Inspired Entertainment : Amendment to Annual Report (Form 10-K/A)

Inspired Entertainment, Inc. ("Inspired Entertainment" or the "Company") is filing this Amendment No. 1 on Form 10-K/A (the "Amendment") to its Annual Report on Form 10-K for the year ended December 31, 2025, originally filed with the Securities and Exchange Commission (the "SEC") on March 10, 2026 (the "Original Report"). This Amendment is filed solely to correct a clerical error in the CBIZ CPAs P.C. audit opinion over the financial statements included in Item 8 of the Original Report, which incorrectly stated that CBIZ CPAs P.C. did not need to express an opinion over the effectiveness of the Company's Internal Control Over Financial Reporting ("ICFR"). The correct audit opinion over ICFR was, in fact, properly included in the Original Report as required. Therefore, the audit opinion over the financial statements was updated accordingly (the "Amended Audit Opinion"). This Amendment includes Item 8. "Financial Statements and Supplemental Data" in its entirety and without change from the Original Report, other than the addition of the Amended Audit Opinion as the new page F-2, and the updating of page references.

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment also includes currently dated certifications from the Company's principal executive officer and principal financial officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. As required by the rules of the SEC, this Amendment sets forth an amended "Item 15. Exhibits, Financial Statement Schedules" in its entirety, which includes the currently dated certifications of the Company's principal executive officer and principal financial officer as Exhibits 31.1, 31.2, 32.1 and 32.2 as well as a currently dated Exhibits 23.1 and 23.2, the consents of Marcum LLP and CBIZ CPAs P.C., the Company's prior and current independent registered public accounting firms, respectively, with respect to this Amendment. This Amendment does not otherwise update any exhibits contained in the Original Filing.

This Amendment does not reflect events occurring after the Original Report and does not modify or update the disclosure therein in any way except as described above. No other changes have been made to the Original Report. Accordingly, this Amendment should be read in conjunction with the Original Filing and with the Company's filings made with the SEC subsequent to the filing of the Original Filing, as information in such filings may update or supersede certain information contained in this Amendment.

TABLE OF CONTENTS

ITEM 8. Financial Statements and Supplementary Data.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2025 AND 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Inspired Entertainment, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Inspired Entertainment, Inc, and Subsidiaries (the "Company") as of December 31, 2025, the related consolidated statements of operations and comprehensive (loss) income, stockholders' deficit and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

As described in Note 1 of the consolidated financial statements, the Company's revenues are generated through four segments (Gaming, Virtual, Interactive, and Leisure). Each of the four segments provides different offerings to their customers. Examples include: (a) Gaming revenue includes delivery of gaming terminals preloaded with proprietary gaming software, server-based content, as well as services such as terminal repairs, maintenance, software updates and upgrades, and content development; (b) Virtual revenue includes packaged products and services in either an on-premise solution or a hosted solution; (c) Interactive revenue is generated from various game content made available via third party aggregation platforms integrated with the Company's remote gaming server or direct to operators on the Company's remote gaming servers platform, and services such as customer support, platform maintenance, updates and upgrades; and (d) Leisure revenue is generated by supplying and operating gaming terminals and amusement machines within arcades, motorway service areas, and pubs, providing managed service solutions. The Company recognized revenue of $304.1 million for the year ended December 31, 2025.

Most of the Company's revenue contracts with customers include multiple promises, the nature of which can vary for each segment and contract. The Company is required to identify whether a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. The evaluation of whether promises are both capable of being distinct in the context of a contract (and thus constitute performance obligations) can require significant judgment and could change the amount of revenue recognized in a given period.

We identified auditing the Company's identification of the performance obligations as a critical audit matter because there is significant judgment exercised by management when evaluating their customer contracts, which may include several promised goods and services, as well as identifying the correct transaction price, all of which will impact the amount of revenue recognized in a given period. This required a high degree of auditor judgment in performing procedures and evaluating audit evidence.

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

Software development costs

As described in Note 1 to the consolidated financial statements, the Company develops software for internal use and capitalizes the software development costs incurred during the application development stage. Costs are capitalized when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. The Company will stop capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to be two to five years.

Additionally, the Company develops software for external use and capitalizes the software development costs incurred once technological feasibility has been reached. Technological feasibility is achieved when the entity has completed all planning, designing, coding, and testing activities that are necessary to establish that the product can be produced to meet its design specifications including functions, features, and technical performance requirements. The Company will stop capitalizing these costs on the date that the software is available for general release to the customers. Costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to be two to five years.

The Company capitalized $12.1 million of software development costs, with the majority of the costs being employee wages and the remaining as external vendor costs, during the year ended December 31, 2025. Total capitalized software development costs are $22.7 million as of December 31, 2025.

We identified software development costs as a critical audit matter because of the judgment exercised by management in determining whether costs incurred on software development projects have met the capitalization criteria, which in turn, required a higher degree of auditor judgment in performing procedures and evaluating audit evidence.

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

CBIZ CPAs P.C.

We have served as the Company's auditor since 2016 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024).

New York, NY

March 10, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Inspired Entertainment, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Inspired Entertainment, Inc. and Subsidiaries (the "Company") as of December 31, 2024, the related consolidated statements of operations and comprehensive income (loss), stockholders' deficit and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, based on our audit results, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

Marcum LLP

We have served as the Company's auditor from 2016 through 2025.

New York, NY

March 26, 2025

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

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

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(in millions, except share and per share data)

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

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(in millions, except share data)

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

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

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

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

1. Nature of Operations, Management's Plans and Summary of Significant Accounting Policies

Company Description and Nature of Operations

Inspired Entertainment, Inc. (the "Company", "Inspired", "we" or "us") is a global gaming technology company, supplying content, platform and other products and services to licensed online and land-based lottery, betting and gaming operators worldwide through a broad range of distribution channels, on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our customers operating digital channels, on aggregator platforms, and in licensed betting offices, adult gaming centers, pubs, bingo halls and motorway service areas for our customers operating land-based venues.

Management Liquidity Plans

As of December 31, 2025, the Company's cash on hand, excluding restricted cash, was $42.0 million, and the Company had working capital in addition to cash and unrestricted cash of $43.9 million. The Company recorded a net loss of $17.0 million and net income of $64.8 million for the years ended December 31, 2025 and December 31, 2024, respectively. Net loss/income includes non-cash stock-based compensation of $6.7 million and $7.6 million for the years ended December 31, 2025 and December 31, 2024, respectively.

Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows provided by operations amounted to $52.0 million and $31.7 million for the years ended December 31, 2025 and December 31, 2024, respectively.

Management currently believes that the Company's cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company's external borrowings will be sufficient to fund the Company's net cash requirements through March 2027.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP").

Principles of Consolidation

All monetary values set forth in these consolidated financial statements are in U.S. Dollars ("USD") unless otherwise stated herein. The accompanying consolidated financial statements include the results of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Foreign Currency Translation

For most of our operations, the British pound ("GBP") is our functional currency. Our reporting currency is the USD. We also have operations where the local currency is the functional currency, including our operations in mainland Europe and North America. Assets and liabilities of foreign operations are translated at period-end rates of exchange, equity is translated at historical rates of exchange and results of operations are translated at the average rates of exchange for the period. Gains or losses resulting from translating the foreign currency financial statements are recorded as a separate component of accumulated other comprehensive income in stockholders' deficit. Gains or losses resulting from foreign currency transactions are included in Selling, general and administrative expenses and Interest expense, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). Aggregate foreign currency losses included in net income amounted to $0.1 million and $2.4 million for the years ended December 31, 2025 and December 31, 2024, respectively.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, including those related to the revenue recognition for contracts involving software and non-software elements, allowance for credit losses, inventory reserve for net realizable value, currency swaps, goodwill and intangible assets, useful lives of long-lived assets, stock-based compensation, valuation allowances on deferred taxes, pension liability, commitments and contingencies and litigation, among others. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. We regularly evaluate these significant factors and make adjustments when facts and circumstances dictate. Actual results may differ from these estimates.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Cash and Restricted Cash

We deposit cash with financial institutions that management believes are of high credit quality. Substantially all of the Company's cash is held outside of the U.S.

Restricted cash consists of escrowed funds from the sale of UK holiday parks business and certain associated leisure assets. The funds are restricted for a period of 12 months from the sale completion date and therefore not available for general corporate purposes until November 2026. In the absence of any claims against the standard warranties provided as part of merger & acquisition transactions, the restriction is time-based only and will lapse automatically upon expiration of the escrow period.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. Our standard credit terms are net 30 to 60 days.

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

In estimating expected credit losses, management considers all available relevant information, including details about past events, current conditions, asset-specific risk characteristics and reasonable and supportable forecasts.

Historical credit loss data is utilized as the basis of the estimation. This is then adjusted to take account of conditions that may have existed within the historical data which now differ from current expectations, and to recognize differences in asset-specific risk characteristics. When assessing conditions over the contractual life of the asset, management will utilize historical credit loss experience for the period beyond which it is possible to make reasonable and supportable forecasts.

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

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

Under certain contracts, the timing of our invoices does not coincide with revenue recognized under the contract. We have unbilled accounts receivable which represent revenue recorded in excess of amounts invoiced under the contract and generally become billable at contractually specified dates. These amounts consist primarily of revenue from our share of net winnings earned on a daily basis where the billing period does not fall on the last day of the period. We had $30.2 million and $26.0 million of unbilled accounts receivable as of December 31, 2025 and December 31, 2024, respectively.

Inventories

Inventories consist primarily of gaming terminals and related parts and other component parts. Inventories are stated at the lower of cost or net realizable value, using the first-in-first-out method. We determine the lower of cost or net realizable value of our inventory based on estimates of potentially excess and obsolete inventories after considering historical and forecasted demand and average selling prices. Demand for gaming terminals and parts inventory is also subject to technological obsolescence. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.

Property and Equipment

Property and equipment are recorded at cost, and when placed into service, depreciated and amortized to their residual values using the straight-line method over the estimated useful lives of the related assets as follows:

Our policy is to periodically review the estimated useful lives of our fixed assets. We also assess the recoverability of long-lived assets (or asset groups) whenever events or changes in circumstances indicate that the carrying amount of such an asset (or asset groups) may not be recoverable.

Where operating leases include an obligation for repairs and dilapidations costs associated with the retirement of the right-of-use asset, amounts are capitalized at the point at which a liability for an asset retirement obligation is recognized.

Repairs and maintenance costs are expensed as incurred. Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are written off and any resulting gain or loss is credited or charged to income.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Software Development and Research and Development Costs

Research and development costs, which primarily consist of employee compensation costs and exclude costs relating to non-project time, leave and absence, are expensed as incurred, except for software product development costs that are eligible for capitalization, as described below. Total research and development costs amounted to $19.4 million and $22.7 million in the years ended December 31, 2025 and 2024, respectively. Research and development costs amounting to $8.4 million and $7.8 million were capitalized during the years ended December 31, 2025 and 2024, respectively. In addition, amounts relating to Costs of obtaining and fulfilling customer contracts, net, of $5.5 million and $4.2 million were capitalized during the years ended December 31, 2025 and 2024, respectively. We expensed $5.5 million and $10.7 million during the years ended December 31, 2025 and 2024, respectively as they related to maintenance, research or support costs. Employee related costs associated with these activities are included in Selling, general and administrative expenses in the Consolidated Statement of Operations and Comprehensive Income (Loss).

We capitalize certain eligible costs incurred to develop internal-use software as well as external use software to be used in the products we sell, lease or market to customers. We account for costs incurred to develop internal use software, including software developed to deliver our cloud-based offerings to customers, in accordance with Accounting Standards Codification ("ASC") 350-40, Internal Use Software. Consequently, certain direct costs incurred during the application development stages are capitalized while all other related costs are expensed as incurred. Once the software is substantially complete and ready for its intended use, we amortize the capitalized internal use software costs over their estimated economic useful life, which ranges from two to five years. Amortization of such costs is included in Depreciation and amortization in the Consolidated Statement of Operations and Comprehensive Income (Loss).

We purchase, license and incur costs to develop external use software to be used in the products we sell, lease or license to customers. Such costs are capitalized under ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed. Costs incurred in developing such software are expensed when incurred as research and development costs until technological feasibility has been established, after which costs are capitalized up to the date the software is available for general release to customers. We capitalize the payments made for software that we purchase or license for use in our products that have previously met the technological feasibility criteria prior to our purchase or license. Once available for general release, capitalized external use software development costs are amortized over the estimated economic life, which ranges from two to four years. Amortization of such costs is included in Depreciation and amortization in the Consolidated Statement of Operations and Comprehensive Income (Loss).

Goodwill and Other Acquired Intangible Assets

Our principal acquired intangible assets relate to goodwill, trademarks, customer relationships and intellectual property licenses. Goodwill represents the excess purchase price over the fair value of the identifiable net assets acquired in a business combination. Trademarks and customer relationships were originally recorded at their fair values in connection with business combinations. Intellectual property licenses are recorded at cost related to specific contracts.

Goodwill and other intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. Intangible assets with finite lives are amortized on a straight-line basis over eighteen months to thirteen years to their estimated residual values and reviewed for impairment. Factors considered when assigning useful lives include legal, regulatory and contractual provisions, product obsolescence, demand, competition and other economic factors.

Impairment of Goodwill and Long-Lived Assets

We test for goodwill impairment at least annually as of December 1, and whenever other facts and circumstances indicate that the carrying value may not be recoverable. For goodwill impairment evaluations, we first make a qualitative assessment to determine if goodwill is may be impaired. If it is more-likely-than-not that a reporting unit's fair value is less than its carrying value, we then compare the fair value of the reporting unit to its respective carrying amount. Goodwill is carried, and therefore tested, at the reporting unit level. As of December 31, 2025 we have five reporting units, Virtual Sports, Interactive, Leisure, and two reporting units within our Gaming segment. If the fair value of the reporting unit is less than its carrying amount, the amount of the impairment loss, if any, will be measured by comparing the implied fair value of goodwill to its carrying amount and would be charged to operations as an impairment loss.

As of December 1, 2025 we determined that it was more-likely-than-not that the fair value of the Virtual Sports reporting unit was less than its carrying value. We carried out a quantitative goodwill impairment analysis and determined that the fair value of the Virtual Sports reporting unit exceeded its carrying value, including goodwill. As a result, it was concluded that there was no impairment of the Virtual Sports goodwill. It was not considered to be more-likely-than-not that the fair value of all other reporting units was less than their carrying values as of December 1, 2025.

As of December 31, 2025 and 2024 management determined there were no indicators of impairment and concluded that no impairment was required at any of these dates.

We assess the recoverability of long-lived assets and intangible assets with finite useful lives whenever events arise or circumstances change that indicate the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets (or asset groups) to be held and used is measured by a comparison of the carrying amount of the asset (or asset group) to the expected net future undiscounted cash flows to be generated by that asset (or asset group) or, for identifiable intangibles with finite useful lives, by determining whether the amortization of the intangible asset balance over its remaining life can be recovered through expected net future undiscounted cash flows. The amount of impairment of other long-lived assets and intangible assets with finite lives is measured by the amount by which the carrying amount of the asset exceeds the fair market value of the asset. As of December 31, 2025 and 2024 management determined there were no indicators of impairment and concluded that no impairment was required at any of these dates. Refer to Note 8, "Intangible Assets and Goodwill" for more information.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Deferred Revenue and Deferred Cost of Sales

Deferred revenue arises from the timing differences between the shipment or installation of gaming terminals and systems products and the satisfaction of all revenue recognition criteria consistent with our revenue recognition policy, as well as prepayment of contracts which are recognized ratably over a service period, such as maintenance or licensing fees. Deferred cost of sales, recorded as prepaid expenses and other assets, consists of the direct costs associated with the manufacture of gaming equipment and systems products for which revenue has been deferred. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue in current liabilities. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion.

Debt Issuance Costs

Debt issuance costs incurred in connection with the Company's debt are capitalized and amortized as interest expense over the term of the related debt. The Company presents debt issuance costs as a reduction from the carrying amount of debt. Only costs that are wholly attributable to obtaining the related debt finance are treated as debt issuance costs. Any other costs are expensed to the Consolidated Statement of Operations and Comprehensive Income (Loss) as part of Acquisition and integration related transaction expenses.

Indirect Taxes

The Company is subject to indirect taxes in some locations. The amount of indirect tax liability is determined by applying the applicable tax rate to the invoiced amount of goods and services sold less indirect tax paid on purchases made with the relevant supporting invoices. Indirect tax is collected from customers by the Company on behalf of the tax authorities and is therefore not charged to the Consolidated Statement of Operations and Comprehensive Income (Loss).

Derivative Financial Instruments and Hedging Activities

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

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

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

FASB ASC 815, Derivatives and Hedging ("ASC 815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company's objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value, with assets and liabilities presented on a gross basis with the exception of where they are with the same counterparty in which case they are offset and presented on a net basis. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

In accordance with the FASB's fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Details of the Company's interest rate swap are given in note 14.

From time to time we enter into foreign currency forward contracts to mitigate the risk associated with cash payments required to be made in non-functional currencies or to mitigate the risk associated with cash to be received in non-functional currencies. At December 31, 2025, there are no foreign currency forward contracts in place.

Revenue Recognition

The Company evaluates the recognition of revenue and rental income based on the criteria set forth in ASC 606 or ASC 842, as appropriate. Revenue is recognized net of rebates and discounts when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied, and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract's transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Step 1 - Identify the contract

The Company identifies contracts with its customers when all parties have approved the contract and are committed to perform their respective obligations, when each party's rights and the payment terms regarding the goods or services to be transferred can be identified. The contract must also have commercial substance, and it must be probable that the Company will collect the consideration to which it will be entitled.

Contracts entered into at or near the same time with the same customer or related parties of the customer are accounted for as one contract if any of the following criteria are met:

Step 2 - Identify performance obligations

Performance obligations are identified by considering whether a good or service is distinct. The Company considers a good or service to be distinct only when the customer can benefit from it either on its own or together with other resources that are readily available, and when the promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

The Company applies the series guidance to its performance obligations where the following criteria apply:

Step 3 - Determine the transaction price

The Company considers all amounts to which it has rights in exchange for the goods or services transferred in determining the transaction price. This includes fixed and variable consideration. If the consideration promised by a customer includes a variable amount, we estimate the amount to which we expect to be entitled using either the expected value or most likely amount method.

In the case where the variable consideration is in the form of usage based fees, the Company evaluates the royalties to determine whether they qualify for the sales and usage-based royalty exception, as discussed under Step 5.

The Company also considers the impact of any liquidated damages clauses or service level agreements that could result in credits or refunds to the client or incentive payments/bonuses from the customer upon achieving certain agreed-upon metrics. Incentive payments are accounted for as variable considerations when the likely amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Additionally, customers with volume discounts in contracts with functional IP are not considered to have material rights as royalty revenue is recognized when usage occurs.

Where variable considerations relate to a performance obligation determined to be a series, variable consideration is not estimated upfront in accordance with the exception allowed by ASC 606.

The Company's contracts with customers generally do not include non-cash consideration.

In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money if the payment terms are not standard and the timing of payments agreed to by the parties to the contract provide the customer or the Company with a significant benefit of financing, in which case the contract contains a significant financing component. In accordance with the practical expedient in ASC 606-10-32-18, the Company elected to not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. Invoices are generally issued as control transfers and/or as services are rendered. Our standard payment terms dictate that payment is due upon receipt of invoice, payable within 30 to 60 days.

Sales taxes and all other items of a similar nature are excluded from the measurement of the transaction price and shipping and handling activities are treated as a fulfillment of our promise to transfer the goods, hence, included in cost of sales.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Step 4 - Allocate the transaction price

The Company allocates the contract's transaction price to each performance obligation based on the relative standalone selling prices of the goods or services being provided. Where a contract includes multiple performance obligations, the Company determines the standalone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price in proportion to those standalone selling prices. Where possible, the Company uses the price charged for the good or service to other customers in similar circumstances as evidence of a standalone selling price. Where this is not possible, the standalone selling price is estimated by experienced management using the best available judgement considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives, and pricing practices.

With respect to performance obligations that are considered to be a series, where appropriate and where the required criteria are met, variable consideration is allocated entirely to a distinct good or service that is part of a series.

Step 5 - Recognize revenue

The Company recognizes revenue over time for performance obligations that meet one of the following criteria:

Revenue for the Company's remaining performance obligations that do not meet one of the above criteria is recognized at the point at which the customer obtains control of the good or service.

The Company assesses usage-based royalties it receives as consideration in contracts that predominantly relate to licenses of its intellectual property to determine if such royalties constitute a sales- or usage-based royalty, according to ASC 606-10-55-65, in which case the usage-based royalties are recognized as revenue when the usage occurs, and is reported by the licensee.

Acting as a Principal or an Agent

The Company evaluates arrangements where we may be acting as either principal or agent. We may include: subcontractor services, third-party vendor services, products or Machine Gaming Duty in certain arrangements. In these arrangements, revenue from sales are recorded gross when we are the principal for the transaction and net of our costs when we are acting as an agent between the customer and the vendor. To determine whether we are principal or agent, we consider whether we obtain control of the services or products before they are transferred to the customer. In making this evaluation, several factors are considered, most notably whether we have primary responsibility for fulfillment to the end customer, as well as inventory risk and pricing discretion.

Segment Revenue

The Company has detailed evaluation of segment specific revenue recognition requirements under ASC 606 or ASC 842, as appropriate.

Gaming Revenue

Gaming contracts typically include multiple performance obligations such as delivery of our gaming terminals preloaded with proprietary gaming software, server-based content, as well as services such as terminal repairs, maintenance, software updates and upgrades on a when-and-if available basis and content development. Consideration with respect to these performance obligations typically takes the form of a fixed price per terminal billed upfront and a usage based fee in the form of percentage of net winnings, billed in arrears (usually monthly).

Transaction price is allocated to all performance obligations within a contract on the basis of their standalone selling prices. Terminal revenue is recognized at the point in time in accordance with contractual terms of each arrangement, but predominantly upon transfer of physical possession of the terminal or the lapse of customer acceptance provisions. Services such as terminal repairs, maintenance, software updates and upgrades and content development are considered stand-ready obligations; therefore, control transfers and revenue is recognized over time over the term of the service period. As the license of our intellectual property is the predominant item to which the royalty relates, revenue is recognized in the period the sale or usage occurs and is reported by the licensee.

The Company also enters into arrangements that provide the customer with the right to use the terminals, wherein the Company operates as both a lessor and a content and service provider. ASC 842 provides a practical expedient that permits lessors to aggregate non-lease components (server-based content, terminal repairs, maintenance, software updates and upgrades and content development) and the associated lease components (terminals) if certain conditions are met and account for the combined unit of accounting under either ASC 606 or ASC 842, based on the predominant characteristic in the arrangement. In contracts where we provide content and services that are identified as non-lease components as well as underlying assets that are identified as lease components and the lease is an operating lease, the content and service provided to the customer represents the most critical element of the arrangement. The Company has elected to combine the non-lease component and the lease component and account for the entire arrangement under ASC 606 based on the consideration that the content and service offering is the predominant and critical element of the contract.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Virtual Sports Revenue

In Virtual Sports, the Company packages products and services in two ways:

For the on-premise solution, contracts typically include multiple performance obligations such as delivery of the software license, games and the content in addition to certain services such as software maintenance, support, updates, upgrades on a when-and-if available basis and content development. Consideration with respect to these performance obligations is a royalty that typically takes the form of a percentage of net winnings billed in arrears (usually monthly). As the license of intellectual property is the predominant item to which the royalty relates, the sales- and usage-based royalty is recognized in the period the sale or usage occurs and is reported by the licensee. Services such as software maintenance, support, updates, upgrades on a when-and-if available basis and content development are considered stand-ready obligations; therefore, control transfers and revenue is recognized over time over the term of the service period.

Occasionally, customer arrangements also may include licenses for which the Company bills an upfront fixed fee. Revenue from such licenses is recognized at the point in time the customer obtains the right to use the license. Upfront fees are normally billed upon signing of the relevant agreement, and become due and payable at set times thereafter.

The Company also enters into arrangements to develop bespoke games on a fixed fee basis. The license to bespoke games is recognized at a point in time the customer obtains the right to use the license or when acceptance is obtained, in instances where acceptance is required. The Company has no ongoing service obligations subsequent to customer acceptance of the bespoke game, and they meet the criteria to be considered distinct. Payment for bespoke games is typically due within a number of days after delivery.

For the hosted solution, the Company provides daily access to the gaming platform as well as a stand ready obligation to deliver customer support, platform maintenance, updates and upgrades. Such arrangements are accounted for as a single performance obligation composed of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). Consideration with respect to these arrangements typically takes the form of usage based fees (percentage of net winnings) which is recognized as usage is incurred. These fees are billed in arrears (usually monthly) and due typically 30 days from the date of the invoice.

Interactive Revenue

Interactive revenue is generated from various games content made available via third party aggregation platforms integrated with Inspired's remote gaming server or direct to operators on the Company's remote gaming servers platform, and services such as customer support, platform maintenance, updates and upgrades. The Company provides daily access to these platforms as well as a stand ready obligation to deliver customer support, platform maintenance, updates and upgrades, as such arrangements are accounted for as a single performance obligation composed of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). When required, revenue is estimated based upon the prior period averages. Consideration with respect to these performance obligations typically takes the form of usage based fees (percentage of net win) which is recognized as usage is incurred. These fees are billed in arrears (usually monthly) and due typically 30 days from the date of the invoice. Revenue from aggregators who function as an agent is recognized on a net basis while revenue from operators where the Company is the principal is recognized on a gross basis.

Leisure Revenue

Up to November 6, 2025 and the sale of our UK holiday parks business and certain associated leisure assets, the Company jointly operated arcades within holiday resorts with the resort owners. The Company also wholly operates a number of gaming arcades within certain motorway service stations. The Leisure segment contract typically includes one stand-ready performance obligation to provide managed services to pubs, holiday resorts and amusement arcades, both standalone and within motorway service stations. Subsequent to the sale of our UK holiday parks business and certain associated leisure assets, this reduced to only pubs, bingo and motorway service stations. Managed service is an end-to-end management solution to provide a comprehensive range of gaming machine terminals, amusement machine terminals, and service of operating amusements over a term, as well as service obligations related to terminal repairs, content and maintenance, cash collections, personnel and other services. Consideration with respect to these performance obligations typically takes the form of usage-based fees (percentage of net win) which is recognized as usage is incurred, with adjustments to account for the movement of income uncollected in the specific period. These fees are billed in arrears (usually monthly) and due typically 30 days from the date of the invoice.

The Company also provides terminal maintenance and spares management services to third parties, including customers. Consideration with respect to this stand-ready performance obligation takes the form of either variable fees based on number of machines being serviced during a period or fixed fees per time period. These fees are billed in arrears and typically settled within 30 days. Revenue is recognized over time over the term of the service period.

Costs to Obtain or Fulfill a Contract

The Company capitalizes certain contract acquisition costs that are incremental to obtaining a contract with a customer, to the extent that such costs are recoverable from the associated contract margin. Capitalized contract acquisition costs primarily consist of certain sales commissions programs paid to internal sales personnel and external advisors.

The Company also capitalizes certain costs to fulfill a contract with a customer when the costs relate directly to the contract, are expected to generate resources that will be used to satisfy a future performance obligation under the contract and are expected to be recovered through revenue generated under the contract. These costs primarily consist of employee-related costs for time incurred on software development projects associated with customer contracts.

Capitalized contract acquisition costs and costs to fulfill a contract are amortized on a systematic basis over the expected period of benefit which ranges from 0 to 4 years based on the contract term and pattern of transfer of the underlying goods and/or services being provided to the customer.

Capitalized costs to obtain and fulfill contracts with customers are included in Costs of obtaining and fulfilling customer contracts, net, in the Consolidated Balance Sheets and amortization of such costs is included in Depreciation and amortization in the Consolidated Statement of Operations and Comprehensive Income (Loss).

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Disaggregation of revenue

Information on disaggregation of revenue is included in Note 27, "Segment Reporting and Geographic Information."

Shipping and Handling Costs

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

Share-Based Payment Arrangements

The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation" ("ASC 718"). ASC 718 requires generally that all equity awards be accounted for at their "fair value." This fair value is measured on the grant date for stock-settled awards. Fair value is equal to the underlying value of the stock for "full-value" awards such as restricted stock units that have time and performance vesting conditions, restricted stock units that have market conditions are valued using a Monte Carlo simulation model.

The Company has elected to recognize stock-based compensation cost using the graded vesting attribution method for each separately vesting tranche of the award from the grant date to the date that each tranche vests over the requisite service period for the restricted stock units. The Company accounts for forfeitures as they occur. For awards that vest over time, previously recognized compensation cost is reversed if the service or performance conditions are not satisfied and the award is forfeited.

Subsequent modifications to outstanding awards result in incremental cost if the fair value is increased as a result of the modification. The incremental cost is charged over the estimated service derived period.

Income Taxes

Income taxes are accounted for under the asset and liability method. Our provision for income taxes is principally based on current period income (loss), changes in deferred tax assets and liabilities and changes in estimates with regard to uncertain tax positions. We estimate current tax expense and assess temporary differences resulting from differing treatments of items for tax and accounting purposes using enacted tax rates in effect for each taxing jurisdiction in which we operate for the period in which those temporary differences are expected to be recovered or settled. These differences result in deferred tax assets and liabilities. Our total deferred tax assets are principally comprised of depreciation and net operating loss carry forwards.

Significant management judgment is required to assess the likelihood that deferred tax assets will be recovered from future taxable income. In assessing the realizability of these deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Management makes this assessment on a jurisdiction by jurisdiction basis considering the historical trend of taxable losses, projected future taxable income and the reversal of deferred tax liabilities.

We evaluate income tax uncertainties, assess the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. Interest and penalties, if any, associated with uncertain tax positions are included in income tax expense.

Comprehensive (Loss) Income

We include and separately classify in comprehensive (loss) income unrealized gains and losses arising from foreign currency translation adjustments and from hedging instruments, gains or losses associated with pension or other post-retirement benefits, prior service costs or credits associated with pension or other post-retirement benefits and transition assets or obligations associated with pension or other post-retirement benefits.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Leases

We determine if an arrangement is a lease at inception of the arrangement. Once it is determined that an arrangement is, or contains, a lease, that determination should only be reassessed if the legal arrangement is modified. Changes to assumptions such as market-based factors do not trigger a reassessment. Determining whether a contract contains a lease requires judgement. In general, arrangements are considered to be a lease when all of the following apply:

The terms of a lease arrangement determine how a lease is classified and the resulting income statement recognition. When the terms of a lease effectively transfer control of the underlying asset, the lease represents an in substance financed purchase (sale) of an asset and the lease is classified as a finance lease by the lessee and a sales-type lease by the lessor. When a lease does not effectively transfer control of the underlying asset to the lessee, but the lessor obtains a guarantee for the value of the asset from a third party, the lessor would classify a lease as a direct financing lease. All other leases are classified as operating leases.

Where a lease contains more than one component, the consideration in the contract is allocated on a relative standalone price basis to the separate lease components and the non-lease components.

Leases - the Company as lessee

Lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available on the date that we adopted Topic 842, or the commencement date, if later, in determining the present value of future payments. The lease ROU asset includes any lease payment made and initial direct costs incurred. Our operating lease terms may include options to extend or terminate the lease which are included in the measurement of the ROU assets and lease liabilities when it is reasonably certain that we will exercise that option.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term. Finance lease assets are amortized straight-line over their useful life where the lease transfers ownership of the underlying asset, or to the earlier of the end of the useful life of the asset and the end of the lease term where ownership is not transferred. Interest on finance leases is recognized as the amount that results in a constant periodic discount rate on the remaining balance of the liability.

We have operating lease agreements with lease and non-lease components. The Company did not make the election to treat the lease and non-lease components as a single component and considers the non-lease components as a separate unit of account.

The Company has elected not to apply the recognition requirements of ASC 842 to short-term operating leases. We recognize the lease payments for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

Leases - the Company as lessor

The Company's lease arrangements are a mixture of sales-type leases and operating leases.

Sales-type lease receivables are recognized based on the net investment in the lease, at the present value of future minimum lease payments receivable over the lease term, plus any guaranteed residual value of the underlying asset, at the commencement date.

The discount rate used in determining the present value of the future minimum lease payments is the rate implicit in the lease. This is calculated using the fair value of the underlying asset and the present value of any unguaranteed residual value.

The underlying asset is derecognized at the point of inception and a selling profit is recognized at lease commencement. Subsequent interest income is recognized over the term of the lease, at an amount that produces a constant periodic discount rate on the remaining balance of the net investment in the lease.

For operating leases, we continue to recognize the underlying asset. Lease income is recognized on a straight-line basis over the lease term.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Recently Issued Accounting Standards

In October 2023, the FASB issued ASU No. 2023-06, "Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative" ("ASU 2023-06"). ASU 2023-06 modifies the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The guidance will be effective on the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective. The amendments in the Update should be applied prospectively. The adoption of ASU 2023-06 is not expected to have a material impact on the Company's financial statement presentation or disclosures.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of income statement expenses" ("ASU 2024-03"). The amendments in ASU 2024-03 require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1) Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)-(e). 2) Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements. 3) Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are still evaluating the effect of this guidance.

In July 2025, the FASB issued ASU No. 2025-05, "Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). ASU 2025-05 provides (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, as follows:

The guidance should be adopted prospectively and will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. We will be adopting the practical expedient as of January 1, 2026, and the adoption of ASU 2025-05 is not expected to have a material impact on the Company's financial statement presentation or disclosures.

In September 2025, the FASB issued ASU No. 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"). ASU 2025-06 changes the cost capitalization threshold by:

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

ASU 2025-06 also modifies the website development costs guidance by eliminating Subtopic 350-50 and relocating any remaining relevant guidance into Subtopic 350-40 and adding a new example. The guidance can be adopted retrospectively, prospectively or on a modified prospective basis and will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are still evaluating the effect of this guidance.

In November 2025, the FASB issued ASU No. 2025-09, "Hedge Accounting Improvements" ("ASU 2025-09"). Consistent with the original objective of Update 2017-12, the objective of ASU 2025-09 is to more closely align hedge accounting with the economics of an entity's risk management activities. Five issues are addressed in ASU 2025-09 and are intended to better reflect those strategies in financial reporting by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions. The five issues are as follows:

ASU 2025-09 applies to any entity that elects to apply hedge accounting in accordance with Topic 815 and is effective for annual periods beginning after December 15, 2026 and for interim reporting periods within those annual reporting periods. We are still evaluating the effect of this guidance, however, the adoption of ASU 2025-09 is not expected to have a material impact on the Company's financial statement presentation or disclosures.

In December 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements" ("ASU 2025-11"). The amendments in ASU 2025-11 clarify interim disclosure requirements and the applicability of Topic 270. The amendments result in a comprehensive list of interim disclosures that are required by GAAP. In developing the list of disclosures required by other Topics, the FASB focused on identifying the interim disclosures that are currently required under GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. The amendments also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. The FASB expects that these clarifications will enhance consistency in interim reporting for all entities. The amendments are effective for public business entities for interim reporting periods within annual reporting periods beginning after December 15, 2027, and can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The adoption of ASU 2025-11 is not expected to have a material impact on the Company's financial statement presentation or disclosures.

In December 2025, the FASB issued ASU No. 2025-12, "Accounting Standards Update Codification Improvements" ("ASU 2025-12"). The FASB has a standing project to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to generally accepted accounting principles. This evergreen project facilitates Codification updates for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The resulting amendments are collectively referred to as Codification improvements. The FASB decided that the types of issues that it will consider through this project are improvements that are not expected to have a significant effect on current accounting practice or result in significant costs to most entities. Thirty-three issues are addressed in ASU 2025-12 and represent changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments make the Codification easier to understand and apply. Generally, the amendments in ASU 2025-12 are not intended to result in significant changes for most entities. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The adoption of ASU 2025-12 is not expected to have a material impact on the Company's financial statement presentation or disclosures.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Newly Adopted Accounting Standards

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The amendments in the ASU enhance income tax disclosures, primarily through standardization, disaggregation of rate reconciliation categories, and income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption allowed. We adopted this guidance prospectively as of January 1, 2025, and included the necessary disclosures in this Form 10-K.

On January 1, 2025, the Company adopted ASU No. 2024-02, "Codification Improvements-Amendments to Remove References to the Concepts Statements" ("ASU 2024-02"). This Update contains amendments to the Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. The adoption of ASU 2024-02 did not have a material impact on the Company's financial statement presentation or disclosures.

2. Acquisitions and Disposals

On November 7, 2025, the Company completed the sale of its UK holiday parks business and certain associated leisure assets to an unconnected third party, recognizing a loss of $6.6 million.

The Company will provide ongoing gaming content and platform services on a recurring revenue basis with respect to the disposed business, in line with its ordinary course of business. The Company will also provide support for ongoing IT and finance activities of the disposed business for a period of up to 12 months post completion, chargeable on an arms-length basis.

3. Accounts Receivable

Accounts receivable consist of the following:

Changes in the allowance for credit losses are as follows:

4. Inventory

Inventory consists of the following:

Component parts include parts for gaming terminals. Included in inventory are reserves for excess and slow-moving inventory of $2.5 million and $1.9 million as of December 31, 2025 and 2024, respectively. Our finished goods inventory primarily consists of gaming terminals which are ready for sale.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

5. Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

6. Property and Equipment, net

Depreciation expense amounted to $18.6 million and $19.8 million for the years ended December 31, 2025 and 2024, respectively.

7. Software Development Costs, net

Software development costs, net consisted of the following:

During the years ended December 31, 2025 and 2024, the Company capitalized $9.9 million and $12.0 million of software development costs, respectively. The total amount of software costs amortized was $11.5 million and $10.7 million for the years ended December 31, 2025 and 2024, respectively.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

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

8. Intangible Assets and Goodwill

The following tables present certain information regarding our intangible assets. Amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives of eighteen months to thirteen years with no estimated residual values, which materially approximates the expected pattern of use.

Aggregate intangible asset amortization expense amounted to $3.5 million and $3.3 million for the years ended December 31, 2025 and 2024, respectively.

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

Goodwill

Goodwill is summarized as follows:

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

9. Other Assets

Other assets consist of the following:

10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

11. Contract Related Disclosures

The following table summarizes contract related balances:

Unbilled accounts receivable are a form of contract asset and primarily result from revenue being recognized when or as control of a solution or service is transferred to the customer, but where invoicing is contingent upon the completion of other performance obligations or payment terms differ from the provisioning of services. The current portion of unbilled accounts receivable is reported within prepaid expenses and other current assets in the consolidated balance sheet, and the non-current portion is included in other assets. Right to recover assets are recognized in respect of the transfer of products with a right of return where the Company has also recognized a refund liability. Right to return assets are recognized in other debtors and refund liabilities are recognized as part of deferred income. Contract liabilities (deferred income and customer prepayments and deposits) primarily relate to consideration received from customers in advance of delivery of the related goods and services to the customer. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

Revenue recognized that was included in the deferred income balance at the beginning of the period amounted to $4.8 million and $3.8 million for the years ended December 31, 2025 and 2024, respectively.

For the years ended December 31, 2025 and 2024 there was no significant amounts of revenue recognized as a result of changes in contract transaction price related to performance obligations that were satisfied in the respective prior periods.

The Company capitalizes certain costs incurred in obtaining or fulfilling a customer contract. The following table summarizes amounts capitalized on the Consolidated Balance Sheets at December 31, 2025 and 2024, net of accumulated amortization.

Amortization of capitalized contract costs was $12.9 million and $9.5 million during the years ended December 31, 2025 and 2024, respectively. We did not recognize any impairment losses on such costs during the years ended December 31, 2025 or 2024.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Transaction Price Allocated to Remaining Performance Obligations

At December 31, 2025, in respect of contracts exceeding one year duration, the aggregate amount of the transaction price allocated to the performance obligations which are unsatisfied (or partially unsatisfied) at the end of the reporting period was approximately $129.1 million. Of this amount, we expect to recognize as revenue approximately 31% through December 31, 2026, approximately 46% through December 31, 2028, approximately 22% through December 31, 2030 and the remaining 1% through December 31, 2031.

12. Other Liabilities

Other liabilities consist of the following:

13. Long Term and Other Debt

Issuance of Long-Term Debt - Series B Notes

On June 4, 2025, Inspired Entertainment (Financing) plc (the "Issuer"), a wholly owned (indirect) subsidiary of the Company, together with certain subsidiaries of the Company entered into a Senior Notes Purchase Agreement (the "Notes Purchase Agreement") with (among others) Global Loan Agency Services Limited (the "Agent") as the agent, GLAS Trust Corporation Limited (the "Security Agent") as the security agent, and Barclays Bank plc, HG Vora Special Opportunities Master Fund, Ltd., BSE Investments, Ltd. and HG Vora Opportunistic Capital Master Fund III A LP as the original noteholders. On September 30, 2025, a number of documents comprising Inspired Guarantor Accession Documents were signed following local law advice, such that the following entities are now guarantors under the Notes Purchase Agreement, being DMWSL 631 Limited, Inspired Entertainment (Financing) PLC, Inspired Entertainment Lotteries LLC, Inspired Gaming (USA) Inc., Gaming Acquisitions Limited, Inspired Gaming (UK) Limited, Inspired Gaming (Greece) Limited, and Inspired Gaming (Gibraltar) Limited.

Pursuant to the Notes Purchase Agreement, the Issuer issued £270.0 million ($363.2 million, as translated at December 31, 2025) aggregate principal amount of Series B Notes (the "Senior Notes") on June 9, 2025 (the "Closing Date"). The Senior Notes are initially guaranteed by the Issuer and certain other subsidiaries of the Company (the "Guarantors"). The terms of the Senior Notes and related guarantees are governed by the Notes Purchase Agreement.

Subject to compliance with customary conditions, the Notes Purchase Agreement allows us to incur additional senior secured indebtedness in the amounts permitted under the Senior Notes, either as a new series of notes or as an additional sub tranche or increase of the Senior Notes.

The proceeds from the offering of Senior Notes were used to refinance the previously existing £235.0 million ($316.1 million) senior secured notes due June 1, 2026 (the "Prior Notes") and £15.0 million ($20.2 million) loans outstanding under the prior revolving credit agreement (the "Prior RCF") and accrued interest and/or fees, in each case (and any related fees, costs and expenses). The Issuer intends to use the balance of the proceeds for general corporate purposes and/or working capital purposes.

The following is a brief description of the Senior Notes.

Interest and Maturity

The Senior Notes bear interest at a rate per annum equal to the Sterling Overnight Index Average ("SONIA") rate plus a margin (based on the Company's consolidated senior secured net leverage ratio) ranging from 5.50% to 6.00% per annum and mature on June 9, 2030 (five years from the date of issuance). Interest is payable on the Senior Notes monthly, quarterly or semi-annually (as selected by the Issuer) or by reference to any other period agreed with all the holders.

Ranking

The Senior Notes and related guarantees are senior secured obligations of the Issuer and the Guarantors that (i) rank equally in right of payment to any of the Issuer's and the Guarantors' existing and future indebtedness (except as otherwise described in this paragraph); (ii) rank senior in right of payment with all of the Issuer's and the Guarantor's existing and future senior subordinated indebtedness; (iii) are effectively junior in right of payment to all of the Issuer's and the Guarantors' existing and future secured indebtedness that is secured by assets that do not secure the Notes and the guarantees thereof to the extent of the value of the assets securing such indebtedness; and (iv) are structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of the Company's subsidiaries that do not guarantee the Senior Notes (other than the Issuer).

Guarantees

The Senior Notes are fully and unconditionally guaranteed on a senior secured first-priority basis by the Guarantors on a joint and several basis.

Security

The Senior Notes and related guarantees are secured, subject to certain permitted collateral liens, on a first-priority basis by certain assets of the Guarantors.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Covenants

The Notes Purchase Agreement contains incurrence covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, (i) incur or guarantee additional debt and issue certain preferred stock of restricted subsidiaries; (ii) create or incur certain liens; (iii) make restricted payments, including dividends or distributions to the Company's stockholders or repurchase its stock; (iv) prepay or redeem subordinated debt; (v) make certain investments, including participating joint ventures; (vi) create encumbrances or restrictions on the payment of dividends or other distributions by restricted subsidiaries; (vii) sell assets, or consolidate or merge with or into other companies; (viii) sell or transfer all or substantially all of the Company's assets or those of the Company's subsidiaries on a consolidated basis; and (ix) engage in certain transactions with affiliates. These covenants are subject to exceptions and qualifications as set forth in the Notes Purchase Agreement.

The Notes Purchase Agreement requires that the Company maintain a maximum consolidated senior secured net leverage ratio of 5.0x on the test date for the relevant periods ending September 30, 2025, December 31, 2025, March 31, 2026, June 30, 2026, September 30, 2026, December 31, 2026 and March 31, 2027, stepping down to 4.75x on June 30, 2027 and each relevant period thereafter (the "Notes Financial Covenant"). The Notes Financial Covenant is calculated as the ratio of consolidated senior secured net debt to consolidated pro forma EBITDA (defined as consolidated net income after adding back certain items including (without limitation) interest expense, taxes, depreciation and amortization expenses and exceptional or non-recurring costs and losses and after adjusting for certain projected savings and synergies) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly on a rolling basis. The Notes Purchase Agreement does not include a minimum interest coverage ratio or other financial covenants. Covenant testing at December 31, 2025 showed covenant compliance with a net leverage of 3.06x.

Events of Default

The Notes Purchase Agreement provides for events of default (subject in certain cases to grace and cure periods) which include, among others, non-payment of amounts when due, breach of covenants or other agreements in the Notes Purchase Agreement, misrepresentations, defaults in payment of certain other indebtedness and certain events of insolvency, material litigation and a "going concern" qualification by the auditors. Subject to certain exceptions, if an event of default occurs, the Agent or the holders of more than 50% of the Senior Notes may declare the principal of, premium, if any, and accrued but unpaid interest on all of the Notes to be due and payable immediately.

Voluntary Redemption

The Issuer may redeem the Senior Notes, in whole or in part, at any time and from time to time prior to the first anniversary of issuance, at a redemption price equal to 100% of the principal amount thereof, plus a "make-whole" premium (the "Make Whole") as set forth in the Notes Purchase Agreement, plus accrued and unpaid interest (if any) up to, but excluding, the redemption date. The Issuer may also redeem the Notes, in whole or in part, at any time and from time to time on or after the first anniversary of issuance but prior to the second anniversary of issuance, at a redemption price equal to 100% of the principal amount thereof, plus 1% of the principal amount redeemed (the "101" and, together with the Make Whole, "Call Protection"), plus accrued and unpaid interest (if any) up to, but excluding, the redemption date. On or after the second anniversary of issuance, the Issuer may redeem the Notes, in whole or in part, at any time and from time to time at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest (if any) up to, but excluding, the redemption date

Mandatory Redemption

If a change of control occurs as specified in the Notes Purchase Agreement, the Issuer must offer to purchase the Notes, in cash, at a redemption price equal to at 100% of the principal amount thereof plus the applicable Call Protection plus accrued and unpaid interest (if any) up to, but excluding, the redemption date. If the Company generates excess cashflow as specified in the Notes Purchase Agreement, the Issuer must offer to apply an agreed percentage of such excess cash flow (subject to certain deductions and varying by reference to the level of senior secured net leverage at such time) to purchase the Senior Notes, in cash, at a redemption price equal to at 100% of the principal amount thereof plus accrued and unpaid interest (if any) up to, but excluding, the redemption date. In addition, the Indenture may require the Issuer to use excess proceeds from certain asset dispositions for an offer to purchase the Senior Notes at 100% of the principal amount thereof plus the applicable Call Protection (unless made in the first 12 months following issuance and not in an amount exceeding £25.0 million ($33.6 million) and made in connection with certain planned disposals by the Company as set out in the Notes Purchase Agreement) plus accrued and unpaid interest (if any) up to, but excluding, the redemption date.

Revolving Credit Facility

In connection with the issuance of the Senior Notes, the Issuer, together with certain subsidiaries of the Company, entered into a Senior Facilities Agreement (the "SFA") on June 4, 2025, with the Agent, the Security Agent and Barclays Bank plc as original lender (the "Lender"), pursuant to which the Lender agreed to provide, subject to certain conditions, a secured revolving facility (the "RCF") in an original principal amount of £17.8 million ($23.9 million) under which, as of the Closing Date, the Issuer is able to draw funds. The RCF will terminate on December 9, 2029 (54 months from the Closing Date).

Subject to compliance with customary conditions, the SFA allows certain members of the Group to incur additional senior secured, second lien and unsecured indebtedness in the amounts permitted under the Senior Notes, either as a new facility or as an additional sub tranche or increase of the RCF.

Proceeds from the RCF, if drawn, may be used towards financing and/or refinancing (directly or indirectly) the general corporate and/or working capital purposes of the Company (including, without limitation, restructuring costs or charges and any acquisitions or investments).

The funding of the RCF is subject to customary conditions set forth in the SFA, including documentary conditions precedent which are to be satisfied on the Closing Date.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The loans under the RCF bear interest at a rate per annum equal to (i) SONIA for borrowings in sterling, (ii) LIBOR for borrowings in dollars, or (iii) EURIBOR for borrowings in Euro, as applicable, plus, in each case, a margin (based on the Company's consolidated senior secured net leverage ratio) ranging from 3.25% to 3.75% per annum. With respect to the RCF, a commitment fee of 35% of the then applicable margin is payable at any time on any unutilized portion of the RCF.

The SFA contains various covenants (which include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company's subsidiaries and fundamental changes, subject in each case to certain exceptions), representations, warranties, limitations and events of default (which include non-payment, breach of obligations under the financing documents, cross default, insolvency and litigation) customary for similar facilities and subject to customary carve-outs and grace periods. Following the occurrence of an event of default which has not been waived or remedied, the Lenders who represent more than 50% of total commitments under the SFA may, subject to the terms of an intercreditor agreement (which governs the relationship between the Lenders and the holders of the Senior Notes), instruct the agent to (i) accelerate the RCF loans, (ii) instruct the security agent to enforce the transaction security and/or (iii) exercise any other remedies available to the Lenders.

The SFA requires that the Company maintain a maximum consolidated senior secured net leverage ratio of 5.50x on the test date for the relevant periods ending September 30, 2025, December 31, 2025, March 31, 2026, June 30, 2026, September 30, 2026, December 31, 2026 and March 31, 2027, stepping down to 5.25x on June 30, 2027 and each relevant period thereafter (the "RCF Financial Covenant"). The RCF Financial Covenant is calculated as the ratio of consolidated senior secured net debt to consolidated pro forma EBITDA (defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly on a rolling basis. The SFA does not include a minimum interest coverage ratio or other financial covenants. Covenant testing at December 31, 2025 showed covenant compliance with a net leverage of 3.06x.

The outstanding principal amount of each advance under the RCF is payable on the last day of the interest period relating to such advance, unless such advance is rolled over on a cashless basis in accordance with customary rollover provisions contained in the SFA, with a final repayment on December 9, 2029.

In the event that a Lender breaches its obligations under the SFA, otherwise repudiates or rescinds the SFA or any other finance document or is subject to an insolvency event, the Issuer is entitled to prepay the amounts owed to such Lender, cancel its undrawn commitments and replace it with another financial institution of the Company's choosing who is willing to join the SFA as a Lender. Subject to the foregoing, recourse against the Lenders by the Company or its subsidiaries that are party to the SFA would, absent fraud or other criminal behavior, generally be limited to remedies for breach of contract.

Termination of Prior Financing

The Company's previous debt consisted of £235.0 million ($316.1 million) of Senior Secured Notes which bore interest at a fixed rate of 7.875% and a Super Senior Revolving Credit Facility in a principal amount of £20.0 million ($26.9 million), of which £15.0 million ($20.2 million) was drawn at the time of termination, which bore interest at a rate per annum equal to (i) SONIA for borrowings in sterling, (ii) LIBOR (or, on and after December 31, 2021, SOFR) for borrowings in US Dollars, or (iii) EURIBOR for borrowings in Euro, as applicable, plus, in each case, a margin (based on the Company's consolidated senior secured net leverage ratio) ranging from 4.25% to 4.75% per annum.

In connection with the entry into each of the Notes Purchase Agreement and the SFA, on June 9, 2025, (i) the Issuer redeemed the Prior Notes and terminated the indenture dated May 20, 2021 pursuant to which the Prior Notes had been issued, and (ii) the Issuer prepaid in full all outstanding loans under the Prior RCF and terminated the Super Senior Revolving Credit Facilities Agreement dated May 20, 2021.

The termination of the prior financing is considered to be a non-substantial modification, in accordance with Topic 470-50. Fees directly associated with the modified Senior Debt amounting to $18.1 million were capitalized and will be amortized over the term of the new Senior Debt, along with the existing $1.6 million unamortized debt issuance costs of the old Senior Debt. $0.9 million of fees associated with the new RCF were capitalized and will be amortized over the term of the new RCF, along with the existing $0.1 million unamortized fees attributable to the Prior RCF. Fees paid to third parties of $2.3 million related to the new Senior Debt were expensed as incurred into Selling, General and Administrative fees.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Outstanding Debt and Finance Leases

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

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

Long term debt as of December 31, 2025 matures as follows:

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

14. Derivatives and Hedging Activities

On November 12, 2025, the Company entered into two interest rate swap agreements with Macquarie Bank Limited designed to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on the current floating rate debt facilities. The swaps are effective from December 9, 2025, until maturity on December 9, 2027. The swaps fix the interest rate at 3.6208% on a notional amount of £250.0 million ($336.3 million), payable to Macquarie Bank Limited, with Macquarie Bank Limited paying an amount to the Company on the notional amount of £250.0 million ($336.3 million) at an interest rate equal to the floating amount due on the Senior Notes, subject to a floor of 3.00%.

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments principally related to the Company's borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the year ended December 31, 2025, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next twelve-months, the Company estimates that an additional $0.3 million will be reclassified as a decrease to interest expense.

As of December 31, 2025, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

The Company did not have any derivatives as of December 31, 2024.

The table below presents the fair value of the Company's derivative financial instruments as well as their classification in the consolidated balance sheet as of December 31, 2025 and December 31, 2024.

There was no effect of offsetting of the derivative financial instruments at December 31, 2025.

The tables below present the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended December 31, 2025 and December 31, 2024.

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The tables below present the effect of the Company's derivative financial instruments on the consolidated statements of operations for the year ended December 31, 2025 and December 31, 2024.

Credit-risk-related Contingent Features

Each of Inspired Gaming (UK) Limited and Gaming Acquisitions Limited, wholly owned (indirect) subsidiaries of the Company, (each, a "Hedging Subsidiary") has entered into an industry standard ISDA Master Agreement, with a negotiated Schedule thereto (each, an "ISDA Agreement"), with the counterparty to its derivative transactions and which ISDA Agreements set forth various provisions which govern the relationship between each such Hedging Subsidiary and its counterparty with respect to such derivative instruments. Such provisions include certain events which, if triggered by either party, may give rise to a termination of the relevant derivative instruments, which may trigger a requirement for the exchange of a breakage payment between the parties.

Each ISDA Agreement contains a provision whereby if any of the Company's subsidiaries that has granted credit support in respect of such derivative transactions defaults on any of its indebtedness above a threshold amount, including default where repayment of such indebtedness has not been accelerated by the relevant creditor, then the relevant Hedging Subsidiary could also be declared in default on its derivative obligations. Each ISDA Agreement also contains a provision where the relevant Hedging Subsidiary could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the relevant Hedging Subsidiary's default on its indebtedness.

As of December 31, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for non-performance risk, related to the ISDA Agreements was $0.5 million. As of December 31, 2025, no Hedging Subsidiary has posted any collateral related to the ISDA Agreement, as no collateral is required under the terms thereof. If the Hedging Subsidiaries had breached any of the provisions under the terms, which resulted in an acceleration of the ISDA Agreements, as at December 31, 2025, the Company could have been required to settle its obligations under the respective ISDA Agreements at their termination value of $0.5 million.

15. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset and liability in an orderly transaction between market participants at the measurement date. We estimate the fair value of our assets and liabilities utilizing an established three-level hierarchy. The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments approximates their recorded values.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

For each period, derivative financial instrument assets and liabilities measured at fair value on a recurring basis are included in the financial statements as per the table below.

Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company's Principal Financial and Accounting Officer determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company's Principal Financial and Accounting Officer.

At December 31, 2025 and December 31, 2024, there were no Level 3 inputs, and no transfers in or out of Level 3 from other levels in the fair value hierarchy.

16. Stockholders' Deficit

Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share in one or more series. The Company's Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. At December 31, 2025 and December 31, 2024, there were no shares of preferred stock issued or outstanding.

Common Stock

The Company is authorized to issue 49,000,000 shares of common stock, par value $0.0001 per share. Holders of the Company's common stock are entitled to one vote for each common share.

17. Stock-Based Compensation

The Company's stock-based compensation plans authorize awards of restricted stock units ("RSUs"), stock options and other equity-related awards. The Company's 2023 Omnibus Incentive Plan ("2023 Plan") was adopted by the Company's Board of Directors on April 10, 2023 and approved by our stockholders on May 9, 2023. The 2023 Plan succeeded the 2021 Omnibus Incentive Plan and the 2018 Omnibus Incentive Plan (collectively, the "Prior Plans") such that shares subject to the unused reserves of the Prior Plans (e.g., as a result of termination or forfeiture of awards) are instead rolled over to the 2023 Plan. The Company has two other predecessor plans, the 2016 Long-Term Incentive Plan and the Second Long-Term Incentive Plan (collectively, the "Terminated Plans"), whose available balances were terminated in connection with approval of the 2018 Omnibus Incentive Plan. Although outstanding awards under the Terminated Plans remain governed by the terms of such plans, no new awards may be granted or become available for grant thereunder.

As of December 31, 2025, there were (i) 1,306,958 shares subject to outstanding awards under the 2023 Plan, including 493,736 shares subject to performance-based target awards, 93,750 shares subject to market-price vesting conditions and 283,243 shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement (a portion of which settled in January 2026); (ii) 1,201,716 shares subject to outstanding awards under the Prior Plans, comprising 97,500 shares subject to market-price vesting conditions and 1,104,216 shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement (a portion of which settled in January 2026); and (iii) 1,118,686 shares subject to outstanding awards under the Terminated Plans as to which the applicable vesting conditions have been met which remain subject to deferred settlement. As of December 31, 2025, there were 2,021,962 shares available for new awards under the 2023 Plan (which includes shares rolled over from the Prior Plans) and no shares available for new awards under the Prior Plans. All awards outstanding as of December 31, 2025 consisted of RSUs (including time-based RSUs, performance-based RSUs and stock price based RSUs).

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The Company also has an employee stock purchase plan ("ESPP") that authorizes the issuance of up to an aggregate of 500,000 shares of common stock pursuant to purchases thereunder by employees. The ESPP, which was approved by stockholders in July 2017, is administered by the Compensation Committee which has discretion to designate the length of offering periods and other terms subject to the requirements of the ESPP. Offerings may also be under the ESPP's subplan for UK-based employees (the "Subplan") which was adopted in June 2022 and is designed to meet the requirements of a sharesave plan under UK law. The terms applicable to offerings approved under the ESPP and Subplan for 2024 are described below. Offerings were not approved for 2025.

ESPP - Eligible employees may contribute up to 10% of base compensation through payroll deductions over a period of twelve months, a maximum of 1,000 shares may be purchased per participant, the purchase price is equal to 85% of the lower of the closing price of the common stock at the beginning of the offering period and the end of the offering period and shares are purchased on the last day of the offering period.

Subplan (UK) - Eligible employees may contribute a maximum amount of £350 per month through payroll deductions over a period of three years, the purchase price is equal to 85% of the closing price of the common stock on the day prior to commencement of the enrollment window for the offering, and participants have a period of six months following the end of the offering to elect to purchase shares or receive a refund.

As of December 31, 2025, a total of 456,756 shares remained available for purchase under the ESPP (including in connection with outstanding purchase rights under the Company's ongoing offering periods). A total of 3,670 shares were purchased in 2024 (at a purchase price of $8.109 per share) and a total of 3,245 shares were purchased in 2025 (at a purchase price of $6.4175 per share). The shares from the 2024 purchases were issued in 2024. Based on enrollments in the ESPP's Subplan, an aggregate of approximately 77,000 shares were subject to outstanding purchase rights as of December 31, 2025.

A summary of the Company's RSU activity is as follows:

The Company issued a total of 348,141 shares during the year ended December 31, 2025, in connection with the Company's equity-based plans, which included an aggregate of 274,112 shares issued in connection with the net settlement of RSUs that vested during the prior year (on December 31, 2024) and an aggregate of 36,968 shares subject to awards that vested between 2020 and 2023.

The weighted average grant date fair value of awards granted for years ended December 31, 2025 and December 31, 2024 amounted to $10.33 and $9.07, respectively. The vesting date value of RSUs vesting for years ended December 31, 2025 and December 31, 2024 amounted to $4.2 million and $7.6 million, respectively.

When tax deductions from stock options and awards are less than the cumulative book compensation expense, the tax effect of the resulting differences is a shortfall. For the year ended December 31, 2025 and December 31, 2024 an income tax expense of $0.4 million and $0.5 million was recorded for shortfalls generated from stock options and awards exercised in their respective years.

Stock-based compensation is recognized as an expense over the requisite service period, which is generally the vesting period. For performance awards that are contingent upon the Company achieving certain pre-determined financial performance targets, compensation expense is calculated based on the number of shares expected to vest after assessing the probability that the performance criteria will be met. Determining the probability of achieving a performance target requires estimates and judgment. For market-based awards that are contingent upon the Company's stock achieving certain pre-determined price targets, compensation expense is calculated based upon the determination of the fair value of the awards as derived through multiple running of the Monte Carlo valuation model, with the fair value recognized on a straight-line basis over the requisite service period. The requisite service period for awards to employees is generally satisfied over a vesting period of three years (and one year for non-employee directors). The Company accounts for forfeitures as they occur. For stock purchase rights under the Company's ESPP (including its subplan), the Company estimates fair value using the Black-Scholes option pricing model on the dates of grant, with the compensation expense recognized over the requisite service period.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The Company recognized stock-based compensation expense as follows:

Total unrecognized compensation expense related to unvested stock awards and unvested RSUs at December 31, 2025 amounts to $4.1 million and is expected to be recognized over a weighted average period of 1.6 years.

18. Accumulated Other Comprehensive Loss (Income)

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

19. Net Income (Loss) per Share

Basic income/loss per share ("EPS") is computed by dividing net income/loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period, including stock options and RSUs, unless the inclusion would be anti-dilutive.

The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because they were contingently issuable shares or because their inclusion would be anti-dilutive:

The calculation of Basic EPS includes the effects of 2,506,145 and 2,091,536 shares for the years ended December 31, 2025 and 2024, respectively, with respect to RSU awards that have vested but have not yet been issued.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

20. Repurchase of Common Stock

On November 1, 2025, the Board of Directors authorized the Company to use up to $25.0 million to repurchase Inspired common shares, subject to repurchases being effected on or before November 30, 2028 (the "Share Repurchase Program"). Management has discretion as to whether to repurchase shares of the Company.

During the year ended December 31, 2025, the Company repurchased 56,604 shares under the Share Repurchase Program for gross payments of approximately $0.4 million, which were canceled and retired during the year ended December 31, 2025. As of December 31, 2025, approximately $24.6 million remained available for future repurchases under the Share Repurchase Program.

Refer Part II, Item 5 of this report for further details regarding shares repurchased during the three months ended December 31, 2025.

21. Other Finance Income

Other finance income consisted of the following:

22. Income Taxes

The effective tax rates for the years ended December 31, 2025 and 2024 were (188.6)% and (3,466.2)%, respectively. For the year ended December 31, 2025, the Company's effective tax rate differs from the federal statutory rate primarily due to an inclusion for global intangible low-taxed income. For the year ended December 31, 2024, the Company's effective tax rate differs from the federal statutory rate primarily due to the reversal of a majority of the Company's valuation allowance on its deferred tax assets in various jurisdictions as well as an inclusion for global intangible low-taxed income.

The components of (loss) earnings before income taxes on the Company's consolidated statement of operations by the U.S. and foreign jurisdictions were as follows:

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

Supplemental disclosure of cash paid during the period for income taxes (net of refunds received) is as follows:

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Reconciliation of the differences between the effective income tax rate and federal statutory rate for the year ended December 31, 2025: