Group 1 - The SPDR Dow Jones Industrial Average ETF Trust (DIA) has 10.1% of its weighted underlying holdings experiencing insider buying in the past six months [1] - Caterpillar Inc. (CAT) constitutes 5.66% of the DIA, with a total holding value of $2,241,591,988, making it the third largest holding in the ETF [2] - Recent insider buying at Caterpillar includes purchases by two directors, with David Maclennan buying 375 shares at $320.70 each and Gerald Johnson buying 100 shares at $318.48 each [2]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents GAN Limited's unaudited condensed consolidated financial statements and detailed notes for Q1 2025 and Q4 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change (k) | % Change | | :-------------------------------- | :------------- | :---------------- | :--------- | :------- | | Total assets | $75,156 | $77,146 | $(1,990) | -2.6% | | Total liabilities | $91,632 | $88,287 | $3,345 | 3.8% | | Total shareholders' deficit | $(16,476) | $(11,141) | $(5,335) | 47.9% | | Cash and cash equivalents | $39,942 | $38,742 | $1,200 | 3.1% | | Accounts receivable, net | $4,134 | $7,043 | $(2,909) | -41.3% | | Long-term debt | $48,092 | $46,875 | $1,217 | 2.6% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (k) | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :------- | | Revenue | $29,366 | $30,651 | $(1,285) | -4.2% | | Operating costs and expenses | $34,417 | $33,954 | $463 | 1.4% | | Operating loss | $(5,051) | $(3,303) | $(1,748) | 52.9% | | Net loss | $(6,828) | $(4,160) | $(2,668) | 64.1% | | Loss per share, basic and diluted | $(0.15) | $(0.09) | $(0.06) | 66.7% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (k) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net loss | $(6,828) | $(4,160) | $(2,668) | | Foreign currency translation adjustments | $1,050 | $(767) | $1,817 | | Comprehensive loss | $(5,778) | $(4,927) | $(851) | [Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20for%20the%20three%20months%20ended%20March%2031,%202025%20and%202024) Changes in Shareholders' Equity (Deficit) (in thousands) | Metric | Balance at Jan 1, 2025 | Net Loss | Foreign Currency Translation | Share-based Compensation | Balance at Mar 31, 2025 | | :-------------------------------- | :--------------------- | :------- | :--------------------------- | :----------------------- | :---------------------- | | Total Shareholders' (Deficit) Equity | $(11,141) | $(6,828) | $1,050 | $792 | $(16,476) | - Ordinary shares outstanding increased from **45,701,556** at January 1, 2025, to **46,153,365** at March 31, 2025[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (k) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net cash provided by (used in) operating activities | $1,214 | $(280) | $1,494 | | Net cash used in investing activities | $(826) | $(727) | $(99) | | Net cash provided by financing activities | $0 | $3 | $(3) | | Effect of foreign exchange rates on cash | $812 | $(982) | $1,794 | | Net increase (decrease) in cash and cash equivalents | $1,200 | $(1,986) | $3,186 | | Cash and cash equivalents, end of period | $39,942 | $36,592 | $3,350 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - GAN Limited operates as a B2B supplier of gaming systems (GameSTACK™, GAN Sports) and a B2C developer/operator of an online sports betting and casino platform (Coolbet brand) in Northern Europe, Latin America, and Canada[24](index=24&type=chunk) - The company entered into a Merger Agreement with SEGA SAMMY CREATION INC. on **November 7, 2023**, with the merger expected to close in **Q2 2025**, converting each ordinary share into **$1.97 cash**[25](index=25&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk) - Substantial doubt exists about the company's ability to continue as a going concern beyond **April 14, 2026**, if the merger does not close, due to the maturity of the Amended Credit Facility[35](index=35&type=chunk) Revenue by Timing of Service Transfer (in thousands) | Revenue Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (k) | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :------- | | Services delivered at a point in time | $24,279 | $18,304 | $5,975 | 32.6% | | Services delivered over time | $5,087 | $12,347 | $(7,260) | -58.8% | | Total Revenue | $29,366 | $30,651 | $(1,285) | -4.2% | - One B2B customer accounted for **2.6%** of total revenue in Q1 2025, a significant decrease from **19.8%** in Q1 2024[124](index=124&type=chunk) - Chile operations contributed **27.5%** of total consolidated revenue in Q1 2025 (up from **21.0%** in Q1 2024), despite ongoing regulatory uncertainty regarding VAT and the legality of online gaming[142](index=142&type=chunk) - Ecuador imposed new tax obligations on sportsbook operations, leading to an accrued estimated tax liability of approximately **$0.8 million** as of July 1, 2024[143](index=143&type=chunk) - A Synthetic Equity Addendum with Station Casinos LLC, tied to a change of control, is currently valued at approximately **$0** due to the anticipated merger share price being below the **$2.00** threshold and unmet revenue conditions[144](index=144&type=chunk)[147](index=147&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operating results, segment performance, non-GAAP measures, liquidity, and going concern status [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - No material changes occurred in critical accounting policies and estimates during the **three months ended March 31, 2025**, compared to those disclosed in the **2024 Annual Report on Form 10-K**[150](index=150&type=chunk) [Forward-Looking Statements](index=36&type=section&id=Forward-Looking%20Statements) - Forward-looking statements are not guarantees of future performance, and actual results may differ significantly due to various factors, including those described in 'Item 1A. Risk Factors'[152](index=152&type=chunk) - The company does not assume any obligation to update forward-looking statements unless required by law[153](index=153&type=chunk) [Overview](index=36&type=section&id=Overview) - GAN Limited operates two reportable segments: B2B (SaaS solutions for iGaming and sports betting) and B2C (Coolbet online sports betting and casino platform)[154](index=154&type=chunk) Net Loss (in thousands) | Period | Net Loss | | :-------------------------------- | :------- | | Three Months Ended March 31, 2025 | $(6,828) | | Three Months Ended March 31, 2024 | $(4,160) | - The company expects to achieve **profitability** through organic growth, expansion into new regulated jurisdictions, margin expansion from Coolbet integration, workforce streamlining, and new content offerings[158](index=158&type=chunk) [Consolidated Results of Operations](index=38&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated Results of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (k) | % Change | | :-------------------------- | :------ | :------ | :--------- | :------- | | Revenue | $29,366 | $30,651 | $(1,285) | -4.2% | | Total operating costs and expenses | $34,417 | $33,954 | $463 | 1.4% | | Operating loss | $(5,051) | $(3,303) | $(1,748) | 52.9% | | Loss before income taxes | $(6,263) | $(4,409) | $(1,854) | 42.1% | | Net loss | $(6,828) | $(4,160) | $(2,668) | 64.1% | Consolidated Revenue by Geographic Region (in thousands) | Region | Q1 2025 | Q1 2024 | Change (k) | % Change | | :---------------- | :------ | :------ | :--------- | :------- | | United States | $4,735 | $9,092 | $(4,357) | -47.9% | | Europe | $15,466 | $11,604 | $3,862 | 33.3% | | Latin America | $8,414 | $6,896 | $1,518 | 22.0% | | Rest of the world | $751 | $3,059 | $(2,308) | -75.4% | | Total revenue | $29,366 | $30,651 | $(1,285) | -4.2% | [Revenue](index=39&type=section&id=Revenue) - Revenue decreased by **$1.3 million (4.2%)** to **$29.4 million** in Q1 2025, primarily due to the expiration of a U.S. multistate B2B commercial contract[162](index=162&type=chunk) - The decrease was partially offset by growth in the B2C segment, driven by increases in Latin America and Europe[162](index=162&type=chunk) [Cost of Revenue](index=39&type=section&id=Cost%20of%20Revenue) - Cost of revenue increased by **$1.4 million (14.9%)** to **$10.7 million** in Q1 2025, primarily due to increased gaming taxes in B2C operations in Latin America, driven by higher revenues[159](index=159&type=chunk)[163](index=163&type=chunk) [Sales and Marketing](index=39&type=section&id=Sales%20and%20Marketing) - Sales and marketing expense decreased by **$0.1 million (1.7%)** to **$5.9 million** in Q1 2025, mainly due to the deployment of an affiliate marketing strategy in Latin America, which reduced upfront customer acquisition costs[159](index=159&type=chunk)[164](index=164&type=chunk) [Product and Technology](index=39&type=section&id=Product%20and%20Technology) - Product and technology expense decreased by **$1.8 million (18.2%)** to **$7.9 million** in Q1 2025, primarily due to overall reductions in compensation costs and headcount from ongoing cost-saving initiatives[159](index=159&type=chunk)[165](index=165&type=chunk) [General and Administrative](index=39&type=section&id=General%20and%20Administrative) - General and administrative expense increased by **$0.8 million (10.5%)** to **$7.9 million** in Q1 2025, mainly due to the recording of a credit reserve related to a payment service provider (PSP)[159](index=159&type=chunk)[166](index=166&type=chunk) [Depreciation and Amortization](index=39&type=section&id=Depreciation%20and%20Amortization) - Depreciation and amortization expense increased by **$0.2 million (9.5%)** to **$2.0 million** in Q1 2025, primarily due to changes in the composition of depreciable assets[159](index=159&type=chunk)[167](index=167&type=chunk) [Income Tax Expense (Benefit)](index=39&type=section&id=Income%20Tax%20Expense%20(Benefit)) Income Tax Expense (Benefit) (in thousands) | Period | Income Tax Expense (Benefit) | Effective Tax Rate | | :-------------------------------- | :--------------------------- | :----------------- | | Three Months Ended March 31, 2025 | $565 | (9.0)% | | Three Months Ended March 31, 2024 | $(249) | 5.6% | - The difference in effective tax rate is primarily due to a mix of earnings in foreign jurisdictions subject to current or deferred tax and loss carryforwards not expected to be realized[168](index=168&type=chunk) [Segment Operating Results](index=40&type=section&id=Segment%20Operating%20Results) Segment Operating Results (in thousands) | Segment | Metric | Q1 2025 | Q1 2024 | Change (k) | % Change | | :---------------- | :---------------- | :------ | :------ | :--------- | :------- | | B2B | Revenue | $5,087 | $12,347 | $(7,260) | -58.8% | | | Cost of revenue | $2,191 | $2,081 | $110 | 5.3% | | | Segment contribution | $2,896 | $10,266 | $(7,370) | -71.8% | | B2C | Revenue | $24,279 | $18,304 | $5,975 | 32.6% | | | Cost of revenue | $8,518 | $7,242 | $1,276 | 17.6% | | | Segment contribution | $15,761 | $11,062 | $4,699 | 42.5% | [B2B Segment](index=40&type=section&id=B2B%20Segment) - B2B revenue decreased by **$7.3 million (58.8%)** primarily due to the expiration of a multistate commercial contract[171](index=171&type=chunk) - B2B cost of revenue increased by **$0.1 million** due to the expansion of B2B offerings in Nevada[172](index=172&type=chunk) - B2B segment contribution decreased by **71.8%** due to the significant revenue decline[172](index=172&type=chunk) [B2C Segment](index=40&type=section&id=B2C%20Segment) - B2C revenue increased by **$6.0 million (32.6%)** primarily due to increased player activity and higher margins in Europe and Latin America[173](index=173&type=chunk) - B2C cost of revenue increased by **$1.3 million** primarily due to the increased revenues[174](index=174&type=chunk) - B2C segment contribution increased by **42.5%**, driven by the revenue growth[174](index=174&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) - Adjusted EBITDA is used as a non-GAAP measure to compare operating performance and assess core business against industry peers, excluding items not directly resulting from core operations[175](index=175&type=chunk)[176](index=176&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :-------------------------------- | :------ | :------ | | Net loss | $(6,828) | $(4,160) | | Income tax expense (benefit) | $565 | $(249) | | Interest expense | $1,212 | $1,132 | | Depreciation and amortization | $2,013 | $1,839 | | Share-based compensation and related expense | $752 | $869 | | Credit reserve on PSP | $753 | $0 | | Transaction related costs | $22 | $0 | | Adjusted EBITDA | $(1,511) | $(569) | [Key Performance Indicators](index=42&type=section&id=Key%20Performance%20Indicators) Key Performance Indicators | KPI | Q1 2025 | Q1 2024 | Change | % Change | | :-------------------------------- | :------ | :------ | :------- | :------- | | B2B Gross Operator Revenue (in millions) | $144.6 | $632.0 | $(487.4) | -77.1% | | B2B Take Rate | 3.5% | 2.0% | 1.5% | 75.9% | | B2C Active Customers (in thousands) | 235 | 222 | 13 | 6.0% | | B2C Marketing Spend Ratio | 17.7% | 23.2% | -5.5% | -23.5% | | B2C Sports Margin | 8.6% | 5.7% | 2.9% | 50.4% | - The decrease in B2B Gross Operator Revenue was primarily driven by the expiration of a multistate commercial contract[182](index=182&type=chunk) - The increase in B2B Take Rate was primarily driven by the expiration of a multistate commercial contract and a mix shift of revenue into higher take rate product offerings[184](index=184&type=chunk) - The increase in B2C Active Customers was primarily driven by increased customer activity in Latin America and Europe[186](index=186&type=chunk) - The decrease in B2C Marketing Spend Ratio was primarily driven by the deployment of affiliate marketing strategies in Latin America[188](index=188&type=chunk) - The increase in B2C Sports Margin was primarily attributable to the outcomes of individual sporting events[190](index=190&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary uses of cash include funding ongoing working capital needs and developing/maintaining proprietary software platforms[191](index=191&type=chunk) - The company was in compliance with all financial covenants of its Credit Facility as of **March 31, 2025**, but potential future violations exist due to cash flow and net losses[196](index=196&type=chunk) - Substantial doubt exists about the company's ability to continue as a going concern beyond **April 14, 2026**, if the merger does not close, due to the maturity of the Amended Credit Facility[198](index=198&type=chunk) - Mitigation plans include deferral of hiring, exiting certain negative margin geographies, and reducing headcount to achieve cash flow targets[197](index=197&type=chunk) Cash Flow Analysis (in thousands) | Activity | Q1 2025 | Q1 2024 | Change (k) | | :-------------------------------- | :------ | :------ | :--------- | | Net cash provided by (used in) operating activities | $1,214 | $(280) | $1,494 | | Net cash used in investing activities | $(826) | $(727) | $(99) | | Net cash provided by financing activities | $0 | $3 | $(3) | | Effect of foreign exchange rates on cash | $812 | $(982) | $1,794 | | Net increase (decrease) in cash and cash equivalents | $1,200 | $(1,986) | $3,186 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, GAN Limited is not required to provide detailed quantitative and qualitative disclosures about market risk - The company is not required to provide market risk disclosures as it qualifies as a smaller reporting company[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to material weaknesses in internal control over financial reporting, with remediation ongoing [Evaluation of Disclosure Controls and Procedures](index=46&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management concluded that the company's disclosure controls and procedures were **not effective** as of **March 31, 2025**, due to identified material weaknesses in internal control over financial reporting[208](index=208&type=chunk) - Despite the material weaknesses, management believes the condensed consolidated financial statements fairly present the company's financial position, results of operations, and cash flows[208](index=208&type=chunk) [Material Weakness in Internal Control Over Financial Reporting](index=46&type=section&id=Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) - A material weakness was identified in the company's internal control over financial reporting, specifically regarding the design of controls to evaluate risks from improper segregation of duties and the precision of manual controls for journal entry preparation and approval[211](index=211&type=chunk) - This material weakness has **not been resolved** as of **March 31, 2025**[211](index=211&type=chunk) [Remediation Plans](index=47&type=section&id=Remediation%20Plans) - The company is actively implementing measures to remediate the identified material weakness, including establishing appropriate controls to segregate journal entry preparation and formal, documented approvals[212](index=212&type=chunk) - Remediation efforts are ongoing and subject to senior management and audit committee review, with full remediation expected once steps are completed and operating effectively for a sufficient period[213](index=213&type=chunk)[214](index=214&type=chunk) [Changes in Internal Controls Over Financial Reporting](index=47&type=section&id=Changes%20in%20Internal%20Controls%20Over%20Financial%20Reporting) - Except for the ongoing remediation efforts for the identified material weakness, there were no other material changes in the company's internal control over financial reporting during the quarter[215](index=215&type=chunk) [PART II - OTHER INFORMATION](index=40&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions but does not anticipate material adverse effects on its financial position or operations - The company is **not currently a party** to any legal proceedings expected to have a material adverse effect on its business[216](index=216&type=chunk) - Litigation outcomes are inherently uncertain and can adversely impact the company due to defense/settlement costs and diversion of management resources[217](index=217&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) There are no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended **December 31, 2024**[218](index=218&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including merger agreements and required certifications - Exhibits include merger agreements with SEGA SAMMY CREATION INC. and certifications from the Chief Executive Officer and Chief Financial Officer[220](index=220&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) The report is formally signed by the Chief Executive Officer and Chief Financial Officer of GAN Limited - The report is signed by Seamus McGill, Chief Executive Officer, and Brian Chang, Chief Financial Officer, on **May 9, 2025**[223](index=223&type=chunk)

[First Quarter 2025 Financial Results Overview](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results%20Overview) GAN reported strong Q1 2025 B2C revenue growth in Europe and Latin America, offsetting B2B segment decline, with the SEGA SAMMY merger on track for a Q2 2025 close [Executive Summary and CEO Commentary](index=1&type=section&id=Executive%20Summary%20and%20CEO%20Commentary) GAN's CEO highlighted strong B2C performance in Europe and Latin America, confirming the SEGA SAMMY merger is on track for a Q2 2025 close - GAN reported strong B2C revenue growth, driven by performance in Europe and Latin America, with the SEGA SAMMY merger on track for an expected close in **Q2 2025**[1](index=1&type=chunk) - CEO Seamus McGill highlighted strong B2C results in European and Latin American markets, confirming the merger with Sega Sammy is nearing regulatory conclusion, expected in **Q2 2025**[2](index=2&type=chunk) Q1 2025 vs Q1 2024 Key Financial Highlights Summary | Metric | Q1 2025 ($M) | Q1 2024 ($M) | Change (%) | Primary Driver | | :----- | :----------- | :----------- | :--------- | :------------- | | Total Revenue | 29.4 | 30.6 | -4% | Decrease in B2B segment | | B2B Revenue | 5.1 | 12.3 | -58.6% | Expiration of multistate B2B contract | | B2C Revenue | 24.3 | 18.3 | +32.8% | Growth in Europe and Latin America | | Operating Expenses | 23.7 | 24.6 | -3.7% | Reduction of compensation costs and headcount | | Net Loss | (6.8) | (4.2) | +61.9% | Lower B2B revenues, partly offset by B2C contribution and lower operating expenses | | Adjusted EBITDA | (1.5) | (0.6) | +150% | Factors impacting net loss | | Cash (as of period end) | 39.9 | 38.7 (Dec 31, 2024) | +3.1% | Favorable changes in working capital | [Key Financial and Operational Highlights](index=1&type=section&id=Key%20Financial%20and%20Operational%20Highlights) Q1 2025 saw a 4.2% total revenue decrease to $29.4 million, driven by B2B decline, partially offset by strong B2C growth, leading to worsened net loss and Adjusted EBITDA Q1 2025 vs Q1 2024 Key Financial Highlights (in thousands) | Metric | March 31, 2025 | March 31, 2024 | YoY Change | | :-------------------------- | :------------- | :------------- | :--------- | | **Revenues** | | | | | B2B | $5,087 | $12,347 | -58.8% | | B2C | $24,279 | $18,304 | +32.7% | | Total revenues | $29,366 | $30,651 | -4.2% | | **Profitability Measures** | | | | | B2B segment contribution | $2,896 | $10,266 | -71.8% | | B2B segment contribution margin | 56.9% | 83.1% | -26.2 pp | | B2C segment contribution | $15,761 | $11,062 | +42.5% | | B2C segment contribution margin | 64.9% | 60.4% | +4.5 pp | | Net loss | $(6,828) | $(4,160) | +64.1% | | Adjusted EBITDA | $(1,511) | $(569) | +165.6% | Q1 2025 vs Q1 2024 Key Performance Indicators | Indicator | March 31, 2025 | March 31, 2024 | YoY Change | | :-------------------------- | :------------- | :------------- | :--------- | | B2B Gross Operator Revenue (in millions) | $144.6 | $632.0 | -77.1% | | B2B Take Rate | 3.5% | 2.0% | +1.5 pp | | B2C Active Customers (in thousands) | 235 | 222 | +5.9% | | B2C Marketing Spend Ratio | 18% | 23% | -5 pp | | B2C Sports Margin | 8.6% | 5.7% | +2.9 pp | - The significant decrease in B2B revenue and B2B Gross Operator Revenue was primarily driven by the expiration of a multistate B2B commercial contract[3](index=3&type=chunk)[5](index=5&type=chunk) - **B2C Active Customers** increased, primarily driven by higher customer activity in Latin America and Europe[3](index=3&type=chunk)[5](index=5&type=chunk) [Strategic Developments](index=2&type=section&id=Strategic%20Developments) This section details the progress and approvals for the SEGASAMMY merger, expected to close in Q2 2025 [SEGASAMMY Merger Update](index=2&type=section&id=SEGASAMMY%20Merger%20Update) The merger with SEGASAMMY has received shareholder and key regulatory approvals (CFIUS, Nevada Gaming Commission) and is expected to close in the second quarter of 2025, subject to remaining regulatory requirements - The merger with SEGASAMMY has been approved by GAN shareholders and received clearance from **CFIUS** and the **Nevada Gaming Commission**[6](index=6&type=chunk) - The merger's closing is subject to remaining regulatory requirements and customary conditions, with an anticipated close in **Q2 2025**[6](index=6&type=chunk) - GAN will not host a conference call for its Q1 2025 earnings release due to the expected merger with SEGASAMMY[7](index=7&type=chunk) [Company Information and Disclosures](index=2&type=section&id=Company%20Information%20and%20Disclosures) This section provides an overview of GAN Limited's business, outlines forward-looking statement caveats, and lists investor contact information [About GAN Limited](index=2&type=section&id=About%20GAN%20Limited) GAN is a leading B2B technology provider of internet gambling software-as-a-service solutions predominantly to the U.S. land-based casino industry and is a market-leading international B2C operator of proprietary online sports betting technology, with market leadership positions in selected European and Latin American markets - GAN operates as a leading **B2B supplier** of internet gambling software-as-a-service solutions to the U.S. land-based casino industry[8](index=8&type=chunk) - GAN is also a market-leading **B2C operator** of proprietary online sports betting technology internationally, with strong positions in European and Latin American markets[8](index=8&type=chunk) - Its B2B segment utilizes the proprietary **GameSTACK enterprise software system** for regulated real money internet gambling, including internet gaming, internet sports betting, and social casino gaming (Simulated Gaming)[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section cautions that the release contains forward-looking statements based on current expectations, involving risks and uncertainties that could cause actual results to differ materially, with no obligation to update - The release contains forward-looking statements regarding anticipated trends in revenues, operating expenses, profitability, and the successful closing of the **SEGASAMMY merger**[9](index=9&type=chunk) - These statements are based on management's current expectations and involve known and unknown risks, uncertainties, and other important factors detailed in the company's **Form 10-K** and subsequent reports[9](index=9&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the Company undertakes no obligation to update or revise them, except as required by law[9](index=9&type=chunk) [Investor Contacts](index=5&type=section&id=Investor%20Contacts) Provides contact information for investor relations inquiries for GAN and Alpha IR Group - Investor inquiries can be directed to **Robert Shore**, VP, Investor Relations & Capital Markets at GAN, or **Ryan Coleman** of Alpha IR Group[18](index=18&type=chunk) [Detailed Financials and Definitions](index=4&type=section&id=Detailed%20Financials%20and%20Definitions) This section provides detailed financial statements, segment performance, geographical revenue, and definitions for key performance indicators and non-GAAP financial measures [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statement of operations shows a net loss of $6.8 million for Q1 2025, an increase from $4.2 million in Q1 2024, primarily due to lower revenue and increased operating costs, despite some cost savings Consolidated Statements of Operations (Unaudited, in thousands) | Metric | March 31, 2025 | March 31, 2024 | YoY Change | | :-------------------------- | :------------- | :------------- | :--------- | | Revenue | $29,366 | $30,651 | -4.2% | | Cost of revenue | 10,709 | 9,323 | +14.9% | | Sales and marketing | 5,916 | 6,017 | -1.7% | | Product and technology | 7,866 | 9,616 | -18.1% | | General and administrative | 7,913 | 7,159 | +10.5% | | Depreciation and amortization | 2,013 | 1,839 | +9.5% | | Total operating costs and expenses | 34,417 | 33,954 | +1.4% | | Operating loss | $(5,051) | $(3,303) | +52.9% | | Interest expense, net | 1,212 | 1,132 | +7.1% | | Loss before income taxes | $(6,263) | $(4,409) | +42.1% | | Income tax (benefit) expense | 565 | (249) | N/A | | Net loss | $(6,828) | $(4,160) | +64.1% | | Loss per share, basic and diluted | $(0.15) | $(0.09) | +66.7% | | Weighted average ordinary shares outstanding | 45,791,271 | 45,134,267 | +1.5% | [Segment Revenue and Gross Profit](index=7&type=section&id=Segment%20Revenue%20and%20Gross%20Profit) B2B revenue significantly decreased by **58.8%** to **$5.1 million**, while B2C revenue grew by **32.7%** to **$24.3 million**, leading to a decrease in total segment contribution despite improved B2C margin Segment Revenue and Gross Profit (Unaudited, in thousands) | Metric | March 31, 2025 | March 31, 2024 | YoY Change | | :-------------------------- | :------------- | :------------- | :--------- | | **Revenue** | | | | | B2B Platform and content license fees | $4,259 | $9,667 | -55.9% | | B2B Development services and other | $828 | $2,680 | -69.1% | | Total B2B revenue | $5,087 | $12,347 | -58.8% | | Total B2C revenue (Gaming) | $24,279 | $18,304 | +32.7% | | Total revenue | $29,366 | $30,651 | -4.2% | | **Gross Profit** | | | | | B2B Cost of revenue | $2,191 | $2,081 | +5.3% | | B2B segment contribution | $2,896 | $10,266 | -71.8% | | B2B segment contribution margin | 56.9% | 83.1% | -26.2 pp | | B2C Cost of revenue | $8,518 | $7,242 | +17.6% | | B2C segment contribution | $15,761 | $11,062 | +42.5% | | B2C segment contribution margin | 64.9% | 60.4% | +4.5 pp | | Total segment contribution | $18,657 | $21,328 | -12.5% | | Total segment contribution margin | 63.5% | 69.6% | -6.1 pp | [Revenue by Geography](index=8&type=section&id=Revenue%20by%20Geography) Revenue from the United States decreased significantly, while Europe and Latin America showed strong growth, aligning with the B2C segment's performance Revenue by Geography (Unaudited, in thousands) | Region | March 31, 2025 | March 31, 2024 | YoY Change | | :------------- | :------------- | :------------- | :--------- | | United States | $4,735 | $9,092 | -47.9% | | Europe | $15,466 | $11,604 | +33.3% | | Latin America | $8,414 | $6,896 | +22.0% | | Rest of the world | $751 | $3,059 | -75.5% | | Total | $29,366 | $30,651 | -4.2% | - Revenue is segmented based on the location of the Company's customer[24](index=24&type=chunk) [Key Performance Indicators and Non-GAAP Financial Measures Definitions](index=4&type=section&id=Key%20Performance%20Indicators%20and%20Non-GAAP%20Financial%20Measures%20Definitions) This section provides definitions for various non-GAAP financial measures and key performance indicators used by GAN to assess its financial and operational performance, emphasizing their supplementary nature to U.S. GAAP - The Company uses certain non-GAAP financial measures to supplement U.S. GAAP results, which are not substitutes for or superior to comparable U.S. GAAP measures[10](index=10&type=chunk) [B2B Gross Operator Revenue (GOR)](index=4&type=section&id=B2B%20Gross%20Operator%20Revenue%20%28GOR%29) This metric represents the total gross revenue generated by B2B corporate customers from various gaming offerings, indicating transaction volume - **B2B Gross Operator Revenue** is defined as the sum of B2B corporate customers' gross revenue from virtual simulated gaming (SIM), gross gaming revenue from RMiG, and gross sports wins from sportsbook offerings[12](index=12&type=chunk) - This metric indicates the extent of transactions processed through the Company's B2B corporate customers' platforms[12](index=12&type=chunk) [B2B Take Rate](index=4&type=section&id=B2B%20Take%20Rate) This metric measures the proportion of B2B segment revenue retained by the Company relative to the total Gross Operator Revenue generated by its B2B customers - **B2B Take Rate** is defined as the quotient of B2B segment revenue retained by the Company over the total Gross Operator Revenue generated by our B2B corporate customers[13](index=13&type=chunk) - This metric indicates the impact of statutory and commercial terms on the business[13](index=13&type=chunk) [B2C Active Customers](index=4&type=section&id=B2C%20Active%20Customers) This metric tracks the number of unique users who placed a wager during the period, aiding in monitoring customer growth and platform traffic - **B2C Active Customers** are defined as users that place a wager during the period[14](index=14&type=chunk) - This metric helps management monitor customer segmentation, growth drivers, and platform traffic[14](index=14&type=chunk) [B2C Marketing Spend Ratio](index=5&type=section&id=B2C%20Marketing%20Spend%20Ratio) This ratio assesses the effectiveness of B2C direct marketing expenses by comparing them to total B2C revenues, indicating return on marketing investment - **B2C Marketing Spend Ratio** is defined as total B2C direct marketing expense for the period divided by total B2C revenues[15](index=15&type=chunk) - This metric measures the success of marketing costs and indicates return on marketing investment[15](index=15&type=chunk) [B2C Sports Margin](index=5&type=section&id=B2C%20Sports%20Margin) This metric evaluates sportsbook performance by comparing wagers minus winnings to total amounts wagered, adjusted for open wagers - **B2C Sports Margin** is defined as the ratio of wagers minus winnings to total amount wagered, adjusted for open wagers at period end[16](index=16&type=chunk) - This metric measures sportsbook performance against its expected outcome[16](index=16&type=chunk) [Adjusted EBITDA](index=5&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP measure used by management to assess core business performance by excluding non-operating and non-cash items - **Adjusted EBITDA** is defined as net loss before interest expense (income), net, income tax expense (benefit), depreciation and amortization, impairments, extraordinary gains or losses, share-based compensation expense and related expense, transaction costs, and other infrequent or unusual items[17](index=17&type=chunk) - Management uses Adjusted EBITDA to compare operating performance period-to-period and assess core business performance against industry peers by removing effects not directly from core operations or differences in capital structure, depreciation, tax, and unusual events[17](index=17&type=chunk) [Adjusted EBITDA Reconciliation](index=8&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation shows an Adjusted EBITDA of $(1.5) million for Q1 2025, a decrease from $(0.6) million in Q1 2024, reflecting the impact of lower B2B revenues and other factors Adjusted EBITDA Reconciliation (Unaudited, in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :------------------------------------ | :------------- | :------------- | | Net loss | $(6,828) | $(4,160) | | Income tax (benefit) expense | 565 | (249) | | Interest expense, net | 1,212 | 1,132 | | Depreciation and amortization | 2,013 | 1,839 | | Share-based compensation and related expense | 752 | 869 | | Credit reserve on PSP | 753 | — | | Transaction related costs | 22 | — | | **Adjusted EBITDA** | $(1,511) | $(569) | [Historical Sports Margin](index=8&type=section&id=Historical%20Sports%20Margin) The actual sports margin for Q1 2025 was 8.6%, showing a positive trend compared to previous quarters, indicating improved sportsbook performance Historical Sports Margin (Unaudited) | Period | Sports Margin | | :------------- | :------------ | | March 31, 2025 | 8.6% | | December 31, 2024 | 8.5% | | September 30, 2024 | 7.2% | | June 30, 2024 | 5.7% |

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) GAN operates B2B SaaS and B2C online betting, with a merger agreement pending regulatory approval [Business Overview](index=8&type=section&id=Business%20Overview) GAN operates B2B SaaS for iGaming/sports betting and B2C 'Coolbet', with B2C revenue slightly down in 2024 - GAN Limited operates two main business lines: B2B (Software-as-a-Service solutions for online casino gaming and sports betting) and B2C (online sports betting and casino platform under the 'Coolbet' brand)[21](index=21&type=chunk) - The B2B segment offers the GameSTACK internet gaming platform and GAN Sports, focusing on enabling the U.S. casino industry's digital transformation for real money iGaming, online sports betting, and simulated gaming[22](index=22&type=chunk) B2C Revenue Breakdown (2024) | Product | Percentage of Total Revenue | | :-------------------- | :-------------------------- | | Online casino games | 60.2% | | Online sports betting | 36.0% | | Online peer-to-peer poker | 3.8% | - B2C revenue slightly decreased **2.3%** from **$86.3 million** in 2023 to **$84.3 million** in 2024, primarily due to a decline in active customers in Latin American markets[23](index=23&type=chunk) [Corporate History](index=8&type=section&id=Corporate%20History) GAN pioneered UK online gaming, expanded globally, went public in 2020, and acquired Coolbet in 2021 - GAN commenced operations in 2002 in the United Kingdom, initially offering online games of skill[24](index=24&type=chunk) - The company launched its first real money casino gambling games in the UK in 2005 and deployed its technology platform in Italy in 2008[25](index=25&type=chunk) - The first version of the GameSTACK enterprise software platform was released in 2010, and the company processed the first legal online bet in New Jersey in 2013[26](index=26&type=chunk) - In May 2020, GAN Limited completed a reorganization, became the parent company of GAN plc, and completed its U.S. initial public offering, raising **$62.4 million**[27](index=27&type=chunk) - On January 1, 2021, GAN completed the acquisition of Coolbet for a total purchase price of **$218.1 million**, comprising cash and ordinary shares[28](index=28&type=chunk) - In September 2022, GAN launched GAN Sports, a modern sportsbook technology platform adapted for the U.S. B2B market, expanding into jurisdictions like Massachusetts and Nevada in 2023[30](index=30&type=chunk) [Merger Agreement](index=10&type=section&id=Merger%20Agreement) GAN entered a merger with SEGA SAMMY CREATION INC. for $1.97/share, expected to close in Q2 2025 - On November 7, 2023, GAN Limited entered into a Merger Agreement with SEGA SAMMY CREATION INC., under which GAN will become a wholly-owned subsidiary of SEGA SAMMY CREATION[31](index=31&type=chunk) - At the effective time of the Merger, each ordinary share will be converted into the right to receive **$1.97 per share** in cash[33](index=33&type=chunk) - The Merger is subject to customary closing conditions, including shareholder approval (received February 13, 2024) and regulatory approvals, with closing anticipated in the **second quarter of 2025**[32](index=32&type=chunk)[33](index=33&type=chunk) [iGaming and Online Sportsbook Industry and Background](index=11&type=section&id=iGaming%20and%20Online%20Sportsbook%20Industry%20and%20Background) U.S. and Canada rapidly legalized sports betting and iGaming since 2018, creating new market opportunities - The Supreme Court overturned PASPA on May 14, 2018, allowing U.S. states to regulate sports betting and real money iGaming[34](index=34&type=chunk) - Canada passed Bill C-218 on June 22, 2021, removing the federal ban on single-game sports betting, with Ontario becoming the first province to regulate online gambling in April 2022[35](index=35&type=chunk) - As of December 31, 2024, **38 U.S. states** and Washington D.C. have approved legalized sports betting, and real money iGaming is legal in **eight states**[36](index=36&type=chunk) [Our Operating Models](index=12&type=section&id=Our%20Operating%20Models) GAN's B2B provides a unified platform, while B2C offers direct-to-customer online betting via proprietary technology - The B2B segment's product strategy for GameSTACK and GAN Sports is to provide a unified, flexible, and highly scalable platform for real money iGaming and online sports betting[40](index=40&type=chunk) - The B2C segment offers real-money online sports betting, online casino, and peer-to-peer poker directly to customers through www.coolbet.com in Northern Europe and Latin America[43](index=43&type=chunk) - Coolbet utilizes proprietary technology and sportsbook software to provide a differentiated entertainment experience and enable rapid entry into new international markets[43](index=43&type=chunk) [Our Products and Service Offerings](index=13&type=section&id=Our%20Products%20and%20Service%20Offerings) GAN offers comprehensive B2B platforms and services, alongside its B2C Coolbet gaming site [B2B GameSTACK Platform, Development and Support Services](index=13&type=section&id=B2B%20GameSTACK%20Platform%2C%20Development%20and%20Support%20Services) GameSTACK is a comprehensive, turnkey U.S. iGaming platform, offering account management, marketing, and compliance tools - GameSTACK is a turnkey, proprietary hosted software platform providing comprehensive tools for account setup, customer services, marketing, and converged gambling across land-based and internet channels[44](index=44&type=chunk) - The platform is optimized for real money iGaming (RMiG) in the U.S., featuring geolocation tracking, Know-Your-Customer processes, and a market-leading payments platform[47](index=47&type=chunk) [GAN Sports retail and online sportsbook](index=14&type=section&id=GAN%20Sports%20retail%20and%20online%20sportsbook) GAN Sports offers a complete turnkey online and retail sportsbook solution for U.S. casino operators - GAN Sports, developed from Coolbet technology, offers a complete turnkey solution for online and retail sports betting to U.S. casino operators, including self-service kiosks and mobile versions[50](index=50&type=chunk) [Super Remote Gaming Server](index=14&type=section&id=Super%20Remote%20Gaming%20Server) GameSTACK functions as a Super RGS, providing internet casino operators access to GAN's game content library for efficiency - GameSTACK can be configured as a 'super' remote gaming server (Super RGS) to provide existing internet casino operators with access to GAN's proprietary and third-party game content library, offering cost and time savings[51](index=51&type=chunk) [Simulated Gaming](index=14&type=section&id=Simulated%20Gaming) Simulated Gaming extends U.S. casino brands online, integrating loyalty programs and sharing a common RMiG code base - The Simulated Gaming (SIM) product is designed for U.S. casino operators to extend their retail brand online, leveraging on-property rewards programs and using a common code base with GameSTACK for RMiG[52](index=52&type=chunk) [iSight Back Office](index=15&type=section&id=iSight%20Back%20Office) iSight offers operators daily back-office management tools, including content selection, player communications, and real-time analytics - iSight provides operators with day-to-day back-office management tools, including content selection, player communications, website layout, process automation, and real-time analytics[54](index=54&type=chunk) [iBridge Framework](index=15&type=section&id=iBridge%20Framework) The iBridge Framework links online players with loyalty offers by verifying them against offline loyalty databases - The proprietary iBridge Framework enables operators to engage online players with loyalty offers by automatically verifying new online players against existing offline loyalty databases[55](index=55&type=chunk) [Development Services](index=15&type=section&id=Development%20Services) GAN provides platform development services, including initial deployment, ongoing software updates, and customization - GAN provides platform development services, including initial deployment of gaming hosting facilities and ongoing software updates for enhanced functionality or customization[56](index=56&type=chunk) [Customer Support Services](index=15&type=section&id=Customer%20Support%20Services) The company offers comprehensive term-based operational services, including turnkey marketing and 24/7 customer support - The company offers a range of term-based operational services, including full turnkey marketing (user acquisition, retention) and customer support (email, phone, live chat), with a 24/7 uptime guarantee[57](index=57&type=chunk) [Non-U.S. B2C Product Offerings](index=15&type=section&id=Non-U.S.%20B2C%20Product%20Offerings) Coolbet.com operates outside the U.S., offering sports betting, casino, and poker in Northern Europe and Latin America - The B2C gaming site www.coolbet.com operates outside the U.S., predominantly in Northern Europe and Latin America, offering sports betting, poker, casino, live casino, and virtual sports[58](index=58&type=chunk) - Coolbet.com is built on proprietary software, including a sportsbook engine and risk management tools, allowing for rapid entry into new international markets with localized content[58](index=58&type=chunk) [Sports Betting](index=16&type=section&id=Sports%20Betting) Coolbet manages an award-winning online sportsbook, providing pre-match and in-play wagers globally with expert-compiled odds - Coolbet manages an award-winning online sportsbook, offering various types of pre-match and in-play wagers on sporting events globally, with specialist odds compiled by in-house experts[60](index=60&type=chunk) [Online Casino](index=16&type=section&id=Online%20Casino) The online casino offers thousands of digital and live dealer games from recognized content creators, integrated into GAN's technology - The online casino offers thousands of digital and live dealer games from recognized content creators, integrated into GAN's proprietary technology, including over **8,500 third-party iGaming titles**[61](index=61&type=chunk) [Poker](index=16&type=section&id=Poker) The poker offering allows registered customers to play real-time peer-to-peer cash games and tournaments on www.coolbet.com - The poker offering allows registered customers to play peer-to-peer poker in cash games and tournaments directly on www.coolbet.com in real-time[62](index=62&type=chunk) [Competition](index=16&type=section&id=Competition) GAN faces intense competition in B2B from content suppliers and technology providers, and in B2C from online operators - B2B operations compete with online casino content suppliers, retail casino operators developing proprietary online gaming capabilities, and other technology providers[63](index=63&type=chunk) - Principal competitive factors in B2B include rapid deployment, ease of integration, user registration/conversion, regulatory compliance, data security, and platform extensibility[64](index=64&type=chunk) - B2C operations compete against various online sportsbook and casino operators, with key competitive factors being customer experience, reliable odds, ease of use, and customer service[65](index=65&type=chunk) [Customers and Ecosystem](index=17&type=section&id=Customers%20and%20Ecosystem) GAN's B2B serves casino operators, with FanDuel a key customer, while B2C serves over 1.9 million registered users - Principal B2B customers are retail casino operators and online casino brands seeking regulatory compliant, complete enterprise technology solutions[67](index=67&type=chunk)[68](index=68&type=chunk) - For the year ended December 31, 2024, FanDuel accounted for **15.3% of total revenue** (**16.4% in 2023**)[71](index=71&type=chunk) - FanDuel's exclusivity for casino gaming operations ended in January 2023, after which they pay a percentage of net gaming revenue; their current U.S. commercial contract expired in January 2025[72](index=72&type=chunk) - Coolbet.com had over **1.9 million registered customers** as of December 31, 2024, with the majority of traffic from mobile users[74](index=74&type=chunk) [Seasonality](index=18&type=section&id=Seasonality) Online sports betting experiences seasonality driven by major sporting events, particularly football seasons and tournaments - Online sports betting operations experience seasonality based on the popularity of sporting events, particularly local and international football seasons and high-profile tournaments[75](index=75&type=chunk) [Intellectual Property Rights](index=18&type=section&id=Intellectual%20Property%20Rights) GAN protects its intellectual property through copyright, trademark, trade secret laws, and contractual agreements - GAN relies on copyright, trademark, and trade secret laws, as well as license agreements and contractual protections, to safeguard its intellectual property[76](index=76&type=chunk) - As of December 31, 2024, the company had **two registered trademarks** in the United Kingdom related to its proprietary technology[77](index=77&type=chunk) [Government Regulation](index=18&type=section&id=Government%20Regulation) GAN operates in a heavily regulated online gaming industry, requiring licenses and compliance with diverse international laws - The company is subject to extensive and evolving U.S. and foreign laws and regulations in the online gaming industry, with primary enforcement through regulatory licenses[79](index=79&type=chunk) - B2B operations are licensed and regulated by authorities in the U.K., Italy, Canada (Ontario), and numerous U.S. states, including New Jersey, Pennsylvania, Michigan, and Nevada[80](index=80&type=chunk) - B2C operations hold gaming licenses in Estonia, Malta, Mexico, Sweden, and Peru, and are subject to evolving data privacy regulations (e.g., GDPR, CCPA) and anti-money laundering laws[82](index=82&type=chunk)[84](index=84&type=chunk) - GAN has an internal compliance program focusing on licensing, local gaming regulations, data protection, and anti-money laundering, utilizing tools like geolocation blocking and age verification[85](index=85&type=chunk)[86](index=86&type=chunk) [Social Responsibility](index=20&type=section&id=Social%20Responsibility) GAN integrates responsible gaming tools into its platform to prevent problem gambling and ensures robust age verification - GAN integrates responsible gaming policies and tools into its GameSTACK software platform to detect and prevent problem gambling, offering features like deposit limits, wagering limits, self-exclusion, and cooling-off periods[89](index=89&type=chunk)[90](index=90&type=chunk) - Teams are trained in responsible gaming to assist players, and robust age verification processes are in place to prevent minors from accessing gaming opportunities[90](index=90&type=chunk) [Human Capital Resources](index=20&type=section&id=Human%20Capital%20Resources) As of December 31, 2024, GAN had 626 global employees, with a diverse workforce committed to competitive compensation and wellness - As of December 31, 2024, GAN had **626 total employees** (**621 full-time, 5 part-time**), with approximately **90%** located outside the United States[92](index=92&type=chunk) Workforce Distribution (December 31, 2024) | Category | Count / Percentage | | :--------------- | :----------------- | | **By Region:** | | | Europe | 511 | | United States | 62 | | Latin America | 31 | | Rest of World | 22 | | **By Function:** | | | Operations | 87% | | Non-operations | 13% | - The company is committed to a diverse global workforce, fostering inclusivity, offering competitive market-based wages and benefits, and supporting employee wellness and flexible working models[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) [Information about Segment and Geographic Revenue](index=22&type=section&id=Information%20about%20Segment%20and%20Geographic%20Revenue) Segment and geographic revenue information is detailed in Note 13 to the Consolidated Financial Statements - Segment and geographic revenue information is detailed in Note 13 to the Consolidated Financial Statements[100](index=100&type=chunk) [Available Information](index=22&type=section&id=Available%20Information) GAN's SEC filings, including the Form 10-K, are available on its investor website and the SEC's website - The company's Annual Report on Form 10-K and other SEC filings are available free of charge on its investor website (https://www.investors.gan.com) and the SEC's website (https://www.sec.gov)[101](index=101&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) Investing in GAN involves risks from financial performance, competition, merger uncertainties, regulatory compliance, and international operations [Risks Related to Our Business](index=22&type=section&id=Risks%20Related%20to%20Our%20Business) GAN faces risks from historical losses, intense competition, customer concentration, sports betting losses, cybersecurity, and IP reliance - GAN has historically incurred net losses and negative cash flows, with an accumulated deficit of **$317.3 million** as of December 31, 2024, and a net loss of **$8.0 million** for the year[103](index=103&type=chunk) - The company operates in a rapidly evolving and highly competitive online gaming industry, requiring continuous development and adaptation to new technologies and regulatory changes[104](index=104&type=chunk)[106](index=106&type=chunk) - Customer concentration is a significant risk; FanDuel accounted for **15.3% of total revenue** and **42.4% of total accounts receivable** for the year ended December 31, 2024[111](index=111&type=chunk) - B2C sports betting operations are exposed to losses from inaccurate odds determination or unfavorable event outcomes, and the business is sensitive to reductions in discretionary consumer spending[114](index=114&type=chunk)[117](index=117&type=chunk) - The company faces significant cybersecurity risks, including potential breaches, system failures, fraud, and theft, which could damage its reputation, lead to financial losses, or incur regulatory fines[121](index=121&type=chunk)[124](index=124&type=chunk) - Reliance on third-party content providers and the inability to protect intellectual property rights are key risks that could adversely affect competitive position and revenue[129](index=129&type=chunk)[131](index=131&type=chunk) [Risks Related to the Merger](index=30&type=section&id=Risks%20Related%20to%20the%20Merger) The proposed merger faces risks from regulatory delays, potential termination, and associated financial penalties - The completion of the merger with SEGA SAMMY CREATION INC. is subject to various regulatory approvals (gaming authorities, antitrust, CFIUS) which may be delayed or impose adverse conditions[143](index=143&type=chunk)[144](index=144&type=chunk) - The Merger Agreement may be terminated if conditions are not fulfilled, or if gaming regulatory authorities impose restrictions that would materially adversely affect the combined company[145](index=145&type=chunk)[146](index=146&type=chunk) - Failure to complete the Merger could result in a **$6.0 million termination fee**, substantial costs, diversion of management attention, and a negative impact on the company's stock price and future business[147](index=147&type=chunk)[149](index=149&type=chunk) [Risks Related to Regulation](index=31&type=section&id=Risks%20Related%20to%20Regulation) GAN operates in a heavily regulated online gaming environment, facing compliance costs, evolving tax laws, data privacy, and internal control weaknesses - The online gaming industry is heavily regulated, and failure to obtain or maintain applicable licenses or comply with evolving requirements could disrupt business operations and lead to fines or license revocation[148](index=148&type=chunk)[152](index=152&type=chunk) - The proliferation of new and changing regulatory frameworks in the rapidly expanding online gaming industry increases compliance costs and the risk of non-compliance[154](index=154&type=chunk)[155](index=155&type=chunk) - A significant portion of B2C revenue comes from 'unregulated' markets, where changes in regulation could lead to loss of business or increased expenses, and evolving tax regulations could result in additional tax liabilities[156](index=156&type=chunk)[157](index=157&type=chunk) - Compliance with evolving data privacy regulations (e.g., GDPR, CCPA) may increase operating costs, and any violation could damage reputation, incur fines, or lead to lawsuits[159](index=159&type=chunk)[160](index=160&type=chunk) - The company has identified a material weakness in internal control over financial reporting related to the segregation of duties over journal entry preparation and approval within the B2C segment[162](index=162&type=chunk)[163](index=163&type=chunk) [Risks Related to our International Operations](index=35&type=section&id=Risks%20Related%20to%20our%20International%20Operations) International operations expose GAN to foreign currency fluctuations, diverse tax regimes, and potential PFIC classification for U.S. shareholders - Operating in many countries with significant operations outside the U.S. subjects the company to additional costs and risks, including challenges from cultural differences, political unrest, and varying tax regimes[165](index=165&type=chunk) - Fluctuations in foreign currency values (e.g., British Pound, Euro, Mexican Peso) can adversely affect reported revenue and profits due to global operations and transactions in multiple currencies[167](index=167&type=chunk) - Expansion subjects the company to taxation in numerous jurisdictions, and changes in tax laws or their interpretation could result in additional tax liabilities[169](index=169&type=chunk)[170](index=170&type=chunk) - U.S. Holders of ordinary shares could face material adverse tax consequences if the company is classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes[172](index=172&type=chunk)[174](index=174&type=chunk) [Risks Related to Corporate Governance Matters](index=37&type=section&id=Risks%20Related%20to%20Corporate%20Governance%20Matters) Corporate governance risks include gaming law restrictions on share ownership, difficulties enforcing U.S. judgments, and anti-takeover provisions - Ownership of ordinary shares is restricted by gaming laws and company by-laws, potentially requiring persons found 'unsuitable' by gaming authorities to dispose of their shares[175](index=175&type=chunk)[176](index=176&type=chunk) - As a Bermuda company, enforcing judgments obtained in U.S. courts against the company or its officers/directors may be difficult due to differences in legal systems and public policy[177](index=177&type=chunk)[179](index=179&type=chunk) - The company's by-laws contain a broad waiver restricting shareholders from bringing legal action against officers and directors, except for fraud/dishonesty or violations of specific U.S. securities acts[181](index=181&type=chunk) - Provisions in the by-laws, such as restrictions on director nominations and the right to force sale of shares from 'unsuitable' persons, may discourage a change of control[182](index=182&type=chunk)[183](index=183&type=chunk) [Item 1B. Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - None[184](index=184&type=chunk) [Item 1C. Cybersecurity](index=39&type=section&id=Item%201C.%20Cybersecurity) GAN maintains robust Information Security programs, aligned with ISO and NIST frameworks, overseen by a CISO and Board - The company collects, processes, stores, and transmits sensitive player data and has implemented Information Security programs aligned with ISO and NIST cybersecurity frameworks[185](index=185&type=chunk) - A dedicated Information Security team, led by a Vice President of Global Information Security (CISO) with over **20 years of experience**, manages and monitors the security program[186](index=186&type=chunk)[187](index=187&type=chunk) - Security measures include continuous risk assessments, vulnerability scans, periodic penetration testing, due diligence on technology vendors, and employee training[186](index=186&type=chunk) - The Board of Directors oversees cybersecurity and information technology matters, receiving updates from the CISO and CTO[188](index=188&type=chunk) [Item 2. Properties](index=39&type=section&id=Item%202.%20Properties) GAN's headquarters is in Las Vegas, with leased regional offices in Bulgaria, Israel, and Estonia, deemed adequate - The corporate headquarters is in Las Vegas, Nevada, and regional offices are located in Bulgaria, Israel, and Estonia[189](index=189&type=chunk) - All corporate and regional offices are leased facilities[189](index=189&type=chunk) - The B2C segment operates out of European regional offices, while the B2B segment operates from the Las Vegas headquarters[189](index=189&type=chunk) [Item 3. Legal Proceedings](index=39&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal actions, none expected to materially impact its financial position or operations - The company may be subject to legal actions and claims arising from contracts or other matters in the ordinary course of business[190](index=190&type=chunk) - Management is not aware of any pending or threatened litigation considered to be other than routine legal proceedings[190](index=190&type=chunk) - The ultimate disposition of routine legal proceedings is not expected to have a material adverse effect on the company's financial position, results of operations, or liquidity[190](index=190&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to GAN Limited - Not applicable[191](index=191&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GAN's ordinary shares are listed on Nasdaq, with no cash dividends or Q4 2024 share repurchases - GAN Limited's ordinary shares have been listed on The Nasdaq Capital Market under the symbol "GAN" since May 7, 2020[192](index=192&type=chunk) - The company has never declared or paid any cash dividends on its ordinary shares and intends to retain future earnings to finance business operations and expansion[194](index=194&type=chunk) - No share repurchases were made during the quarter ended December 31, 2024[195](index=195&type=chunk) [Item 6. [Reserved]](index=34&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[196](index=196&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) GAN reported a reduced net loss of **$8.0 million** in 2024, with revenue growth from B2B expansion and B2C Europe, despite liquidity concerns [Overview](index=41&type=section&id=Overview) GAN operates B2B and B2C segments, reporting a net loss of **$8.0 million** in 2024, with future profitability expected from growth and cost savings - GAN Limited operates two reportable segments: B2B (SaaS solutions for iGaming and online sports betting) and B2C (Coolbet online sports betting and casino platform)[199](index=199&type=chunk) - The company reported a net loss of **$8.0 million** for the year ended December 31, 2024, an improvement from a **$34.4 million** net loss in 2023[203](index=203&type=chunk) - Future profitability is expected to be driven by organic growth, expansion into new regulated jurisdictions, margin expansion from Coolbet technology integration, workforce streamlining, Super RGS rollout, and B2C organic growth[203](index=203&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Revenue recognition, business combinations, share-based compensation, intangible asset impairment, and income taxes require significant management judgment [Revenue Recognition](index=42&type=section&id=Revenue%20Recognition) Revenue recognition involves significant judgment in determining performance obligations, selling prices, and timing of control transfer - Revenue recognition requires significant judgment in determining performance obligations, stand-alone selling prices, transaction price allocation, and timing of control transfer, especially for bundled or highly customized solutions[205](index=205&type=chunk) [Business Combinations](index=42&type=section&id=Business%20Combinations) Fair value determination for acquired assets and liabilities in business combinations requires significant management judgment and estimates - Determining the fair value of acquired assets and assumed liabilities in business combinations requires significant management judgment and estimates, including future cash flows, discount rates, and market prices[209](index=209&type=chunk) [Share-Based Compensation](index=44&type=section&id=Share-Based%20Compensation) Equity-classified share-based awards are expensed over the vesting period, measured at fair value using a Black-Scholes model with various estimates - Equity-classified share-based awards are measured at fair value at the grant date and expensed over the vesting period, using a Black-Scholes model that requires estimates for expected term, volatility, dividend yield, and risk-free interest rate[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Capitalization and Impairment of Internally Generated Intangible Assets](index=45&type=section&id=Capitalization%20and%20Impairment%20of%20Internally%20Generated%20Intangible%20Assets) Management judges capitalization and useful lives of software development costs, reviewing intangible assets for impairment based on future cash flow estimates - Management exercises judgment in capitalizing development costs and determining the useful lives of software products, which are regularly reviewed for appropriateness[218](index=218&type=chunk) - Intangible assets are reviewed for impairment when events indicate the carrying amount may not be recoverable, requiring estimates related to future cash flows and discount rates[219](index=219&type=chunk) [Income Taxes](index=45&type=section&id=Income%20Taxes) Income tax accounting requires significant judgment in interpreting tax laws, determining effective rates, and assessing deferred tax asset realizability - Income tax accounting requires significant judgment in interpreting tax laws across multiple jurisdictions, determining the effective tax rate, and assessing the realizability of deferred tax assets and uncertain tax positions[220](index=220&type=chunk)[221](index=221&type=chunk)[223](index=223&type=chunk) [Consolidated Results of Operations](index=46&type=section&id=Consolidated%20Results%20of%20Operations) GAN significantly reduced its operating and net losses in 2024, driven by revenue growth and decreased operating costs [Year Ended December 31, 2024 Compared to Year Ended December 31, 2023](index=46&type=section&id=Year%20Ended%20December%2031%2C%202024%20Compared%20to%20Year%20Ended%20December%2031%2C%202023) The company reported a **4.3%** revenue increase and an **88.1%** reduction in operating loss, leading to a **76.9%** decrease in net loss in 2024 Consolidated Results of Operations (2024 vs. 2023) | Metric | Year Ended Dec 31, 2024 (in thousands) | Year Ended Dec 31, 2023 (in thousands) | Change (Amount) | Change (Percent) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :---------------- | :--------------- | | Revenue | $134,998 | $129,419 | $5,579 | 4.3% | | Total operating costs and expenses | $138,598 | $159,733 | $(21,135) | (13.2)% | | Operating loss | $(3,600) | $(30,314) | $26,714 | (88.1)% | | Net loss | $(7,959) | $(34,444) | $26,485 | (76.9)% | [Geographic Information](index=46&type=section&id=Geographic%20Information) U.S. and European revenues grew significantly in 2024, offsetting declines in Latin America and the rest of the world Consolidated Revenue by Geographic Region (2024 vs. 2023) | Region | Year Ended Dec 31, 2024 (in thousands) | Year Ended Dec 31, 2023 (in thousands) | Percentage of Revenue 2024 | Percentage of Revenue 2023 | Change (Amount) | Change (Percent) | | :---------------- | :------------------------------------- | :------------------------------------- | :------------------------- | :------------------------- | :---------------- | :--------------- | | United States | $42,277 | $31,758 | 31.3% | 24.5% | $10,519 | 33.1% | | Europe | $52,324 | $47,788 | 38.8% | 36.9% | $4,536 | 9.5% | | Latin America | $31,467 | $39,935 | 23.3% | 30.9% | $(8,468) | (21.2)% | | Rest of the world | $8,930 | $9,938 | 6.6% | 7.7% | $(1,008) | (10.1)% | | **Total revenue** | **$134,998** | **$129,419** | **100.0%** | **100.0%** | **$5,579** | **4.3%** | - Finland revenue was **$17.9 million** in 2024 (vs. **$16.7 million** in 2023), Norway revenue was **$19.5 million** (vs. **$16.0 million**), Chile revenue was **$29.6 million** (vs. **$36.4 million**), and Canada revenue was **$8.9 million** (vs. **$9.9 million**)[226](index=226&type=chunk) [Revenue](index=47&type=section&id=Revenue) Total revenue increased by **$5.6 million (4.3%)** in 2024, driven by B2B expansion and B2C European growth, despite Latin American declines - Total revenue increased by **$5.6 million (4.3%)** to **$135.0 million** in 2024, driven by B2B expansion in Nevada and Michigan (migration services) and B2C growth in Europe (player activity, higher margins)[227](index=227&type=chunk) - The increase was partially offset by declines in B2C operations in Latin America due to reduced player activity and unfavorable exchange rates[227](index=227&type=chunk) [Cost of Revenue](index=47&type=section&id=Cost%20of%20Revenue) Cost of revenue increased by **$1.7 million (4.5%)** in 2024, primarily due to higher gaming taxes in Latin America and B2B expansion in Nevada - Cost of revenue increased by **$1.7 million (4.5%)** to **$40.4 million** in 2024, primarily due to increased gaming taxes in Latin American B2C operations and the expansion of B2B offerings in Nevada[228](index=228&type=chunk) [Sales and Marketing](index=47&type=section&id=Sales%20and%20Marketing) Sales and marketing expense decreased by **$3.7 million (12.7%)** in 2024, mainly due to an affiliate marketing strategy in Latin America - Sales and marketing expense decreased by **$3.7 million (12.7%)** to **$25.3 million** in 2024, mainly attributable to the deployment of an affiliate marketing strategy in Latin America, which reduced upfront customer acquisition costs[229](index=229&type=chunk) [Product and Technology](index=47&type=section&id=Product%20and%20Technology) Product and technology expense decreased by **$4.0 million (10.5%)** in 2024, primarily due to reduced compensation and headcount from cost-saving initiatives - Product and technology expense decreased by **$4.0 million (10.5%)** to **$34.3 million** in 2024, primarily due to overall reductions in compensation costs and headcount from ongoing cost-saving initiatives[230](index=230&type=chunk) [General and Administrative](index=47&type=section&id=General%20and%20Administrative) General and administrative expense decreased by **$5.7 million (15.5%)** in 2024, mainly due to reduced compensation and headcount from cost-saving initiatives - General and administrative expense decreased by **$5.7 million (15.5%)** to **$31.0 million** in 2024, mainly due to overall reductions in compensation costs and headcount from ongoing cost-saving initiatives[231](index=231&type=chunk) [Depreciation and Amortization](index=48&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization expense decreased by **$9.5 million (55.5%)** in 2024, primarily due to fully amortized assets - Depreciation and amortization expense decreased by **$9.5 million (55.5%)** to **$7.6 million** in 2024, primarily due to the reduction of depreciable assets that were fully amortized compared to the prior period[233](index=233&type=chunk) [Income Tax Expense](index=48&type=section&id=Income%20Tax%20Expense) The company recorded an income tax benefit of **$0.3 million** in 2024, reflecting a mix of foreign earnings and unrealized loss carryforwards - The company recorded an income tax benefit of **$0.3 million** in 2024 (effective tax rate of **3.3%**), compared to an income tax expense of **$0.1 million** in 2023 (effective tax rate of **-0.4%**)[234](index=234&type=chunk) - The difference is primarily due to a mix of earnings in foreign jurisdictions subject to current and deferred tax, and loss carryforwards in certain jurisdictions not expected to be realized[234](index=234&type=chunk) [Segment Operating Results](index=48&type=section&id=Segment%20Operating%20Results) B2B revenue increased significantly due to U.S. expansion, while B2C revenue slightly decreased due to Latin American player activity [Year Ended December 31, 2024 Compared to Year Ended December 31, 2023](index=48&type=section&id=Year%20Ended%20December%2031%2C%202024%20Compared%20to%20Year%20Ended%20December%2031%2C%202023) B2B revenue grew **17.5%** and segment contribution increased **18.8%**, while B2C revenue decreased **2.3%** and contribution fell **4.8%** Segment Operating Results (2024 vs. 2023) | Segment | Year Ended Dec 31, 2024 (in thousands) | Year Ended Dec 31, 2023 (in thousands) | Change (Amount) | Change (Percent) | | :-------------------- | :------------------------------------- | :------------------------------------- | :---------------- | :--------------- | | B2B Revenue | $50,716 | $43,154 | $7,562 | 17.5% | | B2B Cost of revenue | $9,459 | $8,424 | $1,035 | 12.3% | | B2B segment contribution | $41,257 | $34,730 | $6,527 | 18.8% | | B2C Revenue | $84,282 | $86,265 | $(1,983) | (2.3)% | | B2C Cost of revenue | $30,972 | $30,276 | $696 | 2.3% | | B2C segment contribution | $53,310 | $55,989 | $(2,679) | (4.8)% | [B2B Segment](index=48&type=section&id=B2B%20Segment) B2B revenue increased by **$7.6 million (17.5%)** due to U.S. expansion and migration services, with a corresponding rise in cost of revenue - B2B revenue increased by **$7.6 million (17.5%)** primarily due to expansion in Nevada and recognition of migration service revenue and termination fees in Michigan and New York[237](index=237&type=chunk) - B2B cost of revenue increased by **$1.0 million (12.3%)** mainly due to the expansion of B2B offerings in Nevada[238](index=238&type=chunk) [B2C Segment](index=48&type=section&id=B2C%20Segment) B2C revenue decreased by **$2.0 million (2.3%)** due to reduced Latin American player activity and unfavorable exchange rates, partially offset by European growth - B2C revenue decreased by **$2.0 million (2.3%)** primarily due to reduced player activity and unfavorable exchange rates in Latin America, partially offset by growth in Europe[239](index=239&type=chunk) - B2C cost of revenue remained relatively consistent with the prior year period[240](index=240&type=chunk) [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA is used by management to assess financial performance and compare core business operations [Adjusted EBITDA](index=49&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA improved significantly to **$8.6 million** in 2024 from a negative **$8.4 million** in 2023, reflecting operational improvements - Management uses Adjusted EBITDA to measure financial performance, comparing operating performance period-to-period and assessing core business against industry peers by removing effects of non-core items[241](index=241&type=chunk) Adjusted EBITDA Reconciliation to Net Loss (2024 vs. 2023) | Metric | Year Ended Dec 31, 2024 (in thousands) | Year Ended Dec 31, 2023 (in thousands) | | :------------------------------------------ | :------------------------------------- | :------------------------------------- | | Net loss | $(7,959) | $(34,444) | | Income tax expense (benefit) | $(275) | $138 | | Interest expense | $4,607 | $5,003 | | Gain on amendment of Content Licensing Agreement | — | $(9,718) | | Loss on debt extinguishment | — | $8,784 | | Contingent liability and related revaluation | — | $(830) | | Depreciation and amortization | $7,634 | $17,161 | | Share-based compensation and related expense | $3,688 | $5,511 | | Transaction related expenses | $888 | — | | **Adjusted EBITDA** | **$8,583** | **$(8,395)** | [Key Performance Indicators](index=49&type=section&id=Key%20Performance%20Indicators) Key performance indicators show strong B2B Gross Operator Revenue growth but a declining B2B Take Rate, while B2C active customers decreased and sports margin improved Key Performance Indicators (2024 vs. 2023) | KPI | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | Change (Amount) | Change (Percent) | | :-------------------------- | :---------------------- | :---------------------- | :---------------- | :--------------- | | B2B Gross Operator Revenue (in millions) | $2,514.6 | $1,657.8 | $856.8 | 51.7% | | B2B Take Rate | 2.0% | 2.6% | (0.6)% | (22.5)% | | B2C Active Customers (in thousands) | 436 | 500 | (64) | (12.8)% | | B2C Marketing Spend Ratio | 21.7% | 23.6% | (1.9)% | (8.1)% | | B2C Sports Margin | 7.5% | 7.0% | 0.5% | 6.9% | [B2B Gross Operator Revenue](index=49&type=section&id=B2B%20Gross%20Operator%20Revenue) B2B Gross Operator Revenue increased by **$856.8 million (51.7%)** in 2024, driven by organic growth in key U.S. and Canadian markets - B2B Gross Operator Revenue increased by **$856.8 million (51.7%)** to **$2,514.6 million** in 2024, driven primarily by organic growth in Pennsylvania, Michigan, New Jersey, Connecticut, and Ontario[246](index=246&type=chunk)[248](index=248&type=chunk) [B2B Take Rate](index=51&type=section&id=B2B%20Take%20Rate) The B2B Take Rate decreased by **0.6 percentage points (22.5%)** in 2024, primarily due to lower contractual revenue rates after an exclusivity period ended - The B2B Take Rate decreased by **0.6 percentage points (22.5%)** to **2.0%** in 2024, primarily due to a decrease in contractual revenue rates following the expiration of an exclusivity period with a B2B customer in 2023[246](index=246&type=chunk)[250](index=250&type=chunk) [B2C Active Customers](index=51&type=section&id=B2C%20Active%20Customers) B2C Active Customers decreased by **64 thousand (12.8%)** in 2024, mainly due to reduced customer acquisition efforts in Latin America - B2C Active Customers decreased by **64 thousand (12.8%)** to **436 thousand** in 2024, primarily driven by reduced customer acquisition in Latin America[246](index=246&type=chunk)[252](index=252&type=chunk) [B2C Marketing Spend Ratio](index=51&type=section&id=B2C%20Marketing%20Spend%20Ratio) The B2C Marketing Spend Ratio decreased by **1.9 percentage points (8.1%)** in 2024, primarily due to affiliate marketing strategies in Latin America - The B2C Marketing Spend Ratio decreased by **1.9 percentage points (8.1%)** to **21.7%** in 2024, primarily due to the deployment of affiliate marketing strategies in Latin America[246](index=246&type=chunk)[254](index=254&type=chunk) [B2C Sports Margin](index=51&type=section&id=B2C%20Sports%20Margin) B2C Sports Margin increased by **0.5 percentage points (6.9%)** in 2024, primarily attributed to favorable outcomes of individual sports events - B2C Sports Margin increased by **0.5 percentage points (6.9%)** to **7.5%** in 2024, primarily attributable to the outcomes of individual sports events[246](index=246&type=chunk)[256](index=256&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) GAN faces going concern uncertainty due to the FanDuel contract expiration and debt maturity, despite generating positive cash from operations in 2024 [Sources of Liquidity](index=51&type=section&id=Sources%20of%20Liquidity) GAN had **$38.7 million** cash on hand as of December 31, 2024, but faces going concern doubt due to contract expiration and debt maturity - As of December 31, 2024, the company had an accumulated deficit of **$317.3 million** and incurred a net loss of **$8.0 million** for the year, generating **$5.8 million** in cash from operations[257](index=257&type=chunk) - Cash on hand totaled **$38.7 million** as of December 31, 2024, with liabilities to users at **$9.9 million**[257](index=257&type=chunk) - The Amended Credit Facility, with a principal balance of **$42.0 million**, matures on April 14, 2026[259](index=259&type=chunk) - The expiration of the U.S. commercial contract with FanDuel in January 2025 and the maturity of the Amended Credit Facility in April 2026 raise substantial doubt about the company's ability to continue as a going concern, though mitigation plans are in place[260](index=260&type=chunk)[261](index=261&type=chunk) [Material Cash Commitments](index=52&type=section&id=Material%20Cash%20Commitments) Primary cash uses include working capital, content licensing, and software development, with capital expenditures decreasing in 2024 - Primary uses of cash include ongoing working capital needs, content licensing, and developing/maintaining proprietary software platforms[264](index=264&type=chunk) - The Content Licensing Agreement with a third-party provider concluded in March 2024, with the remaining **$2.2 million** liability settled[265](index=265&type=chunk) - Capital expenditures for investing activities were **$3.1 million** in 2024 (vs. **$6.8 million** in 2023), including **$2.3 million** for capitalized software development costs[267](index=267&type=chunk) [Cash Flow Analysis](index=53&type=section&id=Cash%20Flow%20Analysis) Operating cash flow significantly improved in 2024, turning positive, while investing cash outflow decreased Summary of Cash Flow Activities (2024 vs. 2023) | Activity | Year Ended Dec 31, 2024 (in thousands) | Year Ended Dec 31, 2023 (in thousands) | Change (Amount) | Change (Percent) | | :------------------------------------ | :------------------------------------- | :------------------------------------- | :---------------- | :--------------- | | Net cash provided by (used in) operating activities | $5,813 | $(3,565) | $9,378 | n.m. | | Net cash used in investing activities | $(3,130) | $(6,815) | $3,685 | (54.1)% | | Net cash provided by financing activities | $2 | $1,347 | $(1,345) | (99.9)% | | Effect of foreign exchange rates on cash | $(2,521) | $1,691 | $(4,212) | n.m. | | Net increase (decrease) in cash | $164 | $(7,342) | $7,506 | n.m. | - Net cash provided by operating activities increased by **$9.4 million**, primarily due to a decrease in net loss after adjustments[269](index=269&type=chunk) - Net cash used in investing activities decreased by **$3.7 million**, mainly due to reduced capitalized software development costs and lower property and equipment purchases[270](index=270&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, GAN Limited is not required to provide market risk disclosures - As a smaller reporting company, GAN Limited is not required to provide the information for this item[272](index=272&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents GAN's audited consolidated financial statements for 2024 and 2023, with an unqualified opinion from Grant Thornton LLP [Report of Independent Registered Public Accounting Firm](index=54&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued an unqualified opinion on GAN's 2024 and 2023 consolidated financial statements, affirming fair presentation in accordance with U.S. GAAP - Grant Thornton LLP issued an unqualified opinion on GAN Limited's consolidated financial statements for the years ended December 31, 2024 and 2023, stating they present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP[274](index=274&type=chunk)[277](index=277&type=chunk) - The audit did not include an opinion on the effectiveness of the company's internal control over financial reporting[276](index=276&type=chunk) [Consolidated Balance Sheets](index=55&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show total assets of **$77.1 million** and a shareholders' deficit of **$(11.1 million)** as of December 31, 2024 Consolidated Balance Sheets (as of December 31, 2024 and 2023) | ASSETS (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $38,742 | $38,578 | | Accounts receivable, net | $7,043 | $11,417 | | Prepaid expenses | $3,165 | $3,344 | | Other current assets | $3,879 | $3,202 | | **Total current assets** | **$52,829** | **$56,541** | | Capitalized software development costs, net | $7,430 | $8,370 | | Intangible assets, net | $8,825 | $12,358 | | Operating lease right-of-use assets, net | $3,417 | $4,340 | | Other assets | $4,645 | $5,895 | | **Total assets** | **$77,146** | **$87,504** | | **LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** | | | | Accounts payable | $5,615 | $6,971 | | Accrued compensation and benefits | $6,680 | $7,849 | | Accrued content license fees | $1,757 | $4,024 | | Liabilities to users | $9,853 | $10,185 | | Current operating lease liabilities | $912 | $804 | | Other current liabilities | $6,351 | $6,891 | | **Total current liabilities** | **$31,168** | **$36,724** | | Deferred income taxes | $3,169 | $3,793 | | Long-term debt | $46,875 | $42,189 | | Non-current operating lease liabilities | $2,528 | $3,577 | | Other liabilities | $4,547 | $5,825 | | **Total liabilities** | **$88,287** | **$92,108** | | Ordinary shares | $457 | $451 | | Additional paid-in capital | $339,720 | $336,552 | | Accumulated deficit | $(317,264) | $(309,305) | | Accumulated other comprehensive loss | $(34,054) | $(32,302) | | **Total shareholders' equity (deficit)** | **$(11,141)** | **$(4,604)** | | **Total liabilities and shareholders' equity (deficit)** | **$77,146** | **$87,504** | [Consolidated Statements of Operations](index=56&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a net loss of **$8.0 million** for 2024, a significant improvement from **$34.4 million** in 2023 Consolidated Statements of Operations (Years Ended December 31, 2024 and 2023) | (in thousands, except share and per share amounts) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :------------------------------------------------- | :---------------------- | :---------------------- | | Revenue | $134,998 | $129,419 | | Operating costs and expenses: | | | | Cost of revenue | $40,431 | $38,700 | | Sales and marketing | $25,303 | $28,972 | | Product and technology | $34,246 | $38,243 | | General and administrative | $30,984 | $36,657 | | Depreciation and amortization | $7,634 | $17,161 | | **Total operating costs and expenses** | **$138,598** | **$159,733** | | **Operating loss** | **$(3,600)** | **$(30,314)** | | Other loss, net | $4,634 | $3,992 | | **Loss before income taxes** | **$(8,234)** | **$(34,306)** | | Income tax (benefit) expense | $(275) | $138 | | **Net loss** | **$(7,959)** | **$(34,444)** | | Loss per share, basic and diluted | $(0.18) | $(0.78) | | Weighted average ordinary shares outstanding, basic and diluted | 45,403,847 | 44,180,600 | [Consolidated Statements of Comprehensive Loss](index=57&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) The consolidated statements of comprehensive loss show a total comprehensive loss of **$(9.7 million)** in 2024, including foreign currency adjustments Consolidated Statements of Comprehensive Loss (Years Ended December 31, 2024 and 2023) | (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :------------------------------------ | :---------------------- | :---------------------- | | Net loss | $(7,959) | $(34,444) | | Other comprehensive loss, net of tax: | | | | Foreign currency translation adjustments | $(1,752) | $1,496 | | **Comprehensive loss** | **$(9,711)** | **$(32,948)** | [Consolidated Statements of Changes in Shareholders' Equity (Deficit)](index=58&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity%20(Deficit)) Shareholders' equity (deficit) decreased to **$(11.1 million)** by December 31, 2024, primarily due to the net loss and foreign currency adjustments Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Years Ended December 31, 2024 and 2023) | (in thousands, except share amounts) | Ordinary Shares (Shares) | Ordinary Shares (Amount) | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Shareholders' Equity (Deficit) | | :----------------------------------- | :----------------------- | :----------------------- | :------------------------- | :-------------------- | :----------------------------------- | :----------------------------------- | | Balance at January 1, 2023 | 42,894,211 | $429 | $328,998 | $(274,861) | $(33,798) | $20,768 | | Net loss | — | — | — | $(34,444) | — | $(34,444) | | Foreign currency translation adjustments | — | — | — | — | $1,496 | $1,496 | | Share-based compensation | — | — | $5,246 | — | — | $5,246 | | Restricted share activity | 829,895 | $8 | $306 | — | — | $314 | | Repurchase of restricted shares to pay tax liability | (142,004) | $(1) | $(212) | — | — | $(213) | | Issuance of ordinary shares upon exercise of share options | 181,516 | $1 | $201 | — | — | $202 | | Issuance of ordinary shares upon ESPP purchases | 57,960 | $1 | $63 | — | — | $64 | | Issuance of ordinary shares in connection with Content Provider Agreement | 1,250,000 | $13 | $1,950 | — | — | $1,963 | | **Balance at December 31, 2023** | **45,071,578** | **$451** | **$336,552** | **$(309,305)** | **$(32,302)** | **$(4,604)** | | Net loss | — | — | — | $(7,959) | — | $(7,959) | | Foreign currency translation adjustments | — | — | — | — | $(1,752) | $(1,752) | | Share-based compensation | — | — | $3,554 | — | — | $3,554 | | Restricted share activity | 753,781 | $8 | $(7) | — | — | $1 | | Repurchase of restricted shares to pay tax liability | (261,390) | $(3) | $(380) | — | — | $(383) | | Issuance of ordinary shares upon exercise of share options | 137,587 | $1 | — | — | — | $1 | | **Balance at December 31, 2024** | **45,701,556** | **$457** | **$339,720** | **$(317,264)** | **$(34,054)** | **$(11,141)** | [Consolidated Statements of Cash Flows](index=59&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated **$5.8 million** in cash in 2024, a significant improvement from a cash outflow in 2023 Consolidated Statements of Cash Flows (Years Ended December 31, 2024 and 2023) | (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :------------------------------------ | :---------------------- | :---------------------- | | Net cash provided by (used in) operating activities | $5,813 | $(3,565) | | Net cash used in investing activities | $(3,130) | $(6,815) | | Net cash provided by financing activities | $2 | $1,347 | | Effect of foreign exchange rates on cash | $(2,521) | $1,691 | | Net increase (decrease) in cash | $164 | $(7,342) | | Cash and cash equivalents, beginning of period | $38,578 | $45,920 | | **Cash and cash equivalents, end of period** | **$38,742** | **$38,578** | | Supplemental Cash Flow Information: | | | | Cash paid for: Interest | $2 | $1,068 | | Cash paid for: Income taxes | $438 | $331 | [Notes to Consolidated Financial Statements](index=61&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information on GAN's operations, accounting policies, acquisitions, assets, debt, equity, and other financial matters [NOTE 1 – NATURE OF OPERATIONS](index=61&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20OPERATIONS) GAN is a Bermuda-based holding company with B2B and B2C segments, currently undergoing a merger with SEGA SAMMY CREATION INC - GAN Limited is a Bermuda-based holding company operating B2B (GameSTACK, GAN Sports) and B2C (Coolbet) segments in the online gaming industry[293](index=293&type=chunk)[294](index=294&type=chunk) - The company entered into a Merger Agreement with SEGA SAMMY CREATION INC. on November 7, 2023, with GAN to become a wholly-owned subsidiary, and shareholders approved the merger on February 13, 2024[295](index=295&type=chunk)[297](index=297&type=chunk) - The merger consideration is **$1.97 per ordinary share** in cash, and closing is anticipated in the **second quarter of 2025**, subject to regulatory approvals[296](index=296&type=chunk)[297](index=297&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=62&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The financial statements adhere to U.S. GAAP, but going concern doubt exists due to contract expiration and debt maturity, despite compliance with covenants - The consolidated financial statements are prepared in accordance with U.S. GAAP and include the Parent and its wholly-owned subsidiaries[298](index=298&type=chunk) - As of December 31, 2024, the company had an accumulated deficit of **$317.3 million** and a net loss of **$8.0 million** for the year, raising substantial doubt about its ability to continue as a going concern due to the FanDuel contract expiration and debt maturity[299](index=299&type=chunk)[302](index=302&type=chunk) - The Amended Credit Facility, with a principal balance of **$42.0 million**, matures on April 14, 2026, and the company was in compliance with all financial covenants as of December 31, 2024[301](index=301&type=chunk) - Revenue from B2B operations is primarily from its GameSTACK SaaS platform, with fees based on a percentage of casino operator's net gaming revenue or net sportsbook win, recognized over time[312](index=312&type=chunk)[314](index=314&type=chunk) - Revenue from B2C gaming operations (sportsbook, casino, poker) is reported net of player winnings and bonuses, recognized at the conclusion of each contest or wager[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - Cost of revenue primarily consists of variable costs such as content license fees, payment processing fees, platform technology costs, gaming duties, and sportsbook feed services[329](index=329&type=chunk) - The company is subject to income taxes in multiple jurisdictions and recognizes deferred tax assets and liabilities, with a valuation allowance applied to deferred tax assets not expected to be realized[358](index=358&type=chunk) [NOTE 3 – ACQUISITION](index=74&type=section&id=NOTE%203%20%E2%80%93%20ACQUISITION) An amended Content Licensing Agreement with Ainsworth Game Technology, initially a **$24.9 million** business combination, was terminated in March 2024 - The Content Licensing Agreement with Ainsworth Game Technology, amended in April 2022, was accounted for as a business combination with a total consideration of **$24.9 million**[365](index=365&type=chunk)[367](index=367&type=chunk) - In December 2022, the company recognized an impairment of **$19.1 million** associated with the identified intangible assets from this business combination[368](index=368&type=chunk) - A further amendment in March 2023 reduced the contract term to March 31, 2024, and decreased fixed fees payable, with the remaining liability settled in March 2024[369](index=369&type=chunk)[370](index=370&type=chunk) [NOTE 4 – PROPERTY AND EQUIPMENT, NET](index=76&type=section&id=NOTE%204%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT%2C%20NET) Net property and equipment totaled **$3.0 million** as of December 31, 2024, with depreciation expense of **$1.5 million** for the year Property and Equipment, Net (as of December 31, 2024 and 2023) | (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :-------------------------- | :----------- | :----------- | | Fixtures, fittings and equipment | $4,323 | $5,052 | | Platform hardware | $1,817 | $2,251 | | Total property and equipment, cost | $6,140 | $7,303 | | Less: accumulated depreciation | $(3,111) | $(3,144) | | **Total** | **$3,029** | **$4,159** | - Depreciation expense related to property and equipment was **$1,535 thousand** for 2024 and **$1,648 thousand** for 2023[371](index=371&type=chunk) [NOTE 5 – CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET](index=76&type=section&id=NOTE%205%20%E2%80%93%20CAPITALIZED%20SOFTWARE%20DEVELOPMENT%20COSTS%2C%20NET) Net capitalized software development costs were **$7.4 million** as of December 31, 2024, with amortization expense of **$2.8 million** for the year Capitalized Software Development Costs, Net (as of December 31, 2024 and 2023) | (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :------------------------------------ | :----------- | :----------- | | Capitalized software development costs | $12,456 | $10,759 | | Development in progress | $357 | $494 | | Total capitalized software development, cost | $12,813 | $11,253 | | Less: accumulated amortization | $(5,383) | $(2,883) | | **Total** | **$7,430** | **$8,370** | - Amortization expense related to capitalized software development costs was **$2,785 thousand** for 2024 and **$1,972 thousand** for 2023[373](index=373&type=chunk) [NOTE 6 – INTANGIBLE ASSETS](index=77&type=section&id=NOTE%206%20%E2%80%93%20INTANGIBLE%20ASSETS) Net definite-lived intangible assets totaled **$8.8 million** as of December 31, 2024, with estimated amortization of **$3.1 million** in 2025 Definite-Lived Intangible Assets, Net (as of December 31, 2024 and 2023) | (in thousands) | Dec 31, 2024 Net Carrying Amount | Dec 31, 2023 Net Carrying Amount | | :-------------------------- | :------------------------------- | :------------------------------- | | Developed technology | $4,108 | $5,958 | | Customer relationships | $634 | $1,142 | | Trade names and trademarks | $2,795 | $3,660 | | Gaming licenses | $1,288 | $1,598 | | **Total** | **$8,825** | **$12,358** | - Amortization expense related to intangible assets was **$3,315 thousand** for 2024 and **$13,543 thousand** for 2023[375](index=375&type=chunk) Estimated Amortization Expense for Intangible Assets (Next Five Years) | Year | Amount (in thousands) | | :--- | :-------------------- | | 2025 | $3,114 | | 2026 | $2,666 | | 2027 | $2,094 | | 2028 | $932 | | 2029 | $19 | | **Total** | **$8,825** | [NOTE 7 – DEBT](index=78&type=section&id=NOTE%207%20%E2%80%93%20DEBT) The Amended Credit Facility has a **$42.0 million** principal balance, maturing in April 2026, with **$4.7 million** in interest expense for 2024 - On April 13, 2023, the Credit Facility was amended, increasing the principal balance from **$30.0 million** to **$42.0 million** with **8.0%** accrued paid-in-kind (PIK) interest, maturing on April 14, 2026[379](index=379&type=chunk)[380](index=380&type=chunk) - The company incurred **$7.3 million** in prepayment premiums and **$3.1 million** in debt issuance costs related to the Amended Credit Facility[380](index=380&type=chunk) Long-Term Debt, Net (as of December 31, 2024) | (in thousands) | Amount | | :-------------------------- | :----- | | Principal | $48,305 | | Less unamortized debt issuance costs | $(1,430) | | **Long-term debt, net** | **$

[Executive Summary & Strategic Update](index=1&type=section&id=Executive%20Summary%20%26%20Strategic%20Update) GAN Limited provides B2B internet gaming technology and operates B2C sports betting, showing improved 2024 financial performance and progressing towards a merger with SEGA SAMMY [Company Overview](index=1&type=section&id=Company%20Overview) GAN Limited is a B2B internet gaming technology provider in North America and a B2C sports betting operator internationally - GAN Limited operates as a **B2B technology provider** for real money internet gaming solutions in North America and a **B2C operator** of internet sports betting internationally[1](index=1&type=chunk)[10](index=10&type=chunk) - The B2B segment provides its proprietary **GameSTACK internet gambling enterprise software system** to U.S. land-based casino operators[10](index=10&type=chunk) [Q4 & Full Year 2024 Performance Overview](index=1&type=section&id=Q4%20%26%20Full%20Year%202024%20Performance%20Overview) GAN Limited reported improved financial performance for both Q4 and the full year 2024, driven by revenue growth and a streamlined cost structure - GAN reported **stronger financial performance in 2024** with growth in both top and bottom lines, attributed to continued execution and a streamlined cost structure[2](index=2&type=chunk) - Net loss significantly improved in Q4 2024 to **$4.2 million** from $9.4 million in Q4 2023, and for the full year 2024 to **$8.0 million** from $34.4 million in 2023[5](index=5&type=chunk) - Adjusted EBITDA turned **positive for the full year 2024 at $8.6 million**, compared to a loss of $(8.4) million in 2023[5](index=5&type=chunk) [SEGA SAMMY Merger Update](index=1&type=section&id=SEGA%20SAMMY%20Merger%20Update) The planned merger with SEGA SAMMY is progressing, having received GAN shareholder approval and clearances from CFIUS and several gaming regulatory agencies - The merger with SEGA SAMMY is expected to close in the **second quarter of 2025**[2](index=2&type=chunk)[8](index=8&type=chunk) - The merger has been approved by GAN shareholders, received CFIUS clearance, and gained approval from several gaming regulatory agencies, including the Nevada Gaming Commission[8](index=8&type=chunk) - GAN will not host a conference call for its Q4 and year-end 2024 earnings due to the expected merger[9](index=9&type=chunk) [Financial Performance Highlights](index=2&type=section&id=Financial%20Performance%20Highlights) GAN Limited achieved revenue growth and significant net loss reduction in Q4 and full year 2024, with positive Adjusted EBITDA [Fourth Quarter 2024 Financial Highlights](index=2&type=section&id=Fourth%20Quarter%202024%20Financial%20Highlights) In Q4 2024, GAN's total revenue increased by 3% to $31.7 million, primarily driven by growth in the B2C segment Fourth Quarter 2024 Financial Highlights (in thousands) | Metric | Q4 2024 (in thousands) | Q4 2023 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Total Revenue | $31,689 | $30,715 | 3% | | B2B Segment Revenue | $9,007 | $11,802 | -23.7% | | B2C Segment Revenue | $22,682 | $18,913 | 19.9% | | Operating Expenses | $23,400 | $29,500 | -20.7% | | Net Loss | $(4,151) | $(9,376) | 55.7% | | Adjusted EBITDA | $8 | $(3,884) | >100% | - The decrease in B2B segment revenue was primarily related to a **B2B partner exit**[5](index=5&type=chunk) - Growth in B2C revenue was driven by **increased player activity in Europe**, partially offset by reduced activity and unfavorable exchange rates in Latin America[5](index=5&type=chunk) [Full Year 2024 Financial Highlights](index=2&type=section&id=Full%20Year%202024%20Financial%20Highlights) For the full year 2024, total revenue grew by 4% to $135.0 million, primarily due to increases in the B2B segment Full Year 2024 Financial Highlights (in thousands) | Metric | FY 2024 (in thousands) | FY 2023 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Total Revenue | $134,998 | $129,419 | 4.3% | | B2B Segment Revenue | $50,716 | $43,154 | 17.5% | | B2C Segment Revenue | $84,282 | $86,265 | -2.3% | | Operating Expenses | $98,200 | $121,000 | -18.8% | | Net Loss | $(7,959) | $(34,444) | 76.9% | | Adjusted EBITDA | $8,583 | $(8,395) | >100% | - The increase in B2B segment revenue was primarily due to an **expansion of offerings in Nevada** and revenue recognition from a partner exit in Michigan[5](index=5&type=chunk) - Operating expenses decreased due to overall reduction in compensation costs, reduced headcount from cost-saving initiatives, and lower depreciation and amortization[5](index=5&type=chunk) [Detailed Financial Statements](index=7&type=section&id=Detailed%20Financial%20Statements) Detailed statements reveal improved net loss and operating income for Q4 and full year 2024, driven by revenue growth and cost reductions across segments and geographies [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a significant reduction in net loss for both the fourth quarter and full year 2024, driven by increased revenue and substantial decreases in total operating costs and expenses Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :-------------------- | :------ | :------ | :------ | :------ | | Revenue | $31,689 | $30,715 | $134,998 | $129,419 | | Total Operating Costs and Expenses | $34,347 | $39,297 | $138,598 | $159,733 | | Operating (Loss) Income | $(2,658) | $(8,582) | $(3,600) | $(30,314) | | Net (Loss) Income | $(4,151) | $(9,376) | $(7,959) | $(34,444) | | Loss per share, basic and diluted | $(0.09) | $(0.21) | $(0.18) | $(0.78) | - Depreciation and amortization expenses decreased significantly from **$4,378 thousand in Q4 2023 to $1,903 thousand in Q4 2024**, and from **$17,161 thousand in FY 2023 to $7,634 thousand in FY 2024**[22](index=22&type=chunk) [Segment Revenue and Gross Profit](index=8&type=section&id=Segment%20Revenue%20and%20Gross%20Profit) Segment analysis reveals that B2C revenue increased in Q4 2024 while B2B revenue decreased, but for the full year, B2B revenue grew significantly while B2C slightly declined Segment Revenue and Gross Profit (in thousands) | Metric (in thousands) | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :-------------------- | :------ | :------ | :------ | :------ | | B2B Revenue | $9,007 | $11,802 | $50,716 | $43,154 | | B2C Revenue | $22,682 | $18,913 | $84,282 | $86,265 | | Total Revenue | $31,689 | $30,715 | $134,998 | $129,419 | | B2B Segment Contribution | $6,112 | $9,507 | $41,257 | $34,730 | | B2B Segment Contribution Margin | 67.9% | 80.6% | 81.3% | 80.5% | | B2C Segment Contribution | $14,633 | $11,396 | $53,310 | $55,989 | | B2C Segment Contribution Margin | 64.5% | 60.3% | 63.3% | 64.9% | | Total Segment Contribution | $20,745 | $20,903 | $94,567 | $90,719 | - B2B revenue from platform and content license fees decreased in Q4 2024 but **increased for the full year 2024**[24](index=24&type=chunk) - B2C gaming revenue showed **strong growth in Q4 2024 (19.9% YoY)** but a slight decline for the full year 2024 (-2.3% YoY)[24](index=24&type=chunk) [Revenue by Geography](index=9&type=section&id=Revenue%20by%20Geography) Geographically, revenue from the United States and Europe increased in both Q4 and the full year 2024, while Latin America showed mixed results Revenue by Geography (in thousands) | Geography (in thousands) | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :----------------------- | :------ | :------ | :------ | :------ | | United States | $8,649 | $8,487 | $42,277 | $31,758 | | Europe | $14,437 | $12,114 | $52,324 | $47,788 | | Latin America | $8,011 | $7,145 | $31,467 | $39,935 | | Rest of the world | $592 | $2,969 | $8,930 | $9,938 | | Total | $31,689 | $30,715 | $134,998 | $129,419 | - Revenue in the United States increased by **1.9% in Q4 2024** and **33.1% for the full year 2024**[26](index=26&type=chunk) - Latin America revenue decreased by **21.2% for the full year 2024**, despite a 12.1% increase in Q4 2024[26](index=26&type=chunk) [Adjusted EBITDA Reconciliation](index=9&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation of net loss to Adjusted EBITDA highlights the impact of non-operating and non-cash items, showing significant improvement for both periods Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :-------------------- | :------ | :------ | :------ | :------ | | Net (loss) income | $(4,152) | $(9,376) | $(7,959) | $(34,444) | | Income tax (benefit) expense | $309 | $(247) | $(275) | $138 | | Interest expense, net | $1,158 | $1,118 | $4,607 | $5,003 | | Depreciation and amortization | $1,903 | $4,378 | $7,634 | $17,161 | | Share-based compensation and related expense | $690 | $785 | $3,688 | $5,511 | | Transaction related costs | $100 | $0 | $888 | $0 | | Adjusted EBITDA | $8 | $(3,884) | $8,583 | $(8,395) | - Adjusted EBITDA improved from a loss of **$(3,884) thousand in Q4 2023 to $8 thousand in Q4 2024**[28](index=28&type=chunk) - For the full year, Adjusted EBITDA swung from a loss of **$(8,395) thousand in 2023 to a positive $8,583 thousand in 2024**[28](index=28&type=chunk) [Key Performance Indicators & Non-GAAP Measures](index=3&type=section&id=Key%20Performance%20Indicators%20%26%20Non-GAAP%20Measures) Key performance indicators show strong B2B growth and improved B2C sports margin, with definitions provided for non-GAAP measures [Key Performance Indicators](index=3&type=section&id=Key%20Performance%20Indicators) Key performance indicators show strong growth in B2B Gross Operator Revenue for both Q4 and the full year 2024, indicating increased activity on GAN's B2B platforms Key Performance Indicators | KPI | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :-------------------------------- | :------ | :------ | :------ | :------ | | B2B Gross Operator Revenue (in millions) | $651.2 | $384.7 | $2,514.6 | $1,657.8 | | B2B Take Rate | 1.4% | 3.1% | 2.0% | 2.6% | | B2C Active Customers (in thousands) | 212 | 236 | 436 | 500 | | B2C Marketing Spend Ratio | 17% | 28% | 22% | 24% | | B2C Sports Margin | 8.5% | 6.5% | 7.5% | 7.0% | - B2B Gross Operator Revenue increased by **69% in Q4 2024** and **52% for the full year 2024**, driven by organic growth in Pennsylvania, New Jersey, Ontario, and Connecticut[5](index=5&type=chunk) - B2C Active Customers declined primarily due to **limited customer acquisition in Latin America**[5](index=5&type=chunk) [Historical Sports Margin](index=10&type=section&id=Historical%20Sports%20Margin) The actual sports margin for the B2C segment showed an improving trend throughout 2024, peaking at 8.5% in Q4 2024 Historical Sports Margin | Quarter | Sports Margin | | :------ | :------------ | | Dec 31, 2024 | 8.5% | | Sep 30, 2024 | 7.2% | | Jun 30, 2024 | 5.7% | | Mar 31, 2024 | 6.5% | - The B2C Sports Margin increased from **6.5% in Q1 2024 to 8.5% in Q4 2024**[30](index=30&type=chunk) [Non-GAAP Financial Measures Definitions](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) This section provides definitions for various non-GAAP financial measures used by GAN, including B2B Gross Operator Revenue, B2B Take Rate, B2C Active Customers, B2C Marketing Spend Ratio, B2C Sports Margin, and Adjusted EBITDA - B2B Gross Operator Revenue indicates the extent of transactions processed through the Company's B2B corporate customers' platforms[14](index=14&type=chunk) - Adjusted EBITDA is used to measure financial performance by removing the effect of items not directly resulting from core operations and assessing core business performance against industry peers[19](index=19&type=chunk) - B2C Active Customers, B2C Marketing Spend Ratio, and B2C Sports Margin are metrics used to monitor customer segmentation, marketing effectiveness, and sportsbook performance, respectively[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section includes forward-looking statements and investor contact information [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding anticipated trends in revenues, operating expenses, profitability, and the successful closure of the merger with SEGA SAMMY - Forward-looking statements include expectations regarding revenue trends, operating expenses, profitability, and the successful completion of the SEGA SAMMY merger[11](index=11&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and other important factors detailed in the Company's Form 10-K and subsequent periodic reports[11](index=11&type=chunk) [Investor Contacts](index=6&type=section&id=Investor%20Contacts) Contact information for investor relations is provided for GAN and Alpha IR Group - Investor inquiries can be directed to **Robert Shore, VP, Investor Relations & Capital Markets at GAN**, or **Ryan Coleman/Davis Snyder at Alpha IR Group**[20](index=20&type=chunk)

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents GAN Limited's unaudited condensed consolidated financial statements for Q1 2024, covering key financial statements and accounting notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202024%20and%20December%2031%2C%202023) Condensed Consolidated Balance Sheets | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | :-------------------- | | Total Assets | $81,403 | $87,504 | -$6,101 | | Total Liabilities | $90,325 | $92,108 | -$1,783 | | Total Shareholders' Deficit | $(8,922) | $(4,604) | -$4,318 | | Cash | $36,592 | $38,578 | -$1,986 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Revenue | $30,651 | $35,129 | -$4,478 | | Operating Loss | $(3,303) | $(6,001) | $2,698 | | Net (Loss) Income | $(4,160) | $1,501 | -$5,661 | | (Loss) Earnings Per Share, basic and diluted | $(0.09) | $0.03 | -$0.12 | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Condensed Consolidated Statements of Comprehensive Loss | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net Loss | $(4,160) | $1,501 | -$5,661 | | Foreign currency translation adjustments | $(767) | $966 | -$1,733 | | Comprehensive (Loss) Income | $(4,927) | $2,467 | -$7,394 | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Condensed Consolidated Statements of Changes in Shareholders' Equity | Metric | Balance at Jan 1, 2024 (in thousands) | Balance at March 31, 2024 (in thousands) | Balance at Jan 1, 2023 (in thousands) | Balance at March 31, 2023 (in thousands) | | :-------------------------------- | :------------------------------------- | :--------------------------------------- | :------------------------------------- | :--------------------------------------- | | Total Shareholders' (Deficit) Equity | $(4,604) | $(8,922) | $20,768 | $24,607 | | Net (Loss) Income | $(4,160) | $(4,160) | $1,501 | $1,501 | | Share-based compensation | $840 | $840 | $1,382 | $1,382 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net cash used in operating activities | $(280) | $(4,175) | $3,895 | | Net cash used in investing activities | $(727) | $(1,762) | $1,035 | | Net cash provided by (used in) financing activities | $3 | $(47) | $50 | | Net decrease in cash | $(1,986) | $(5,165) | $3,179 | | Cash, end of period | $36,592 | $40,755 | -$4,163 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - GAN Limited operates in two segments: **B2B (GameSTACK™, GAN Sports for U.S. casinos)** and **B2C (Coolbet online sports betting and casino in Northern Europe, Latin America, Canada)**[24](index=24&type=chunk) - The Company entered into a **Merger Agreement** with **SEGA SAMMY CREATION INC.** on **November 7, 2023**, under which GAN will become a wholly-owned subsidiary, with shareholders approving the merger on **February 13, 2024**[25](index=25&type=chunk)[27](index=27&type=chunk) - The merger consideration is **$1.97 per ordinary share** in cash, with all outstanding restricted shares, restricted share units, and options vesting and converting to cash at the effective time[29](index=29&type=chunk) - Financial statements are prepared under **U.S. GAAP**, consolidating all wholly-owned subsidiaries, with intercompany transactions eliminated[30](index=30&type=chunk) - As of March 31, 2024, the Company had an accumulated deficit of **$313.5 million** and a net loss of **$4.2 million** for the quarter[31](index=31&type=chunk) - The Amended Credit Facility requires minimum liquidity of **$10.0 million**, and the Company was in compliance as of March 31, 2024, but future covenant violations are possible[33](index=33&type=chunk) - Foreign currency translation adjustments resulted in a net loss of **$767 thousand** for Q1 2024, compared to a gain of **$966 thousand** for Q1 2023[17](index=17&type=chunk) - Approximately **$28.5 million** of cash deposits are held in foreign countries (Northern Europe and Latin America), subject to local banking laws[38](index=38&type=chunk) - Macroeconomic conditions (inflation, higher interest rates, recession, strong U.S. dollar) can adversely impact the Company's results, affecting consumer spending and wagering[40](index=40&type=chunk) - B2B revenue is primarily from **GameSTACK™ SaaS platform**, content licensing, development, and hardware resale, with fees often usage-based or fixed[42](index=42&type=chunk)[43](index=43&type=chunk) - Remaining unsatisfied performance obligations related to fixed minimum guaranteed revenue totaled **$47.1 million** as of March 31, 2024, with **$34.0 million** expected to be satisfied within five years[43](index=43&type=chunk) - B2C operations include sportsbook, poker, casino, live casino, and virtual sports via www.coolbet.com, with revenue recognized at the conclusion of each contest or wager[53](index=53&type=chunk)[57](index=57&type=chunk) - Cost of revenue includes content license fees, payment processing fees, platform technology costs, gaming duties, and sportsbook feed services, excluding depreciation and amortization[60](index=60&type=chunk) - Sales and marketing expenses, including B2C user acquisition, are expensed as incurred[61](index=61&type=chunk) - General and administrative expenses include professional services, compensation, and foreign currency transaction gains/losses[63](index=63&type=chunk) - Share-based compensation expense is recognized for share options and restricted shares/units, valued at grant date fair value and amortized over the vesting period[65](index=65&type=chunk)[67](index=67&type=chunk) - Cash includes balances held at banks and third-party service providers, with **$10.2 million** held to satisfy liabilities to users as of March 31, 2024[69](index=69&type=chunk) - Capitalized software development costs are amortized on a straight-line basis over **3-5 years**, with development in progress for GAN Sports and GameSTACK technology[70](index=70&type=chunk)[71](index=71&type=chunk)[91](index=91&type=chunk) Property and Equipment, Net | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Total Property and Equipment, net | $3,737 | $4,159 | | Accumulated Depreciation | $(3,40

[Executive Summary & Q1 2024 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q1%202024%20Highlights) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) GAN's CEO highlighted **strong** B2B revenue **growth** and **successful** cost **reduction** initiatives in Q1 2024, with the merger with SegaSammy **progressing** as planned - B2B revenue **grew** nearly **10%** in Q1 2024[2](index=2&type=chunk) - Operating expenses **reduced** by **20%** **due to** ongoing cost initiatives[2](index=2&type=chunk) - B2C revenues **impacted by** lower sports margin, though new products (pre-built parlay bets) and major events (European Championship, Copa America) are **anticipated**[2](index=2&type=chunk) - Merger with SegaSammy **remains on track** to close in late 2024 or early 2025, with shareholder **approval** in February and CFIUS application **submitted**[2](index=2&type=chunk) [Q1 2024 Financial & Operational Overview](index=1&type=section&id=Q1%202024%20Financial%20%26%20Operational%20Overview) GAN reported a **13%** **decrease** in total revenue for Q1 2024, **primarily due to** a B2C segment **decline**, while B2B revenue **increased** by **9%** and operating expenses **decreased** by **20.6%** Q1 2024 vs Q1 2023 Key Financials | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | Change (%) | | :----- | :-------------------- | :-------------------- | :--------- | | Total Revenue | $30.7 | $35.1 | -13% | | B2B Revenue | $12.3 | $11.3 | +9% | | B2C Revenue | $18.3 | $23.9 | -23.4% | | Total Segment Contribution | $21.3 | $25.0 | -14.8% | | Operating Expenses | $24.6 | $31.0 | -20.6% | | Net (Loss) Income | ($4.2) | $1.5 | N/A | | Adjusted EBITDA | ($0.6) | $0.0 | N/A | | Cash (as of period end) | $36.6 | $38.6 (Dec 31, 2023) | -5.2% | - B2B Gross Operator Revenue (GOR) **increased** **49%** to **$632.0 million**, **driven by** organic **growth** in Pennsylvania, Michigan, New Jersey, Ontario, and Connecticut, despite a **decrease** in Take Rate[3](index=3&type=chunk) - B2C Active Customers **declined due to** limited customer acquisition in Latin America and fewer sporting events[3](index=3&type=chunk) [Key Financial Highlights (Unaudited)](index=2&type=section&id=Key%20Financial%20Highlights%20(Unaudited)) [Key Financial Highlights Table](index=2&type=section&id=Key%20Financial%20Highlights%20Table) This section **provides** a detailed unaudited summary of key financial and performance indicators for Q1 2024 compared to Q1 2023, covering revenues, profitability, and KPIs Key Financial Highlights (Unaudited) | Metric | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------ | | **Revenues** | | | | B2B | $12,347 | $11,279 | | B2C | $18,304 | $23,850 | | Total revenues | $30,651 | $35,129 | | **Profitability Measures** | | | | B2B segment contribution | $10,266 | $9,284 | | B2B segment contribution margin | 83.1% | 82.3% | | B2C segment contribution | $11,062 | $15,684 | | B2C segment contribution margin | 60.4% | 65.8% | | Net loss | ($4,160) | $1,501 | | Adjusted EBITDA | ($569) | $39 | | **Key Performance Indicators** | | | | B2B Gross Operator Revenue (in millions) | $632.0 | $422.8 | | B2B Take Rate | 2.0% | 2.7% | | B2C Active Customers (in thousands) | 222 | 257 | | B2C Marketing Spend Ratio | 23% | 21% | | B2C Sports Margin | 5.7% | 7.1% | [Corporate Updates](index=2&type=section&id=Corporate%20Updates) [Sega Sammy Transaction Update](index=2&type=section&id=Sega%20Sammy%20Transaction%20Update) GAN shareholders **approved** the merger with Sega Sammy, with applications **submitted** to CFIUS and gaming authorities, **on track** for late 2024 or early 2025 close - Merger with Sega Sammy **approved** by GAN shareholders on February **13, 2024**[6](index=6&type=chunk) - Application **submitted** to the Committee on Foreign Investment in the U.S. (CFIUS) and relevant gaming regulatory authorities[6](index=6&type=chunk) - Transaction **remains on track** to close in late 2024 or early 2025[6](index=6&type=chunk) [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) **Due to** the pending merger with Sega Sammy, GAN will **not host** a conference call for its first quarter 2024 earnings release - **No conference call** for Q1 2024 earnings **due to** expected merger with Sega Sammy[7](index=7&type=chunk) [Company Overview](index=2&type=section&id=Company%20Overview) [About GAN Limited](index=2&type=section&id=About%20GAN%20Limited) GAN is a **leading** B2B supplier of internet gambling SaaS solutions to the U.S. land-based casino industry and a **market-leading** B2C operator internationally - GAN is a **leading** B2B supplier of internet gambling software-as-a-service (SaaS) solutions to the U.S. land-based casino industry[8](index=8&type=chunk) - GAN is also a **market-leading** B2C operator of proprietary online sports betting technology internationally, with **strong** positions in selected European and Latin American markets[8](index=8&type=chunk) - The B2B segment **utilizes** the proprietary GameSTACK internet gambling enterprise software system, **licensed** as a turnkey solution for internet gaming, internet sports betting, and social casino gaming (Simulated Gaming)[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements regarding future expectations, subject to risks detailed in SEC filings, with no obligation to update - Statements in the release regarding future expectations, plans, and anticipated trends are forward-looking and involve known and unknown risks and uncertainties[9](index=9&type=chunk) - Readers are cautioned **not to place undue reliance** on forward-looking statements, which speak only as of their date[9](index=9&type=chunk) - The Company undertakes **no obligation to update** or revise any forward-looking statements, except as required by law[9](index=9&type=chunk) [Non-GAAP Financial Measures & KPIs](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20KPIs) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section **clarifies** the use of non-GAAP financial measures as supplements to U.S. GAAP results, noting they are **not substitutes** and may **not be comparable** - The company uses non-GAAP financial measures to supplement U.S. GAAP results, but they are **not substitutes** for GAAP measures[10](index=10&type=chunk) - Non-GAAP measures may **not be comparable** to similarly titled measures used by other companies[17](index=17&type=chunk) [Key Performance Indicator Definitions](index=3&type=section&id=Key%20Performance%20Indicator%20Definitions) This section **defines** key performance indicators and non-GAAP financial measures used by GAN, explaining their purpose for management and investors [B2B Gross Operator Revenue (GOR)](index=3&type=section&id=B2B%20Gross%20Operator%20Revenue%20(GOR)) B2B Gross Operator Revenue (GOR) is the sum of B2B corporate customers' gross revenue from virtual simulated gaming, RMiG, and gross sports wins - B2B GOR includes gross revenue from virtual simulated gaming, RMiG, and gross sports wins from sportsbook offerings[12](index=12&type=chunk) - This metric **indicates the extent** of transactions processed through the Company's B2B corporate customers' platforms[12](index=12&type=chunk) [B2B Take Rate](index=3&type=section&id=B2B%20Take%20Rate) B2B Take Rate is the quotient of B2B segment revenue retained by the company over the total Gross Operator Revenue generated by B2B corporate customers - B2B Take Rate is the ratio of B2B segment revenue retained by GAN to the total GOR generated by B2B customers[13](index=13&type=chunk) - It **indicates the impact** of statutory and commercial terms on the business[13](index=13&type=chunk) [B2C Active Customers](index=3&type=section&id=B2C%20Active%20Customers) B2C Active Customers are defined as users who place a wager during the period, a metric used to monitor customer segmentation, growth drivers, and platform traffic - B2C Active Customers are users who place a wager during the period[14](index=14&type=chunk) - This metric **helps monitor** customer segmentation, growth drivers, and platform traffic[14](index=14&type=chunk) [B2C Marketing Spend Ratio](index=3&type=section&id=B2C%20Marketing%20Ratio) The B2C Marketing Spend Ratio is the total B2C direct marketing expense divided by total B2C revenues, used to measure marketing investment success - B2C Marketing Spend Ratio is calculated as total B2C direct marketing expense divided by total B2C revenues[15](index=15&type=chunk) - This metric **measures the success** of marketing costs and allows for comparison across jurisdictions[15](index=15&type=chunk) [B2C Sports Margin](index=3&type=section&id=B2C%20Sports%20Margin) B2C Sports Margin is the ratio of wagers minus winnings to the total amount wagered, adjusted for open wagers, measuring sportsbook performance - B2C Sports Margin is the ratio of wagers minus winnings to total amount wagered, adjusted for open wagers[16](index=16&type=chunk) - It **measures sportsbook performance** against its expected outcome, reflecting the theoretical margin in sports bets[16](index=16&type=chunk) [Adjusted EBITDA](index=3&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP measure used to assess financial performance by removing effects not directly from core operations, such as interest, taxes, and non-cash items - Adjusted EBITDA is a non-GAAP measure used to compare operating performance and **assess core business performance**[17](index=17&type=chunk) - It **excludes** interest, taxes, depreciation, amortization, impairments, share-based compensation, restructuring costs, and other infrequent or unusual items from net loss[17](index=17&type=chunk) [Investor Contacts](index=3&type=section&id=Investor%20Contacts) [Investor Contact Information](index=3&type=section&id=Investor%20Contact%20Information) This section **provides** contact information for investor relations, including GAN's Vice President of Investor Relations & Capital Markets and Alpha IR Group - Contact information for GAN's Investor Relations and Alpha IR Group is **provided**[18](index=18&type=chunk) [Financial Statements (Unaudited)](index=4&type=section&id=Financial%20Statements%20(Unaudited)) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a net loss of **($4.16) million** for Q1 2024, compared to a net income of **$1.50 million** in Q1 2023, with total revenue **decreasing** by **12.7%** YoY Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $30,651 | $35,129 | | Cost of revenue | $9,323 | $10,161 | | Sales and marketing | $6,017 | $7,184 | | Product and technology | $9,616 | $9,578 | | General and administrative | $7,159 | $10,006 | | Depreciation and amortization | $1,839 | $4,201 | | Total operating costs and expenses | $33,954 | $41,130 | | Operating loss | ($3,303) | ($6,001) | | Interest expense, net | $1,132 | $1,716 | | Other income, net | ($26) | ($9,292) | | (Loss) income before income taxes | ($4,409) | $1,575 | | Income tax (benefit) expense | ($249) | $74 | | Net (loss) income | ($4,160) | $1,501 | | (Loss) earnings per share, basic and diluted | ($0.09) | $0.03 | [Segment Revenue and Gross Profit](index=5&type=section&id=Segment%20Revenue%20and%20Gross%20Profit) This section **details** revenue and segment contribution by B2B and B2C segments, with B2B revenue **increasing** by **9.5%** YoY and B2C revenue **decreasing** by **23.3%** YoY Segment Revenue and Gross Profit (Unaudited) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | **Revenue** | | | | B2B Platform and content license fees | $9,667 | $8,627 | | B2B Development services and other | $2,680 | $2,652 | | Total B2B revenue | $12,347 | $11,279 | | Total B2C revenue | $18,304 | $23,850 | | Total revenue | $30,651 | $35,129 | | **Gross Profit** | | | | B2B segment contribution | $10,266 | $9,284 | | B2B segment contribution margin | 83.1% | 82.3% | | B2C segment contribution | $11,062 | $15,684 | | B2C segment contribution margin | 60.4% | 65.8% | | Total segment contribution | $21,328 | $24,968 | | Total segment contribution margin | 69.6% | 71.1% | [Revenue by Geography](index=6&type=section&id=Revenue%20by%20Geography) Revenue from the United States **increased** by **6.8%** YoY, while Europe and Latin America experienced **declines** of **8.5%** and **38.8%** respectively, with Rest of the World **increasing** by **14.7%** Revenue by Geography (Unaudited) | Geography | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :---------------- | :-------------------------------- | :-------------------------------- | | United States | $9,092 | $8,516 | | Europe | $11,604 | $12,677 | | Latin America | $6,896 | $11,270 | | Rest of the world | $3,059 | $2,666 | | Total | $30,651 | $35,129 | [Adjusted EBITDA Reconciliation](index=6&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation shows an Adjusted EBITDA of **($0.57) million** for Q1 2024, a **decrease** from **$0.04 million** in Q1 2023, **primarily due to** the shift from net income to net loss Adjusted EBITDA Reconciliation (Unaudited) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net (loss) income | ($4,160) | $1,501 | | Income tax (benefit) expense | ($249) | $74 | | Interest expense, net | $1,132 | $1,716 | | Gain on amendment of Content Licensing Agreement | — | ($9,292) | | Depreciation and amortization | $1,839 | $4,201 | | Share-based compensation and related expense | $869 | $1,839 | | Adjusted EBITDA | ($569) | $39 | [Historical Sports Margin](index=7&type=section&id=Historical%20Sports%20Margin) The actual sports margin for Q1 2024 was **5.7%**, showing a **decline** from **6.5%** in Q4 2023 and **7.1%** in Q1 2023, **indicating** a downward trend over the past year Historical Sports Margin (Unaudited) | Period | Sports Margin | | :---------------- | :------------ | | March 31, 2024 | 5.7% | | December 31, 2023 | 6.5% | | September 30, 2023 | 6.0% | | June 30, 2023 | 8.5% |

[Company Announcement & Merger Update](index=1&type=section&id=Company%20Announcement%20%26%20Merger%20Update) GAN Limited announced Q4 and full-year 2023 results and provided an update on its merger with Sega Sammy Holdings [Fourth Quarter and Full Year 2023 Results Announcement](index=1&type=section&id=Fourth%20Quarter%20and%20Full%20Year%202023%20Results%20Announcement) GAN Limited reported unaudited financial results for Q4 and full year 2023, following shareholder approval of its merger - GAN Limited (NASDAQ: GAN) reported its unaudited financial results for the quarter and year ended December 31, 2023[2](index=2&type=chunk) [Sega Sammy Merger Transaction Update](index=1&type=section&id=Sega%20Sammy%20Merger%20Transaction%20Update) GAN shareholders approved the merger with a Sega Sammy Holdings subsidiary, expected to close in late 2024 or early 2025 pending approvals - GAN shareholders approved the previously announced merger agreement and merger of GAN and a subsidiary of SEGA SAMMY CREATION INC., an affiliate of SEGA SAMMY HOLDINGS INC[3](index=3&type=chunk) - The closing of the merger is expected to occur in late 2024 or early 2025, subject to the satisfaction or waiver of certain conditions to closing, including the approval of the merger and change in control of GAN by certain gaming authorities[5](index=5&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) This section provides an overview of GAN Limited's key financial performance for the fourth quarter and full year 2023 [Fourth Quarter 2023 Financial Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20Financial%20Highlights) Q4 2023 saw a **17% revenue decrease** due to B2B rate changes and lack of major B2C sports events, while net loss improved and Adjusted EBITDA declined Q4 2023 Financial Highlights | Metric | Q4 2023 (Millions) | Q4 2022 (Millions) | Change (%) | | :----------------------- | :----------------- | :----------------- | :--------- | | Total Revenue | $30.7 | $36.9 | -17% | | B2B Segment Revenue | $11.8 | $14.1 | -16.4% | | B2C Segment Revenue | $18.9 | $22.8 | -17.1% | | Total Segment Contribution | $20.9 | $26.9 | -22.3% | | Operating Expenses | $29.5 | $172.4 | -82.9% | | Net Loss | $(9.4) | $(147.7) | +93.6% | | Adjusted EBITDA | $(3.9) | $(0.4) | -875% | | B2B Gross Operator Revenue | $384.7 | $365.8 | +5% | - The decrease in B2B segment revenue was primarily driven by a decrease in contractual revenue rates related to the expiration of an exclusivity period with a B2B customer[3](index=3&type=chunk) - The decrease in B2C segment revenue was primarily driven by increased activity from the World Cup occurring in the fourth quarter of 2022, which did not have a comparable event in Q4 2023[3](index=3&type=chunk) [Full Year 2023 Financial Highlights](index=2&type=section&id=Full%20Year%202023%20Financial%20Highlights) Full year 2023 saw a **9% revenue decrease**, improved net loss due to prior year impairment, negative Adjusted EBITDA, but strong B2B Gross Operator Revenue growth Full Year 2023 Financial Highlights | Metric | FY 2023 (Millions) | FY 2022 (Millions) | Change (%) | | :----------------------- | :----------------- | :----------------- | :--------- | | Total Revenue | $129.4 | $141.5 | -9% | | B2B Segment Revenue | $43.2 | $54.1 | -20.1% | | B2C Segment Revenue | $86.2 | $87.5 | -1.5% | | Total Segment Contribution | $90.7 | $99.9 | -9.2% | | Operating Expenses | $121.0 | $292.4 | -58.6% | | Net Loss | $(34.4) | $(197.5) | +82.6% | | Adjusted EBITDA | $(8.4) | $6.0 | -240% | | Cash | $38.6 | $45.9 | -15.9% | | B2B Gross Operator Revenue | $1,657.8 | $1,224.4 | +35% | - The **20% decrease in B2B segment revenue** was primarily driven by a decrease in contractual revenue rates related to the expiration of an exclusivity period with a B2B customer[7](index=7&type=chunk) - The **35% increase in B2B Gross Operator Revenue** was primarily driven by organic growth with existing customer base in Pennsylvania, Michigan, New Jersey, and Connecticut[7](index=7&type=chunk) [Detailed Financial Statements](index=6&type=section&id=Detailed%20Financial%20Statements) This section presents GAN Limited's consolidated statements of operations, segment revenue, geographical revenue, and Adjusted EBITDA reconciliation [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated statements show Q4 2023 net loss of **$(9.4) million** and FY 2023 net loss of **$(34.4) million**, improved due to lower operating expenses Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Revenue | $30,715 | $36,947 | $129,419 | $141,528 | | Cost of revenue | $9,812 | $10,036 | $38,700 | $41,634 | | Sales and marketing | $7,268 | $8,011 | $28,972 | $28,303 | | Product and technology | $8,277 | $10,267 | $38,243 | $35,195 | | General and administrative | $9,562 | $10,541 | $36,657 | $37,848 | | Impairment | — | $137,149 | — | $166,010 | | Depreciation and amortization | $4,378 | $6,414 | $17,161 | $23,276 | | Total operating costs and expenses | $39,297 | $182,418 | $159,733 | $334,037 | | Operating loss | $(8,582) | $(145,471) | $(30,314) | $(192,509) | | Net loss | $(9,376) | $(147,709) | $(34,444) | $(197,498) | - The Company completed a reorganization in Q2 2023, reclassifying operating expenses between sales and marketing, product and technology, and general and administrative, with prior year figures reclassified for comparability[23](index=23&type=chunk) [Segment Revenue and Gross Profit](index=7&type=section&id=Segment%20Revenue%20and%20Gross%20Profit) Segment analysis shows declining B2B and B2C revenues and contributions for Q4 and FY 2023, though B2B segment contribution margin remained strong Segment Revenue and Gross Profit (in thousands) | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | **B2B Revenue** | | | | | | Platform and content license fees | $8,357 | $12,311 | $31,466 | $43,519 | | Development services and other | $3,445 | $1,829 | $11,688 | $10,526 | | Total B2B revenue | $11,802 | $14,140 | $43,154 | $54,045 | | B2B segment contribution | $9,507 | $11,907 | $34,730 | $42,797 | | B2B segment contribution margin | 80.6% | 84.2% | 80.5% | 79.2% | | **B2C Revenue** | | | | | | Gaming | $18,913 | $22,807 | $86,265 | $87,483 | | Total B2C revenue | $18,913 | $22,807 | $86,265 | $87,483 | | B2C segment contribution | $11,396 | $15,004 | $55,989 | $57,097 | | B2C segment contribution margin | 60.3% | 65.8% | 64.9% | 65.3% | | Total segment contribution | $20,903 | $26,911 | $90,719 | $99,894 | | Total segment contribution margin | 68.1% | 72.8% | 70.1% | 70.6% | [Revenue by Geography](index=8&type=section&id=Revenue%20by%20Geography) Revenue declined in the US and Latin America for Q4 and FY 2023, while Europe's full-year revenue increased and other regions showed mixed results Revenue by Geography (in thousands) | Geography (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :----------------------- | :------ | :------ | :------ | :------ | | United States | $8,487 | $12,084 | $31,758 | $45,615 | | Europe | $12,114 | $11,749 | $47,788 | $45,092 | | Latin America | $7,145 | $11,168 | $39,935 | $44,078 | | Rest of the world | $2,969 | $1,946 | $9,938 | $6,743 | | Total | $30,715 | $36,947 | $129,419 | $141,528 | [Adjusted EBITDA Reconciliation](index=8&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA was **$(3.9) million** for Q4 2023 and **$(8.4) million** for FY 2023, a significant decline from prior year due to revenue decrease Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Net loss | $(9,376) | $(147,709) | $(34,444) | $(197,498) | | Income tax expense (benefit) | $(247) | $3,429 | $138 | $3,942 | | Interest expense, net | $1,118 | $1,758 | $5,003 | $4,279 | | Depreciation and amortization | $4,378 | $6,414 | $17,161 | $23,276 | | Share-based compensation and related expense | $785 | $1,591 | $5,511 | $7,262 | | Impairment | — | $137,149 | — | $166,010 | | Adjusted EBITDA | $(3,884) | $(368) | $(8,395) | $6,042 | [Historical Normalized Revenue](index=9&type=section&id=Historical%20Normalized%20Revenue) Historical normalized revenue adjusts for a consistent **7.0% sports margin** to provide a clearer view of underlying revenue trends Historical Normalized Revenue (in thousands) | Metric (in thousands) | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | | :-------------------- | :------ | :------ | :------ | :------ | | Revenue | $30,715 | $29,817 | $33,758 | $35,129 | | Normalized adjustments | $1,433 | $1,441 | $(2,331) | $(529) | | Normalized Revenue | $32,148 | $31,258 | $31,427 | $34,600 | | Actual sports margin | 6.5% | 6.0% | 8.5% | 7.1% | | Normalized sports margin | 7.0% | 7.0% | 7.0% | 7.0% | - The adjustments are based on the effects of a normalized sports margin of **7.0%** for the year[31](index=31&type=chunk) [Key Performance Indicators (KPIs) & Non-GAAP Measures](index=3&type=section&id=Key%20Performance%20Indicators%20(KPIs)%20%26%20Non-GAAP%20Measures) This section outlines GAN's key performance indicators and definitions of non-GAAP financial measures used to assess business performance [Key Performance Indicators Overview](index=3&type=section&id=Key%20Performance%20Indicators%20Overview) KPIs show **5%** Q4 and **35%** full-year B2B Gross Operator Revenue growth, but B2C Active Customers and Sports Margin declined in Q4 2023 Key Performance Indicators | KPI | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------------- | :------ | :------ | :------ | :------ | | B2B Gross Operator Revenue (in millions) | $384.7 | $365.8 | $1,657.8 | $1,224.4 | | B2B Take Rate | 3.1% | 3.9% | 2.6% | 4.4% | | B2C Active Customers (in thousands) | 236 | 331 | 500 | 559 | | B2C Marketing Spend Ratio | 28% | 24% | 24% | 21% | | B2C Sports Margin | 6.5% | 6.5% | 7.0% | 6.9% | - **B2B Gross Operator Revenue** increased by **5%** in Q4 2023 and **35%** for the full year, primarily driven by organic growth with existing customers in Pennsylvania, Michigan, New Jersey, and Connecticut[3](index=3&type=chunk)[7](index=7&type=chunk)[9](index=9&type=chunk) - B2C KPIs were impacted by the World Cup in the prior year period, with no significant international sports events in the current year[3](index=3&type=chunk)[7](index=7&type=chunk) [Non-GAAP Financial Measures Definitions](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) GAN defines key non-GAAP financial measures and performance indicators, including B2B Gross Operator Revenue, Adjusted EBITDA, and B2C Active Customers, for operational insights - **B2B Gross Operator Revenue** is defined as the sum of B2B corporate customers' gross revenue from virtual simulated gaming (SIM), gross gaming revenue from RMiG, and gross sports wins from sportsbook offerings, indicating the extent of transactions processed through the Company's B2B platforms[14](index=14&type=chunk) - **Adjusted EBITDA** is defined as net loss before interest expense (income), net, income tax expense (benefit), depreciation and amortization, impairments, share-based compensation expense and related expense, restructuring costs, and other infrequent or unusual items, used to compare operating performance and assess core business performance against industry peers[19](index=19&type=chunk) - **B2C Active Customers** are defined as users who place a wager during the period, allowing management to monitor customer segmentation, growth drivers, and platform traffic[16](index=16&type=chunk) [About GAN & Disclosures](index=4&type=section&id=About%20GAN%20%26%20Disclosures) This section provides an overview of GAN Limited's business, forward-looking statements, and investor contact information [About GAN Limited](index=4&type=section&id=About%20GAN%20Limited) GAN Limited is a leading North American B2B internet gaming technology provider and an international B2C sports betting operator, using its GameSTACK™ system - GAN is a leading business-to-business supplier of internet gambling software-as-a-service solutions predominantly to the U.S. land-based casino industry[10](index=10&type=chunk) - GAN is a market-leading business-to-consumer operator of proprietary online sports betting technology internationally with market leadership positions in selected European and Latin American markets[10](index=10&type=chunk) - In its B2B segment, GAN has developed a proprietary internet gambling enterprise software system, GameSTACK, which it licenses to land-based U.S. casino operators as a turnkey technology solution for regulated real money internet gambling[10](index=10&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements about future expectations and trends, noting inherent risks and uncertainties, with no obligation to update - This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated trends in revenues, operating expenses, profitability, and the merger[11](index=11&type=chunk) - These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different[11](index=11&type=chunk) - The Company undertakes no obligation to update or revise any forward-looking statements for any reason, except as required by law[11](index=11&type=chunk) [Investor Contacts](index=5&type=section&id=Investor%20Contacts) Contact information for investor relations is provided for inquiries regarding GAN Limited - Investor Contacts: Robert Shore, Vice President, Investor Relations & Capital Markets, (610) 812-3519, rshore@GAN.com; Alpha IR Group, Ryan Coleman or Davis Snyder, (312) 445-2870, GAN@alpha-ir.com[20](index=20&type=chunk)

PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) GAN Limited operates B2B SaaS for online gaming and B2C sports betting, currently undergoing acquisition by SEGA SAMMY CREATION INC - GAN Limited operates two main business segments: B2B (Software-as-a-Service for online casino gaming and sports betting, GameSTACK™ and GAN Sports) and B2C (online sports betting and casino platform 'Coolbet')[17](index=17&type=chunk) - The company entered into a Merger Agreement with SEGA SAMMY CREATION INC. on November 7, 2023, under which GAN will become a wholly-owned subsidiary of SEGA SAMMY CREATION[27](index=27&type=chunk) - The Merger consideration is **$1.97** in cash per ordinary share, and the closing is anticipated for late 2024 or early 2025, subject to regulatory approvals[28](index=28&type=chunk)[31](index=31&type=chunk) B2C Revenue Breakdown (2023) | Product Category | Percentage of Total B2C Revenue | | :--------------- | :------------------------------ | | Online Casino | 58.0% | | Online Sports Betting | 38.6% | | Online Peer-to-Peer Poker | 3.4% | - B2C revenue slightly decreased by **1.4%** from **$87.5 million** in 2022 to **$86.3 million** in 2023, primarily due to a decline in active customers in Latin American markets[19](index=19&type=chunk) - As of December 31, 2023, Coolbet had over **1.6 million** registered customers[19](index=19&type=chunk)[72](index=72&type=chunk) - FanDuel accounted for **16.4%** of total revenue in 2023 and **20.9%** in 2022. The exclusivity period with FanDuel for casino gaming operations ended in January 2023, which could lead to a significant decline in future revenue[69](index=69&type=chunk)[70](index=70&type=chunk)[114](index=114&type=chunk) - As of December 31, 2023, GAN Limited had **677** total employees, with approximately **89%** located outside the United States, and **88%** working in operations[88](index=88&type=chunk)[89](index=89&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from net losses, intense competition, customer concentration, merger uncertainties, regulatory complexities, and internal control weaknesses - The company has incurred net losses and negative cash flows, with an accumulated deficit of **$309.3 million** as of December 31, 2023, and a net loss of **$34.4 million** for the year ended December 31, 2023[103](index=103&type=chunk) - The online gaming industry is highly competitive and rapidly evolving, requiring continuous adaptation to technological changes and new product development, with risks of price reductions, reduced margins, or loss of market share[104](index=104&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - The proposed merger with SEGA SAMMY CREATION INC. is subject to various regulatory approvals, which may be delayed or impose conditions, and failure to complete the merger could negatively impact the stock price and business[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) - A material weakness in internal control over financial reporting was identified, specifically regarding 'super user' access, monitoring of elevated access, and segregation of duties in the B2C segment, which remains unresolved as of December 31, 2023[165](index=165&type=chunk)[166](index=166&type=chunk)[501](index=501&type=chunk) - B2C operations generate a significant portion of revenue from 'unregulated' markets, where changes in tax and licensing regulations could lead to loss of business or increased compliance costs[160](index=160&type=chunk)[161](index=161&type=chunk) - The company's international operations expose it to risks such as currency fluctuations, varying tax regimes, and difficulties in enforcing judgments due to being a Bermuda company[167](index=167&type=chunk)[169](index=169&type=chunk)[178](index=178&type=chunk) [Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[185](index=185&type=chunk) [Cybersecurity](index=39&type=section&id=Item%201C.%20Cybersecurity) The company maintains ISO/NIST-aligned cybersecurity programs, overseen by the Board, with no material incidents reported - The company has implemented Information Security programs aligned to ISO and NIST cybersecurity frameworks to protect player data and IT systems[186](index=186&type=chunk) - The security program is managed by a dedicated Information Security team, led by a CISO with over 20 years of experience, and includes continuous risk assessments, vulnerability scans, and periodic penetration testing[187](index=187&type=chunk)[188](index=188&type=chunk) - The Board of Directors provides oversight for cybersecurity and information technology matters[189](index=189&type=chunk) - No material cybersecurity incidents were identified in the last fiscal year, but ongoing risks are acknowledged[188](index=188&type=chunk) [Properties](index=39&type=section&id=Item%202.%20Properties) Corporate headquarters are in Irvine, California, with leased regional offices in Bulgaria, Israel, and Estonia - Corporate headquarters are located in Irvine, California[190](index=190&type=chunk) - Regional offices are maintained in Bulgaria, Israel, and Estonia, all of which are leased[190](index=190&type=chunk) - Current facilities are deemed adequate, and additional space is expected to be available as needed[190](index=190&type=chunk) [Legal Proceedings](index=39&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to routine legal actions and claims but is not aware of any material adverse litigation - The Company is subject to routine legal actions and claims[191](index=191&type=chunk) - Management is not aware of any pending or threatened litigation that would have a material adverse effect on financial position, results of operations, or liquidity[191](index=191&type=chunk) [Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to GAN Limited - Not applicable[192](index=192&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=40&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GAN's ordinary shares trade on Nasdaq, with 118 holders as of March 2023; no dividends paid, future earnings retained - Ordinary shares are listed on The Nasdaq Capital Market under the symbol 'GAN' since May 7, 2020[193](index=193&type=chunk) - As of March 22, 2023, there were **118** holders of record for ordinary shares[194](index=194&type=chunk) - The company has never declared or paid any cash dividends and intends to retain future earnings for business operations and expansion[195](index=195&type=chunk) - No share repurchases were made during the quarter ended December 31, 2023[196](index=196&type=chunk) [Item 6. [Reserved]](index=40&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[197](index=197&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net loss improved to **$34.4 million** in 2023, but revenue declined to **$129.4 million** due to B2B exclusivity expiration and B2C market shifts Consolidated Results of Operations (2023 vs 2022) | Metric (in thousands) | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | Change Amount | Change Percent | | :-------------------- | :---------------------- | :---------------------- | :------------ | :------------- | | Revenue | $129,419 | $141,528 | $(12,109) | (8.6)% | | Operating Loss | $(30,314) | $(192,509) | $162,195 | (84.3)% | | Net Loss | $(34,444) | $(197,498) | $163,054 | (82.6)% | - The decrease in revenue was primarily due to a **$10.8 million** decrease in B2B revenues, driven by lower contractual revenue rates following the expiration of an exclusivity period with a B2B customer (FanDuel)[237](index=237&type=chunk)[238](index=238&type=chunk)[249](index=249&type=chunk) - B2C revenues decreased by **$1.2 million**, mainly attributable to a decline in active customers in Latin American markets, partially offset by growth in Europe[237](index=237&type=chunk)[238](index=238&type=chunk)[251](index=251&type=chunk) Key Performance Indicators (2023 vs 2022) | KPI | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | Change Amount | Change Percent | | :-------------------- | :---------------------- | :---------------------- | :------------ | :------------- | | B2B Gross Operator Revenue (in millions) | $1,657.8 | $1,224.4 | $433.4 | 35.4% | | B2B Take Rate | 2.6% | 4.4% | (1.8)% | (41.0)% | | B2C Active Customers (in hundreds) | 500 | 559 | (59) | (10.5)% | | B2C Marketing Spend Ratio | 23.6% | 21.0% | 2.6% | 12.2% | | B2C Sports Margin | 7.0% | 6.9% | 0.1% | 1.6% | - The B2B Take Rate decreased primarily due to lower contractual revenue rates related to the expiration of an exclusivity period with a B2B customer[265](index=265&type=chunk) - The company had an accumulated deficit of **$309.3 million** and cash on hand of **$38.6 million** as of December 31, 2023. Net cash used in operating activities was **$3.6 million**[272](index=272&type=chunk) - An Amended Credit Facility, effective April 14, 2023, increased the principal balance to **$42.0 million** and waived prior events of default, with management believing it provides sufficient liquidity for at least one year[277](index=277&type=chunk)[278](index=278&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, GAN Limited is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, GAN Limited is not required to provide quantitative and qualitative disclosures about market risk[288](index=288&type=chunk) [Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited consolidated financial statements for 2023 and 2022 are presented, with an unqualified opinion and detailed notes - Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2023 and 2022[289](index=289&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :---------------------- | :---------------- | :---------------- | | Total Assets | $87,504 | $103,080 | | Total Liabilities | $92,108 | $82,312 | | Total Shareholders' Equity (Deficit) | $(4,604) | $20,768 | Consolidated Statements of Operations Highlights (in thousands) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------------- | :---------------------- | :---------------------- | | Revenue | $129,419 | $141,528 | | Operating Loss | $(30,314) | $(192,509) | | Net Loss | $(34,444) | $(197,498) | | Loss per share, basic and diluted | $(0.78) | $(4.66) | Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(3,565) | $(1,249) | | Net cash used in investing activities | $(6,815) | $(19,103) | | Net cash provided by financing activities | $1,347 | $27,448 | | Cash, end of period | $38,578 | $45,920 | - Goodwill was fully impaired in 2022 with a total charge of **$136.9 million**, resulting in no goodwill balance as of December 31, 2022 and 2023[373](index=373&type=chunk)[410](index=410&type=chunk) - Intangible assets, net, decreased from **$24.9 million** in 2022 to **$12.4 million** in 2023, partly due to a **$19.1 million** impairment recognized in 2022 related to content licensing arrangements[379](index=379&type=chunk)[412](index=412&type=chunk) - The company's operations in Chile, which represented **28.1%** of total consolidated revenue in 2023, face regulatory uncertainty regarding VAT application and legality of online gaming, potentially leading to fines or market exit[489](index=489&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=101&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure matters - No changes in or disagreements with accountants on accounting and financial disclosure[496](index=496&type=chunk) [Controls and Procedures](index=101&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were ineffective due to a material weakness in internal control over financial reporting, with ongoing remediation efforts - Management concluded that disclosure controls and procedures were not effective as of December 31, 2023[499](index=499&type=chunk) - A material weakness in internal control over financial reporting was identified, specifically regarding improper segregation of duties, lack of user access review, and insufficient monitoring of finance users with elevated rights in financial reporting systems within the B2C segment[501](index=501&type=chunk) - Remediation plans include implementing controls to segregate journal entry preparation and approvals, actively monitoring finance users with elevated rights, and segregating the information technology administration function from the finance team[502](index=502&type=chunk) - Despite the material weakness, management concluded that the consolidated financial statements fairly present the financial position, results of operation, and cash flows in conformity with GAAP[499](index=499&type=chunk) [Other Information](index=103&type=section&id=Item%209B.%20Other%20Information) There is no other information to report under this item - No other information to report[508](index=508&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=103&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to GAN Limited - Not applicable[509](index=509&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=104&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Shareholder Meeting - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Shareholder Meeting[511](index=511&type=chunk) [Executive Compensation](index=104&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[512](index=512&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=104&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details on security ownership of certain beneficial owners and management, along with related stockholder matters, are incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[512](index=512&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=104&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[513](index=513&type=chunk) [Principal Accountant Fees and Services](index=104&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[513](index=513&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=105&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements, omits schedules, and provides a comprehensive list of exhibits - Lists the consolidated financial statements included in Item 8 of the report[514](index=514&type=chunk) - All financial statement schedules are omitted as they are not required[515](index=515&type=chunk) - Includes a comprehensive list of exhibits, such as the Agreement and Plan of Merger, Memorandum of Association, By-Laws, Equity Incentive Plan, and various employment agreements[517](index=517&type=chunk)[518](index=518&type=chunk) [Form 10-K Summary](index=107&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[522](index=522&type=chunk) [SIGNATURES](index=108&type=section&id=SIGNATURES) The report is signed by the CEO, Interim CFO, and other directors as of March 13, 2024, with a Power of Attorney included - The report is signed by the Chief Executive Officer (Seamus McGill) and Interim Chief Financial Officer (Brian Chang) as principal executive and financial officers, respectively, along with other directors[526](index=526&type=chunk)[529](index=529&type=chunk) - Signatures are dated March 13, 2024[526](index=526&type=chunk)[529](index=529&type=chunk) - A Power of Attorney is included, authorizing the Certifying Officers to sign amendments to the Annual Report[527](index=527&type=chunk)

IRVINE, Calif.--(BUSINESS WIRE)--GAN Limited (NASDAQ: GAN) (the “Company” or “GAN”), a leading North American B2B technology provider of real money internet gaming solutions and a leading International B2C operator of Internet sports betting, today announced that Mr. Seamus McGill has recently been named the Company’s Chief Executive Officer. Mr. McGill had previously been serving in an interim capacity. Mr. McGill’s will remain on the Company’s board of directors and will be focused on guiding the Compa ...