898

As of December 31, 2022, the fair value of the contingent consideration was zero .

Merger with Acies Acquisition Corp.

On June 21, 2021 (the “Closing Date”), Acies Acquisition Corp., a Cayman Islands exempted company (prior to the Closing Date, “Acies”), consummated the previously announced business combination (“Acies Merger”) with PlayStudios, Inc., a Delaware corporation (“Old PLAYSTUDIOS”) pursuant to the Agreement and Plan of Merger, dated as of February 1, 2021 (the “Merger Agreement”), by and among Acies, Catalyst Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of Acies (“First Merger Sub”), Catalyst Merger Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Acies (“Second Merger Sub”), and Old PLAYSTUDIOS.

In connection with the closing of the Acies Merger, Acies filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation (the “Certificate of Incorporation”) and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which Acies was domesticated and continues as a Delaware corporation, changing its name to PLAYSTUDIOS, Inc.

As a consequence of filing the Certificate of Incorporation, the Company adopted a dual class structure, comprised of the Company’s Class A common stock, which is entitled to one vote per share, and the Company’s Class B common stock, which is entitled to 20 votes per share.

See Note 17— Stockholders' Equity for further discussion on the dual class structure.

As a result of and upon the effective time of the Domestication, among other things, (1) each of the then-issued and outstanding Class A ordinary shares, par value $ 0.0001 per share, of Acies (the “Acies Class A ordinary shares”), automatically converted, on a one -for-one basis, into a share of the Class A common stock, par value $ 0.0001 per share, of the Company (the “Class A common stock”);

(2) each then-issued and outstanding redeemable warrant of Acies automatically converted into a redeemable warrant (the "Warrants") to acquire one share of Class A common stock;

and (3) each of the then-issued and outstanding units of Acies that had not been previously separated into the underlying Acies Class A ordinary shares and underlying Acies warrants upon the request of the holder thereof were cancelled and entitled the holder thereof to one share of Class A common stock and one-third of one Warrant.

Any fractional Warrants for any holder of units were rounded down and canceled for no consideration.

Following the Domestication, the following transactions (the “Transactions”) occurred:

• First Merger Sub merged with and into Old PLAYSTUDIOS, with Old PLAYSTUDIOS surviving as a wholly owned subsidiary of Acies (the “First Merger”);

• immediately following the First Merger, and as part of an integrated transaction with the First Merger, Old PLAYSTUDIOS merged with and into Second Merger Sub, with Second Merger Sub surviving as a wholly owned subsidiary of Acies (the “Second Merger” and, together with the First Merger, the “Mergers”);

• as a result of the Mergers, among other things, each outstanding share of common stock of Old PLAYSTUDIOS (“PlayStudios Common Stock”) and each outstanding share of preferred stock of Old PLAYSTUDIOS (“PlayStudios Preferred Stock”) and, together with the "PlayStudios Common Stock," the "Old PLAYSTUDIOS

Stock" as of the effective time of the First Merger (the “Effective Time”) were cancelled in exchange for the following:

◦ if the holder of such share made an election to receive cash, $ 2.33 in cash per share of Old PLAYSTUDIOS Stock subject to such cash election, provided that no holder could elect to receive cash for more than 15 % of such holder's shares of Old PLAYSTUDIOS Stock;

◦ if the holder of such share did not make a cash election, the capital stock held by the holder was automatically canceled and converted into the right to receive 0.233 shares of the Company's common stock (the "Exchange Ratio"), rounded down to the nearest whole number of shares;

• as a result of the Mergers, each outstanding share of PlayStudios Common Stock and PlayStudios Preferred Stock issued and outstanding immediately prior to the Effective Time as well as any outstanding unexercised vested options to purchase shares of PlayStudios Common Stock received the contingent right to receive the applicable Earnout Pro Rata Portion (as defined in the Merger Agreement) of an aggregate of 15.0 million additional shares of Class A common stock (the “Earnout Shares”), which right shall be contingent upon the closing price of the Class A common stock exceeding $ 12.50 and $ 15.00 per share, respectively, for any 20 trading days within any 30 -trading day period commencing on or after November 18, 2021 and ending no later than June 21, 2026 (the Earnout Shares will also vest based on the price targets in connection with a sale of the Company) (each of the foregoing vesting events, an “Earnout Triggering Event”);

• as a result of the Mergers, each outstanding and unexercised option to purchase PlayStudios Common Stock, whether or not vested or exercisable, converted into an option to purchase a share of Class A common stock, except for any such option that was held by any member of the Founder Group, which converted into an option to purchase a share of Class B common stock, in each case with the same terms except for the number of shares exercisable thereunder and the exercise price, each of which were adjusted using the Exchange Ratio.

In connection with the Business Combination, Acies entered into subscription agreements with certain investors ("PIPE Investors"), whereby it issued 25.0 million shares of Class A common stock at $ 10.00 per share (the "PIPE Shares") for an aggregate purchase price of $ 250.0 million (the "PIPE Financing"), which closed simultaneously with the consummation of the Business Combination.

In connection with the Acies Merger, Acies entered into subscription agreements with certain investors ("PIPE Investors"), whereby it issued 25.0 million shares of Class A common stock at $ 10.00 per share (the "PIPE Shares") for an aggregate purchase price of $ 250.0 million (the "PIPE Financing"), which closed simultaneously with the consummation of the Acies Merger.

$ 20.0 million of the PIPE Financing was used to terminate the profit share provision of an agreement with MGM Resorts International, one of the PIPE Investors.

The following table summarizes the total number of shares of common stock outstanding immediately following the Closing:

Acies public stockholders (1)

Sponsor (1)(2)

PLAYSTUDIOS stockholders (excluding the Founder Group) (3)

Founder Group (3)

PIPE Investors 25,000

Common Stock 125,753

Class A common stock 109,623

Class B common stock 16,130

(1) Excludes the shares of Class A common stock underlying the Warrants.

Reflects the redemption of 11.3 million Acies Class A ordinary shares.

(2) Includes 0.9 million shares of Class A common stock, held by Acies Acquisition, LLC (the "Sponsor") that are subject to forfeiture if certain earnout conditions are not satisfied, as the shares are issued and outstanding as of the Closing of the Business Combination.

The 0.9 million shares do not have voting rights until the Earnout Triggering Events have occurred.

(3) Excludes the shares of Class A and Class B common stock underlying stock options and the Earnout Shares, as they do not represent legally outstanding shares of common stock at Closing.

In connection with the Business Combination, the Company incurred direct and incremental costs of $ 32.8 million related to the equity issuance, consisting primarily of investment banking and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds.

The Company incurred approximately $ 1.4 million of expenses primarily related to advisory, legal, and accounting fees in conjunction with the Business Combination.

Of this, $ 0.1 million and $ 1.3 million was recorded in general and administrative expenses on the consolidated statements of operations for the years ended December 31, 2021 and December 31, 2020, respectively.

The aggregate consideration for the Business Combination was approximately $ 1,041.0 million, payable in the form of the Company's Class A and Class B common stock and cash.

In connection with the Acies Merger, the Company incurred direct and incremental costs of $ 32.8 million related to the equity issuance, consisting primarily of investment banking and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds.

The Company incurred approximately $ 1.4 million of expenses primarily related to advisory, legal, and accounting fees in conjunction with the Acies Merger.

Of this, $ 0.1 million and $ 1.3 million was recorded in general and administrative

expenses on the Consolidated Statements of Operations for the years ended December 31, 2021 and December 31, 2020, respectively.

The aggregate consideration for the Acies Merger was approximately $ 1,041.0 million, payable in the form of the Company's Class A and Class B common stock and cash.

The following table summarizes the merger consideration (in thousands, except per share information):

9 unchanged sentences

Aggregate consideration $ 1,041,000

(1) Excludes shares of common stock underlying stock options that are vested but unexercised as of the closing date of the Business Combination.

As the shares do not represent legally outstanding shares of common stock at closing, they are excluded from the total consideration amount.

The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows for the year ended December 31, 2021:

(1) Excludes shares of common stock underlying stock options that are vested but unexercised as of the closing date of the Acies Merger.

Since the shares do not represent legally outstanding shares of common stock at closing, they are excluded from the total consideration amount.

The following table reconciles the elements of the Acies Merger to the Consolidated Statements of Cash Flows for the year ended December 31, 2021:

Cash - Acies Trust and cash (net of redemptions) $ 101,965

2 unchanged sentences

Transaction costs, net of proceeds received from exercises of Old PLAYSTUDIOS' warrants ( 44,775 )

Net Business Combination and PIPE Financing $ 185,170

Reverse Recapitalization

The Business Combination was accounted for as a reverse recapitalization and Acies was treated as the “acquired” company for accounting purposes.

The Business Combination was accounted as the equivalent of Old PLAYSTUDIOS issuing stock for the net assets of Acies, accompanied by a recapitalization.

Net Acies Merger and PIPE Financing

The Acies Merger was accounted for as a reverse recapitalization and Acies was treated as the “acquired” company for accounting purposes.

The Acies Merger was accounted as the equivalent of Old PLAYSTUDIOS issuing stock for the net assets of Acies, accompanied by a recapitalization.

Accordingly, all historical financial information presented in these consolidated financial statements represents the accounts of Old PLAYSTUDIOS “as if” Old PLAYSTUDIOS is the predecessor to the Company.

The common stock and net income per share, prior to the Business Combination, have been adjusted to share amounts reflecting the Exchange Ratio.

The common stock and net income per share, prior to the Acies Merger, have been adjusted to share amounts reflecting the recapitalization exchange ratio of approximately 0.233 for Old PLAYSTUDIOS common stock.

NOTE 4— RELATED-PARTY TRANSACTIONS

3 unchanged sentences

Marketing Agreement $ 1,000 $ 1,000 Intangibles, net

Marketing Agreement $ — $ 20,000 Accrued liabilities

The Company did no t have any revenues recognized from related parties during the years ended December 31, 2022, 2021, and 2020.

In connection with the Business Combination and in accordance with the Merger Agreement, during the year ended December 31, 2021, the Company paid $ 2.5 million to myCause Charitable Foundation ("myCause"), a 501(c)(3) foundation established and administered by certain members of management of the Company.

In connection with the Acies Merger and in accordance with the Merger Agreement, during the year ended December 31, 2021, the Company paid $ 2.5 million to PLAYSTUDIOS Impact Fund, formerly myCause Charitable Foundation ("myCause"), a 501(c)(3) foundation established and administered by certain members of management of the Company.

The Company’s remaining expenses recognized from related parties were immaterial during the years ended December 31, 2022, 2021, and 2020.

1 unchanged sentence

MGM is a stockholder and MGM's Chief Commercial Officer also serves on the Company’s Board of Directors.

MGM owned approximately 16.6 million and 14.6 million shares of the Company's outstanding Class A common stock as of December 31, 2021 and December 31, 2020, respectively.

MGM owned approximately 16.6 million shares of the Company's outstanding Class A common stock as of each of December 31, 2022 and December 31, 2021.

Marketing Agreement

11 unchanged sentences

As a result of the termination, the Company is no longer obligated to make profit share payments, but the other rights and obligations under the Marketing Agreement continue in full force and effect.

The Company recorded zero , $ 0.3 million, and zero as profit share expense during the years ended December 31, 2021, 2020, and 2019, respectively.

On June 21, 2021, the Company consummated the previously announced Business Combination and MGM participated in the PIPE Financing.

The Company recorded zero , zero , and $ 0.3 million as profit share expense during the years ended December 31, 2022, 2021, and 2020, respectively.

On June 21, 2021, the Company consummated the Acies Merger and MGM participated in the PIPE Financing.

In connection with the PIPE Financing, the Company recorded an equity contribution from MGM as a settlement of the $ 20.0 million liability.

10 unchanged sentences

Concentration of Credit Risk

As of December 31, 2021, Apple, Inc.

and Google, Inc.

accounted for 43.0 % and 34.6 % of the Company’s total receivables, respectively, while as of December 31, 2020, Apple, Inc.

and Google, Inc.

accounted for 49.0 % and 43.0 % of the Company’s total receivables, respectively.

As of December 31, 2022, Apple and Google accounted for 33.6 % and 27.2 % of the Company’s total receivables, respectively, while as of December 31, 2021, Apple and Google accounted for 43.0 % and 34.6 % of the Company’s total receivables, respectively.

As of December 31, 2022 and December 31, 2021, the Company did not have any additional counterparties that exceeded 10% of the Company’s net accounts receivable.

During the year ended December 31, 2021, the Company entered into agreements pursuant to which the Company acquired the rights to develop and operate Tetris®-branded mobile games.

As contemplated in the agreements, the Company agreed to a $ 8.0 million Advance Payment (as defined in Note 15— Commitments and Contingencies ).

If the Company and the c ounterparty fail to perform according to the terms of the agreements, the maximum amount of loss which the Company may incur is approximately $ 9.7 million, of which $ 8.0 million related to the Advance Payment is reported within the Other long-term assets line item on the Consolidated Balance Sheets.

As contemplated in the agreements, the Company

agreed to a $ 8.0 million Advance Payment (as defined in Note 16— Commitments and Contingencies ).

If the Company and the c ounterparty fail to perform according to the terms of the agreements, the maximum amount of loss which the Company may incur is approximately $ 9.9 million, of which $ 8.0 million related to the Advance Payment is reported within the "Other current assets" line item on the Consolidated Balance Sheets.

NOTE 6— FAIR VALUE MEASUREMENT

The carrying values of the Company’s cash and cash equivalents, trade receivables, and accounts payable approximate fair value due to their short maturities.

The following tables present the financial assets not measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020:

December 31, 2021

Carrying Value Estimated Fair Value Fair Value Hierarchy Financial Statement Line Item

Financial assets:

Notes receivable - current $ 8 $ 8 Level 3 Receivables

Notes receivable - non-current 3,391 3,391 Level 3 Other long-term assets

Advance payment - non-current 8,000 8,000 Level 3 Other long-term assets

Total financial assets $ 11,399 $ 11,399

The following tables present the liabilities measured at fair value on a recurring basis, by input level, in the Consolidated Balance Sheet at December 31, 2022 and December 31, 2021:

December 31, 2022

Carrying Value Estimated Fair Value Fair Value Hierarchy Financial Statement Line Item

Financial assets:

Notes receivable - non-current $ 815 $ 815 Level 3 Other long-term assets

Total financial assets $ 815 $ 815

The notes receivable are fixed-rate investments, are not traded and do not have observable market inputs, therefore, the fair value is estimated to be equal to the carrying value.

The advance payment is a not traded asset and does not have observable market inputs, therefore, the fair value is estimated to be equal to the carrying value.

The following table presents the liabilities measured at fair value on a recurring basis, by input level, in the Consolidated Balance Sheet at December 31, 2021:

Level 1 Level 2 Level 3 Total

Financial liabilities:

Public Warrants $ 2,153 — — $ 2,153

Private Warrants — 1,529 — 1,529

Total financial liabilities $ 2,153 $ 1,529 $ — $ 3,682

December 31, 2021

4 unchanged sentences

Total financial liabilities $ 4,255 $ 2,266 $ — $ 6,521

The Company did not have any liabilities similar to those above requiring fair value measurement at December 31, 2020.

The change in fair value of contingent consideration payable was valued using significant unobservable inputs (Level 3).

The change was included in "Other income (expense), net" in the Consolidated Statements of Operations and consisted of the following:

Balance as of December 31, 2021

Recorded in connection with business combinations 3,361

Fair value adjustments based upon post-acquisition performance ( 2,411 )

Balance as of December 31, 2022

NOTE 7— PROPERTY AND EQUIPMENT, NET

1 unchanged sentence

2022 December 31,

Land and land improvements $ 1,382 $ —

Building and building improvements 3,705 —

Computer equipment 9,423 8,819

Leasehold improvements 10,204 6,310

Purchased software 4,471 542

Furniture and fixtures 3,553 2,125

19 unchanged sentences

Total internal-use software, net $ 36,118 $ 43,267

The aggregate amortization expense for internal-use software, net is reflected in "Depreciation and amortization" in the Consolidated Statements of Operations.

The aggregate amortization expenses for internal-use software, net is reflected in "Depreciation and amortization" in the Consolidated Statements of Operations.

During the years ended December 31, 2022, 2021, and 2020, the Company capitalized internal-use software development costs of $ 23.9 million, $ 28.3 million, and $ 25.8 million, respectively.

Total amortization expense associated with its capitalized internal-use software development costs for the years ended December 31, 2021, 2020, and 2019 was $ 23.7 million, $ 18.7 million, and $ 21.1 million, respectively.

Total amortization expenses associated with its capitalized internal-use software development costs for the years ended December 31, 2022, 2021, and 2020 was $ 22.7 million, $ 23.7 million, and $ 18.7 million, respectively.

The Company recorded an $ 8.4 million non-cash impairment charge within "Restructuring and related" in the Consolidated Statement of Operations during the year ended December 31, 2022 related to the suspension of further development of Kingdom Boss, resulting in a change in the useful life of the assets associated with the game.

There were no write-offs or impairment charges recorded for the years ended December 31, 2021 and 2020.

Subsequent to December 31, 2021, the Company adopted a plan to suspend the further development of Kingdom Boss during the first quarter of 2022, resulting in a change in the useful life of the assets associated with Kingdom Boss .

The Company expects to record a non-cash impairment charge during the first quarter of 2022.

As of December 31, 2021, the gross carrying amount of internal-use software associated with Kingdom Boss was $ 8.7 million and the total accumulated amortization was $ 0.1 million.

NOTE 9— GOODWILL AND INTANGIBLE ASSETS

The Company had $ 5.1 million in goodwill as of December 31, 2021 and December 31, 2020.

Other than the Business Combination and reverse recapitalization described in Note 3— Business Combination , there were no business combinations during the years ended December 31, 2021 and 2020.

There were no indicators of impairment as of December 31, 2021 and December 31, 2020.

The following table provides the changes in the carrying amount of goodwill for the years ended December 31, 2022 and December 31, 2021:

Goodwill, Gross Accumulated Impairment Goodwill, Net

Balance as of December 31, 2020

$ 5,059 $ — $ 5,059

Additions from acquisitions — — —

Measurement period adjustments — — —

Balance as of December 31, 2021

5,059 — 5,059

Additions from acquisitions 42,074 — 42,074

Measurement period adjustments — — —

Balance as of December 31, 2022 $ 47,133 $ — $ 47,133

Intangible Assets

7 unchanged sentences

Licenses $ 21,040 $ ( 7,962 ) $ 13,078 $ 19,000 $ ( 1,245 ) $ 17,755

Acquired technology 15,003 ( 830 ) 14,173 — — —

Customer relationships 12,000 ( 600 ) 11,400 — — —

Trade names 2,740 ( 1,278 ) 1,462 1,240 ( 1,240 ) —

3 unchanged sentences

Total intangible assets $ 51,783 $ ( 10,670 ) $ 41,113 $ 21,240 $ ( 2,485 ) $ 18,755

Intangible assets consist of trade names and long-term license agreements with various third parties.

Intangible assets consist of trade names, long-term license agreements with various third parties, acquired technology, and customer relationships.

The Company entered into agreements with N3TWORK Inc.

3 unchanged sentences

In addition, the Company will pay royalties to The Tetris Company, LLC, the licensor of the rights.

The aggregate amortization expense for amortizable intangible assets is reflected in “Depreciation and amortization” in the Consolidated Statements of Operations.

During the years ended December 31, 2021, 2020, and 2019, amortization was $ 0.9 million, $ 0.7 million, and $ 1.4 million, respectively.

The aggregate amortization expenses for amortizable intangible assets are reflected in “Depreciation and amortization” in the Consolidated Statements of Operations.

During the years ended December 31, 2022, 2021, and 2020, amortization expenses were $ 8.2 million, $ 0.9 million, and $ 0.7 million, respectively.

There were no impairment charges for intangible assets for the years ended December 31, 2022, 2021, and 2020.

As of December 31, 2021, the estimated annual amortization expense for the years ended December 31, 2021 through 2025 is as follows:

As of December 31, 2022, the estimated annual amortization expenses for the years ending December 31, 2022 through 2027 is as follows:

Year Ending December 31, Projected Amortization

2023 $ 13,137

Thereafter 712

Total $ 40,113

1 unchanged sentence

Public Warrants and Private Warrants

Upon the closing of the Business Combination, there were approximately 7.2 million publicly-traded redeemable warrants to purchase shares of Class A common stock (the "Public Warrants") and 3.8 million redeemable warrants to purchase shares of Class A common stock initially issued to the Sponsor in a private placement (the "Private Warrants") by Acies.

Upon the closing of the Acies Merger, there were approximately 7.2 million publicly-traded redeemable warrants to purchase shares of Class A common stock (the "Public Warrants") and 3.8 million redeemable warrants to purchase shares of Class A common stock initially issued to the Sponsor in a private placement (the "Private Warrants") by Acies.

Each whole Public Warrant entitles the registered holder to purchase one whole share of the Company’s Class A common stock at a price of $ 11.50 in cash per share, subject to adjustment as discussed below, as of October 27, 2021.

Pursuant to the Warrant Agreement, a holder of Public Warrants may exercise the Public Warrants only for a whole number of shares of Class A common stock.

The Public Warrants will expire 5 years after the completion of the Business Combination, or earlier upon redemption or liquidation.

The Private Warrants are identical to the Public Warrants, except that the Private Warrants and the shares of Class A common stock issuable upon exercise of the Private Warrants were not transferable until after the completion of the Business Combination, subject to certain limited exceptions.

The Public Warrants will expire 5 years after the completion of the Acies Merger, or earlier upon redemption or liquidation.

The Private Warrants are identical to the Public Warrants, except that the Private Warrants and the shares of Class A common stock issuable upon exercise of the Private Warrants were not transferable until after the completion of the Acies Merger, subject to certain limited exceptions.

Additionally, the Private Warrants are non-redeemable so long as they are held by the initial holder or any of its permitted transferees.

1 unchanged sentence

The Private Warrants may be exercised on a cashless basis so long as held by the Sponsor or certain permitted transferees.

The Company may redeem the outstanding Public Warrants in whole, but not in part, at a price of $ 0.01 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s common stock equals or exceeds $ 18.00 per share for any 20 -trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the holders of the Public Warrants.

The Company may redeem the outstanding Public Warrants in whole, but not in part, at a price of $ 0.01 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Class A common stock equals or exceeds $ 18.00 per share for any 20 -trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the holders of the Public Warrants.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis.

In no event will the Company be required to net cash settle the exercise of Public Warrants.

On April 1, 2022, the Company commenced (i) an offer to each holder of its outstanding Public Warrants and Private Warrants (collectively, the “Warrants”) the opportunity to receive $ 1.00 in cash, without interest, for each outstanding Warrant tendered by the holder pursuant to the offer (the “Offer to Purchase”), and (ii) the solicitation of consents (the “Consent Solicitation”) from holders of the outstanding Warrants to amend the Warrant Agreement, dated as of October 22, 2020, by and between the Company (formerly Acies Acquisition Corp.) and Continental Stock Transfer & Trust Company, which governs all of the Warrants (the “Warrant Amendment”) (collectively the "Tender Offer").

The Tender Offer expired midnight, Eastern Time, at the end of the day on May 13, 2022 (the “Expiration Date”), in accordance with its terms.

Broadridge Corporate Issuer Solutions, Inc., the depositary for the Tender Offer, indicated that as of the Expiration Date, (i) 1,792,463 outstanding Public Warrants, or approximately 25 % of the outstanding Public Warrants were validly tendered in and not withdrawn from the Offer to Purchase, and (ii) none of the outstanding Private Warrants were validly tendered in and not withdrawn from the Offer to Purchase.

The Warrant Amendment was not approved.

The Company paid $ 1.8 million for all Public Warrants tendered by the holders pursuant to the Offer to Purchase and $ 1.1 million of fees, expenses, and other related amounts incurred in connection with the Tender Offer.

At December 31, 2022, there were approximately 5.4 million Public Warrants and 3.8 million Private Warrants outstanding.

3 unchanged sentences

2022 December 31,

MGM profit share buyout $ — $ 20,000

Accrued payroll and vacation 9,666 5,696

Accrued user acquisition 4,183 1,700

Income taxes payable 702 1,201

Accrued royalties 1,484 —

Minimum guarantee liability 1,500 5,200

1 unchanged sentence

Total accrued liabilities $ 21,473 $ 15,599

MGM Profit Share Buyout

As further described in Note 4— Related-Party Transactions to these consolidated financial statements, in October 2020, the Company and MGM agreed to amend the Marketing Agreement to terminate the profit share provision.

In exchange, the Company agreed to remit to MGM a one-time payment of $ 20.0 million, payable on the earliest to occur of (i) the PIPE Financing, (ii) the date that the Company waives MGM’s commitment to participate in the PIPE Financing, or (iii) two years from the date of the MGM Amendment.

At the Closing of the Business Combination, the Company satisfied all obligations related to the MGM profit share buyout.

NOTE 12— LEASES

On January 1, 2022, the Company adopted the guidance set forth in ASU No.

2016-02, Leases (Topic 842) using the optional transition method provided by the guidance set forth in ASU No.

2018-11, Leases (Topic 842).

Our operating leases primarily consist of real estate leases such as offices.

Our leases have remaining terms of approximately one year to six years .

During the year ended December 31, 2022, operating lease expense was $ 4.2 million.

We do not have any finance leases.

Our total variable and short-term lease payments were immaterial for all periods presented.

Supplemental balance sheet information related to operating leases are as follows:

December 31, 2022

Operating lease right-of-use assets, net $ 15,562

Operating lease liabilities, current 4,571

Operating lease liabilities, noncurrent 11,660

Operating lease liabilities, total $ 16,231

Weighted average remaining lease term, years 4.0

Weighted average discount rate 3.3 %

Operating lease liability maturities:

Year ending December 31, Operating Leases

Thereafter 382

Total undiscounted cash flows $ 17,442

imputed interest $ ( 1,211 )

Lease liabilities, total $ 16,231

As of December 31, 2022, we did not have material additional operating leases that have not yet commenced.

NOTE 13— LONG-TERM DEBT

Credit Agreement

On June 24, 2021, in connection with the closing of the Acies Merger, the Company terminated and replaced the Revolver (as defined below).

The Company, a subsidiary of the Company, JPMorgan Chase Bank, N.A., as administrative

agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers entered into a credit agreement (the “Credit Agreement”) which provides for a five-year revolving credit facility in an aggregate principal amount of $ 75.0 million.

Borrowings under the Credit Agreement may be borrowed, repaid and re-borrowed by the Company, and are available for working capital, general corporate purposes, and permitted acquisitions.

Commitment fees and interest rates are determined on the basis of either a Eurodollar rate or an Alternate Base Rate plus an applicable margin.

The applicable margins are initially 2.50 %, in the case of Eurodollar loans, and 1.50 %, in the case of Alternate Base Rate loans.

The applicable margin is subject to adjustment based upon the Company's Total Net Leverage Ratio (as defined in the Credit Agreement).

Eurodollar rates and the Alternate Base Rate are subject to floors of 0.00 % and 1.00 %, respectively.

The Credit Agreement contains various affirmative and negative financial and operational covenants applicable to the Company and its subsidiaries.

The Credit Agreement includes customary reporting requirements, conditions precedent to borrowing and affirmative, negative and financial covenants.

Specific financial covenants include the following, commencing with the quarter ended September 30, 2021:

• Total Net Leverage Ratio of 3.50 :1.00 (subject to increase to 4.00 :1.00 following consummation of certain material acquisitions)

• Fixed Charge Coverage Ratio of not less than 1.25 :1.00.

On May 13, 2022, the Company entered into the Amendment No.

1 to the Credit Agreement, which amended the Credit Agreement to, among other things, exclude from the definition of Fixed Charge Coverage Ratio certain funds, up to $ 15.0 million, expended or to be expended by the Company in connection with the Tender Offer.

On August 9, 2022, the Company entered into the Amendment No.

2 to the Credit Agreement, which further amended the Credit Agreement (as amended by Amendment No.

1 to the Credit Agreement) to, among other things, (i) increase the total current available line of credit from $ 75.0 million to $ 81.0 million, (ii) change the basis for calculation of interest under the facility from LIBOR to SOFR, and (iii) exclude from the calculation of the Fixed Charge Coverage Ratio (A) up to $ 6.0 million for the acquisition of, and improvements to, the real property located at 10150 Covington Cross Drive, Las Vegas, Nevada 89144 incurred on or prior to the first anniversary of the effective date of Amendment No.

2 to the Credit Agreement, and (B) up to $ 20.0 million for the redemption or repurchase of up to $ 11.0 million warrants to purchase shares of Class A common stock of the Company, and shares of Class A common stock of the Company, on or before December 31, 2023, of which as of the date of Amendment No.

2 to the Credit Agreement the Company had used $ 1.8 million to redeem outstanding warrants to purchase Class A common stock in connection with the Tender Offer.

The Company capitalized a total of $ 0.7 million in debt issuance costs related to the Credit Agreement and subsequent amendments.

As of December 31, 2022, the Company does not have any balances outstanding under the Credit Agreement.

NOTE 14— REVENUE FROM CONTRACTS WITH CUSTOMERS

17 unchanged sentences

Contract assets represent the Company’s ability to bill customers for performance obligations completed under a contract.

As of December 31, 2021 and December 31, 2020, there were no contract assets recorded in the Company’s consolidated balance sheet.

As of December 31, 2022 and December 31, 2021, there were no contract assets recorded in the Company’s consolidated balance sheets.

The deferred revenue balance related to the purchase of virtual currency was immaterial as of December 31, 2022 and December 31, 2021.

The opening and closing balance of trade receivables is further described in Note 5— Receivables .

NOTE 13— LONG-TERM DEBT

Credit Agreement

On June 24, 2021, in connection with the Closing, the Company terminated and replaced the Revolver (as defined below).

The Company, a subsidiary of the Company, JPMorgan Chase Bank, N.A., as administrative agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers entered into a credit agreement (the “Credit Agreement”) which provides for a five-year revolving credit facility in an aggregate principal amount of $ 75.0 million.