F-1 1 tm2332616-5_f1.htm F-1 tm2332616-5_f1 - none - 58.0414937s
As filed with the Securities and Exchange Commission on April 16, 2024.
No. 333-         
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Games Global Limited
(Exact name of registrant as specified in its charter)
Isle of Man
(State or other jurisdiction of
incorporation or organization)
7999
(Primary Standard Industrial
Classification Code Number)
Not applicable
(I.R.S. Employer
Identification No.)
62 Circular Road
Douglas
Isle of Man IM1 1LA
Tel: +44 1624 727515
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Games Global USA Inc.
1515 N Federal Hwy Suite 407
Boca Raton, FL 33432
United States
Tel: (954) 281-3661
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Justin Stock
David Peinsipp
Courtney T. Thorne
Trey Reilly
Cooley LLP
22 Bishopsgate
London, EC2M 1QS
United Kingdom
Tel: +44 (0) 20 7583-4055
Simcocks Advocates Limited
Ridgeway House
Ridgeway Street
Douglas
Isle of Man IM1 1EL
Tel: +44 (0) 16 2469-0300
Marc D. Jaffe
Ian D. Schuman
Jennifer M. Gascoyne
Latham & Watkins LLP
1271 Avenue of the Americas
New York, NY 10020
United States
Tel: (212) 906-1200
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

The information contained in this preliminary prospectus is not complete and may be changed. We and the selling shareholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and neither we nor the selling shareholder are soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to completion, dated           , 2024
Preliminary prospectus
           Shares
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Ordinary shares
This is an initial public offering of ordinary shares of Games Global Limited. We are offering         ordinary shares and the selling shareholder identified in this prospectus is offering an additional      ordinary shares. We will not receive proceeds from the sale of ordinary shares by the selling shareholder.
Prior to this offering, there has been no public market for our ordinary shares. The initial public offering price is expected to be between $       and $       per share. We intend to apply to list our ordinary shares on the New York Stock Exchange under the symbol “GGL.”
We are an “emerging growth company” and a “foreign private issuer” as defined under the Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements for this prospectus and future filings. We are also a “controlled company” as defined under the rules of the New York Stock Exchange, and therefore are permitted to elect not to comply with certain corporate governance requirements thereunder. See “Prospectus Summary — Implications of Being an Emerging Growth Company,” “Prospectus Summary — Implications of Being a Foreign Private Issuer” and “Prospectus Summary — Implications of Being a Controlled Company.”
Per ordinary
share
Total
Initial public offering price
$       $      
Underwriting discounts and commissions(1)
$ $
Proceeds, before expenses, to us
$ $
Proceeds, before expenses, to the selling shareholder
$ $
(1)
See “Underwriting” for a description of the compensation payable to the underwriters.
We have granted the underwriters an option to purchase up to       additional ordinary shares from us at the public offering price, less underwriting discounts and commissions, for a period of 30 days following the date of this prospectus.
Our business and an investment in our ordinary shares involve a high degree of risk. See “Risk Factors” beginning on page 26 of this prospectus to read about factors you should consider before buying our ordinary shares.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the ordinary shares to purchasers on          , 2024.
J.P. Morgan
Jefferies
Macquarie Capital
Barclays
          , 2024

 
TABLE OF CONTENTS
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F-1
You should rely only on the information contained in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus we may authorize to be delivered or made available to you. Neither we, the selling shareholder nor any of the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we, the selling shareholder nor any of the underwriters take responsibility for, or can provide any assurance as to the reliability of, any other information that others may give you. We, the selling shareholder and the underwriters are offering to sell, and seeking offers to buy, our ordinary shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any applicable free writing prospectus or of any sale of our ordinary shares.
For investors outside the United States: neither we, the selling shareholder nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any applicable free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside of the United States who come into possession of this prospectus or
 
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any applicable free writing prospectus must inform themselves about, and observe any restrictions relating to, this offering of our ordinary shares and the distribution of this prospectus and any applicable free writing prospectus outside of the United States.
We were incorporated in the Isle of Man on July 8, 2021 under the Isle of Man Companies Act 2006, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the Securities and Exchange Commission (“SEC”), we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
 
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
We were incorporated on July 8, 2021 by Fusion Holdings Limited (“Fusion”), a private limited company incorporated in the Isle of Man, pursuant to a carve-out of Fusion’s game development business. The methodology employed in the carve-out was the management approach, which allowed management to apportion the activity and financial position of Fusion’s game development division into the new Games Global Limited. Accordingly, the financial information for the periods prior to the date of our incorporation have been prepared on a “carve-out” basis to present the results of operations and the costs of doing business. The basis of preparation included in our consolidated and carve-out financial statements provides a detailed description of the treatment of historical transactions in the period prior to the date of our incorporation. See note 1 to our consolidated and combined financial statements included elsewhere in this prospectus.
Throughout this prospectus, unless otherwise indicated or the context otherwise requires, all references to “Games Global,” the “Company,” “the Group,” “we,” “our,” “ours,” “us,” “our company,” “our business” or similar terms refer to Games Global Limited and, where appropriate, our consolidated subsidiaries.
This prospectus includes our audited consolidated and combined financial statements as of and for the years ended March 31, 2023 and 2022, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). This prospectus also includes our unaudited condensed consolidated interim financial statements as of and for the nine months ended December 31, 2023 and 2022, which have been prepared in accordance with IFRS, as issued by the IASB.
This prospectus also includes the audited financial statements of MahiGaming LLC (“Mahi”) as of March 31, 2022 and 2021 and for the year ended March 31, 2022 and for the period from June 9, 2020 (date of inception) to March 31, 2021, together with the condensed unaudited interim financial statements of Mahi as of June 30, 2022 and 2021 and for the three month periods then ended, which have both been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
This prospectus further includes the audited combined financial statements of Snowborn Games AB, JFTW Games Development AB, Spinplay Holdings Limited and Riversun Holdings Inc. (collectively, the “Velo Studios”) as of and for the years ended December 31, 2022 and 2021, which have been prepared in accordance with IFRS, as issued by the IASB.
Our consolidated and combined financial statements are presented in Euro and, unless otherwise stated, all monetary amounts are in Euro. The financial statements of Mahi are presented in U.S. dollar and, unless otherwise stated, all monetary amounts are in U.S. dollar. For the convenience of the reader, in this prospectus, unless otherwise indicated, translations from Euro into U.S. dollars were made at the rate of €1.00 to $1.1062, which was the rate in effect on December 29, 2023, the last business day prior to the fiscal quarter-end. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of Euro at the dates indicated. All references in this prospectus to “$,” “U.S. dollar” and “dollar” mean U.S. dollar, and all references to “€,” “EUR” and “Euro” mean European Monetary Union Euro, unless otherwise noted.
The financial information set forth in this prospectus has been rounded for ease of presentation. In addition, percentages in tables may be calculated on the basis of such financial information prior to such rounding. As a result, percentages in tables may differ from the percentage that would be calculated based upon the rounded financial information presented or may not add up to 100%, and the totals of other numerical figures, including certain financial data, shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. Financial information has been rounded to the nearest thousand in all cases, unless otherwise stated.
Unaudited Pro Forma Condensed Combined Financial Information
Our unaudited pro forma combined financial information (the “Pro Forma Financial Information”) includes the unaudited pro forma combined statement of profit or loss for the year ended March 31, 2023 to illustrate the effect of both the (i) acquisition of Mahi (the “Mahi Acquisition”) and (ii) the acquisition of the Velo Studios (the “Velo Studios Acquisition” and together with the Mahi Acquisition, the “Pro Forma
 
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Transactions”), as if the Pro Forma Transactions had taken place on April 1, 2022, the beginning of our 2023 fiscal year for purposes of the pro forma statement of profit or loss. See “Unaudited Pro Forma Condensed Combined Financial Information” for more information.
Gross Gaming Revenue
Gross gaming revenue (“GGR”) is a key metric used by companies throughout the iGaming value chain to monitor their performance. GGR represents the total amount of money that players wager on a gaming platform or game (which players access through the websites of business-to-consumer iGaming companies (“iGaming operators”)), minus any winnings for the players (i.e., GGR is the net win for the iGaming operator). Our revenue is predominantly derived through revenue-share arrangements and determined as a percentage of the GGR earned by iGaming operators, through players playing our games on their sites. The mechanism by which our share of the revenue is calculated is set through our contractual agreements with our customers. Our share of revenue is equal to the GGR earned from the player, less applicable gaming taxes, bonuses and promotions and the customer’s contractual share of the revenue, plus a fee to us for supplying the revenue-generating game. We recognize usage-based fees when revenue usage occurs (i.e., when players play our games). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Our Business Model” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Components of Results of Operations — Revenue” for additional information.
We automatically track GGR, which is an essential input for customer billing, through the interaction between the iGaming operator’s website and the games platform where we deploy our games that takes place every time a player plays one of our games. When a player accesses an iGaming operator’s website, the player’s account (e.g., registration and banking) information is stored and the player is offered a selection of games. If the player selects one of our games, this launches a game client, which runs through the operator website and requests content and services from our games platform. The games client provides the games platform with the IP address of the player, enabling us to authenticate that our game may be played in the territory where the player is located. Once we have authenticated this information, the game is downloaded, the player places a bet and the player plays the game on their browser via the game client. When a player finishes their session, the iGaming operator either retains the amount wagered or pays out winnings to the player, based on the outcome of the game. As a result of this operational activity, when a player selects one of our games to play, we receive several pieces of information on a pseudonymized basis, including: which game was selected; the IP address of the player and the territory in which it is registered; and the underlying components of GGR (the amount wagered and the amount paid out). This information is used for customer billing and regulatory compliance, but we also use this information to track the territory in which GGR arose and the specific games that produced GGR. The GGR generated by playing our games is what we refer to as our games’ “underlying GGR.”
 
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information that may be important to you before deciding to invest in our ordinary shares, and we urge you to read this entire prospectus carefully, including the sections titled “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated and combined financial statements and related notes and other financial information and our unaudited condensed consolidated interim financial statements and related notes and other financial information, included elsewhere in this prospectus, before deciding to invest in our ordinary shares.
Overview
We are a leading developer, distributor and marketer of innovative online, casino-style gaming (“iGaming”) content and integrated business-to-business (“B2B”) solutions to iGaming operators in regulated markets globally based on the size of our studio network. Based on our analysis of publicly available data, including the websites, public statements and accounts of our competitors, we believe that we have one of the largest networks of exclusive iGaming content studios, measured by the number of studios that develop our games. Our 40 in-house and partnered studios with whom we have exclusive rights have established operating histories predating the formation of our company. These studios have developed more than 1,300 proprietary games over the past 20 years (including predating the formation of our company), all of which are now part of our portfolio of games. We are a key content provider to iGaming operators, supporting the rapidly growing consumption of iGaming content through a diverse portfolio of what we believe to be market-leading offerings. While slot games (including progressive variants of slot games) have historically represented, and continue to represent, the vast majority of our revenue, our product portfolio also includes table games (including progressive variants of table games), video poker, video bingo, game show games, crash games and live casino games.
We were incorporated in the Isle of Man on July 8, 2021, pursuant to a carve-out of the game development business of Fusion Holdings Limited, with the strategic vision of creating the largest and most innovative iGaming studio and distribution ecosystem in the world. To advance this vision, we strive to regularly develop and offer new branded game titles (each, a “game title”), creating multiple versions of each game title (each, a “game” or “game variant”) to enable each of our customers to select the game variant that best meets their commercial needs, including in relation to game mechanics (e.g., bet limits, volatility, multipliers), compliance with specific regulatory frameworks, return-to-player (“RTP”) percentages, application type (mobile or desktop) and other metrics that are important to iGaming operators. Each game variant we offer is individually certified and brought to market. Using our access to underlying operational data, we monitor and analyze the popularity of our games across the markets that our customers serve. Our technology allows us to identify the territory in which our games are being played and, as a result, we can track game play and our customers’ gross gaming revenue (“GGR”) arising from game play (which we refer to as our games’ “underlying GGR”) by territory. These data insights enable us to better understand our players and inform our market and product development strategies.
We have established positions in our existing markets in Europe and North America, based on our games’ underlying GGR. In December 2023, we had more than 7.3 million unique monthly active players making €6.5 billion in wagers on our games across 8 billion paid spins (each spin, a “game round”) (compared to 5.3 million unique monthly active players making €5.6 billion in wagers on our games across 5.6 billion paid game rounds in December 2022). We released approximately 60 new game variants per month for game play in these jurisdictions during the nine months ended December 31, 2023 (compared to 33 new game variants per month during the nine months ended December 31, 2022) and offer some of the industry’s highest paying online progressive jackpots. While our distribution of games to customers in North America was previously limited to customers in the Canadian market, in connection with our acquisition of the B2B assets of Digital Gaming Corporation USA (“DGC” and the acquisition of DGC, the “DGC Acquisition”) in February 2024, we expanded our business into the United States, whose states in the aggregate are forecasted to represent the largest iGaming market globally according to H2 Gambling Capital (“H2GC”). Prior to this acquisition, we sold a selection of our games to DGC, which were made available in the United States by DGC under its U.S. regulatory licenses. The limited releases of our games by DGC
 
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preceding the DGC Acquisition attracted strong demand, as evidenced by these game titles representing four of the top 25 new iGaming titles in the Eilers & Krejcik Gaming (“Eilers & Krejcik”) February 2024 U.S. Online Game Performance Report (the “Eilers & Krejcik Report”), including the third top new game title in the overall U.S. market. We reacquired the games previously sold to DGC as part of the DGC Acquisition. We are currently licensed or certified to sell our games into 20 jurisdictions, and we supply our games to over 350 iGaming operators, consisting of business-to-consumer (“B2C”) iGaming operators to whom we directly supply our games (our “Direct Customers”) and B2B resellers who further sell, market and deploy our games to a variety of B2C iGaming operators (our “Indirect Customers”), which in each case make our games available to individual players.
Our mission is to become the industry’s standard for exceptional, entertaining and high performing iGaming content and solutions. This mission is underpinned by the following key strategic pillars:

cultivate meaningful customer relationships and develop differentiated, bespoke customer solutions to grow iGaming operator share of wallet;

expand to offer our games beyond our existing geographic markets within Europe and North America as new markets adopt regulations and increase penetration into the high growth U.S. markets, which is projected to have a total addressable market of approximately $26 billion by 2028 for online slot and table games (“online casino”), iLottery, online poker and online video bingo, according to H2GC;

focus on innovation through our Center of Excellence utilizing shared tools, infrastructure and best practices across all studios to expand into additional iGaming product adjacencies, such as lottery games and omnichannel (i.e., land- and iGaming-based) offerings, and drive customer engagement; and

leverage our global studio model to continue generating a robust pipeline of new games across genres and categories, thereby increasing the probability of creating franchise brands.
We have expanded rapidly since our inception through a combination of strategic acquisitions and organic growth. With what we believe to be our highly competitive structural framework, we expect to continue to grow as we enter into new markets and expand our customer share of wallet in our current markets, both as a result of continued organic growth and opportunistic strategic acquisitions. For the nine months ended December 31, 2023 and 2022, we generated revenue of €273.2 million and €221.4 million, respectively, and profit for the period of €79.1 million and €81.4 million, respectively. For the years ended March 31, 2023 and 2022, we generated revenue of €306.9 million and €168.3 million, respectively, and profit for the year of €107.8 million and €97.3 million, respectively. We generated Adjusted EBITDA of €120.8 million and €109.9 million for the nine months ended December 31, 2023 and 2022, respectively, and €145.0 million and €113.2 million for the years ended March 31, 2023 and 2022, respectively. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-IFRS Financial Measures” for the definition of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to profit for the year/period, the most directly comparable financial measure stated in accordance with IFRS.
Our Industry
iGaming Value Chain
iGaming covers the wagering on various online games, including online casino and slot games, iLottery, online poker and online bingo, via a smartphone, tablet, laptop or desktop computer. Typically, a player accesses a “lobby” hosted on an iGaming operator’s website or mobile application to select games for play. iGaming operators determine the placement of game titles in this lobby based on factors such as the expected level of play, brand affinity of a game and the operator’s respective promotional strategy.
B2B companies, such as Games Global, play a critical role in the iGaming ecosystem by providing essential games, software and services to iGaming operators that drive player traffic and wagering volume. In return for providing products and services, B2B companies typically receive a share of operators’ gaming revenue, usually based on a percentage of revenue associated with the utilization of such products (“revenue
 
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share”). We derive the majority of our revenue from revenue share arrangements, allowing us to align incentives with our customers and to participate in the success of each game.
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(1)
Includes 16 studios outside the Games Global corporate group that develop content exclusively for Games Global.
(2)
Includes multiple skins (variants of our games) and third-party titles. Our portfolio of our own games totals over 1,300.
(3)
GGR less taxes and applicable bonuses
The iGaming Industry and Our Opportunity
The broader global online gaming market is comprised of iGaming and online sports betting. According to H2GC, the iGaming market, which H2GC defines as online casino, iLottery, online poker and online video bingo and excludes Asia and the Middle East, is expected to more than double from $31 billion of GGR in 2022 to $73 billion of GGR in 2028, representing a 15% compound annual growth rate (“CAGR”) over this period. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Components of Results of Operations — Revenue” for a definition of GGR and how we calculate GGR.
We expect growth across all iGaming product segments and geographies, spurred by key fundamental drivers such as:

regulatory tailwinds as an increasing number of jurisdictions legalize iGaming, particularly in the United States;

expansion of the player base into a younger demographic that favors increasingly convenient forms of gaming, primarily through increased mobile engagement; and

improved structural aspects of mobile penetration, such as access to internet, data transmission capacity and integrated payment solutions, supporting a more seamless game experience for players.
iGaming Market — Key Product Segments
The iGaming industry is comprised of multiple game types, including virtual formats of traditional land-based casino games such as online casino, iLottery, online poker and online video bingo.
 
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Slot games represent the largest iGaming game type, generating approximately $16 billion in global GGR in 2022 (49% of the overall iGaming market), according to H2GC. Online slot games follow the same fundamental mechanics as land-based slot machines, with prize payouts determined by a random number generator (“RNG”). Online slot GGR is expected to increase at a 16% CAGR between 2022 and 2028, according to H2GC.
Table games, such as blackjack and roulette, are offered either through (i) a digital format in which outcomes are determined by an RNG (approximately 26% of overall table games GGR in 2022 according to H2GC), or (ii) a live casino format (approximately 74% of overall table games GGR in 2022, according to H2GC), where a live dealer at a physical table or roulette wheel streams to players in real-time and deals cards or spins the wheel to determine the game outcome (“live casino”). Live casino, which generated over $3 billion of GGR in 2022 according to H2GC, is one of the fastest growing product segments within iGaming globally and is projected to grow at a 17% CAGR between 2022 and 2028, according to H2GC.
Some online slot and table games also include a “jackpot” mechanic, where a winning player has the chance to receive a higher prize payout. In each “progressive” game round played, a player either contributes to or wins a pooled jackpot prize. Games that are connected with one another in this manner are part of the same “progressive” network. Players who play on the same “progressive network” play to win the same jackpot, regardless of whether players are playing the same game type or accessing our games through the same iGaming operator.
After slot games, iLottery represents the largest iGaming game type, representing 29% of the overall iGaming market with $9 billion in global GGR in 2022, according to H2GC. iLottery is offered through virtual instant or “scratch” tickets, where a player uncovers hidden symbols to reveal a prize that is determined by an RNG, or as an electronic purchase of a draw-based game, where a player is required to match a series of numbers to earn the prize. We do not currently offer iLottery games.
Online video bingo is a digital version of traditional bingo that is played on the internet. It typically involves the purchase of virtual bingo cards, and an RNG then draws numbers. It offers the convenience of playing bingo on a personal device, often with various themes and additional features compared to traditional bingo halls. Online poker involves players joining a virtual poker room or platform where they can participate in various poker games, including Texas Hold’em, Omaha and 7 Card Stud. Online video bingo and poker together represented 7% of the overall iGaming market with $2 billion in global GGR in 2022, according to H2GC.
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Source: H2GC
In addition to the key iGaming product segments noted above, we also develop games in adjacent iGaming verticals such as game show and crash games. Game show games typically combine elements of traditional table games (e.g., a spinning wheel) with stylistic components of game shows, including live presenters. A crash game is a fast-paced single or multiplayer betting round in which players wager on the outcome of a simulated event, with winnings increasing until the game “crashes,” at which point the player forfeits any winnings.
 
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iGaming — Key Geographic Markets
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Source: H2GC
European iGaming Market
iGaming has been regulated in European markets since 2005 with the passage of the Gambling Act 2005 (the “Gambling Act”) in the United Kingdom, followed by subsequent regulation in other major jurisdictions across Europe. Europe has since grown to become the largest iGaming region globally with $21 billion of GGR in 2022, representing 67% of the overall iGaming market, according to H2GC. GGR in Europe has grown at a 19% CAGR between 2018 and 2022 and is projected to grow at a 10% CAGR between 2022 and 2028 according to H2GC, as markets adopt or change existing iGaming regulations and experience further player adoption.
Our Opportunity in Europe
To grow market share in our existing European markets, we have established a dedicated market strategy team that identifies areas of opportunity to improve our market position through country-specific strategies. In addition, our partnership team focuses on developing growth plans centered around customized products for our customers. For example, we recently implemented a country-specific strategy in Italy, where our games generated limited GGR prior to 2023. We believe our strategy in Italy has been successful, as our games’ underlying GGR in the region in the nine months ended December 31, 2023 was 103.3% higher than the equivalent period in the prior year.
While new markets bring new opportunities, we also believe that our approach to customer relationships can yield further growth in even our most mature markets. The largest regulated iGaming market in Europe is the United Kingdom, where our games’ underlying GGR grew by 40.7% in the nine months ended December 31, 2023 compared to the equivalent period in the prior year.
North American iGaming Market
North America is forecast to become the highest growth iGaming market. In particular, U.S. online casino GGR is projected to more than quadruple in size from $5 billion in 2022 to $20 billion in 2028 to become the largest individual online casino market globally, according to H2GC. We expect growth to be driven by a combination of: (i) an increase in the number of U.S. states where online casino is legal (from six states in 2023 to 15 states by 2028, including the potentially large and attractive markets of New York, Illinois and Indiana, which according to H2GC are expected to introduce regulated online casino in 2025) and (ii) the continued adoption of online casino in existing markets, which is expected to grow at an 89% CAGR in currently legalized states between 2019 and 2023, according to H2GC. We believe there is potential for longer term growth if additional states legalize online casino, in addition to other iGaming products. We believe that the economic benefits experienced by U.S. jurisdictions that have legalized other forms of gaming may create an incentive for future iGaming expansion. In the United States, 38 states have
 
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legalized sports betting following the repeal of the Professional and Amateur Sports Protection Act of 1992. In addition, 27 states have legalized commercial land-based gaming, 45 states have legalized lottery and over 40 states have legalized pari-mutuel betting in some form on horse racing.
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[MISSING IMAGE: bc_totalmarket-4c.jpg]
Source: H2GC
Our Opportunity in North America
We believe that we are well positioned to establish ourselves as a leading supplier in the overall North American iGaming market, building on a market-leading position in Canada according to a third-party industry data aggregator and the opportunity to grow our business in the United States following the DGC Acquisition, beginning with the four states into which we are now licensed to offer our games. We will continue to focus on growing our business in Canada, where our games’ underlying GGR grew by 32.1% in the nine months ended December 31, 2023 compared to the equivalent period in the prior year. In connection with the DGC Acquisition in February 2024, we began directly selling our games to customers in the United States. Prior to this acquisition, we sold a selection of our games to DGC, which were made available in the United States by DGC under its U.S. regulatory licenses. The limited releases of our games by DGC preceding the DGC Acquisition attracted strong demand, as evidenced by our game titles representing four of the top 25 new online casino game titles in the Eilers & Krejcik Report (including the third top new game title in the overall U.S. market). We reacquired the games previously sold to DGC as part of the DGC Acquisition. Following the DGC Acquisition, we distribute approximately 160 game titles in the U.S. markets. In order to better serve customers and capture the market opportunity by directly offering our full product suite and game title library, we have received regulatory approvals to operate in Connecticut, Michigan, New Jersey and Pennsylvania, where we began selling our games directly to iGaming operators following the DGC Acquisition. Following the DGC Acquisition, we have broad distribution coverage in New Jersey, Pennsylvania and Michigan, and are looking to expand our distribution coverage in Connecticut and West Virginia. Eight other states have either previously proposed or we understand are in active discussions to propose enabling legislation for online casino in 2024 or 2025. Among these, New York, Illinois and Indiana alone are projected to generate an aggregate of approximately $6 billion in GGR by 2028, according to H2GC. We currently expect to launch our live casino product offering in the United States by the end of 2024.
 
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U.S. Online Casino Legalization Landscape
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Source: H2GC
We are confident in our ability to succeed in the United States due to:

our completion of the DGC Acquisition and, as a result, our strong existing relationships with major U.S. online casino operators, the top four of whom represented approximately 80% of overall U.S. online casino market GGR during the three-month period ending June 30, 2023 in the Eilers & Krejcik Report;

our large catalogue of games, including our portfolio of exclusive and owned brands, critically acclaimed game franchises such as Stormcraft and a market-leading progressive jackpot offering, which are ready to be integrated and deployed by U.S. iGaming operators;

our global infrastructure that enables us to support continued innovation within product adjacencies and to develop bespoke offerings to address an increasing desire for operators to differentiate their product offerings; and

the full control of the distribution of our vast game library.
Our Opportunity in Other Markets
In addition to those market opportunities discussed above, we believe that other territories, such as Peru, Ireland, New Zealand, France, Norway and Chile, may be considering some form of regulation around iGaming that may present future opportunities for our business. In particular, we believe that there is significant opportunity in the Latin American market, where, for example, Brazil in February 2024 has issued a regulation setting forth the requirements and procedures for the recognition of certification entities for fixed-odds betting systems, including online games offered by iGaming operators. Additionally, we are targeting entry into the South African market by the end of 2024.
Our Organization
We are a holding company that was formed to consolidate independent studios under one organization with a unified strategy and broad distribution capabilities. Through a series of acquisitions, we have created one of the industry’s largest and most diversified portfolios of iGaming content, leveraging shared technology and resources to enhance delivery of our products and services to our customers. Since we commenced operations on April 1, 2022, we have built a network of 40 studios, including 24 in-house studios and
 
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16 partnered studios with whom we have exclusive rights, across the world delivering a range of proprietary game intellectual property (“IP”). Through our relationships with our partnered studios, we own exclusive IP rights to the game IP created by such studios, including IP developed prior to the beginning of our contractual relationship and IP developed in the future.
Our key administrative functions are located in the Isle of Man. We maintain other studio and office locations in South Africa, Australia, the United States, Malta, the United Kingdom, Estonia, Gibraltar and Sweden. Our network of 40 in-house and partnered studios is geographically diverse, enabling these studios to create localized, market-attuned content.
Game Studios
We believe that we have access to some of the world’s best iGaming development talent across our 40 development studios, which are a combination of wholly- and majority-owned studios and independent studios that develop games exclusively for us.
Our in-house and partnered studios are focused on the creative aspects of the game development process. Through our “strategic roadmap” for game development, we aim to develop and offer our customers a range of new games. Our strategic roadmap is directed by our games strategy team based in the Isle of Man, and our studios receive support related to the underlying technology platform, quality control, certification and integration with iGaming operators from teams across our network. We believe that our studio structure accelerates the game development process compared to other game development studios and enhances speed-to-market, which we believe increases the probability of regularly generating franchise game titles. Moreover, our games strategy team manages the game development pipeline across our network of studios to optimize the timing and phasing of game deployments to maintain a steady supply of new content and highlight our franchise game titles, while ensuring that the market is not saturated with content at any one time.
Our studio network has global reach across five continents. Our in-house and partnered studios enable us to provide a broad and diversified product portfolio, which includes slot games, table games, video poker, video bingo, progressive jackpot variants and live casino games in addition to adjacent iGaming verticals such as game show and crash games as outlined below.
 
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Our dedicated “Portfolio Studio,” which manages and upgrades legacy games, extends the revenue generating lifetime of our games and provides other studios the ability to focus on building new games. Thanks in part to our Portfolio Studio, we believe our games portfolio enjoys a high degree of “stickiness” as demonstrated by the game usage fees generated within monthly game cohorts over time. Each cohort is comprised of games released within the applicable month (e.g., the January 2022 cohort includes games released from January 1 to January 31, 2022). Usage fees represent the amount we earned from our game IP within our Direct Customer channel, but excludes progressive administrative fees, which are earned across multiple games and therefore not attributable to individual game titles. Furthermore, this data does not include fees generated from our live casino games, where the individual acting as the live dealer rather than the game title drives player demand, or our Indirect Channel, a portion of which is earned pursuant to fixed fee arrangements and therefore not tied to individual game play. As demonstrated in the graphic below, we have historically continued to generate revenue from games for years after the initial release date, with our game cohorts generally benefiting from a limited attrition curve against minimal costs to maintain previously released content. For example, for the nine months ended December 31, 2023, 64% of usage fees from the Direct Customer channel were generated from games that were released prior to January 1, 2023. While we believe these cohorts are a fair representation of the performance of our games over time, there is no assurance that they will be representative of any future cohort of games or periods.
 
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Since our inception in 2021, we have strategically augmented our global content development capabilities, growing our studio footprint to 40 in-house and partnered studios and expanding our development team to 658 people, representing approximately 66% of our total workforce as of December 31, 2023 (compared to 615 people, representing approximately 71% of the total workforce as of December 31, 2022). Notwithstanding having one of the largest networks of exclusive iGaming content studios, we consistently seek to expand our reach and product breadth by building relationships with new third-party studios that we may subsequently seek to acquire.
Center of Excellence
We believe that our success is underpinned by the quality of our game development. Our “Center of Excellence” is a team of approximately 18 employees dedicated to coordinating and delivering consistency of our game development processes across our studios. Extensive IP, knowledge, talent, training resources and technology are collated in a shared database and developed within the Center of Excellence and then utilized across our interconnected network of studios to position each studio for long-term success. In addition to providing shared resources for new franchise development, the Center of Excellence supports our Portfolio Studio, which maintains and upgrades legacy games to extend their lifespan.
We have also established Games Global University to complement our Center of Excellence. All newly onboarded studios undergo a multi-week education process across technology, sales and marketing and other functional areas to accelerate the integration of best practices into these studios.
Central Intelligence Solutions
In addition to supplying games, we also offer critical analytics capabilities to maximize game performance and user engagement tools through our Central Intelligence Solutions team, which we believe enables our customers to provide excellent player experiences, resulting in high player retention and ultimately increased revenue. Through our large proprietary game portfolio, we have a significant repository of pseudonymized data that can be utilized to tailor game offerings based upon player behavior, regional dynamics and shifts in genre popularity.
Game data from our products is collected from approximately 225 million spins a day (representing the daily average number of spins over the nine month period ended December 31, 2023), which are synthesized to inform: (i) game optimization models; (ii) user interface improvements; (iii) prediction models aimed at player retention and reduction in churn; (iv) analyses for marketing and sales; (v) financial forecasting; (vi) cost management and (vii) RTP monitoring, which ensures games are fair and achieve the correct targeted RTP based upon the design of the game.
 
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Our Customers
Our customers offer our games on their websites and/or mobile applications and configure them according to their needs and preferences through a remote gaming system accessed through a software integration layer (the “Games Platform”). We distribute our games to iGaming operators either indirectly through resellers or directly to the operators themselves. We have a relationship with Apricot Investments Limited (“Apricot”), which holds the right to, customizes and maintains the Games Platform that we use to distribute games to customers, and also resells our games to certain of its own iGaming operator customers as part of its turnkey gaming platform solution. In addition to Apricot, our Indirect Customers also include various aggregators that sub-license access to our games to their own iGaming operator customers. Through our Direct Customer channel, we are able to capture attractive economics compared to selling through a third party, which further enables us to control placement of our content and tailor it to our customers’ needs, creating opportunities for the continued success of our games.
Our more than 350 iGaming operator customers offer our bespoke games across over 600 branded websites, which have been developed by regional studios and tailored to local needs through the creation of a differentiated online casino experience, an increasing focus among iGaming operators. Our iGaming operators distribute our games in a diverse range of geographic markets (based on our games’ underlying GGR) including Canada, the United Kingdom and New Zealand, under various regulatory licenses.
The value we provide our customers extends beyond supplying game content. We work closely with customers to develop unique and differentiated customer strategies, provide quarterly business reviews and key performance indicator metrics and revise pricing models geared toward mutual growth. We believe the combination of these value-add services and our premium content offerings have resulted in our ability to consistently grow customer share of wallet.
Growth Strategies
Grow with Market Through Revenue Share Model
We intend to generate organic growth by leveraging our existing customer relationships and distribution within markets that are experiencing sector tailwinds. Global iGaming GGR, excluding Asia and the Middle East, is projected to grow at a 15% CAGR from 2022 to 2028, according to H2GC. As these markets continue to grow, we believe we will benefit in kind through our revenue share agreements, which represented the majority of our revenue to date and which we expect to represent the majority of our revenue for the foreseeable future.
To help us achieve this growth, our dedicated market strategy team identifies customers and segments of opportunity and implements a country-specific strategy in partnership with the commercial team. Our local customer teams allow us to deliver on our customized strategy to develop content that is tailored to local player preferences.
Our partnership team is strictly focused on maximizing profitability for our customers through ongoing support in the form of bespoke growth plans centered around customized product offerings, which are assessed on a quarterly basis to evolve with our customers’ respective businesses and markets.
Gain Market Share through Increased Take of iGaming Operator Wallet
We have a track record of success across multiple initiatives that have grown our customers’ businesses and, in turn, the share of our customers’ GGR generated by our games, which we refer to as share of wallet. These include:

collaborating with customers on strategic initiatives to grow their businesses;

offering bespoke pricing structures for each customer, tailored to suit each customer’s player base;

developing complementary offerings; and

creating exclusive games with customer branding, including custom re-skinned branding to align with the customer’s site design.
 
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Our dedicated commercial team is focused on increasing market share within existing jurisdictions. On a regular basis, they review our existing customer relationships, product segments and areas for improvement, which our partnership team then utilizes to inform its sales and customer relationship management strategy, including localized content, customer and technical support.
We are focused on developing key operator relationships across the various teams in the business to position ourselves as the supplier of choice for our customers, ultimately increasing the value of our partnership. We have a strategy with these operators to drive volume for both parties, which has led to an increase in our wallet share. As shown below, our customer-focused strategy has already delivered significant increases in the GGR generated by our games with leading customers in their respective markets of Italy and the United Kingdom. The customers illustrated below are significant and well-established iGaming operators in their respective markets, and we believe are representative of our overall performance with iGaming operators in such markets.
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(1)
Amministrazione Autonoma dei Monopoli di Stato.
(2)
United Kingdom Gambling Commission.
(3)
Represents, for the applicable calendar year, the GGR generated by our games as deployed by Operator A and B, respectively, which we consider to be leading iGaming operators in their respective markets. We have presented the GGR generated by our games for the calendar year, rather than our fiscal year, in order to provide a direct comparison against the market-wide GGR data published by the applicable Italian and U.K. regulatory authorities, which is only available for the full calendar year. Amounts shown for 2021 include GGR generated by our games under the ownership of Fusion during the period preceding the incorporation of Games Global and related carve-out of our operations from Fusion.
Entry into New Markets
We believe we are optimally positioned to successfully expand into new, high growth markets through our unique business model, driven by our diverse studio portfolio and operational leverage. For example, we recently refocused our efforts in Italy through our customer relationship with a major Italian operator and believe that our strategy has been successful, as our games’ underlying GGR in the region in the nine months ended December 31, 2023 was 103.3% higher than the equivalent period in the prior year.
We are focused on expanding our business in the United States as we believe the U.S. markets represent the highest growth opportunity globally. We have signed, or are in advanced discussions with, most major operators in the United States and, following the DGC Acquisition, have multiple existing game titles that Eilers & Krejcik rank in the top 25 online games, including the top online slot games, on a consistent basis. Our U.S. game titles have proven player demand as demonstrated by their approximately 10% share of the online casino market based on GGR through January 2024 in the Eilers & Krejcik Report. With a history of successful iGaming offerings developed for the Canadian market, including having a leading market position based on the underlying GGR of our games in the recently regulated Ontario market according to a third-party industry data aggregator, we believe our high-quality offerings will translate successfully
 
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into the United States, which could represent a total addressable market of approximately $26 billion of GGR by 2028, according to H2GC. We believe our acquisition of the B2B assets of DGC will help us to achieve our roadmap to deliver on our goal of releasing 80 games per year into U.S. markets.
In addition to our U.S. expansion strategy, our market strategy team focuses on newly regulated markets such as the Netherlands, South Africa and Germany and closely monitors potential new regulated markets as they arise, such as Peru and Brazil, ensuring that we are positioned to transition to the next phase of growth as soon as possible with a fully certified suite of content and products tailored to that jurisdiction.
Expanding into New Product Verticals
While we have historically focused on creating premium slot games, and historically, the vast majority of revenue derived from our games has been attributable to slot games (including progressive variants of slot games), we are expanding our portfolio into adjacent product offerings such as live casino, game show and crash games. We are also beginning to develop our iLottery product offering, which we expect will open up a new and fast-growing market for us. By providing a full suite of games that appeals to players, we increase our relevance to our existing and new operator partners, which positions us favorably to continue to grow our wallet share.
We have worked closely with our distribution network to encourage the integration of our live casino games onto their sites. We believe live casino is a significant growth area with the market currently in early stages of adoption in many jurisdictions with other forms of legal iGaming and experiencing robust player demand upon introduction.
We believe that we can become a meaningful supplier in new product verticals both organically and through thoughtful acquisition opportunities.
Accretive Acquisition Opportunities
In addition to pursuing organic growth, we will continue to seek strategic acquisition opportunities in order to drive increased market share or enter into new markets and product verticals as described above. Although our acquisition criteria vary, we generally consider acquisitions that: (i) deliver enhanced content; (ii) improve our technology solutions; (iii) allow us to expand into additional geographies or game types or (iv) bolster our leading position in our core competencies.
Our business model enables us to leverage our platform, scale and robust cash generation to take advantage of accretive acquisition opportunities and maximize the potential of success for acquired studios. We acquired a number of studios in the period from April 1, 2022 and December 31, 2023, and we are focused on identifying additional opportunities to produce attractive returns and maintain our industry-leading studio network. For example, we acquired MahiGaming LLC (“Mahi”) on August 4, 2022 for aggregate equity consideration of €80.8 million and we acquired a majority interest in Snowborn Games AB, JFTW Games Development AB, Spinplay Holdings Limited and Riversun Holdings Inc. (collectively, the “Velo Studios”) on February 28, 2023 for aggregate equity consideration of €81.2 million, pursuant to which we acquired studios from which we had previously commissioned games and enabling us to strengthen our studio network.
Our business is highly cash generative, which we believe, combined with our unlevered balance sheet, provides sufficient capacity to pursue multiple acquisition opportunities, which are considered in the context of strategic fit and overall value accretion.
Competitive Strengths
Our competitive strengths originate from our global studio model, which generates a high volume of new games and top-performing marquee titles, in addition to a customer network that we believe encompasses most of the major iGaming operators across each regulated jurisdiction. The combination of our global infrastructure, customized game development, data analytics capabilities and incentive structure is difficult to replicate and enables our studios to focus on creating leading game content.
Global Studio Model Producing Proprietary Content
Our global network of in-house and partnered studios provides a compelling combination of scale and diversification to service the needs of our global customer base through:
 
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a studio ecosystem located across five continents with multi-product expertise;

a unified strategy across our studio footprint and effective allocation of resources across product genres and game types depending on market trends and player behaviors;

a centralized and cloud-enabled “Client Portal,” which allows iGaming operators to view both available and soon-to-be-released game titles and game variants;

the utilization of resources from our Center of Excellence to assist studios in maximizing the probability of introducing successful game titles; and

a Portfolio Studio dedicated to increasing the longevity of gameplay and thus revenue generation for legacy game titles.
We believe that our studio network and resulting high percentage of proprietary games and internally generated brands allow us to generate attractive margins and provide us with the opportunity to benefit from enhanced economics relative to competitors who have significantly less development capacity and narrower distribution reach than we do. We believe we are also able to achieve premium pricing that is commensurate with the quality of the games we deliver to our customers.
Our network and volume of game titles and game variants generated each year provide enhanced visibility and recognition to iGaming operators, allowing us to upsell and cross-sell other games and services.
Our global studio footprint consists of 40 geographically diverse studios, which allow us to create localized, market-attuned content.
Our Global Studio Footprint as of December 31, 2023
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Note:   Our 24 in-house studios are denoted with an asterisk.
Game Development Capacity
Our studio model is designed to centrally coordinate the development of games across our studios, while empowering our studios to act independently. With the support and guidance of our games strategy team, our studios benefit from access to our centralized game development library and broader group insights. We have developed this studio model to encourage knowledge sharing across our studio network, with key development personnel financially incentivized to circulate new ideas and game content across the wider studio network. Each of our studios has a core team of specialists, with expertise in specific competencies required for game development, such as mathematics, graphic design and sound, and project management. Studios are further supported by several central teams that provide resources, oversight and strategic and
 
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marketing insight and direction in connection with new game development. Each game development team can draw on the expertise and aggregated know-how of our 658 development team members globally as of December 31, 2023 (compared to 615 people as of December 31, 2022), as well as the operational capacity of a group of our scale.
We have demonstrated the ability to generate franchise game titles on a frequent cadence, given our proprietary technology stack, our tools and our scaled approach to development, marketing and distribution. Our technology stack provides our studios with the tools to test, iterate and publish games in an efficient and effective manner that we believe accelerates speed-to-market.
We produce approximately 60 new game variants each month, and we expect to continue our trend of producing an increasing number of game titles that attain franchise status, including the highest value progressive jackpot offerings in the market that we believe pay out more frequently than any other offerings in the market. As shown below, our ability to produce successful games has increased since our inception, leading to increased wagering, which drives our ability to generate revenue.
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We strive to consistently improve the quality of our games, which we measure through retention statistics. In particular, we measure the percentage of players who wager in over 200 game rounds in the first day of the game going live, which we believe indicates a highly successful game. Out of over 1,000 game variants launched between April 1, 2022 and December 31, 2023, approximately 200 were considered to be highly successful from a retention standpoint.
Through GGR data collected by us and our customers, we can calculate the approximate revenue derived from each of the game types in our portfolio. Historically, the vast majority of revenue derived from our games has been attributable to slot games (including progressive variants of slot games). While slot games are an important part of our business, we offer customers a wide-ranging product portfolio that also includes table games (including progressive variants of table games), video poker, video bingo, game show games, crash games and live casino games.
Our game development capacity allows us to expand into adjacent product areas. While our largest category of games by both revenue and number of game titles is slot games, we have leveraged the creative expertise of our studio ecosystem to expand into adjacent products including live casino, a market that has grown at a 36% historical CAGR between 2019 and 2022 and is expected to grow at a 17% CAGR between 2022 and 2028, according to H2GC. We offer live casino games and game shows using streaming technology to create an immersive experience for players.
During the year ended March 31, 2023, we acquired a number of additional studio groups to further strengthen our content development capabilities, and we strive to improve their market position and customer relationships by leveraging our network.
Broad Reach
We provide our games to what we believe are the major iGaming operators in regulated markets, including large U.S. operators such as BetMGM, DraftKings, FanDuel, Caesars Entertainment and Bally’s.
 
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Based on management’s analysis of the competitive landscape, we believe our distribution is among the broadest globally based on the fact that our games are hosted on the websites and mobile applications of more than 350 customers as of December 31, 2023 (compared with 320 customers as of December 31, 2022) across established regulated markets, predominantly in Europe, and with a growing presence in increasingly regulated markets within North and Latin America, which we believe creates a strong opportunity for future expansion of our operations. Our broad reach enables us to be agnostic to individual operator performance in each market.
We recently completed the acquisition of the assets of DGC’s B2B division, which exclusively distributes a subset of our slot games catalogue to the leading U.S. iGaming operators by GGR, according to the Eilers & Krejcik Report. We believe the DGC acquisition provided a “day one” launchpad into U.S. markets with huge potential, targeting a broader customer base with our large portfolio of iGaming content.
Data Analytics
We have the ability to collect an enormous amount of game performance data through our customers’ approximately 1 million underlying player accounts, participating in approximately 220 million game sessions (each of which may entail multiple game rounds) per day on average across our content portfolio over the last 60 days as of December 31, 2023 (compared to approximately 845,000 underlying player accounts and approximately 186 million game sessions per day on average across our content portfolio over the 60 days prior to December 31, 2022).
We are able to synthesize this pseudonymized data to: (i) optimize individual games immediately following launch; (ii) inform our studio strategy; (iii) customize content offerings for our customers and their players to drive an improved game experience and reduce customer churn and (iv) better predict the success of games in development.
Through our strategic roadmap, based in part on this performance data, we believe we have the ability to identify those games that will be top performers, allowing us to adapt our go to market strategy for individual games.
Customer Focus
We believe our focus on cultivating meaningful relationships with our customers sets us apart from our competitors, allowing us to grow quickly and generate brand affinity. We believe that we have a unique go-to-market approach (market, partnership, ranging) and that our ability and desire to deliver unique and differentiated customer strategies helps our customers optimize their product portfolios, and that our strength in data analytics gives us the tools and the metrics to work with our customers to drive mutual growth.
We are also developing our own proprietary games platform to enhance our ability to connect iGaming operators directly with our studios. Our goal is to increase the ease of doing business, our speed to market and our ability to adapt quickly to our customers’ needs.
Strong Financial Profile and Operating Leverage
For the nine months ended December 31, 2023, we generated profit for the period of €79.1 million and Adjusted EBITDA of €120.8 million, representing profit margin and Adjusted EBITDA margin of 28.9% and 44.2%, respectively. For the nine months ended December 31, 2022, we generated profit for the period of €81.4 million and Adjusted EBITDA of €109.9 million, representing profit margin and Adjusted EBITDA margin of 36.8% and 49.6%, respectively. Given that we have no third-party debt (except for amounts owed under our lease agreements) on our balance sheet as of the date of this prospectus and that we have been able to achieve significant organic growth after the initial phase of bringing together our corporate group, we believe that we are well positioned to drive growth in our existing and new markets, both organically and through targeted merger and acquisition activity. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-IFRS Financial Measures” for the definition of Adjusted EBITDA and Adjusted EBITDA margin, as well as a reconciliation of Adjusted EBITDA to profit for the period, the most directly comparable financial measure stated in accordance with IFRS.
 
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Experienced Management Team and Board of Directors
We believe that we have assembled a world-class management team comprised of industry veterans who have demonstrated a long track record of success within the online and land-based gaming industries. Each member of our leadership team was selected based upon his or her ability to drive strong strategic growth and bring innovative technology and content to market. Our board of directors and senior management team can draw on significant experience in the gaming industry.
We are led by highly regarded gaming industry executives, M. Gavin Isaacs, the chairman of our board of directors, and Walter Bugno, our Chief Executive Officer. Both Mr. Isaacs and Mr. Bugno possess decades of executive-level experience at many of today’s leading B2B gaming companies, including Aristocrat Leisure Limited, Light & Wonder, Inc. (f/k/a Scientific Games Corporation) and International Game Technology plc.
Employee Engagement
We believe that our human capital is a key asset of our business. We aim to attract and retain exceptionally talented, highly educated, experienced and motivated employees. Our human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees and consultants. The principal purposes of our planned equity and other incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of equity-based compensation awards and cash-based performance bonus awards. We also place significant importance on non-financial factors in the retention of staff, investing in their development and ensuring that they have access to all available and relevant opportunities.
We believe in supporting our employees and balancing business objectives with cultural diversity and local customs. Through implementation of a range of policies, we have fostered a culture that promotes diversity, inspires creativity, drives innovation and freedom of artistic expression, which we believe are all required to remain competitive in our industry. Given these factors, retaining talent is crucial and a strategic focus for us.
These commitments were designed to create a strong and loyal corporate culture and support what we believe to be a low employee turnover rate.
Commitment to Environmental, Social and Governance Goals
Our board of directors and management team believe that environmental stewardship, social responsibility and solid corporate governance are important to our business strategy and long-term value creation for our shareholders, employees, customers and communities. In March 2023, our board of directors appointed a dedicated Environmental, Social and Governance (“ESG”) Committee comprised of independent directors to oversee ESG matters across our business operations in accordance with its charter. Our Head of ESG, together with others on our management team, is responsible for developing and driving our strategic ESG initiatives, programs and reporting across our business and providing regular updates on progress to the ESG Committee.
Risk Factor Summary
Investing in our ordinary shares involves substantial risk. The risks described in the section titled “Risk Factors” immediately following this summary may cause us to not realize the full benefits of our strengths or may cause us to be unable to successfully execute all or part of our strategy. Some of the more significant challenges include the following:

The markets in which we operate are competitive, and if we do not compete effectively, our business, financial condition and results of operations could be harmed.

We have a limited operating history as a consolidated group at our current scale, and our historical, operating and financial results may not be indicative of future performance, which makes it difficult to predict our future business prospects and financial performance.
 
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Negative events or negative media coverage relating to the gaming industry may adversely impact our customers, which could have an adverse impact on our business, financial condition and results of operations.

The markets for our games, software and services are rapidly evolving, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

We derive a significant portion of our revenue from several key geographic markets, and the loss of market share or slower than anticipated growth in any of these markets could adversely affect our business, financial condition and results of operations.

The success of our business depends on our ability to retain and expand our existing customer relationships and to attract new customers.

We derive a significant portion of our revenue from a limited number of customers, and in particular our largest customer, Apricot, and the loss of one or more of such customers would result in lower revenue and could harm our business.

We are dependent on a third-party provider, Apricot, for the provision, customization and maintenance of our Games Platform.

Our business depends on the interoperability of our games across third-party platforms, operating systems, devices and applications.

If we fail to develop, maintain and enhance our brand and reputation, our ability to expand our customer base will be impaired, and our business, financial condition and results of operations may suffer.

Our current operations are global in scope, and as we plan further geographic expansion we may encounter a variety of operational challenges, which will require the dedication of management attention and financial resources.

Our results of operations may fluctuate for a variety of reasons, and these fluctuations make it difficult for us to forecast our future results of operations and could result in our failure to execute our operating plan or to meet the expectations of investors or analysts for any period.

Interruptions, performance problems or defects associated with our software or games may adversely affect our business, financial condition and results of operations.

If we or our third-party service providers experience a security breach or if unauthorized parties otherwise obtain access to customers’ data, our data and/or our Games Platform, our games or Games Platform may be perceived as not secure, our reputation may be harmed, our business operations may be disrupted, demand for our games may be reduced and we may incur significant liabilities.

The online gaming industry is subject to extensive and changing laws and regulations (including applicable direct and indirect taxation, anti-corruption, anti-money laundering and economic sanctions laws) as well as licensing requirements, and any failure to comply with such laws, regulations and requirements, or the interpretation or enforcement thereof, could have a material adverse effect on our business, financial conditions and results of operations.

We are subject to rapidly changing and increasingly stringent laws, contractual obligations and industry standards relating to privacy and data security. The restrictions and costs imposed by these requirements, or an actual or perceived failure to comply with them, could have an adverse impact on our business, financial condition and results of operations.

Any failure to obtain, maintain, protect or enforce our intellectual property and proprietary rights could impair our ability to protect our proprietary technology and brand, which could have a material adverse effect on our business, financial condition and results of operations.

As a result of being a public company, we will be obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our ordinary shares.
 
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We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses or if we are unable to develop and maintain an effective system of internal controls, we may not be able to produce timely and accurate financial statements or comply with applicable laws and regulations, which may adversely affect our business and the price of our ordinary shares.

Concentration of ownership of our ordinary shares by Zinnia Limited may prevent new investors from influencing significant corporate decisions.
Corporate Information
We were incorporated in the Isle of Man on July 8, 2021 under the Isle of Man Companies Act 2006 (the “Isle of Man Companies Act”). Our principal executive offices are located at 62 Circular Road, Douglas, IM1 1LA, Isle of Man. Our telephone number at this address is +44 1624 727515.
Our principal website address is www.gamesglobal.com. The information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus. We have included our website address as an inactive textual reference only.
“Games Global,” the Games Global logo and other trademarks or service marks of Games Global appearing in this prospectus are the property of Games Global Limited or our subsidiaries. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ®, ™ or SM symbols.
Implications of Being an Emerging Growth Company
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, the option to present only two years of audited financial statements and related discussion in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and, to the extent we no longer qualify as a foreign private issuer, reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation, including golden parachute compensation. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and the price of our ordinary shares may be more volatile.
Section 107 of the JOBS Act also provides that an emerging growth company that prepares its financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards. As a result, an emerging growth company can delay the adoption of certain U.S. GAAP accounting standards until those standards would otherwise apply to private companies. Given that we currently prepare our financial statements in accordance with IFRS, as issued by the IASB, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB.
We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the date on which we are deemed to be a large accelerated filer, which means the market value of our common equity that was held by non-affiliates exceeded $700 million as of the last business day of our most recently completed second fiscal quarter; and (iv) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
Implications of Being a Foreign Private Issuer
We are also a “foreign private issuer” under SEC rules. In our capacity as a foreign private issuer, we are exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. We will also not be
 
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required to comply with Regulation FD, which addresses certain restrictions on the selective disclosure of material information. In addition, among other matters, our executive officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our ordinary shares.
We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We will remain a foreign private issuer until the end of the fiscal year following the last date of our second fiscal quarter when more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our members of our board of directors or executive officers are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States.
We have taken advantage of certain reduced reporting and other requirements in this prospectus. Accordingly, the information contained herein may be different from the information you receive from other public companies.
Implications of Being a Controlled Company
Prior to this offering, 100% of our ordinary shares are owned by Zinnia Limited. Upon the completion of this offering, Zinnia Limited will continue to control more than 50% of the voting power of our outstanding ordinary shares. See “Principal and Selling Shareholders” for more information. As a result, we will be a “controlled company” within the meaning of the New York Stock Exchange (the “NYSE”) corporate governance rules. For so long as we are a controlled company under that definition, we may elect not to comply with certain corporate governance standards, including:

the requirement that a majority of the board of directors consist of independent directors;

the requirement that we have a remuneration committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

the requirement that our director nominations be made, or recommended to our full board of directors, by our independent directors or by a nominating committee that consists entirely of independent directors and that we adopt a written charter or board resolution addressing the nominations process.
We may take advantage of any or all of these exemptions, and, as a result, you may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements. In the event that we cease to be a “controlled company,” we will be required to comply with these provisions within the transition periods specified in the NYSE corporate governance rules, subject to other available exemptions.
Zinnia Limited Share Purchase
On December 1, 2023, Zinnia Limited entered into a share purchase agreement (the “Zinnia SPA”) with Velo Studio Holdings Limited and Samson Studio Holdings Limited, pursuant to which Zinnia Limited acquired 6,018,500 of our ordinary shares (the “Sale Shares”). The Sale Shares were compensation received by Velo Studio Holdings Limited and Samson Studio Holdings Limited in connection with the acquisitions of Velo Studios and Mahi, respectively. Pursuant to the terms of the Zinnia SPA, the consideration owed by Zinnia Limited for the Sale Shares will be an amount equal to the volume-weighted average closing sale price of our ordinary shares for the 30-trading-day period beginning on the date our ordinary shares are publicly listed for trading in connection with this offering, or, if such date does not occur by a date specified in the Zinnia SPA, at a fair market value to be determined by the parties. Based on the assumed initial public offering price of $      per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, the consideration owed by Zinnia Limited for the Sale Shares will be $     . As a result of its purchase of the Sale Shares, Zinnia Limited owns 100% of our ordinary shares prior to this offering.
Acquisition of AreaVegas Holdings Limited
On September 1, 2023, our subsidiary, Games Global UK Limited entered into an acquisition agreement (the “AreaVegas Agreement”) with Bellerive Capital BCP 34 Limited (the “Seller”), pursuant to which Games
 
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Global UK Limited acquired a 51% ownership interest in AreaVegas Holdings Limited (“AreaVegas”) from the Seller for cash consideration of $5.0 million and an additional earnout payment. We acquired AreaVegas in order to benefit from its IP, which will enhance the game development capability of our studio network. The earnout payment will be payable following the 12-month period ending December 31, 2025 (the “Earnout Period”), and will be calculated on the basis of a formula sensitive to a) the EBITDA recorded by AreaVegas during the Earnout Period and b) a multiple based on the weighted average closing price of our ordinary shares over the 60 trading days preceding the expiry of the Earnout Period divided by the sum of our consolidated EBITDA for the four fiscal quarters immediately prior to the end of the Earnout Period. If our ordinary shares are not listed on any stock exchange at the end of the Earnout Period, this multiple defaults to 12.0x. Based on the default multiple of 12.0x, each increase (decrease) of $1.0 million in the EBITDA recorded by AreaVegas during the Earnout Period would increase (decrease) the amount of the earnout payment by $400,000. We will be required to calculate and deliver the relevant EBITDA calculations to the Seller of AreaVegas as soon as reasonably practicable following the end of the Earnout Period. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Application of Critical Accounting Estimates — Key Sources of Estimation Uncertainty —Accounting for the Acquisition of AreaVegas Holdings Limited” for additional information regarding management’s valuation at the date of acquisition of the contingent consideration related to the earnout payment.
The foregoing description of our acquisition of AreaVegas and the related earnout payment is qualified by reference to the AreaVegas Agreement, a copy of which is filed with the SEC as an exhibit to the registration statement of which this prospectus forms a part.
 
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THE OFFERING
Ordinary shares offered by us:
            ordinary shares.
Ordinary shares offered by the selling shareholder:
            ordinary shares.
Ordinary shares outstanding immediately after this
offering:
            ordinary shares.
Underwriters’ option to purchase additional ordinary shares:
We have granted the underwriters an option for a period of 30 days after the date of this prospectus to purchase up to             additional ordinary shares from us at the public offering price, less underwriting discounts and commissions.
Use of proceeds:
We estimate that the net proceeds to us from this offering will be approximately $          million (€         million) (or $          million (€          million) if the underwriters exercise in full their option to purchase additional ordinary shares), based on the assumed initial public offering price of $          per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of ordinary shares by the selling shareholder.
The principal purposes of this offering are to obtain additional working capital, to facilitate an orderly distribution of our ordinary shares for the selling shareholder, to create a public market for our ordinary shares and to facilitate our future access to the public equity markets. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from this offering. However, we currently intend to use the net proceeds we receive from this offering for working capital and other general corporate purposes, including: developing and enhancing our technical infrastructure, solutions and services; expanding our research and development efforts and sales and marketing operations; meeting the increased compliance requirements associated with our transition to and operation as a public company; and expanding into new markets. We may also use a portion of the proceeds to acquire or invest in businesses, products, services or technologies; however, we do not have agreements or commitments for any material acquisitions or investments at this time. See “Use of Proceeds.”
Concentration of ownership:
Prior to this offering, 100% of our ordinary shares are owned by Zinnia Limited. Following this offering, Zinnia Limited will hold approximately          % of our outstanding share capital (or          % of our outstanding share capital following this offering if the underwriters exercise in full their option to purchase additional ordinary shares from us). See “Principal and Selling Shareholders” for additional information. We are also a “controlled company” as defined under the rules of the NYSE and therefore are permitted to elect not to comply with certain corporate governance requirements thereunder. See “Prospectus Summary —Implications of Being a Controlled Company” and “Principal and Selling Shareholders” for more information.
 
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Dividend policy:
Between January 1, 2024 and the date of this offering, we have paid an aggregate of €     million in cash dividends to our sole shareholder. Following this offering, we currently intend to retain any earnings for use in our business and do not anticipate declaring or paying any dividends on our ordinary shares in the foreseeable future. The declaration and payment of any future dividends will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, any future debt agreements or applicable laws and other factors that our board of directors may deem relevant. See “Dividend Policy” for more information.
Risk factors:
See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ordinary shares.
NYSE listing symbol:
We intend to apply to list our ordinary shares on the NYSE under the symbol “GGL.”
The number of ordinary shares that will be outstanding after this offering is based on 106,018,500 ordinary shares outstanding as of December 31, 2023 and excludes:

     ordinary shares reserved for future issuance under our 2024 Equity Incentive Plan with Non-Employee Sub-Plan (“2024 EIP”), plus any future increases in the number of ordinary shares reserved for issuance thereunder, as more fully described in the section “Management — 2024 Equity Incentive Plan” and

an aggregate of       ordinary shares underlying equity awards that we expect to grant to certain of our officers, directors, contractors and employees under our 2024 EIP upon the closing of this offering, based on the assumed initial public offering price of $     per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus.
Unless otherwise indicated, all information contained in this prospectus assumes or gives effect to no exercise by the underwriters of their option to purchase additional ordinary shares from us in this offering.
 
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SUMMARY CONSOLIDATED FINANCIAL DATA
The following tables present our summary consolidated financial data for the periods indicated. We have derived the condensed consolidated statement of profit or loss for the nine months ended December 31, 2023 and 2022 and condensed consolidated statement of financial position as of December 31, 2023 from our unaudited condensed consolidated interim financial statements included elsewhere in this prospectus. We have derived the consolidated statements of operations data for the years ended March 31, 2023 and 2022 and consolidated balance sheet data as of March 31, 2023 from our audited consolidated and combined financial statements included elsewhere in this prospectus.
The following financial information is impacted by business combinations that occurred during the year ended March 31, 2023 and impact comparability of financial information between the years ended March 31, 2023 and 2022. The business combinations are more fully described in note 4 to our audited consolidated and combined financial statements included elsewhere in this prospectus. The historical results included below and elsewhere in the prospectus are not necessarily indicative of our future performance.
The information set forth below is only a summary. You should read the consolidated financial data set forth below in conjunction with our consolidated and combined financial statements and the accompanying notes and the information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this prospectus.
Our audited annual consolidated and combined financial statements have been prepared in accordance with IFRS, as issued by the IASB. Our unaudited condensed consolidated interim financial statements have been prepared on the same basis as our audited consolidated and combined financial statements.
For the year
ended March 31,
For the nine months
ended December 31,
(in thousands)
2023
2022*
2023
2022
Statements of Operations Data:
Revenue
€306,926 €168,297 €273,223 €221,438
Cost of services
(135,289) (68,635) (111,967) (95,041)
Sales, general and administrative expenses:
(59,881) (2,584) (75,729) (40,705)
Profit from operations
111,756 97,078 85,527 85,692
Financial income
1,314 247 926 132
Financial expenses
(2,468) (5,351) (2,747)
Profit before tax
110,602 97,325 81,102 83,077
Taxation
(2,766) (2,030) (1,654)
Profit for the year/period
€107,836 €97,325 €79,072 €81,423
*
Carve-out (refer to note 1 to our audited consolidated and combined financial statements included elsewhere in this prospectus).
As of December 31, 2023
(in thousands)
Actual
Pro Forma(1)
Pro Forma
As Adjusted(2)
(unaudited)
Statement of Financial Position Data:
Total current assets
186,942              
Total assets
433,944
Total liabilities
81,895
Total equity
352,049
Total equity attributable to shareholders of Games Global Limited or parent
327,801
 
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(1)
The pro forma balance sheet data gives effect to the payment of cash dividends in the aggregate amount of €        million between January 1, 2024 and the date of this offering.
(2)
The pro forma as adjusted balance sheet data gives effect to (i) the pro forma adjustments set forth above and (ii) the sale by us of          ordinary shares in this offering at the assumed initial public offering price of $          per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase or decrease in the assumed initial public offering price of $          per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the as adjusted amount of each of cash and cash equivalents, total assets and total equity by approximately $          million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions. An increase or decrease of 1.0 million in the number of ordinary shares we are offering, as set forth on the cover page of this prospectus, would increase or decrease the as adjusted amount of each of cash and cash equivalents, total assets and total shareholders’ equity by approximately $          million, assuming no change in the assumed initial public offering price per share and after deducting the underwriting discounts and commissions.
For the year ended
March 31,
For the nine months
ended December 31,
(in thousands)
2023
2022
2023
2022
Cash Flow Data
Net cash provided by operating activities
€101,823 €127,296 €113,135 €73,135
Net cash used in investing activities
(17,077) (50,067) (28,005) (16,769)
Net cash used in financing activities
(40,496) (77,229) (74,174) (26,396)
 
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RISK FACTORS
Investing in our ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below, as well as the other information in this prospectus, including our consolidated and combined financial statements and the related notes, unaudited condensed consolidated interim financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our ordinary shares. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and prospects. In such an event, the market price of our ordinary shares could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”
Risks Related to Our Business and Industry
The markets in which we operate are competitive, and if we do not compete effectively, our business, financial condition and results of operations could be harmed.
The market for online gaming is highly competitive, highly fragmented and subject to rapid change and evolving industry standards. Some geographic markets, such as the United States, are not expected to reach maturity for several years as legal restrictions are removed or lessened and online gaming becomes more broadly available. In the key markets in which our games are distributed for play, including Canada, the United Kingdom and New Zealand, barriers to entry are low, and businesses can easily launch online content at nominal cost by using commercially available software or partnering with various established companies in these markets. The market for our games is also characterized by rapid technological developments, frequent launches of new games and content, changes in player preferences, needs and behavior, market disruption caused by new game studios and evolving business models and industry standards. As a result, our industry is constantly changing games and business models in order to adopt and optimize new technologies, increase cost efficiency and adapt to player preferences and regulatory changes.
We primarily compete with B2B online gaming companies and software providers, including Evolution Gaming Group AB, Pragmatic Play (Gibraltar) Limited, Playtech PLC, Play’n Go Malta Limited, International Game Technology PLC and others. Some of these companies have greater name recognition, longer operating histories, more established customer relationships, a larger base of existing customers, larger marketing budgets and access to superior platforms and greater financial and operational resources than us. These companies may use these advantages to develop different games, technology and services to compete with our games, spend more on advertising and marketing, invest more in research and development or respond more quickly and effectively to new or changing opportunities, technologies, standards, regulatory conditions or player preferences or requirements than we do. Furthermore, if we fail to deliver timely releases of our games that are ready for use, release new versions, services, tools or updates, innovate and grow our content library to match the competition or otherwise respond to new offerings by our competitors, or if new technologies emerge that are able to deliver competitive products more quickly and efficiently, more conveniently or more securely than our games, then our position in our markets could be harmed, and we could lose customers, which would adversely affect our business and results of operations.
We also face competition from other existing and future public and private retail gaming establishments, including casinos, gaming halls, slot route operators and, potentially, integrated destination resorts, as well as, to a limited extent, national, regional and charitable lotteries. Similarly, some of our customers may possess the resources and technical capabilities necessary to internally develop products similar to those we provide or intend to provide. If these customers decide to pursue in-house development rather than licensing or purchasing our products, it could have a material adverse effect on our business, financial condition and results of operations. Additionally, we compete with illegal retail and online gaming activities, including forms of betting that circumvent public regulation and, in particular, offshore gaming and operators that, as a result of their disregard of applicable regulations, may offer attractive pricing, promotions or other services. Such unregulated activities may drain significant portions of betting volumes away from the regulated industry. In particular, illegal betting could divert players’ available spending that might otherwise have been
 
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used to play our games. If we are not able to respond to and manage competitive pressure on our business effectively, it could adversely impact our business, financial condition and results of operations.
Finally, we face competition for the leisure time and discretionary spending of players. Other forms of leisure and entertainment, such as the internet, television, movies, sports, and offline, traditional online, personal computer and console games, offer much larger and more well-established options for consumers. Consumer tastes and leisure activity preferences are also subject to sudden or unpredictable change due to new technologies, other innovations or other factors outside of our control. If consumers who dedicate time and discretionary spending to online gaming do not find our games to be compelling or if other existing or new leisure activities are perceived by players or prospective players to offer greater variety, affordability, interactivity or overall enjoyment, our business, financial condition and results of operations could be adversely affected.
We have a limited operating history as a consolidated group at our current scale, and our historical, operating and financial results may not be indicative of future performance, which makes it difficult to predict our future business prospects and financial performance.
We were carved out of Fusion and commenced operations as Games Global on April 1, 2022, and therefore the financial information for the year ended March 31, 2022 included in our consolidated and combined financial statements herein has been carved out of the financial information of Fusion. These carve-out financial statements may not be indicative of the results of operations, financial position and cash flows if we had been an independent standalone entity and may not be indicative of our future performance. We have also made several acquisitions of businesses and assets in recent periods. Accordingly, we have a limited history of operating our business at its current scale and scope. It is impracticable to forecast our future results based upon historical data, and you should not rely on our past results of operations as indicators of future performance. You should consider and evaluate our prospects in light of the risks and uncertainties frequently encountered by growing companies in rapidly evolving markets. These risks and uncertainties include challenges in accurate financial planning as a result of limited historical data relevant to the current scale and scope of our business and the uncertainties resulting from having had a relatively limited time period in which to implement and evaluate our business strategies as compared to companies with longer operating histories.
We are not certain whether we will be able to sustain or increase our revenue or whether we will attain sufficient revenue to maintain profitability in the future. We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not increase by amounts sufficient to offset such costs and expenses. In particular, we intend to continue to make significant investments to grow our business in such areas as:

research and development, including investments in new gaming software and technology, such as our own proprietary game platform;

sales and marketing initiatives to grow our presence and increase brand awareness in new territories;

our technology infrastructure, including systems architecture, scalability, availability, performance and security;

acquisitions or strategic investments;

global expansion; and

our general and administrative organization and the legal, information technology and accounting expenses associated with being a public company.
Even if such investments, including our strategic investments, increase our revenue, any such increase may not be enough to offset our increased operating expenses, and we may not be able to maintain profitability and our business, financial position and results of operations may be harmed.
Negative events or negative media coverage relating to the gaming industry may adversely impact our customers, which could have an adverse impact on our business, financial condition and results of operations.
Adverse public opinion could significantly influence our business. The gaming industry may be, and has been from time to time, perceived as an industry involved in political corruption, organized crime,
 
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money laundering, tax evasion and other criminal activities, and many gaming companies face allegations relating to their or their business partners’ involvement in illegal activities. In particular, in recent years, public attention has been drawn to findings or allegations of illegal betting and gaming, participation or alleged participation in gaming activities by minors and to the risks related to social issues such as addiction to online gaming and risks related to data protection and payment security. Furthermore, the gaming industry is exposed to negative publicity and attention generated by a variety of sources, including citizens’ groups, non-governmental organizations, media sources, local authorities and other groups and institutions. Adverse or negative perceptions or other concerns regarding the gaming industry, even if not directly connected to our business, could have a material and adverse effect on us. For example, if a perception develops that the iGaming industry is failing to address public concerns, the resulting political pressure and public sentiment may result in increased or more restrictive regulation of iGaming in the jurisdictions in which we operate, a reduction in demand or political appetite to open up new regulated markets or harm to our reputation, and such consequences could adversely impact our business, financial condition and results of operations.
The markets for our games, software and services are rapidly evolving, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
The industry in which we operate is characterized by rapid technological change, new features, tools, solutions and strategies, evolving legal and regulatory requirements, changing customer needs and a dynamic competitive market. We expect the online gaming market to grow rapidly, particularly in the United States, where legislative changes have been implemented in some states and proposed in other states that would expand the market significantly. Furthermore, the opportunities provided by online gaming are still relatively new, and our customers may not recognize the need for, or benefits of, our games. For example, we recently launched a new live casino product line. If our customers or players are not interested in this line or if it does not meet our revenue expectations, our business and results of operations could be adversely affected. Our future success will depend in large part on the continued growth of our markets, our ability to capitalize upon market fragmentation and our ability to improve and expand our products to respond quickly and effectively to this expected growth.
Further, we must be able to keep pace with rapid regulatory changes in order to compete successfully in our markets. Our growth rate, strategy and future revenue streams are affected by the regulation of new and existing markets and the subsequent growth of player interest and acceptance in such newly regulated markets and by changes to existing markets. When a market implements new or updated regulations targeting the online gaming industry, the increased transparency and regulatory certainty can drive iGaming operators to enter the new market and/or further develop their existing operations and offerings in that market. As iGaming operators expand their operations into newly regulated markets, they invest heavily in targeting new players and educating them as to the products and services available. This impacts our business by resulting in increased demand for, and use of, our games, particularly as we are able to leverage our existing relationships and follow our customers into newly regulated markets. However, new market requirements or changes to existing market requirements may result in additional costs to update our games and/or Games Platform to meet such requirements, and there is no guarantee that we will recover these increased costs. New or updated regulatory or fiscal requirements may also increase the pressure on our customers’ margins, which our customers may seek to mitigate through reducing the proportionate rates payable to us for our games or by developing content in-house instead of licensing our products.
Our revenue growth depends on our ability to respond to frequently changing data protection regulations, policies and customer demands and expectations, which will require us to incur additional costs. The regulatory landscape in this industry is rapidly shifting, and we may become subject to new or amended regulations that restrict our operations or materially and adversely affect our business, financial condition and results of operations.
We derive a significant portion of our revenue from several key geographic markets, and the loss of market share or slower than anticipated growth in any of these markets could adversely affect our business, financial condition and results of operations.
Our revenue is predominantly derived through revenue-share arrangements and determined as a percentage of the GGR earned by our iGaming operator customers (including both our Direct Customers
 
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and the customers of our Indirect Customers). The IP information we use for regulatory compliance purposes (for example, territorial geo-blocking) allows us to identify the territory in which players are playing our games. We are able to link this IP information to the GGR data we collect in order to determine in which territories our games’ underlying GGR arose. This allows us to determine in which markets our games are being played. Based on this operational information, we are able to determine that a significant portion of our games’ underlying GGR arises in several key geographic markets, including Canada and the United Kingdom, which we estimate represented 33.1% and 24.4% of our games’ underlying GGR for the nine months ended December 31, 2023, respectively (compared to 32.8% and 22.7% of our games’ underlying GGR for the nine months ended December 31, 2022, respectively). Because our games’ underlying GGR is an essential component of customer billings, a decrease in underlying GGR overall, or in an individual key market, could result in a decrease of billings and thus our revenue in the relevant period. For further discussion regarding the relationship between GGR and how we generate revenue see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Components of Results of Operations — Revenue.” There can be no assurance that we would be able to recover or replace a significant reduction in revenue or anticipated growth thereof in one or more of these markets if that were to happen for any reason, which could adversely affect our business, financial condition and results of operations.
Acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute shareholder value and adversely affect our business, financial condition and results of operations.
We have aggregated various studios to further our goal of expanding our games and abilities. As part of our business strategy, we have in the past acquired, and expect to acquire in the future, businesses, joint ventures, assets or other technologies that we believe could complement or expand our games offering, enhance our technical capabilities or otherwise offer growth opportunities. For example, in February 2023, we acquired four gaming studios, and in February 2024, we acquired the B2B assets of DGC. Any acquisition or investment may divert the attention of management that would otherwise be available for the development of our existing business and may cause us to incur various expenses in identifying, investigating and pursuing suitable opportunities, whether or not the transaction is completed, and may result in unforeseen operating difficulties and expenditures. In addition, we operate in a highly competitive environment for mergers and acquisitions, and we may not be able to identify desirable acquisition targets or business opportunities, which may impede our growth and negatively affect our business, particularly if such acquisition targets or business opportunities are key to our growth strategies. If unanticipated costs arise in connection with the integration of these companies or if we do not complete other future acquisitions as intended, our business may be adversely affected, and we may be unable to find other viable manners in which to grow our business.
Furthermore, we may encounter difficulties assimilating or integrating the businesses, technologies, data, solutions, personnel or operations of any acquired companies, particularly if the key personnel of an acquired company choose not to work for us or face cultural challenges integrating with our Company, if their software or technology is not easily adapted to work with our games or technology or if we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise.
We could also face risks related to liability for the activities of any acquired company as conducted before the acquisition, including intellectual property infringement claims, violations of laws and other regulatory risks, commercial disputes, tax liabilities and other known and unknown liabilities, litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, players, former shareholders or other third parties, and our efforts to limit such liabilities could be unsuccessful. Any such acquisitions that we are able to complete may not result in any synergies or other benefits we expected to achieve, which could result in impairment charges that could be substantial. These acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses or the impairment of goodwill, any of which could materially and adversely affect our results of operations. If the performance of any acquired business fails to meet our expectations or if any of the above risks or liabilities in connection with an acquisition materialize, our business, financial condition and results of operations may be materially and adversely affected.
 
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The success of our business depends on our ability to retain and expand our existing customer relationships and to attract new customers.
An important component of our future success is our ability to retain and expand our relationships with existing customers and to attract new customers to market, sell and scale our games.
In order for us to monetize and scale our games, it is important that we maintain positive relationships with our customers, who ultimately control how our games are marketed and presented to players. We invest in targeted marketing efforts to identify opportunities to grow the use of our games within and across our customer base, and we implement a variety of customer service strategies to identify opportunities to increase and maintain our customer base. Despite our efforts, our customer retention rates may decline or fluctuate as a result of a number of factors, some of which may be outside of our control, including: the perceived performance and value associated with our games offering, including our customers’ perception of our continued development of commercially successful games; the business strength or weakness of our developers and studios; the success of our games; the entry and success of competitive products and overall general economic conditions in the geographic regions in which we operate.
Obtaining new customers is also important to the success of our business so that we are able to, among other things, support our growth in new markets and manage concentration risk. Significant investment is and will continue to be required in order to expand our customer base, for instance, in connection with our new live casino offering and in new markets within the United States, and there can be no assurance that our efforts will be successful. Our efforts to obtain new customers and maintain existing customers could be adversely affected if iGaming operators or players perceive our competitors’ games, technology or other services to be more relevant or attractive than ours. Additionally, iGaming operators may choose to invest significant efforts in their own internally generated programs and replace certain of our games with their own unless they perceive our games as offering significant incremental and/or long-term benefits. Any decrease in satisfaction with our games or customer support would also harm our brand, reputation and word-of-mouth referrals, which, in turn, would hamper our ability to attract new customers. Additionally, continued or increased customer consolidation within our markets may limit our ability to obtain new customers.
While we believe that we have a large and diverse customer portfolio, we derive a significant portion of our revenue from a limited number of customers, and we cannot assure you that the size and diversification of our customer portfolio will be sufficient to adequately maintain or increase our revenue in the future.
We derive a significant portion of our revenue from a limited number of customers, and in particular our largest customer, Apricot, and the loss of one or more of such customers would result in lower revenue and could harm our business.
Historically, we have derived a significant portion of our revenue from a limited number of customers. For the nine months ended December 31, 2023 and 2022, our top 20 customers accounted for 73.6% and 76.7% of our revenue, respectively, including our largest customer, Apricot, which accounted for 50.2% and 48.4% of our revenue for the nine months ended December 31, 2023 and 2022, respectively. We are party to various games access services agreements with Apricot, which is a B2B reseller of our games, or a subsidiary of Apricot, pursuant to which we provide Apricot with access to our games for further distribution to certain iGaming operators who use Apricot’s turnkey platform services to access and make available our games for individual players. Super Group (SGHC) Limited is a material customer of Apricot. Each of our games access services agreements relates to a specific operator or group of operators: (i) 32Red; (ii) Apollo; (iii) Super Group and (iv) all other such operators existing at the time of the effective date of the relevant games access services agreement.
It is likely that we will continue to generate a significant portion of our revenue from a limited number of customers for the foreseeable future and, in some cases, the portion of our revenue attributable to individual customers may increase in the future. We cannot guarantee that our largest customers will continue to partner with us, and the loss of Apricot or another of our key customers could materially reduce our revenue. Our games services agreements with respect to 32Red, Apollo and Super Group (SGHC) Limited expire on December 31, 2024, July 31, 2024 and December 31, 2035, respectively, subject in each case to automatic renewal unless terminated by the parties sooner upon six months’ written notice. The remaining games access services agreement for all other operators using Apricot’s platform services can be terminated
 
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upon one month’s written notice. If Apricot were to terminate any of our games services agreements, our revenue will be reduced and our results of operations will be adversely affected. If we fail to maintain existing customers or develop relationships with new customers, our business would be harmed.
A majority of our revenue is generated from our B2B reseller customers who sell, market and deploy our games to a variety of iGaming operators, and any failure to effectively develop, manage and maintain our indirect sales channels could harm our business.
Our customers consist of Direct Customers and Indirect Customers, including Apricot. Our Direct Customers make our games available to their customers, which consist of players who use iGaming operator websites to access and play games. Our Indirect Customers sell, market and deploy our games to a variety of B2C iGaming operators, which in turn make our games available to players. We generate the majority of our revenue through our Indirect Customers and, in particular, through Apricot. Loss of or reduction in indirect sales through our Indirect Customers, in particular from Apricot, could ultimately reduce the number of potential players able to play our games and therefore reduce our revenue. Furthermore, identifying and retaining resellers, training them in our technology and product offerings and negotiating and documenting relationships with them requires significant time and resources. We cannot assure you that we will be able to maintain our relationships with our Indirect Customers on favorable terms or at all.
Our agreements with Indirect Customers are non-exclusive such that our Indirect Customers may offer their own customers the games of several different companies, including games that compete with our games. Our Indirect Customers may favor our competitors’ games or services over ours, including due to incentives that our competitors provide to our Indirect Customers. One or more of our Indirect Customers could be acquired by one of our competitors, which could adversely affect our ability to sell through that Indirect Customer. If our Indirect Customers do not effectively sell, market or deploy our games, choose to promote our competitors’ games or otherwise fail to meet the needs of the operators that access our games through our Indirect Customers, our ability to sell our games could be adversely affected, which would have a material adverse effect on our business, financial condition and results of operations.
We are dependent on a third-party provider, Apricot, for the provision, customization and maintenance of our Games Platform.
We rely on a third-party provider, Apricot, for the provision, customization and maintenance of our Games Platform, which is the remote gaming system software integration layer that has been customized to meet our business needs and enables our customers to access our games and to configure them according to their needs and preferences. Our ability to generate revenue depends on the performance of the Games Platform, as players can only play our games through this Games Platform. Any issue affecting the Games Platform’s performance or any adverse change in our relationship or agreements with Apricot could have a material adverse effect on our business, financial condition and results of operations.
The Games Platform is owned by Apricot and depends upon Apricot’s technology and services. If Apricot terminates its relationship with us or refuses to renew the platform services agreement between us and Apricot on commercially reasonable terms, we would need to find an alternative provider. Due to certain customized features of the Games Platform, an exact replacement might not be possible for us to find, and we may not be able to secure such replacement on similar terms or within an acceptable time frame. Further, any negative publicity related to the Games Platform or Apricot’s turnkey platform services, including any publicity related to regulatory concerns, could adversely affect our reputation and brand and could potentially lead to increased regulatory or litigation exposure. If any of these risks were to materialize, it could increase our costs and negatively impact our relationship with our customers, which would adversely affect our business, financial condition and results of operations.
Our business relies on certain strategic relationships with external intellectual property (“IP”) and studio suppliers, and the failure to maintain favorable terms and conditions and business relations with respect to our strategic relationships could adversely affect our business, financial condition and results of operations.
We rely on strategic relationships with external game and software development companies to design, develop and supply their games to us for distribution through our business and on other technology providers for technology used in developing some of our games. These strategic partners include gaming companies
 
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such as our former parent company, Fusion, and non-subsidiary studios that provide content exclusively to us. If any of these strategic partners were to suspend, limit or cease their operations, terminate their relationships with us or terminate their relationships with us without sufficient notice to identify a replacement party, our results of operations could be adversely affected.
For example, while our agreements with external studio suppliers are often exclusive and typically do not have fixed terms, our external studio suppliers could decide to stop working with us, ask to modify their agreement terms in a cost prohibitive manner when their agreement is up for renewal or enter into exclusive or more favorable relationships with our competitors. Our business depends on continually creating and offering customers high quality games that are attractive to players, and losing any of these relationships might mean offering fewer than expected games in the future or otherwise becoming less competitive as former strategic partners become the competition or develop favorable relationships with our existing competition.
Any loss of a strategic relationship could negatively affect the attractiveness of our games to customers. For example, a strategic partner that is a brand licensor might stop licensing a brand to us, which could be viewed negatively by customers or players. In addition, we may have disagreements or disputes with these parties that could negatively impact or threaten our relationship with them. We cannot assure you that we will be successful in cultivating new strategic relationships or in retaining or extending our existing strategic relationships. If we are unable to develop new strategic relationships or if the parties with whom we currently have strategic relationships were to terminate their relationships with us, our revenue could decline, and our business could be adversely affected.
We rely on third-party providers to perform services that are crucial to the operation of our business, and if our third-party providers do not perform adequately or if they terminate their relationships with us, our business, financial condition and results of operations could be adversely affected.
We rely on third-party service providers to perform many functions that are crucial to the operation of our business including, but not limited to, customer support, software development, information technology (“IT”) infrastructure maintenance and support, information and data security, jackpot administration and management, database management and data analysis. We do not control these providers, and, as a result, we are subject to risks and uncertainties related to the actions taken, or not taken, by them.
The failure of these third parties to provide adequate services and technologies, or to adequately maintain or update their services and technologies, could result in significant disruption to our business operations. For example, if one of our third-party providers had an outage during which uptime was severely inhibited, delayed or unavailable, this could result in decreased volume of gameplay, which would result in decreased revenue. We cannot be certain that we will always detect such outages in a timely fashion or that we will be able to recover any resulting losses from third-party providers. Any such outages may cause our customers to have a negative experience, our brand or reputation may be negatively affected and our customers may be less inclined to continue or resume utilizing our products or recommend our product to other potential customers. As a result, any such outages could harm our reputation, business and operating results. Additionally, while we own the game transaction data generated by each game round played, any outage affecting the Game Platform or sudden unavailability of the Game Platform could impede our ability to collect and store this data, which would have a negative impact on our ability to provide data-based insights to our customers.
The success of our business depends upon the effective operation of certain operating systems, networks and standards that are run by third-party providers. For instance, we rely on geolocation and identity verification systems to ensure that we maintain compliance with certain laws and regulations, and any service disruption to those systems would adversely affect our business. There is no guarantee that the third-party geolocation and identity verification systems on which we rely will perform adequately or will be effective. Additionally, incorrect or misleading geolocation and identity verification data with respect to current or potential players received from third-party service providers may result in us inadvertently allowing access to our games to individuals who should not be permitted to access them or denying access to individuals who should be able to access our games, in each case based on inaccurate identity or geographic location determinations. Our third-party geolocation service providers in turn rely on their ability to obtain information necessary to determine geolocation from mobile devices, operating systems and other
 
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sources. Changes, disruptions or temporary or permanent failure to access such sources by our third-party service providers may result in their inability to accurately determine the location of players. Additionally, if players actively try to circumvent geolocation technology to mask their locations, we cannot guarantee that our third-party service providers would be aware of it. Moreover, our inability to maintain our existing contracts with third-party service providers, or to replace them with equivalent third parties, may result in our inability to access geolocation and identity verification data necessary for our day-to-day operations. If any of these risks materialize, we may be subject to disciplinary actions, fines or lawsuits, and our business, financial condition, results of operations and prospects would be adversely affected.
Additionally, we use the services of Jumbo Jackpots (“Jumbo Jackpots”), a subsidiary of Apricot that oversees the administration, funding and payout of our “progressive” jackpot games. If a player wins a progressive jackpot game, Jumbo Jackpots is obligated to furnish the payout to the iGaming operator, who provides the payout to the winning player. As we provide progressive jackpot games to our customers as a service provider, if Jumbo Jackpots did not furnish the jackpot payout in full and in a timely manner, we could be liable to our customers for breach of contract. While we would be entitled to recover any resulting losses from Jumbo Jackpots for breach of contract, such litigation could be costly and time intensive, and we may not be successful in recovering our losses in part or in full. Additionally, while it would be possible to replace Jumbo Jackpots with an alternative service provider, finding a replacement on acceptable terms could be time intensive and costly. Any failure for progressive jackpot game payouts to be furnished in full and in a timely manner would hurt our reputation and could have a material adverse effect on our business, financial condition and results of operations.
We also largely utilize web-based technology, including, for example, cloud-based platforms such as Amazon Web Services. The providers that control these operating systems frequently introduce new technology, and, from time to time, they may introduce new operating systems or modify existing ones. We and our customers are subject to the policies, practices, guidelines, certifications and terms of service of operating system provider platforms upon which we and our customers create, run and monetize applications and content. Each provider has broad discretion to change and interpret its terms of service, guidelines and policies, and those changes may have an adverse effect on us or on our customers’ ability to use our games or software. Providers could also change their technical requirements, guidelines or policies in a manner that materially and adversely impacts the way in which we or our customers collect, use and share data, including restricting our ability to use or read device identifiers, other tracking features or other device data. Our providers may also change their fee structures, add fees associated with access to and use of its platform, alter how customers are able to advertise and monetize on their platform, change how the personal or other information of its users is made available to application developers on their platform, limit the use of personal information and other data for advertising purposes or restrict how users can share information on their platform or across other platforms. Providers could limit or discontinue our access to their platforms or technologies if, for instance, they establish more favorable relationships with one or more of our competitors, and we would have no recourse against any such provider. If we or our customers were to violate, or if a provider believes that we or our customers have violated, a provider’s terms of service, guidelines, certifications or policies, then such provider could limit or discontinue our and/or our customers’ access to its platform. In some cases, these requirements may not be clear, and our interpretation of the requirements may not align with the interpretation of the provider, which could lead to inconsistent enforcement of these terms of service or policies against us and/or our customers and could also result in the provider limiting or discontinuing access to its platform. If our games or Games Platform are unable to work effectively on or with these operating systems, either because of technological constraints or because the provider impairs our ability to operate on its platform, it could have a material adverse effect on our business, financial condition and results of operations.
Additionally, the actions of third-party providers may put our business, reputation and brand at risk. If any of our third-party providers provide inadequate or substandard service, then our customers may have a negative experience with our offerings, our brand or reputation may be negatively affected and our customers may stop utilizing our products and/or be less inclined to continue or resume utilizing our games and services or recommend our games and services to other potential customers. Any negative publicity related to any of our third-party providers, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure. Furthermore, third party service providers are regularly given access to sensitive proprietary
 
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information and personal information in performance of their agreed services to us, including, for instance, game and software development services and human resources and customer support services. Such providers could misappropriate and engage in unauthorized use of our information, technology or customers’ or our customers’ players’ data. Further, disruptions in the online gaming industry, financial markets, economic downturns, poor business decisions or reputational harm may adversely affect our third-party providers, including increasing their propensity to engage in fraud or otherwise illegal activity that could harm our reputation, and they may not be able to continue honoring their obligations to us, or we may cease our arrangements with them.
If any of our third-party providers terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate provider, and we may not be able to secure similar terms or services or replace such third-party providers in an acceptable time frame, to an acceptable standard or at all. Any of these risks could result in significant one-time costs and adversely affect our business, financial condition, results of operations or prospects.
Our business depends on the interoperability of our games across third-party platforms, operating systems, devices and applications.
Our customers rely on us to create and deploy games that can be played on a wide range of third-party platforms, operating systems, devices and applications so that players can play our games regardless of what device or internet browser they may (or may want to) use to play games. Our success also depends on our ability to simultaneously manage games on multiple platforms and our ability to effectively deploy our games to an increasing number of new platforms, including in new and rapidly changing markets such as the United States. Given the number of third-party platforms we support, it can be difficult to keep pace with the number of third-party updates that are required in order to provide the interoperability that our customers expect and demand. Additionally, third-party platforms are constantly evolving, and we may not be able to modify our games to assure compatibility with third-party platforms following development changes within a timely manner. For example, third-party platforms frequently deploy updates to their hardware or software and modify their system requirements. The success of our business depends on our ability to update or modify our games to effectively respond to changes to device and operating system platform requirements. Failure to provide games with sufficient interoperability or failure to effectively respond to changes or updates to third-party platforms that we currently support could have a material adverse effect on our business, financial condition and results of operations.
Our business may be materially adversely affected if our existing and future games, software and services do not achieve and maintain broad market acceptance, if we fail to keep pace with or adapt to rapidly changing technology, evolving industry and regulatory standards or if we do not invest in games and software development and provide services that are attractive to our customers and players.
Our future business and financial success will depend on our ability to continue to anticipate the needs of current and potential customers and players, to achieve and maintain broad market acceptance for our existing and future software and games, to successfully introduce new and upgraded software and games, to enhance game performance and player experience, to successfully implement our current and future geographic expansion plans and to adapt to new technology trends. To be successful, we must be able to quickly adapt to changes in technology, industry standards and regulatory requirements by continually enhancing our technology, services and games. Developing new services and upgrades to services, as well as integrating and coordinating current services, imposes burdens on our internal teams, including management, compliance and product development. These processes are costly, and our efforts may not be successful.
In addition, successfully launching a new or upgraded game or expanding into a new jurisdiction puts additional strain on our technology and marketing resources. Expanding into new markets and increasing the depth of our coverage within existing markets impose additional burdens on our research, systems development, sales, marketing and general managerial resources. If we are unable to manage our expansion efforts effectively, or if we are unsuccessful in obtaining greater market share or leveraging the widespread adoption of new or upgraded software and games, we may not be able to offset the expenses associated with the launch and marketing of the new or upgraded software and games or of our games in new markets,
 
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which could have a material adverse effect on our financial results. Expansion into new markets will also place us in competitive and regulatory environments with which we are unfamiliar and involve various risks, including the need to invest significant resources and the possibility that returns on such investments will not be achieved for several years, if at all.
If we are unable to develop new or upgraded games, fail to release timely updates to games, or if we decide to combine, shift focus from or phase out a game, then our customers, potential customers or players may choose the games of our competitors instead of our games, our revenue may decline and our profitability may be reduced. If we incur significant costs in developing new or upgraded software or games or combining and coordinating existing software or games, or if we are not successful in marketing and selling these new games or upgrades or our customers fail to accept these new or combined and coordinating products, our revenue could decrease, our profitability could be reduced and there could be a material adverse effect on our results of operations. If we eliminate or phase out a game and are not able to offer and successfully market and sell an alternative game, our revenue may decrease, which could have a material adverse effect on our results of operations.
Our success depends on our continued efforts to provide software and games that are attractive to our customers and to players. The market for online gaming software is competitive and evolving, characterized by rapid, complex and disruptive changes in technology as well as player, developer and creator demands, expectations and preferences that could make it difficult for us to effectively compete. For example, in general, the longer a game takes to load, the more likely a player is to navigate away from our game and the less likely such player is to complete a game round. If we fail to minimize loading times, or if our competitors have or are perceived to have faster loading times than we do, then our games will be less popular with players and our customers may choose the games of our competitors instead of our games, which could have a material adverse effect on our business, financial condition and results of operations. Our future success depends on a variety of factors, including our continued ability to innovate, introduce new software and games and release new features, enhance and optimize game performance and user experience, extend our core technology into new applications and anticipate technological developments in a timely and cost-effective manner. If we are unable to do so, or if we are unable to react quickly to new technology trends (such as the widespread adoption of generative artificial intelligence (“AI”)) or otherwise provide software or games that customers or their players want, our customers may become dissatisfied and use competitors’ services. If we are unable to continue offering innovative software and games, we may be unable to attract additional customers or retain our existing customers, which could harm our business, financial condition and results of operations.
We may not be able to successfully manage our growth, and if we are not able to grow efficiently, our business, financial condition and results of operations could be harmed.
We have recently experienced, and anticipate that we will continue to experience, a period of rapid growth in our operations and headcount. The growth and expansion of our business places a continuous significant strain on our management, operational and financial resources. The process of acquiring new entities and assets could subject us to significant costs, including costs related to business integration, human resources and employment, diligence, compliance and legal services, among other costs. If completion of an acquisition is delayed or if we do not complete an acquisition as intended, our business may be adversely affected, and we may be unable to find other viable manners in which to efficiently grow our business. We also intend to expand our business within the United States as the legalization of online gaming has opened up new market opportunities within some U.S. states. However, if we are unable to access the U.S. markets due to legislative restrictions or any other reason, or if our expansion into such markets is not at the scale and speed that we intend, our business, financial condition and results of operations could be adversely affected.
Our success will depend in part on our ability to manage this growth effectively. To manage the expected growth of our operations and personnel, we will need to continue to improve our management, technical, administrative, operational and financial controls and our reporting systems and procedures. As usage of our games grows, we will also need to devote additional resources to improving the capabilities, features and functionality of these systems and procedures. In addition, we will need to appropriately scale our internal business, IT, financial, operating, compliance and administrative systems to serve our
 
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growing customer base and continue to manage headcount, capital and operating and reporting processes in an efficient manner. Any failure of or delay in these efforts could result in impaired performance and reduced customer satisfaction, resulting in decreased sales to new customers or loss of existing customers, either of which could hurt our revenue growth and our reputation.
As our business continues to grow in scale, complexity and headcount, the need to scale internal systems may require management to devote additional time and resources to a significant number of projects related to such internal systems, often simultaneously. The cost of such projects in management time and expense, and the resulting risk that management may be unable to apply sufficient attention to the day-to-day operation of the business, may lead our financial results to be adversely affected.
Further, any failure in optimizing the costs associated with our third-party services as we scale could negatively impact our gross margins. Even if we are successful in our expansion efforts, they will be expensive and complex, and require the dedication of significant management time and attention. We may also suffer inefficiencies or service disruptions as a result of our efforts to scale our internal infrastructure. We cannot be sure that the expansion of and improvements to our internal IT infrastructure will be effectively implemented on a timely basis, if at all. Any failure to manage our growth could harm our business, financial condition and results of operations.
If we fail to develop, maintain and enhance our brand and reputation, our ability to expand our customer base will be impaired, and our business, financial condition and results of operations may suffer.
Our reputation forms the foundation of our relationships with key stakeholders, including our customers, business partners, investors, regulatory authorities, employees and the communities in which we operate. Maintaining a positive reputation and brand is critical to our ability to expand our customer base and successfully operate our business. Our business is subject to evolving corporate governance and stakeholder expectations, including with respect to environmental, social and governance (“ESG”) matters and responsible gaming practices, which could affect our brand and reputation. In addition, stakeholder expectations regarding ESG matters continue to evolve rapidly and are not uniform. We also may become subject to evolving and complex rules, regulations and stakeholder expectations relating to ESG matters, including reporting requirements and due diligence obligations, that could result in increased expense and management time and attention to complying with and meeting such regulations and expectations. There is a risk that negative information about us or others with whom we do business, even if based on false rumor or misunderstanding, could adversely affect our business. Any harm to our reputation could adversely impact employee engagement, our ability to attract and retain talent or the willingness of customers and partners to do business with us, any of which could have a material adverse effect on our business, financial condition and results of operations.
Failing to detect or prevent fraud, theft or other forms of unethical behavior, including by players, customers, employees and our third-party providers, could harm our brand and reputation and subject us to investigations and litigation, any of which could negatively impact our business, financial condition and results of operations.
Fraud, theft and other forms of unethical behavior may occur across all touchpoints of our business operations, including such behavior by players, customers, third-party providers, employees or strategic partners. Such acts of fraud, theft or other unethical behavior may involve various tactics, including collusion with our employees or the exploitation of loopholes in our promotional bonus schemes. Successful exploitation of our systems could negatively affect our games, software or services and could harm our reputation. Failure to discover such acts or schemes in a timely manner could result in harm to our operations. In addition, negative publicity related to such schemes could have an adverse effect on our reputation, potentially causing a material adverse effect on our business, financial condition and results of operations. In the event of the occurrence of any such issues in relation to our games, software or services, substantial development and marketing resources and management attention may be diverted from other projects to correct these issues, which may delay other projects and the achievement of our strategic objectives.
In addition, any misappropriation of, or access to, customers’ or players’ or other proprietary information or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions or liability for failure to comply with privacy and information security laws, including for failure to protect personal information or for misusing personal information, which
 
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could disrupt our operations, force us to modify our business practices, damage our reputation and expose us to claims from players, customers, regulators, employees and other persons, any of which could have an adverse effect on our business, financial condition and results of operations.
Despite measures we have taken to detect and reduce the occurrence of fraudulent or other malicious activity in connection with our games, software and services, we cannot guarantee that any of our measures will be effective or will scale adequately with our business. Our failure to adequately detect or prevent fraudulent transactions could harm our reputation or brand, result in litigation or regulatory action or lead to expenses that could adversely affect our business, financial condition and results of operations.
The impact of economic conditions, public health incidents, weather events and natural catastrophes, including the resulting effect on consumer spending, may harm our business and results of operations.
Our results of operations may vary based on the impact of changes on our industry or the economy on us, our partners and our customers. Negative conditions in the general economy in the United Kingdom, United States, Canada and abroad, including conditions resulting from the COVID-19 pandemic or other public health threats, the Russia-Ukraine and Hamas-Israel military conflicts and related political and economic response, bank failures, changes in gross domestic product growth, inflation, rising interest rates, financial and credit market fluctuations, international trade relations, political turmoil, weather events, and natural catastrophes, including warfare and terrorist attacks on the United Kingdom, the United States, Canada, or elsewhere, could adversely affect our liquidity and financial condition as well as demand for our offerings and the growth of our business. In particular, we generate a significant proportion of our revenue from a limited number of geographical markets, including the United Kingdom and Canada. If such negative conditions were to disproportionally affect these markets, the demand for our games and the growth of our business may be more severely impacted. Such disruptions may create additional costs for us to maintain or resume operations and may also negatively affect the growth of our business.
Our results of operations are impacted by the amount of disposable income that players have to spend on online gaming. Actual or perceived risks of an economic recession and recent inflationary pressures may adversely impact consumer disposable income and result in decreased player retention and engagement. In addition, significant increases in the costs of other products required by consumers, as well as a raise in interest rates may affect consumer spending power and result in overall reduced spending and reduced demand for our games. An economic downturn could also lead our customers to experience losses, including due to bankruptcy or our customers ceasing operations, which may result in an inability to collect receivables from these parties. A decline in revenue or the collectability of our receivables could harm our business.
In addition, rising inflation could increase our employee costs and other sales, general and administrative expenses, which could adversely affect our business and results of operations if we are not able to pass on the increased costs to our customers or successfully implement other mitigating actions. Furthermore, rising inflation could lead to a decrease in the amounts that players are willing to wager, which could lead to a decrease in our revenue. Many central banks have increased interest rates as a result of recent inflation, which in turn may increase our borrowing costs or increase any interest expense if we incur indebtedness in the future.
Our current operations are global in scope, and as we plan further geographic expansion we may encounter a variety of operational challenges, which will require the dedication of management attention and financial resources.
Our operations are global in scope, with our headquarters in the Isle of Man, and studios, customers, and a sales presence in many other countries. We are continuing to adapt to global markets, but we cannot assure you that such efforts will be successful. We intend to expand our business within the United States as legalization of online gaming has created new market opportunities within some U.S. states, as well as expand into other markets, such as Latin America, as legalization of online gaming is introduced in such jurisdictions. However, if we are unable to access the U.S. or Latin American markets due to legislative restrictions or any other reason, or if our expansion into those markets is not at the scale and speed that we intend, our business, financial condition and results of operations could be adversely affected. We expect
 
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that our global activities will continue to grow for the foreseeable future as we continue to pursue opportunities in new and existing markets, which will require the dedication of management attention and financial resources.
Our current and future global business operations involve a variety of risks, including:

slower than anticipated availability and adoption of our games by content creators and developers outside our existing markets;

the need to adapt to and localize our games for specific countries and cultures;

the difficulty of maintaining our company culture across all of our offices globally;

greater difficulty collecting accounts receivable and potential for longer payment cycles;

burdens of complying with a variety of laws, including costs associated with legal structures, accounting, audits, statutory filings and tax liabilities;

burdens of complying with a variety of gaming regulations, including costs associated with developing technical builds of, and/or functionality in, our games for different markets;

changes or instability in a specific country’s or region’s political, social or economic conditions, including in the United Kingdom as a result of its exit from the European Union;

differing and potentially more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and/or personal information;

differing and potentially more onerous labor regulations and practices or strike actions, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations or the existence of workers’ councils and labor unions;

challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, statutory equity requirements and compliance programs that are specific to each jurisdiction;

unexpected changes in trade relations, regulations, laws or enforcement;

difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;

difficulties in monitoring potential illegal activities, such as fraud;

increased travel, real estate, IT infrastructure and legal compliance costs associated with multiple global locations and subsidiaries;

currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the costs and risks of entering into hedging transactions if we choose to do so in the future;

restrictions on the transfer of funds, such as limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;

enhanced difficulties of integrating any foreign acquisitions;

laws and business practices favoring local competitors or general market preferences for local vendors;

reduced or uncertain intellectual property protection or difficulties obtaining, maintaining, protecting or enforcing our intellectual property rights, including our copyrights, trademarks and patents;

political instability, hostilities, war or terrorist activities, high crime rates, power failures and outages in certain jurisdictions;

exposure to liabilities under anti-corruption and anti-money laundering laws in the jurisdictions in which we operate; and
 
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adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.
If we invest substantial time and resources to further expand our operations and are unable to do so successfully and in a timely manner, our business and results of operations will suffer.
Macroeconomic factors such as increased commodity prices, higher costs of labor, insurance and healthcare, supply chain and changes in or changes to the interpretations of other laws, regulations and taxes may also increase our cost of services and our sales, general and administrative expenses, and may otherwise adversely affect our financial condition and results of operations.
Our insurance may not provide adequate levels of coverage against claims or we may be unable to find insurance with sufficient coverage at a reasonable cost.
We believe that we maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Additionally, there are types of losses that we believe are becoming more difficult to insure on commercially acceptable terms, such as losses due to cybersecurity attacks. See “— If we or our third-party service providers experience a security breach or if unauthorized parties otherwise obtain access to customers’ data, our data and/or Games Platform, our games or Games Platform may be perceived as not secure, our reputation may be harmed, our business operations may be disrupted, demand for our games may be reduced and we may incur significant liabilities.” Moreover, if we do not make policy payments on a timely basis, we could lose our insurance coverage, or if a loss is incurred that exceeds policy limits, our insurance provider could refuse to cover our claims, which could result in increased costs. If we are unable to make claims on our insurance, then we may be liable for any such claims, which could cause us to incur significant liabilities.
Although we believe that we have adequate coverage, if we lose our insurance coverage and are unable to find similar coverage elsewhere or if rates continue to increase, it may have an adverse impact on our business, financial condition and results of operations.
We may have difficulty accessing banking services due to the nature of our business, which may make it difficult to operate or support the growth of our business.
Although financial institutions are permitted to provide services to us and others in our industry, banks may be hesitant to offer banking and payment processing services to us as our software is used by online gaming businesses. Consequently, businesses involved in our industry, including our own, may encounter difficulties in establishing and maintaining banking relationships with a full scope of services and generating market rate interest. Similarly, our providers’ banks and/or credit card providers might decline to allow our providers to effect transactions with online gaming or businesses or might block such attempted transactions. If we are unable to maintain our bank accounts or our providers are unable to use their bank accounts to make payments, it would be difficult for us to operate our business, increase our operating costs and pose additional operational, logistical and security challenges, which could result in an inability to implement our business plan and harm our business, financial condition, results of operations and prospects.
We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all, and we may in the future incur third-party debt, including to finance acquisitions.
While we have been profitable in the past, we cannot be certain that our operations will continue to generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business, including strategic acquisitions, and may require additional funds to respond to business challenges, including the need to develop new games, software or services or enhance our existing games, software and services, enhance our operating infrastructure, expand globally and acquire complementary businesses and technologies. Additional financing may not be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, financial condition and results of operations. Even if we are able to raise such capital, we cannot assure you that it will enable us to achieve better operating results or grow our business.
 
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While as of the date of this prospectus we do not have any third-party debt (except for amounts owed under our lease agreements), should we incur indebtedness in the future, it could: be difficult for us to satisfy any such debt obligations and liabilities; increase our vulnerability to, and reduce our flexibility to respond to, general adverse economic and industry conditions; require the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, any indebtedness; restrict us from pursuing acquisitions or exploiting business opportunities; limit our flexibility in planning for, or reacting to, changes in our business, the competitive environment and the industry in which we operate; increase our exposure to interest rate increases if some of our indebtedness bears a floating rate of interest; place us at a competitive disadvantage compared to our competitors that are not as leveraged; limit our ability to obtain additional financing to fund future operations, capital expenditures, business opportunities, acquisitions and other general corporate purposes and increase the cost of any future borrowings. Any of these or other consequences or events could have a material adverse effect on our business, financial condition and results of operations.
The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate, and even if each market in which we compete grows as forecasted, our business could fail to grow at a similar rate in such market, if at all.
The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate. Market opportunity estimates and growth forecasts included in this prospectus, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that affect the calculation of our market opportunity are also subject to change over time.
Our expectations regarding potential future market opportunities that we may be able to address are subject to even greater uncertainty. For example, our expectations regarding future market opportunities in gaming depend, among other things, on the extent to which we are able to increase the penetration of the emerging markets within the United States for our games and the extent to which we are able to develop new games and features that expand the applicability of our software. We cannot assure you that each relevant United States market will mature in line with our expectations, or that any particular number or percentage of addressable players or customers assumed by our market opportunity estimates will purchase our games at all or generate any particular level of revenue for us. In addition, any expansion in our market depends on a number of factors, including the cost, performance and perceived value associated with our software and that of our competitors. Even if each market in which we compete meets the size estimates and growth forecasts included in this prospectus, our business could fail to obtain a substantial share of this market or grow at a similar rate, if at all. Our growth is subject to many risks and uncertainties. Accordingly, the estimates of market opportunity or forecasts of market growth included in this prospectus should not be taken as indicative of our future growth.
Our results of operations may fluctuate for a variety of reasons, and these fluctuations make it difficult for us to forecast our future results of operations and could result in our failure to execute our operating plan or to meet the expectations of investors or analysts for any period.
Our results of operations have fluctuated in the past and are expected to fluctuate in the future. As a result, period-to-period comparisons of our results of operations may not be meaningful, particularly as we scale the size of our operations, and our past results may not be indicative of our future performance. Our results of operations may fluctuate due to a variety of factors, many of which are outside of our control and, as a result, may not fully reflect the underlying performance of our business. Such factors include, without limitation:

our ability to attract new customers and retain existing customers;

changes in the mix of games we sell to customers;

our ability to price our games effectively;

the timing and success of new game or software introductions by us or our competitors or any other change in the competitive landscape, including consolidation among our customers or competitors;
 
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fluctuations in the demand for our customers’ products and our customers’ ability to monetize those products;

unpredictability related to the costs that we incur in order to comply with rapidly changing regulatory or legal requirements, especially with respect to privacy and security matters;

changes in customers’ budgets and in the timing of their budget cycles;

our ability to successfully expand our business globally;

our reliance on third-party providers and delays in the technical integration of new customers to our Games Platform and resulting delays in generating revenue from these new customers until the technical integration by the third parties is complete;

changes in our pricing policies or those of our competitors;

investments in new features and functionality of our games;

general economic conditions in the markets in which we operate;

future accounting pronouncements or changes in our accounting policies or practices;

the amount and timing of our operating costs, including amount and timing of costs associated with recruiting, training and integrating new employees and retaining and motivating existing employees;

significant security breaches of, technical difficulties with or interruptions to the delivery and use of our software;

changes in the competitive dynamics of our markets, including consolidation among competitors or customers;

the timing and impact of acquisitions and costs associated with integrating acquired companies; and

increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our financial and other operating results from period to period. These fluctuations make it difficult for us to forecast our future results of operations and could result in our failure to meet our operating plan or the expectations of investors or analysts for any period. As a result, you should not rely on our results or growth for any prior quarterly or annual periods as any indication of our future results or growth, and you should consider and evaluate our prospects in light of the risks and uncertainties frequently encountered by growing companies in rapidly evolving markets. If we fail to meet such expectations for these or other reasons, the market price of our ordinary shares could fall substantially, and we could face costly lawsuits, including securities class action suits.
Fluctuations in currency exchange rates could harm our operating results and financial condition.
The reporting currency for our consolidated and combined financial statements is the Euro. While the majority of the cash we generate is denominated in Euros, we also generate a significant portion of our revenue in other currencies, including primarily the British Pound Sterling and South African Rand. As a result, a portion of our revenue is subject to fluctuations due to changes in foreign currency exchange rates. Furthermore, a significant portion of our operating expenses is denominated in currencies other than the Euro. As we continue to expand our operations, including in the United States and Canada, we expect that our exposure to the effects of fluctuations in currency exchange rates will increase. Because we conduct business in currencies other than Euros but report our results of operations in Euros, we also face translation exposure to fluctuations in currency exchange rates, which could hinder our ability to predict our future results and earnings and could materially and adversely impact our financial condition and results of operations.
To date, we have engaged in minimal currency hedging activities to limit the risk of exchange fluctuations. If we do engage in currency hedging activities in the future, the use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.
 
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Indemnity provisions in various agreements to which we are a party potentially expose us to substantial liability for infringement, misappropriation or other violations of intellectual property rights, data protection and other losses.
Our agreements with our customers and other third parties include indemnification provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of infringement, misappropriation or other violation of intellectual property rights, data protection or other data rights, damages caused by us to property or persons or other liabilities relating to or arising from our software, services, products, our acts or omissions under such agreements or other contractual obligations. Although we attempt to contractually limit our liability with respect to such indemnity obligations in all of our customer agreements, large or a high number of simultaneous indemnity payments could harm our business, financial condition and results of operations, and we may be required to cease providing certain functions or features on our games as a result of any such claims. Even if we succeed in contractually limiting our liability, such limitations may not always be enforceable. Any dispute with a customer or other third party with respect to such obligations could have adverse effects on our relationship with such customer or other third-party and other existing or prospective customers, reduce demand for our games and adversely affect our business, financial conditions and results of operations. In addition, although we carry general liability insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed on us or otherwise protect us from liabilities or damages with respect to claims, including clams on such matters as alleged compromises of customer data, which may be substantial. Any such coverage may not continue to be available to us on acceptable terms or at all.
Our unaudited pro forma condensed combined financial information may not be representative of our future results.
The pro forma financial information included in this prospectus is constructed from our consolidated and combined financial statements and the historical consolidated financial statements of Mahi and the Velo Studios and does not purport to be indicative of the financial information that will result from our future operations. The pro forma financial information presented in this prospectus is based, in part, on certain assumptions that we believe are reasonable; however, we cannot assure you that our assumptions will prove to be accurate over time. Accordingly, the pro forma financial information included in this prospectus does not purport to be indicative of what our results of operations and financial condition would have been had we, Mahi and the Velo Studios been a combined entity during the periods presented or what our results of operations and financial condition will be in the future.
Risks Related to Our Employees and Operations
Our chief executive officer, Walter Bugno, serves in such role pursuant to a consultancy agreement, and, accordingly, we may face competitive fiduciary and pecuniary interests that conflict with our interests.
We are party to a consultancy agreement, dated April 1, 2022 (as subsequently amended, the “Consultancy Agreement”), with RNG Squared S.A.R.L. (“RNG Squared”), a management and consulting services company owned by Walter Bugno and his spouse, for the provision of services of Mr. Bugno as our Chief Executive Officer. RNG Squared is permitted to accept other engagements during the term of the Consultancy Agreement. The Consultancy Agreement shall continue unless and until terminated by either party giving not less than six months’ written notice. RNG Squared’s ability to accept other engagements is limited by restrictions in the Consultancy Agreement, where the acceptance of such engagements would result in Mr. Bugno not devoting sufficient time to our business, or it would result in a breach of RNG Squared’s duties under the Consultancy Agreement. However, we can provide no assurances that Mr. Bugno will not devote significant time to the management of other entities. Mr. Bugno may also have competing fiduciary obligations and pecuniary interests relating to other businesses that may conflict with our interests. To the extent RNG Squared accepts alternative engagements that require the devotion of significant time from Mr. Bugno, or that these additional activities create a conflict between such external interests and our own interests, investors and commercial partners may lose confidence in our company, and our business, financial condition and results of operations would be adversely affected.
 
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We rely on the performance of highly skilled personnel, including our management and other key employees, and the loss of one or more of such personnel, or of a significant number of our team members, or the inability to attract and retain executives and employees we need to support our operations and growth, could harm our business.
Our success and future growth depend upon the continued services of our management team and other key employees. In particular, certain members of our leadership team are critical to our overall management, as well as the continued development of our software, games, culture and strategic direction. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. We also are dependent on the continued service of our sales and partnership teams to maintain and expand our customer relationships and market games to our customers, the leaders of our studio teams to manage our studios and our software developers team to develop new technologies, including our own proprietary games platform. We may terminate any employee’s employment at any time, with or without cause, and any employee may resign at any time, with or without cause, subject only to the notice periods prescribed by each employee’s respective agreement if done without cause. The loss of one or more members of our senior management or key employees could harm our business, and we may not be able to find adequate replacements in a timely manner or at all. We cannot ensure that we will be able to retain the services of any members of our senior management or key employees.
In addition, we must attract and retain highly qualified personnel in order to execute our growth plan. We have had temporary difficulty quickly filling certain open positions in the past, and we expect to have significant future hiring needs corresponding to our growth. Competition to hire data scientists, research and development specialists and experienced sales professionals is intense, and particularly so in the areas in which we have offices and studios. In order to continue to access top talent, we expect to continue to expand our operations to new jurisdictions, which may add to the complexity and costs of our business operations. From time to time, we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment. As a result, if the perceived value of our equity awards declines or experiences significant volatility such that prospective employees believe there is limited upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed.
We generally enter into non-competition agreements with our employees. These agreements prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors for a limited period of time. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work, and it may be difficult for us to restrict our competitors from benefiting from the expertise our former employees developed while working for us.
Risks Related to Our Information Technology and Cybersecurity
Interruptions, performance problems or defects associated with our software or games may adversely affect our business, financial condition and results of operations.
Our reputation and ability to attract and retain customers and grow our business depends in part on our ability to offer our games at high levels of reliability, scalability and performance, including the ability of our existing and potential customers to access our games quickly and easily at any time of the day. Interruptions in the performance of our software or any of our individual games, whether due to system failures, computer viruses, denial of service attacks or physical or electronic break-ins, could affect the availability of our internal systems, Games Platform, data or any of our individual games. Players may experience disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of customers accessing our Games Platform simultaneously, denial of service attacks or other security-related incidents.
It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our customers’ player bases grow and our customers’ own software platforms become
 
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more complex. If our customers’ platforms are unavailable or if our customers are unable to access our products within a reasonable amount of time or at all, we may experience a loss of customers, loss in volume of gameplay, lost or delayed market acceptance of our products, delays in payment to us by customers, injury to our reputation and brand, legal claims against us, significant costs of remedying these problems, significant costs of compensating customers to maintain our relationships and the diversion of our resources. In addition, to the extent that we do not effectively address any capacity constraints, upgrade our systems as needed or continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition and results of operations, as well as our reputation, may be materially and adversely affected.
Further, the technology underlying our software is inherently complex and may contain material defects or errors, particularly when new games are first introduced or when new features or capabilities are released. We have from time to time found defects or errors in our software, and new defects or errors in our existing games or new games may be detected in the future by us, our customers or their players. We cannot assure you that our existing games and new games will not contain defects. Any defects could result in loss of revenue and customer confidence in our games, even if only one of our games contained defects. Any real or perceived errors, failures, vulnerabilities or bugs in our software or individual games could result in negative publicity or lead to data security, access, retention or other performance issues, or threaten our compliance with various ISO standards, any of which could harm our business. Additionally, if a defect resulted in a game not complying with the requirements of a certain regulated market, we could face adverse regulatory consequences, including investigations, fines or suspension of one or more of our licenses, depending on the severity and scope of the defect. The costs incurred in correcting such defects or errors may be substantial and could harm our business. Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and could similarly harm our business. If any of the foregoing occurred, it could have a material adverse effect on our business, financial condition and results of operations.
If we or our third-party service providers experience a security breach or if unauthorized parties otherwise obtain access to customers’ data, our data and/or our Games Platform, our games or Games Platform may be perceived as not secure, our reputation may be harmed, our business operations may be disrupted, demand for our games may be reduced and we may incur significant liabilities.
Operating our business involves the collection, storage and transmission of proprietary and confidential information, including, in some cases, personal information, of our employees, studio employees, customers, players and the confidential information (including personal information) we receive from our partners, studios and customers. We rely on internal computer systems, Apricot’s computer systems and those of our current and any future strategic collaborators, vendors and other contractors or consultants, and the confidentiality, integrity and availability of such systems and our confidential information are vulnerable to cyber-attacks, computer malware (including viruses), unauthorized access, natural disasters, cybersecurity threats, terrorism, war, telecommunication and electrical failures. We have been subject to data security breaches in the past and may be again in the future. The security measures we and our third-party providers take to protect this information may be breached as a result of social engineering (including, but not limited to, deep fakes (which may be increasingly more difficult to identify as fake), spear phishing and ransomware attacks), hacking and other efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations or nation-states, organized crime, other criminal enterprises, individual actors and/or advanced persistent threat groups. In addition, we may experience intrusions on our physical premises by any of these threat actors. Furthermore, remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.
Our organization is also vulnerable to intentional or unintended acts or omissions by anyone with authorized access that create exploitable vulnerabilities. For example, internal employees who have access to sensitive product code or other proprietary information may collaborate with external bad actors to engage in fraudulent activities against us. Such collusion can manifest in various forms, including data breaches, intellectual property theft or financial fraud schemes. We have implemented security measures, including access controls and employee monitoring, intended to mitigate this risk. However, we cannot ensure
 
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sufficient ongoing vigilance and adherence to our security protocols in order to safeguard our assets and maintain the trust of our stakeholders.
Cyber incidents have become more prevalent in recent years and have been increasing in sophistication, technique and frequency, and businesses in our industry are frequently subject to cyber-attacks. In particular, we and our partners, including Apricot, have been subject to distributed denial of service attacks, none of which have had a material impact on our business as of the date of this prospectus. Threat actors are becoming increasingly sophisticated in using techniques and tools, including AI, that circumvent security controls, evade detection and remove forensic evidence. Incidents may include third parties attempting to gain access to employee or customer data using stolen or inferred credentials, computer malware, viruses, spamming, phishing attacks, ransomware, card skimming code and other deliberate attacks and attempts to gain unauthorized access. Because the techniques used by computer programmers who may attempt to penetrate and sabotage our network security or our website change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques, react in a timely manner or implement adequate preventative measures.
For example, attempts by malicious actors to frequently induce our personnel into disclosing usernames, passwords or other information that can be used to access our systems have increased and could be successful. Our security measures could also be compromised by personnel, theft or errors or be insufficient to prevent harm resulting from security vulnerabilities in software or systems on which we rely. Such incidents may occur, resulting in unauthorized, unlawful or inappropriate access to, inability to access, disclosure of or loss of the sensitive, proprietary and confidential information that we handle. Security incidents could also damage our IT systems and our ability to make the financial reports and other public disclosures required of public companies.
We rely on third-party service providers to provide critical services that help us maintain, develop and deliver our games and operate our business. In the course of providing their services, these providers may support or operate critical business systems for us or store or process personal information and any of the same proprietary and confidential information that we handle. These service providers may not have adequate security measures and could experience a security incident that compromises the confidentiality, integrity or availability of the systems they operate for us or the information they process on our behalf. Such occurrences could materially and adversely affect our business to the same degree as if we had experienced these occurrences directly, and we may not have recourse, or have limited recourse, from the responsible third-party service provider for the resulting liability we incur.
While we have developed and implemented systems and processes designed to protect the integrity, confidentiality and security of our studios’ and our employees’ confidential and personal information under our control, we cannot guarantee that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. A security breach or other security incident, or the perception that one has occurred, could: result in a loss of customer confidence in the security of the Games Platform, damage to our reputation and brand or loss or unavailability of data, which we may not be able to effectively restore; reduce demand for our games; disrupt normal business operations; require us to incur material costs to investigate and remedy the incident; recover data (if possible) and prevent recurrence; expose us to litigation, regulatory enforcement action, fines, penalties and damages and materially and adversely affect our business, financial condition, results of operations and reputation. These risks are likely to increase as we continue to grow and process, store and transmit an increasingly large volume of data.
We have legal and contractual obligations to notify relevant stakeholders of security breaches. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data in certain circumstances. For example, laws in the European Economic Area (“EEA”), United Kingdom and all 50 U.S. states may (depending on the nature of the breach) require businesses to provide notice to regulatory authorities and/or individuals whose personal information has been disclosed as a result of a data security breach. Also, pursuant to the California Consumer Privacy Act and the California Privacy Rights Act (together, the “CCPA”), if we experience a security breach, California residents could bring a private right of action claiming the breach was the result of our violation of the duty to implement and maintain reasonable security procedures and practices, which could be costly and cause reputational harm. Similarly, there is an increasing risk of class actions in
 
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the United Kingdom and Europe. Security breaches could also result in enforcement actions by government or regulatory authorities alleging that we have violated laws that require us to maintain reasonable security measures and comply with mandatory disclosure requirements. Failure to comply with these notification requirements could subject us to regulatory scrutiny and additional liability.
In addition, our agreements with certain customers and third-party partners may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity and may cause our customers to lose confidence in the effectiveness of our security measures. A security breach could lead to claims by our studios, their users or other relevant parties that we have failed to comply with contractual obligations to implement specified security measures. As a result, we could be subject to legal action, including class actions, or our customers could end their relationships with us. We cannot assure you that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages or claims related to our data privacy and security obligations. While we do have in place insurance policies with respect to, and service agreements with external suppliers to prevent, cybersecurity attacks, we cannot be certain that our insurance coverage or any other contractual protections we may have will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of any changes to our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations.
In addition, we continue to expend significant costs in order to protect our Games Platform and to offer additional security features to our customers, and we expect to continue doing so in the future. Any increase in these costs could adversely affect our business, financial condition and results of operations.
While we have policies in place to limit the use of open-source software in our games, open-source software may be used in some technology used by or licensed to us, which could negatively affect our ability to sell our services or subject us to litigation.
We have processes and policies in place to limit our technology containing software modules licensed to us by third-party authors under “open-source” licenses. However, we cannot guarantee that no open-source software is used in our games or in the technology licensed to us by third-party providers. Use and distribution of open-source software may entail greater risks than use of third-party commercial software, as open-source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it easier for others to compromise our technology.
Some open-source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open-source software we use or grant other licenses to our intellectual property. If we combine our software with open-source software in a certain manner, we could, under certain open-source licenses, be required to release the source code of our software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software.
Although we monitor our use of open-source software to avoid subjecting our technology to conditions we do not intend, the terms of many open-source licenses have not been interpreted by U.S. or other national courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products. From time to time, there have been claims challenging the ownership of open-source software against companies that incorporate open-source software into their platforms. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open-source software. Moreover, we cannot assure you that our processes for controlling
 
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our use of open-source software in our technology will be effective. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our technology, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition and results of operations.
Use of generative AI tools in our business may result in significant reputational harm and liability.
We use generative AI tools (“Generative AI Tools”) in our business, including to generate software code and other materials and content for use in our games, and we expect to use Generative AI Tools in the future. Generative AI refers to AI technology that creates new content (such as text, audio, data, images, video or software code) (“Output”) by leveraging content that the technology was trained on (for example, through machine learning) in response to prompts submitted by a user (“Prompts”). Generative AI provides significant opportunities for new and efficient forms of content development, across a wide range of applications. However, generative AI is relatively new, and the business, legal and ethical landscape regarding its use, commercialization and regulation is unsettled and constantly evolving. Uncertainty in the legal regulatory regime relating to AI may require significant resources to modify and maintain business practices to comply with relevant U.S. and non-U.S. laws.
The use of Generative AI in aspects of our business may present material risks and challenges that could increase as Generative AI Tools become more prevalent. We also face such risks and challenges in respect of third-party providers using AI-generated work product in the content they provide to us.
Recent decisions of the U.S. Copyright Office suggest that we would not be able to claim copyright ownership in any Output, and the availability of such protection in other countries is unclear. In the United Kingdom, copyright law may protect works generated by a computer where there is no human creator; however, to date there has been no judicial treatment of these computer-generated work considerations in the context of Generative AI. Therefore, even in jurisdictions where copyright protection may be extended to AI-generated works, the ownership of any Outputs generated using Generative AI Tools may be subject to legal challenge. As a result, we may not be the legal owner of the Output, which in turn is likely to prevent or limit our ability to enforce our rights in the Output, prevent others from copying it or reusing it or stop the provider of the Generative AI Tool from using identical Outputs. The Generative AI Tool’s terms of service may also declare that the provider of the Generative AI Tool owns the Outputs or that it retains a broad right to re-use the Outputs beyond the right to use the Outputs (and the Prompts) to train the Generative AI Tool.
In addition, we have little or no insight into the third-party content and materials used to train the Generative AI Tools or the extent of the original works that remain in the Output. As a result, we may face claims from third parties claiming infringement of their intellectual property rights or infringement of open-source licenses or other license terms. Open-source licenses have various conditions on the use of the source code, ranging from notice and attribution requirements to other more onerous provisions, such as an obligation to make any proprietary code linking to or derived from such open-source code available under the same license terms, which could have significant implications for the protection of our proprietary code. We could also be subject to various claims, including: from the providers of the Generative AI Tools if our use of the Output or the service is inconsistent with, or in breach of, the terms of use; from our customers, including contractual claims if the agreement prohibits the use of AI-generated content in our offering and indemnification claims if our products or services, including our games, incorporate any infringing Output. Any of these claims could result in legal proceedings and could require us to purchase a costly license, comply with the requirements of open-source software license terms, limit or cease using the Output unless and until we can re-engineer such Output to avoid infringement or change the use of, or remove, the implicated Output. In practice, this could prevent us from selling the affected games or otherwise monetizing the use of our games or require removal of the games from the market, which could lead to reputational damage and loss of revenue.
Our use of Generative AI Tools for software development may also present additional security risks because the generated source code may have been modelled from publicly available code or otherwise not
 
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subject to all of our standard internal controls. There is also a risk that bad actors may intend to influence training models to incorporate latent security issues, trojans, malware or “inorganic” results in Outputs. Unlike open-source software, which typically involves community oversight and review of contributions to open-source projects or other community-driven code, Generative AI Tools may not have the same oversight and review, increasing the risk of any widespread vulnerability or influence of algorithmic output by those with intentions that are against the interest of users or entire groups of users. In addition, AI algorithms may be flawed, and datasets may be insufficient or contain biased information, which could result in inaccurate Output, or Output that is discriminatory, unethical or biased.
In the event that any Output specifically identifies a natural person, such as by their image, video or voice, the user of such Output may be violating their rights of publicity or creating a false association between them and the user, if they do not have an agreement with that third party to do so. Any use of Generative AI Tools that have been trained using a person’s name, image, voice or likeness, or that create Output that may incorporate a person’s name, image, voice or likeness, are subject to these risks.
We also face risks in respect of any personal information or confidential or proprietary information of our Company that may be included in any Prompts. Generative AI Tools do not typically have confidentiality or security obligations with respect to Prompts or Outputs. As a result, if our confidential information, or information of a third party to which we have an obligation to keep confidential, is included in the Prompt provided to the Generative AI Tool, the Generative AI Tool might disclose or reuse such confidential information, including re-creating the Output to others or using the confidential information as training data for other Outputs, and we may not have the ability to prevent the Generative AI Tool from doing so. Additionally, there is the risk of personal information being included in a Prompt, which could result in such personal information being inappropriately transferred or processed. This could result in a breach of our obligations under applicable data protection law, or contracts with third parties, which could put us at risk of a fine from the relevant regulator and/or a claim for damages.
Several jurisdictions around the globe, including Europe and certain U.S. states, have proposed or enacted laws governing Generative AI Tools. For example, European regulators have proposed a stringent AI regulation, and we expect other jurisdictions will adopt similar laws. Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal information) and regulate automated decision making, which may be incompatible with our use of Generative AI Tools. These obligations may make it harder for us to conduct our business using Generative AI Tools, lead to regulatory fines or penalties, require us to change our business practices, retrain our Generative AI Tools or prevent or limit our use of Generative AI Tools. For example, the U.S. Federal Trade Commission (“FTC”) has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of Generative AI Tools where they allege the company has violated privacy and consumer protection laws. If we cannot use Generative AI Tools or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.
The risks resulting from use of Generative AI Tools could be difficult to eliminate or manage, and, if not addressed, could have a material adverse effect on our business, reputation, results of operations, financial condition and prospects.
Risks Related to Litigation, Regulatory Compliance and Governmental Matters
The online gaming industry is subject to extensive and changing laws and regulations (including applicable direct and indirect taxation, anti-corruption, anti-money laundering and economic sanctions laws) as well as licensing requirements, and any failure to comply with such laws, regulations and requirements, or the interpretation or enforcement thereof, could have a material adverse effect on our business, financial conditions and results of operations.
Regulatory requirements applicable to the online gaming industry vary from jurisdiction to jurisdiction. Because of the broad geographical reach of our customers’ operations, they and we are subject to a wide range of complex laws and regulations in the jurisdictions in which we all operate. Furthermore, a key part of our corporate strategy is to take advantage of the global expansion of jurisdictions regulating the iGaming industry. Applicable laws and regulations govern, for example, market access, advertisement, competition and consumer protection, privacy and personal information, payouts, taxation, cash and anti-money laundering
 
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compliance procedures and other specific limitations, such as permissible forms of gaming and betting online. These laws and regulations vary from one jurisdiction to another, and future legislative, regulatory and enforcement action, court decisions or other governmental action may be affected by, among other things, political pressures and changes in government leadership or legislative or governmental priorities. Any such action may have an adverse direct impact on our operations and financial results or indirectly on the basis they adversely impact on our customers’ operations and financial results. Some jurisdictions have introduced regulations attempting to restrict or prohibit online gaming or the marketing thereof, while others have taken the position that online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations to enable online gaming in their jurisdictions. Additionally, some jurisdictions in which we may operate and/or from where our customers derive revenue and which are presently unregulated or partially regulated may enact or change laws and regulations, resulting in such customers (and potentially us) needing to obtain local licenses. We cannot predict the timing, scope or terms of the implementation or revision of any such state, federal or foreign laws or regulations, or the extent to which any such laws and regulations may facilitate or hinder our strategy or be applicable to or impactful on our business, operations and financial condition. Any enactment of laws or regulations in these jurisdictions related to online gaming or the marketing thereof would require a change in how we conduct business in such jurisdictions, and may lead to incremental expense in our operations in such territories.
In particular, regulation of online gaming in the United States is evolving rapidly, as states, including Connecticut, Michigan, New Jersey and Pennsylvania, have legalized online gaming in the recent past. We have obtained regulatory licenses in these states and also acquired certain assets of Digital Gaming Corporation USA (“DGC”) that have enabled us to commence business activities in the United States. We are monitoring ongoing regulatory discussions in additional states, which we expect to result in the legalization of online gaming across additional states over the next few years. The delay or cessation of these ongoing regulatory discussions or the implementation of strict licensing requirements or adverse regulation, or any adverse actions taken by gaming authorities or consumer protection agencies could have a significant impact on our business, financial condition and results of operations. If we are unable to effectively develop and operate directly or indirectly within these additional states once the laws are regulated, if at all, or if our competitors are able to successfully penetrate geographic jurisdictions that we cannot access or where we face other restrictions, there could be a material adverse effect on our business, operating results and financial condition. Our failure to obtain or maintain the necessary regulatory approvals and licenses in these additional states, whether individually or collectively, could have a material adverse effect on our business, operating results and financial condition.
In addition to limiting the scope of our permitted activities, some of these regulations may limit the number and configuration of the online gaming activities of our customers that we may support. Gaming authorities, governments or other regulatory bodies may deny, revoke or suspend our licenses and impose fines or seize our assets if we are found to be in violation of any of these regulations. If a license is required by a regulatory authority, and we fail to seek or do not obtain the necessary license, then we may be prohibited from providing our online games or services in the relevant jurisdiction. We may also experience delays from time to time in the renewal of our licenses, which may result in disruptions to our business and the inability to provide our games or services. Upon the expiration of a license, a regulator could decide to offer that license to one or more third parties (through a competitive tender process or otherwise). In addition, the regulator may issue additional licenses to third parties at any time. Renewing a license may be costly and time consuming, and our current licenses may not be renewed upon their expiration on favorable terms or at all.
We have implemented policies and procedures aimed at preventing and detecting violations of applicable gaming, anti-corruption and anti-money laundering laws and requirements. We also adhere to regional standards and industry best practices to protect and encourage responsible gaming practices. We comply with relevant U.K. laws on advertising and marketing as well as the eCommerce Online Gaming Regulation and Assurance’s Generally Accepted Practices, which focuses on player protection, fair gaming and responsible operator conduct. Despite our efforts to update and maintain suitable policies and procedures, they may prove to be inadequate or insufficient and we may be exposed to potential allegations of inappropriate conduct in the future. We operate in certain countries and regions with a reputation for heightened corruption risk where we may face challenges or be unsuccessful in implementing and ensuring compliance with the
 
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policies and procedures aimed at preventing and detecting violations of applicable gaming, anti-fraud, anti-corruption and anti-money laundering laws and requirements.
In addition, changes in existing laws or regulations, or changes in their interpretation, including laws or regulations with a direct impact on the gaming industry, such as laws or regulations that prohibit money laundering and financing of terrorist and other unlawful financial activities, could impact our profitability and restrict our ability to operate our business. In recent years, changes in existing laws or regulations have had a significant impact on the online gaming industry. The online iGaming operators that we supply our content to may experience increasing regulatory pressure in the form of advertisement restrictions, taxation increases, limitations on payment methods, licensing and sponsorship restrictions, or limitations on promotions, maximum bets or prizes, among others. There can be no assurance that jurisdictions where they hold licenses will not adopt additional or incremental changes to their laws or their regulations, or that we will foresee or otherwise be able to predict such changes or that we will be able to successfully adapt to them. Our customers’ failure to successfully mitigate negative impacts of such changes could have an adverse effect on our business, financial condition, results of operations and prospects.
We cannot be certain that laws, regulations or any authorities in the jurisdictions where we operate from time to time will not restrict our customers’ ability to advertise or market, which may limit or prevent them from advertising or marketing our content. In addition, we cannot be certain that our customers will always comply with any such laws or regulations in the jurisdictions where we or such third parties operate. Any failure or perceived failure by such third parties to comply with applicable regulation, including by offering our online gaming products in violation of advertising restrictions or in jurisdictions where any such offering would be prohibited, may damage our reputation, result in sanctions and/or fines, adversely affect our ability to obtain or renew licenses and to enter any potential strategic partnership, or otherwise materially and adversely affect our business, financial condition and results of operations.
Online gaming legislation or regulation may be interpreted in such a way as to prohibit certain of our activities, or certain activities of our customers.
We generate income through licensing content on a B2B basis to iGaming operators and other resellers. In return, we generally receive a share of the revenue such iGaming operators make by providing to players access to our games as part of the gambling services they provide. One of the consequences of the supply of operational gambling products to online gaming operators who provide services to players in certain jurisdictions, in return for a share of revenue, is the potential regulatory risk associated with doing so. While in many jurisdictions laws and regulations may not specifically apply to supplies by gambling software licensors (as distinct from online gaming operators supplies to players), this is not universally the case and, indeed, a number of jurisdictions have sought to regulate (e.g., the United Kingdom) or prohibit (e.g., Singapore) such supply explicitly.
Laws and regulations relating to the supply of online gaming services are complex, inconsistent, and evolving, and we may be subject to such laws indirectly (insofar as we have supplied online gaming operators who are themselves subject to such laws). There is a corresponding, continuing risk to some online gaming operators that we supply to (and us) that governmental and enforcement authorities in jurisdictions in which players are located may seek to argue that those online gaming operators and/or we, are acting illegally in accepting, or assisting in the acceptance of, bets or wagers from citizens in those jurisdictions.
Many jurisdictions have not updated their laws to address the supply of online gambling. Moreover, the legality of online gaming and the provision of products and services is subject to uncertainties arising from differing approaches by legislatures, regulators and enforcement agencies including in relation to determining in which jurisdiction the game or the bet takes place and therefore which law applies. Online gaming operators sometimes seek to justify their activities in certain jurisdictions by asserting that if online gaming is permitted from the country of origin (i.e., from the point of supply where they hold a relevant license) then, in order to render the activity illegal or entitle the country of receipt to assert jurisdiction, either the laws in the country of receipt would have to specifically outlaw the activity of the customer (remotely accessing online gambling services), or the authorities in the country of receipt would have to have the authority to implement laws that extend outside of the jurisdiction in question. iGaming operators have sought to reduce any associated risks of the authorities in such jurisdictions enforcing a contrary view by limiting or avoiding physical presence in jurisdictions where any online gaming activities are not clearly legal.
 
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Despite our monitoring of legal and regulatory developments and the precautions we take as to the location of personnel and assets, there remains a prospect that, in the event of legislation being interpreted in an unfavorable or unanticipated way, criminal and/or civil actions could be brought against us and/or any of our directors, any of which could have an adverse effect on our business, financial condition and results of operations.
Moreover, there is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities, incumbent monopoly providers or private individuals could be initiated against our customers and/or indeed us, as a provider of services to customers servicing such markets. Such potential proceedings could assert that online gaming services have not been lawfully supplied into the domestic market and could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed on us or our customers. Were we to become subject to any such investigations, proceedings and/or penalties, this may lead to investigations, proceedings and/or penalties arising in other jurisdictions in which we operate and/or hold licenses. Such investigations, proceedings, and/or penalties could impact our reputation and have a material adverse effect on our business, financial condition and results of operations.
There can be no assurance that law enforcement or gaming regulatory authorities in the jurisdictions from where our customers derive revenue will not seek to restrict their business in such jurisdictions or to initiate investigations which may result in sanctions or enforcement proceedings affecting them and us. In addition, there can be no assurance that any such restrictions or investigations, to the extent they result in sanctions or enforcement proceedings, will not have a material adverse impact on such customers or our ability to retain and renew existing licenses or to obtain new licenses in such or other jurisdictions, or that they will not otherwise materially and adversely affect our business, results of operations and financial condition. Future legislative and regulatory action, and court decisions or other governmental action, may have a material impact on our customers’ operations and on our financial results. Governmental authorities could view such customer and us as having violated applicable laws or regulations, despite our efforts to obtain and maintain all applicable licenses or approvals and despite, based upon advice of local counsel, our belief that our customer and we are acting lawfully. There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities or incumbent providers, or private individuals, could be initiated against our customers, us, internet service providers, advertisers and others involved in online gaming industries. Such potential proceedings could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon our customers, us or our business partners, while diverting the attention of key executives. Such proceedings could have an adverse effect on our business, financial condition, results of operations and prospects, as well as impact our reputation.
Legislation or regulation may develop in a way that requires us or our customers to obtain a variety of local licenses or impose other regulatory burdens, which could be detrimental to our long-term commercial interests.
Laws and regulations relating to online gambling are in a constant state of change. Various jurisdictions, particularly those in Europe, have in recent years implemented (or are in the process of implementing) changes to their markets by introducing competitive licensing and regulatory frameworks. While these developments may provide growth opportunities for us and our customers, such new licensing regimes may evolve in such a way as to prove commercially disadvantageous.
Laws or regulations may be passed or otherwise interpreted to prohibit, legislate or regulate various aspects of the online gaming industry and/or the marketing thereof. Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations. For example, newly required local licenses or approvals may be costly or difficult for us to obtain and/or such licenses or approvals may contain other commercially undesirable conditions, including conditions that limit or even prohibit our marketing strategy. Further, the costs of compliance may become sufficiently high that may determine that we can no longer operate in a particular jurisdiction.
Even where enabling legislation is passed, there can be no assurance that such legislation and accompanying regulations and interpretation thereof will be positive for our business, either at the outset or upon subsequent revision. In the past, there have been instances where business-friendly legislation and/or
 
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regulations have been enacted only for subsequent revisions or interpretations to follow with the effect of severely restricting our ability to do business profitably.
The effect on our customer’s businesses may be exacerbated by regulations that restrict customers’ ability to offer certain of our key products or may limit customers’ scope to market such products in the way they would wish to do so, all of which may deter them from committing to an emerging local licensing regime. Further, customers may face a potential loss of competitiveness to the extent that restrictions are imposed on customer choice (e.g., deposit caps, stake limits, pay-out limits).
Moreover, jurisdictions may effectively limit access to their markets by establishing licensing regimes that only offer a finite number of B2C licenses and/or restrict online activity to those operators who already hold land-based licenses (as is the case in certain U.S. states). The clear consequence of this could be to preclude us from participating in such a market if our customers were unable to either obtain one of the finite number of licenses or limit our participation to those customers who were able to obtain licenses.
In addition, local license application procedures can be onerous. A degree of business disruption would likely to be caused by the requirement on customers to obtain any number of licenses. Customers’ revenue could also be impacted by the imposition of license fees (together with taxes) and, depending upon how our revenue sharing arrangements with individual customers is calculated, such costs could impact our revenue. Regulations can also be ill-considered, exposing customers to double taxation for the same transaction (in some jurisdictions the requirement to pay tax is determined where the customer is based and in others where critical equipment and functions are carried out). In addition, in some jurisdictions there is a requirement to register to pay taxes and/or duties with retrospective effect before an entity can qualify to apply for a license.
In addition, the ongoing compliance costs associated with any licensing requirements may be significant. Sums may be required by way of bonds (which under the Spanish licensing regime, for example, runs to €1 million, depending upon which products are required to be licensed).
Certain of our customers accept (or have in the past accepted) gambling business from players located in jurisdictions in which they do not hold a relevant license or from jurisdictions where a license is unavailable. There is a risk that such legacy activities could, in the future, harm the ability of those customers and, due to the provision of products and services by us to such customers, us to obtain licenses in such jurisdictions to the extent they ever become available. Such jurisdictions could consider such historical activities to be illegal or, at best, of uncertain legality, and as a consequence, were the customers or we to seek to obtain a license or authorization from the relevant jurisdiction in the future, issues regarding suitability could be raised and “bad-actor” provisions in the relevant legislation and regulations could result in an application being refused. The inability of customers or us to obtain licenses in any jurisdiction where there is a commercially viable opportunity due to our customers’ or our past activities could have a material adverse effect on our business, financial condition and results of operations.
In short, even in cases in which a jurisdiction purports to license and regulate online gaming, the licensing and regulatory regimes can vary considerably in terms of their commercial attractiveness and at times may be intended to provide incumbent operators with advantages over new licensees. Therefore, the evolution of local licensing regimes, in any number of territories, may prove to be detrimental to the financial performance of customers and may have a material adverse effect on our business, financial condition and results of operations.
The Parliament of Canada passed legislation in 2021 allowing provinces to regulate single event wagering within their jurisdictions, although at this point it is unclear as to the approach which each province will take in such regard. However, as a consequence of the legislative change, crown corporations and many of our private operator competitors, as well as new market entrants (some of which are well-funded and involve major business interests) have announced their intentions to begin or expand online betting operations in Canada.
Independently, several Canadian provinces have been considering altering their approach to regulated online gaming, to permit private operators like us to enter the provincially regulated system. In particular, the Province of Ontario moved ahead with its plans to permit provincially regulated online gaming by private operators under a new regulatory framework in December 2020. Other Canadian provinces are expected
 
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to follow suit eventually. In the past, when other countries have introduced regulatory frameworks, our financial results have been impacted by, among other things, increased taxation and compliance costs, offset by improvements in other costs of doing business such as payment processing and product costs. In some cases, the introduction of a restrictive regulatory regime has resulted in a decrease in the size of the market, whereas in other cases, a liberal regulatory regime has led to an increase in the size of the market. Although it is possible that all of the above will expand the size of the total addressable market in Canada and/or improve the profitability of the Canadian market for us, at this point this cannot be said for certain, and it is possible that parties like us that have pre-existing Ontario or Canadian operations may be at a disadvantage under these new frameworks unless we are prepared to agree to certain conditions. While we actively seek out regulated jurisdictions for the expansion of our business and therefore welcome the recently passed legislation, we cannot be certain about the future impacts of these changing circumstances on our business, operations or financial prospects. To the extent that competition in these key markets is increased and we are unable to maintain our related business, it may have a material adverse on our business, financial condition, results of operations, and prospects.
The outcome of the review of the Gambling Act 2005 may impact the British gambling industry in a way that is detrimental to us.
In December 2020, the United Kingdom’s Department for Digital, Culture, Media and Sport announced a review of the Gambling Act 2005 (“Gambling Act”). The objectives of the review are to examine whether it is necessary to amend gambling legislation and/or regulation in Great Britain to reflect the changes to the gambling landscape since 2005 (with particular regard to technological advances), ensure there is an appropriate balance between consumer freedoms and choice on the one hand and the prevention of harm to vulnerable groups on the other, and to ensure that consumers are suitably protected whenever they gamble.
The U.K. government’s review of the Gambling Act was extensive in scope. Key areas under review were:

the effectiveness of the existing online protections in preventing gambling harm and an evidence-based consideration of, by way of example, imposing greater control on online product design such as stake, speed and prize limits and the introduction of deposit, loss and spend limits or affordability tests;

the benefits or harms caused by allowing licensed gambling operators to advertise and make promotional offers and the positive or negative impact of gambling sponsorship arrangements across sports, esports and other areas;

the effectiveness of the regulatory system currently in place, including consideration of whether the British Gambling Commission has sufficient investigative, enforcement and sanctioning powers to both regulate the licensed market and address the unlicensed market;

the availability and suitability of redress arrangements in place for an individual consumer who believes that they may have been treated unfairly by a gambling operator, including consideration of the introduction of other routes for consumer redress, such as a gambling ombudsman; and

the effectiveness of current measures to prevent illegal underage gambling and consideration of what extra protections may be needed for young adults in the 18-25 age bracket.
The U.K. government launched a 16-week call for evidence alongside the commencement of its review into the Gambling Act, which closed in March 2021. The U.K. government’s conclusions and proposals were published in a white paper (the “White Paper”) entitled “High stakes: gambling reform for the digital age” in April 2023. As of the date of this prospectus, the implications for the industry as a whole and us, in particular, remain uncertain. The updates to the law and regulation required to implement the recommendations of the white paper will the subject of a protracted (and as yet ongoing) series of public consultations.
There is a risk that the introduction of more stringent responsible gaming and/or anti-money laundering regulatory measures in the British market may prove operationally onerous for our customers and will have a direct impact on the way end users consume our gaming products. Moreover, the potential for the introduction of stake, speed and prize limits and the introduction of deposit, loss and spend limits may
 
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operate to impact the financial performance of our customers and reduce the long-term growth opportunities for them in the British market. For example, the British Government’s Consultation on Proposals for a Maximum Stake Limit on Online Slot Games (which was conducted in fall 2023) resulted in the announcement in February 2024 that the maximum stake for online slots would be £5 per spin for adults aged 25 and above and £2 per spin for young adults aged 18 to 24, with effect from September 2024. The related impact assessment estimates a reduction of 2.6% of GGR across the British remote gaming market.
Within the White Paper, the British Government gives its “initial headline impact estimate” for the proposals which result in a “potential drop of between 3% and 8% in commercial Gross Gambling Yield (“GGY”) (with a drop in online GGY of 8% to 14% partially offset by a land-based increase of 2% to 5%).” These estimates are also subject to changes following development of policy details through forthcoming consultations. The review, therefore, is likely to result in end user gaming activity being limited or restricted and consumer spend being reduced accordingly, with a detrimental impact on the financial performance of our customers. Any such negative impact on the financial performance of certain of our customers, in turn, would negatively impact our financial performance.
We rely on regulatory licenses to conduct our operations, and the failure to renew or replace these licenses on reasonable terms could have a material adverse effect on our business.
We are required to obtain, renew and maintain regulatory licenses in order to conduct our operations in the jurisdictions in which we operate. In addition, certain jurisdictions in which we operate, including Spain, require game-category licenses in addition to a general license. Our failure to obtain and maintain licenses or related approvals in any jurisdiction may prevent us from distributing our games, increasing our customer base and/or generating revenue in such jurisdictions.
We may also have difficulty or face uncertainty in renewing our existing licenses or obtaining new ones, especially if the relevant regulations are unclear or change, or if new regulations are enacted. While we have processes in place to renew our existing licenses, where relevant, we cannot assure you that our licenses will be renewed or that they will be renewed on satisfactory terms or on a timely basis. Renewals of our licenses, if approved, may be subject to certain delays, upfront renewal fees, canon tax surcharges or changes to national and regional regulations of the online gaming industry. Additional changes may occur in the future that may have an impact on our ability to renew our licenses, such as changes in the license granting process (such as an open bidding process). Changes in national and regional authorities may also impact our license renewal processes, which may be subject to change from time to time. Regulation of online gaming in the United States is rapidly evolving and we do not yet know what new licensing requirements may be imposed, or how these may differ between state jurisdictions. Consequently, there can be no assurance that we will be successful in renewing our operating licenses, or that new potential economic terms of renewals will be reasonable or attractive to us, which could have a material adverse effect on our business, financial condition and results of operations.
Further, gaming authorities may deny, revoke, suspend or refuse to renew any of our licenses and impose fines or seize assets if we or our partners, licensees or customers are found to be in violation of any relevant regulations. Furthermore, the licenses under which we operate may be revoked by regulatory authorities even if we are in compliance with all relevant obligations. Consequently, we cannot provide any assurance as to whether the licenses under which we operate will be or renewed at the end of its corresponding term. Any revocation, suspension or refusal to renew any of our licenses by gaming authorities could have a material adverse effect on our business, financial condition and results of operations.
The legal and technological solutions that our customers and we have in place to block provision of our content to players in certain jurisdictions may prove inadequate or fail.
Historically, the gaming industry has been regulated at a national level, and currently there is no international gaming regulatory regime. Although the regulatory regime for traditional land-based casinos is well established in many countries, the laws in such countries may not take account of the internet or the availability of online gaming solutions. As a result, there is uncertainty as to the legality of online gaming in a number of countries. Some jurisdictions have laws that expressly criminalize the provision of, and in some instances, participation in, gambling services, irrespective of where the gambling operator is located and licensed. We take precautionary measures by contractually requiring our customers to comply with the laws
 
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and regulations that apply to their gambling services, including through screening and restricting access to the relevant customer’s online platform by players in jurisdictions in which the customer cannot demonstrate compliance with applicable local laws and regulations. While we and our key suppliers, including Apricot, have implemented legal and technological solutions to restrict access to our content as required, such solutions may prove ineffective, players from restricted jurisdictions may successfully circumvent these solutions or services may otherwise be supplied by our customers to players in contravention of applicable laws, any of which could have a material adverse effect on our reputation, business, financial condition and results of operations.
The introduction of legislation or regulations restricting access by players from certain jurisdictions may require our customer and/or us to adopt additional legal or technological solutions and restrict the ability of certain players to access our games and services and those of our customers. While our current customer agreements require that our customers vet and screen players in compliance with applicable laws and regulations, changes in local laws and regulations may render previous screens and inspections of players inadequate or require additional information from existing and verified players. To the extent that a customer is unable to adopt and implement solutions regarding any such changes or developments, certain restricted or unpermitted players may access our games and services via the relevant customer’s online gambling platform. In addition, a court or other governmental authority in any jurisdiction could take the position that our systems are inadequate, or that our current or past business practices in relation to such jurisdiction violated applicable law. If any such actions were brought against us, whether successful or not, we could incur considerable legal and other costs and management’s time and resources may be diverted. If the technical blocking systems were to fail or be circumvented, or if the list of jurisdictions from which we must block access is extended, it could have a material adverse effect on our business, financial condition and results of operations.
Companies and governmental agencies may restrict access to our website or the internet generally, which could lead to the loss or slower growth of our customers’ players and negatively impact our business, financial condition and results of operations.
Governmental agencies in any of the jurisdictions in which we, our customers or players are located could block access to or require a license for our games, our website, operating system platforms or the internet generally for a number of reasons, including security, confidentiality or regulatory concerns. Players generally need to access the internet, including in geographically diverse areas, to play games we create or operate. In addition, companies may adopt policies that prohibit employees from accessing our programs or the platforms that players need in order to play our games. If companies or governmental entities block, limit or otherwise restrict customers from accessing our programs, or players from playing games developed or operated by us, our business could be negatively impacted, our customers’ players could decline or grow more slowly, and our results of operations could be adversely affected.
We are subject to rapidly changing and increasingly stringent laws, contractual obligations and industry standards relating to privacy and data security. The restrictions and costs imposed by these requirements, or an actual or perceived failure to comply with them, could have an adverse impact on our business, financial condition and results of operations.
Certain aspects of our business rely upon on our ability to collect, process, use and share information of customers, players and others. These activities are regulated by a variety of federal, state, local and international privacy, data protection and data security laws and regulations, which have become increasingly stringent in recent years. Most jurisdictions in which we or our customers operate have adopted, or are in the process of adopting, privacy, data protection and data security laws. For example, the General Data Protection Regulation 2016/679 (“E.U. GDPR”), national implementing legislation in the EEA member states, and the United Kingdom General Data Protection Regulation and Data Protection Act 2018 (collectively, the “U.K. GDPR”) (the E.U. GDPR and U.K. GDPR together referred to as the “GDPR”) regulate the collection, control, processing, sharing, disclosure and other use of personal information relating to individual natural persons. The Isle of Man data protection regime is independent from but aligned to the GDPR. The Isle of Man Data Protection Act 2018 provided that the Council of Ministers may by order apply the GDPR to the Isle of Man as part of the law of the Isle of Man. The GDPR (subject to specified exceptions, adaptations and modifications) was applied to the Isle of Man by the Data Protection
 
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(Application of GDPR) Order 2018 and associated orders. References herein to “E.U. GDPR” should also be read as including such Isle of Man legislation unless the context otherwise requires. The GDPR imposes a comprehensive data privacy compliance regime including: maintaining a record of data processing; providing detailed disclosures about how personal information is collected and processed (in a concise, intelligible and easily accessible form); demonstrating that appropriate legal bases are in place to justify data processing activities; complying with rights for data subjects in regard to their personal information (including data access, erasure (the right to be “forgotten”) and portability); ensuring appropriate safeguards are in place when personal information is transferred outside the EEA and the U.K. and complying with the principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit. The applicability of the specific requirements depends on whether an organization acts as controller or processor.
We are subject to the supervision of local data protection authorities in the EEA and the U.K., hence we may be fined under both the E.U. GDPR, Isle of Man legislation and U.K. GDPR for the same breach. Penalties for certain breaches of the E.U. GDPR and U.K. GDPR are up to the greater of €20 million (£17.5 million) or 4% of global annual turnover, or up to a maximum of £1 million under Isle of Man legislation. In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease or change our data processing activities, enforcement notices or assessment notices for a compulsory audit. We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.
We depend on a number of third parties in relation to the operation of our business, a number of which process personal information on our behalf. There can be no assurances that the privacy and security-related measures and safeguards we have put in place in relation to these third parties will be effective to protect us and/ or the relevant personal information from the risks associated with the third-party processing, storage and transmission of such data. Any violation of data or security laws, or of our relevant measures and safeguards, by our third-party processors could have a material adverse effect on our business, result in applicable fines and penalties, damage our reputation, and/ or result in civil claims.
We are also subject to evolving European Union and United Kingdom privacy laws on cookies, tracking technologies and e-marketing. Recent European court and regulator decisions are driving increased attention to cookies and tracking technologies. As we do not have direct relationships with players, we rely on our customers to obtain the consent of the player on our behalf, to process players’ data, and to implement any notice or choice mechanisms required under applicable laws, but if our customers do not follow this process (and in any event, as the legal requirements in this area continue to evolve and develop), we could be subject to fines and liability. European regulators have issued significant fines in certain circumstances where the regulators alleged that appropriate consent was not obtained in connection with targeted advertising activities. If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions continues, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our tracking activities, divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities. In light of the complex and evolving nature of EEA, EEA Member State and United Kingdom privacy laws on cookies and tracking technologies, there can be no assurances that we will be successful in our efforts to comply with such laws; violations of such laws could result in regulatory investigations, fines, orders to cease or change our use of such technologies, as well as civil claims including class actions, and reputational damage. We may not have adequate insurance or contractual indemnity arrangements to protect us against any such claims and losses.
It is anticipated that the ePrivacy Regulation and national implementing laws will replace the current national laws implementing the ePrivacy Directive, which may require us to make significant operational changes. We may not have adequate insurance or contractual indemnity arrangements to protect us against any such claims and losses. In the United States, there are numerous federal and state privacy and data security laws and regulations governing the collection, use, disclosure, and protection of personal information, including state information privacy protection laws, federal and state security breach notification laws, and federal and state consumer protection laws. While many of these laws and regulations do not apply to us
 
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today, we expect that to change as we grow and expand our business in the United States. This will increase our compliance risk as well as the costs to us of getting into and maintaining compliance. These laws include Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive commercial practices and new rules promulgated by the SEC that require public companies to disclose material cybersecurity incidents and material information regarding their cybersecurity risk management, strategy, and governance. In addition, many states have enacted laws regulating the online collection, use and disclosure of personal information and requiring companies implement reasonable data security measures. Laws in all states and U.S. territories also require businesses to notify affected individuals, governmental entities and/or credit reporting agencies of the occurrence of certain security breaches affecting personal information. These laws are not consistent, and compliance with them in the event of a widespread data breach is complex and costly.
States have also begun to introduce more comprehensive privacy legislation. For example, California, where one of our studios is located, enacted the CCPA, which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal information of consumers or households. The CCPA gives California residents expanded rights to access, correct and delete their personal information, opt out of the sale of their personal information, or the disclosure of their personal information for cross-contextual behavior advertising and receive detailed information about how their personal information is used. The CCPA also imposes specific restrictions on the sale of personal information, the disclosure of personal information for cross-contextual behavior advertising, and the use of sensitive personal information. The CCPA provides for civil penalties for violations, which will be enforced by a new state agency as well as a privacy action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with data breach litigation.
The enactment of the CCPA is prompting a wave of similar legislative developments in other states in the United States, which creates the potential for a patchwork of overlapping but different state laws. Certain other state laws impose similar privacy obligations and we expect that more states may enact legislation similar to the CCPA, which provides consumers with privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers. The CCPA has prompted a number of proposals for a new federal and state-level privacy legislation. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
In the ordinary course of business, we may transfer personal information from Europe and other jurisdictions to the United States or other countries. Certain jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal information to other countries. In particular, the E.U. GDPR and U.K. GDPR regulates cross-border transfers of personal information outside of the EEA and the United Kingdom. Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses — a standard form of contract approved by the European Commission as an adequate personal information transfer mechanism — alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis. On July 10, 2023, the European Commission adopted an Adequacy Decision in relation to the E.U.-U.S. Data Privacy Framework (“DPF”), rendering the DPF effective as an E.U. GDPR transfer mechanism to U.S. entities self-certified under the DPF. On October 12, 2023, the U.K. Extension to the DPF came into effect (as approved by the United Kingdom Government), as a U.K. GDPR data transfer mechanism to U.S. entities self-certified under the U.K. Extension to the DPF. We currently rely on the European Union standard contractual clauses to transfer personal information outside the EEA with respect to both intragroup and third-party transfers. We currently rely on the older version of the European Union standard contractual clauses to transfer personal information outside the United Kingdom with respect to both intragroup and third-party transfers and will have to update this transfer mechanism by March 2024 to ensure compliance with the U.K. GDPR. We expect the existing legal complexity and uncertainty regarding international personal information transfers to continue. In particular, we expect the DPF Adequacy Decision to be challenged and international transfers to the United States and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators. As the regulatory guidance and enforcement landscape in relation
 
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to data transfers continue to develop, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal information necessary to operate our business. Additionally, companies that transfer personal information out of the EEA and United Kingdom to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.
Additionally, other countries outside of the European Union and the United Kingdom have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our games and operating our business.
Apart from the requirements of privacy, data protection and data security laws, we have obligations relating to privacy, data protection and data security under our policies and documentation, contracts and applicable industry standards. Although we endeavor to comply with these obligations, we may have failed to do so in the past and may be subject to allegations that we have failed to do so or have otherwise processed data improperly. We could be subject to enforcement action or litigation alleging that our methods of data collection or our other data processing practices violate our published policies, federal or state laws prohibiting unfair or deceptive business practices or other privacy laws.
In response to the increasing restrictions of global privacy and data security laws, our customers have sought and may continue to seek increasingly stringent contractual assurances regarding our handling of personal information and may adopt internal policies that limit their use of our games. In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards upon which we may be legally or contractually bound. If we fail to comply with these contractual obligations or standards, we may face substantial contractual liability or fines.
Various jurisdictions around the world continue to propose new laws that regulate the privacy and/or security of certain types of personal information. Complying with these laws, if enacted, would require significant resources and leave us vulnerable to possible fines and penalties if we are unable to comply. Our obligations under privacy and data security laws, our contracts and applicable industry standards (including requirements by operating system platforms or app stores) are increasing, becoming more complex and changing rapidly, which has increased and may continue to increase the cost and effort required to comply with them. The privacy and data security compliance challenges we and our customers face in the Isle of Man, the EEA, the United Kingdom, the United States and other jurisdictions may also limit our ability to operate, or offer certain product features, in those jurisdictions, which could reduce demand for our games from customers subject to their laws. We may also be required to adapt our games in order to comply with changing regulations. Despite our efforts, we may not be successful in achieving compliance with these rapidly evolving requirements. We could be perceived to be in non-compliance with applicable privacy laws, especially when acquiring new companies and before we have completed our gap analysis and remediation. Any actual or perceived non-compliance could result in litigation and proceedings against us by governmental entities, customers, individuals or others; fines and civil, criminal or administrative penalties for us or company officials; obligations to cease offering or to substantially modify our games in ways that make them less effective in certain jurisdictions; negative publicity; harm to our brand and reputation and reduced overall demand for our games or reduced revenue. Such occurrences could materially and adversely affect our business, financial condition and results of operations.
We are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws, and non-compliance with such laws could subject us to criminal or civil liability and harm its business, financial condition and results of operations.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the United Kingdom Bribery Act 2010, the Isle of Man Bribery Act 2013 and other anti-bribery laws in countries in which we conduct our activities. These laws generally prohibit companies, their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. In addition, the FCPA’s accounting provisions require us to maintain accurate books and records and a
 
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system of internal accounting controls. We have policies, procedures, systems, and controls designed to promote compliance with applicable anti-corruption laws.
As we increase our global sales and business, we may engage with business partners and third-party providers to market our games and obtain necessary permits, licenses and other regulatory approvals. In addition, we or our third-party providers may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party providers, our employees, representatives, contractors, partners and agents, even if we do not authorize such activities.
Despite our compliance efforts and activities, there can be no assurance that our employees or representatives will comply with the relevant laws, and we may be held responsible. Non-compliance with anti-corruption, anti-money laundering or other trade laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas or investigations are initiated, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition and results of operations could be materially harmed. Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense and compliance costs and other professional fees. In addition, regulatory authorities may seek to hold us liable for successor liability for violations committed by companies in which we invest or that we acquire. As a general matter, enforcement actions and sanctions could harm our business, financial condition and results of operations.
We are subject to governmental export and import controls and sanctions laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in compliance with applicable laws. Changes to such laws and regulations, as well as changes to trade policy, import laws, and tariffs, may also have a material adverse effect on our business, financial condition and results of operations.
We conduct business throughout the world, and our business activities and services are subject to various applicable import and export control and trade and economic sanctions laws and regulations, including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). These laws and regulations may restrict or prohibit altogether the sale or supply of our products and services to certain governments, persons, entities, countries, and territories, including those that are the target of comprehensive sanctions, unless there are license exceptions that apply or specific licenses are obtained. For example, in response to the Russia-Ukraine conflict, the United States and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain parts of the Ukrainian regions of Donetsk and Luhansk, as well as on certain persons, entities from and industries within those regions, and the exclusion of certain Russian financial institutions from the SWIFT system. The United States and other countries could impose further sanctions, trade restrictions and other retaliatory actions should the conflict continue or worsen.
Although we take precautions to comply with all such laws and regulations, it is possible that we could invest both time and capital into a project involving a country or counterparty that may become subject to sanctions. Moreover, our customers may have users in countries that are subject to sanctions laws of the governments of the Isle of Man, the United Kingdom, the United States the European Union and other applicable jurisdictions, which may prohibit the sale of products or provision of services to embargoed jurisdictions (“Sanctioned Countries”) or sanctioned parties. We have taken steps to avoid having customers in Sanctioned Countries and have implemented various control mechanisms designed to prevent unauthorized dealings with Sanctioned Countries or sanctioned parties going forward. Although we have taken precautions to prevent our games from being provided, deployed or used in violation of sanctions laws, due to the remote nature of our games and the potential for manipulation using virtual private networks, we cannot assure you that our policies and procedures relating to sanctions compliance will prevent any violations in the future. Any violations of governmental export control and economic sanctions laws and regulations could result in negative consequences to us, including government investigations, sanctions,
 
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criminal or civil fines or penalties, more onerous compliance requirements, loss of authorizations needed to conduct aspects of our international business, reputational harm and other adverse consequences.
In some jurisdictions our key executives, certain employees or other individuals related to the business, including significant shareholders, will be subject to licensing or compliance requirements. Failure by such individuals to obtain the necessary licenses or comply with individual regulatory obligations, could cause the business to be non-compliant with its obligations, or imperil its ability to obtain or maintain licenses necessary for the conduct of the business.
As part of obtaining our gaming licenses, the responsible gaming authority will generally determine suitability of certain directors, officers and employees and, in some instances, significant shareholders. The criteria used by gaming authorities to make determinations as to who requires a finding of suitability or the suitability of an applicant to conduct gaming operations varies among jurisdictions, but generally requires extensive and detailed application disclosures followed by a thorough investigation. Gaming authorities typically have broad discretion in determining whether an applicant should be found suitable to conduct operations within a given jurisdiction. If any gaming authority with jurisdictions over our business were to find an applicable officer, director, employee or significant shareholder of ours unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required to sever our relationship with that person. Furthermore, such gaming authorities may require us to terminate the employment of any person who refuses to file required applications. Either result could have a material adverse effect on our business, operations and prospects. Additionally, a gaming regulatory body may refuse to issue or renew a gaming license or restrict or condition the same, based on our past or present activities, or our current or former directors, officers, employees, shareholders or third parties with whom we have relationships, which could adversely affect our operations or financial condition. As such, we can give no assurance that any licenses, permits and approvals that may be required by our directors, officers, key employees or significant shareholder will be granted, that existing ones will be renewed or will not be revoked or that any pending license applications will be granted. In the case of renewals, these are subject to, among other things, continued satisfaction of suitability requirements of our directors, officers, key employees and shareholders. Any failure of an applicable officer, director, employee or significant shareholder to renew or maintain licenses required for us to operate or to receive new licenses when necessary could harm our business, financial condition and results of operations.
There is an increasing trend of claims against online gaming operators.
As the gambling industry becomes subject to increasing levels of regulatory intervention, and this regulatory intervention is broadly discussed in the media, there is an increasing risk that players may seek redress from online gaming operators in relation to their own interactions with them, particularly to the extent that an entity has been publicly admonished by a regulator for compliance failings or courts of a certain jurisdiction find the provision of facilities for online gaming without a license held in such jurisdiction to be illegal and, as a result, online gaming contracts are deemed either null and void or unenforceable. Any such customer claims, if successful, could negatively impact on the financial performance of certain of our customers which, in turn, would negatively impact on our business, financial condition and results of operations.
There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities, incumbent monopoly providers or private individuals could be initiated against our customer and/or us as a provider of services to them. Such potential proceedings could assert that online gambling services have not been lawfully supplied into the domestic market and could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed on our customers or us. If our customers and/or we become subject to any such investigations, proceedings and/or penalties in one jurisdiction, this may lead to investigations, proceedings and/or penalties arising in other jurisdictions in which they and/or we operate and/or hold licenses. Such investigations, proceedings, and/or penalties could negatively impact on the financial performance of certain of our customers which, in turn, would negatively impact on our business, financial condition and results of operations.
Any legal proceedings or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome.
We may in the future become subject to legal proceedings, investigations and claims, including claims that arise in the ordinary course of business, such as claims brought by our customers or partners in
 
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connection with commercial disputes, claims by users, claims or investigations brought by regulators or employment claims made by our current or former employees.
We are not currently a party to any pending or, to our knowledge, threatened litigation that will have a significant effect on our financial position or profitability. Any litigation, investigation or claim, whether meritorious or not, could harm our reputation, will increase our costs and may divert management’s attention, time and resources, which may in turn harm our business, financial condition and results of operations. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us. A claim brought against us that is uninsured or underinsured could result in unanticipated costs, potentially harming our business, financial position and results of operations.
Risks Related to Our Intellectual Property
Any failure to obtain, maintain, protect or enforce our intellectual property and proprietary rights could impair our ability to protect our proprietary technology and brand, which could have a material adverse effect on our business, financial condition and results of operations.
Our success depends to a significant degree on our ability to obtain, maintain, protect and enforce our intellectual property rights, including our proprietary technology, know-how and brand. We rely on a combination of trademarks, trade secret laws, patents, design rights, copyrights, service marks, contractual restrictions and other intellectual property laws and confidentiality procedures to establish and protect our proprietary rights. However, the steps we take to obtain, register, maintain, protect and enforce our intellectual property rights may be inadequate. We will not be able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property rights. If we fail to protect our intellectual property rights adequately, or fail to continuously innovate and advance our technology, our competitors could misappropriate our proprietary technology and develop and commercialize substantially identical games, services or technologies. In addition, defending our intellectual property rights might entail significant expense. Any patents, trademarks, designs or other intellectual property rights that we have or may obtain may be challenged or circumvented by others or invalidated or held unenforceable through administrative processes, including re-examination, inter partes review, interference and derivation proceedings and equivalent proceedings in foreign jurisdictions, such as opposition or cancellation proceedings, or litigation. In addition, despite our pending patent applications, we cannot assure you that our patent applications will result in issued patents. Even if we continue to seek patent protection in the future, we may be unable to obtain or maintain patent protection for our technology. In addition, any patents issued from pending or future patent applications or licensed to us in the future may not provide us with competitive advantages or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are not uniform across all the jurisdictions in which we operate and can be subject to varying court interpretations. Despite our precautions, it may be possible for third parties to copy our products and use information that we regard as proprietary to create games that compete with ours. Patent, trademark, design, copyright and trade secret protection may not be available to us in every country in which our games are available. The value of our intellectual property could diminish if others assert rights in or ownership of our trademarks and other intellectual property rights, or if others use trademarks that are similar to our trademarks. We may be unable to successfully resolve these types of conflicts to our satisfaction. In some cases, litigation or other actions may be necessary to protect or enforce our trademarks and other intellectual property rights.
In addition, the laws of some foreign countries may not be sufficiently protective of intellectual property rights, and mechanisms for enforcement of intellectual property rights may be inadequate. As we expand our global activities, our exposure to unauthorized copying and use of our games, intellectual property and proprietary information will likely increase. Moreover, policing unauthorized use of our technologies, trade secrets, copyrights, and other intellectual property may be difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights and where mechanisms for enforcement of intellectual property rights may be weak. Additionally, failure to comply with applicable procedural, documentary, fee payment, foreign filing license and other similar requirements with the United States Patent and Trademark Office and various similar foreign governmental
 
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agencies could result in abandonment or lapse of the affected patent, trademark or application. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights.
We enter into agreements with our employees, consultants and other third parties, including suppliers and other partners, to protect our intellectual property and proprietary information, and to assign to us any intellectual property developed by them in connection with their engagement with us. However, we cannot guarantee that we have entered into such agreements with each party that has or may have had access to our proprietary information, know-how and trade secrets or that has or may have developed intellectual property in connection with their engagement with us. Moreover, we cannot assure you that these agreements will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering or disclosure of our proprietary information, know-how and trade secrets or assigning to us any intellectual property developed in connection with their engagement with us. Further, these agreements may not prevent our competitors from independently developing games or technologies that are substantially equivalent or superior to ours. These agreements may be breached, and we may not have adequate remedies for any such breach. See also: “We may be subject to claims that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.”
Moreover, a portion of our intellectual property has been acquired from one or more third parties. While we have conducted diligence with respect to such acquisitions, because we did not participate in the development or prosecution of much of the acquired intellectual property, we cannot guarantee that our diligence efforts identified and/or remedied all issues related to such intellectual property, including potential ownership errors, potential errors during prosecution of such intellectual property, and potential encumbrances that could limit our ability to enforce such intellectual property rights.
In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect our intellectual property rights. Litigation may be necessary in the future to enforce our intellectual property rights, such as rights under our software licenses, and to protect our trade secrets. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management, and could result in the impairment or loss of portions of our intellectual property. Further, we are also subject to the risk of challenges to our intellectual property rights by third parties who may assert intellectual property claims against us, and our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. If such standalone claims, or defenses, counterclaims or countersuits to our claims are successful, we could lose valuable intellectual property rights. See also: “We are and may in the future become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.” Our inability to enforce our unique licensing structure, including financial eligibility tiers, and our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products, impair the functionality of our products, delay introductions of new games, result in our substituting inferior or more costly technologies into our products, or injure our reputation. In addition, we may be required to license additional technology from third parties to develop and market new platform features, which may not be on commercially reasonable terms, or at all, and would adversely affect our ability to compete. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations.
Our ability to acquire and maintain licenses to intellectual property may affect our revenue and profitability. These licenses may become more expensive and increase our costs.
While most of the intellectual property we use is created by us, we have also acquired rights to proprietary intellectual property that provide key features and functionality in our games. We have also obtained rights to use intellectual property through licenses and service agreements with various third parties.
Proprietary licenses typically limit our use of intellectual property to specific uses and for specific time periods. If we are unable to maintain these licenses or obtain additional licenses on reasonable economic
 
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terms or with significant commercial value, our revenue and profitability may be adversely impacted. These licenses may become more expensive and increase the advances, guarantees and royalties that we may pay to the licensor, which could significantly increase our costs and adversely affect our profitability.
We are and may in the future become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.
There is considerable intellectual property development and enforcement activity in our industry. We expect that game developers in our industry will increasingly be subject to infringement claims as the number of competitors grows and the functionality of platforms, products and services in different industries overlap and new technologies, such as artificial intelligence, are used in the development process. Our future success depends in part on not infringing upon or misappropriating the intellectual property rights of others. There is a risk that our operations, software or games, whether created in-house or purchased from time to time through mergers or acquisitions, may infringe or otherwise violate, or be alleged to infringe or otherwise violate, the intellectual property rights of third parties. However, we may not be aware if our operations, software or games are infringing, misappropriating, or otherwise violating third-party intellectual property rights, and such third parties may bring claims alleging such infringement, misappropriation, or violation. Because patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover one or more of our operations, software or games and there is also a risk that we could adopt a technology without knowledge of a pending patent application, which technology would infringe a third-party patent once that patent is issued. Moreover, the law continues to evolve and be applied and interpreted by courts in novel ways that we may not be able to adequately anticipate, and such changes may subject us to additional claims and liabilities. In addition, certain companies and rights holders seek to enforce and monetize patents or other intellectual property rights they own, have purchased, or otherwise obtained. Many potential litigants have the ability to dedicate substantial resources to assert their intellectual property rights and to defend claims that may be brought against them. Any litigation may also involve non-practicing entities or other adverse patent owners that have no relevant solution revenue, and therefore, our patent portfolio may provide little or no deterrence as we would not be able to assert our patents against such entities or individuals. In a patent infringement claim against us, we may assert, as a defense, that we do not infringe the relevant patent claims, that the patent is invalid or both. The strength of our defenses will depend on the patents asserted, the interpretation of these patents and our ability to invalidate the asserted patents. However, we could be unsuccessful in advancing non-infringement or invalidity arguments in our defense. In the United States, issued patents enjoy a presumption of validity, and the party challenging the validity of a patent claim must present clear and convincing evidence of invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof.
If we are subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:

require costly litigation to resolve and the payment of substantial royalty or license fees, lost profits or other damages, including potential treble damages if we are found to willfully infringe a patent;

require and divert significant management time;

cause us to enter into unfavorable royalty or license agreements;

require us to rebrand or discontinue some of our games;

require us to indemnify our customers or third-party service providers; and/or

require us to expend additional development resources to redesign or rebrand our software or games.
Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on our business, results of operations or the market price of our common stock. Any of the foregoing could materially and adversely affect our business, prospects, financial condition and results of operations.
 
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We may be subject to claims that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.
Many of our employees, consultants and advisors are currently or were previously engaged by other companies in our field, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the confidential or proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Costly litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to potentially paying substantial monetary damages, we may lose valuable intellectual property rights or personnel.
In addition, while it is our policy to require our employees, consultants, and advisors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. Furthermore, local laws in the jurisdictions in which we operate may place restrictions on our ability to obtain assignments or the assignment of intellectual property rights in our agreements with employees, consultants and advisors may not be sufficient, or the assignment agreements may be breached. As a result, we may be forced to bring costly claims against third parties, or defend claims that may be brought against us, to determine the ownership of what we regard as our intellectual property. Any of the foregoing could adversely impact our business, operating results and financial condition.
Risks Related to Tax Matters
Due to the nature of our business, we are subject to taxation in a number of jurisdictions, and changes and uncertainties in, or new interpretation of, tax laws, tax rulings or their application by tax authorities could result in unanticipated tax liabilities and could materially affect our business, financial condition and results of operations.
Our tax obligations are varied and include U.S. federal and state, U.K. and other national and international taxes due to the nature of our business. The tax laws, regulations and treaties that are applicable to our business are subject to interpretation, and significant judgment is required in determining our worldwide provision for income and other taxes. In the course of our business, there will be many transactions and calculations where the ultimate tax determination is uncertain. For example, compliance with certain tax laws or regulations may require the collection of information we do not regularly produce, the use of estimates in our consolidated and combined financial statements, and the exercise of significant judgment in accounting for our tax provisions. As laws and regulations, and associated guidance, evolve, and as we gather more information and perform more analysis, our results may differ from previous estimates and our consolidated and combined financial statements may be materially affected.
In addition, many countries and organizations (including the Organization for Economic Cooperation and Development (the “OECD”) and the European Commission), have had an extended focus on issues related to the taxation of multinational corporations and have recently proposed or (in the case of certain countries) enacted, or are in the process of enacting, changes to existing tax laws or new tax laws that could significantly increase our tax obligations in the countries where we do business or in which our customers are located. For example, the OECD is working on a two-pillar solution to address the tax challenges arising from the digitalization of the economy, commonly referred to as BEPS 2.0, which, to the extent implemented, would make important changes to the international tax system by allocating taxing rights in respect of certain profits of multinational enterprises above a fixed profit margin to the jurisdictions within which they carry on business, referred to as the Pillar One proposal, and imposing a minimum effective tax rate on certain multinational enterprises, referred to as the Pillar Two proposal. A number of countries within which we carry on our business have enacted, or are in the process of enacting, core elements of the Pillar Two proposal. Based on our current understanding of the minimum revenue thresholds, we currently expect to be outside the scope of both the Pillar One and Pillar Two proposals but could fall within their scope in the future, which could materially affect our business, financial condition and results of operations.
 
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The gaming industry represents a significant source of tax revenue to the jurisdictions in which we operate. Gaming companies are currently subject to significant taxes and fees in addition to normal corporate income taxes, and such taxes and fees are subject to increase at any time. From time to time, various legislators and other government officials have proposed and adopted changes in tax laws, or in the administration or interpretation of such laws, affecting the gaming industry. In addition, any worsening of economic conditions and the large number of jurisdictions with significant current or projected budget deficits, many of which have been made worse due to COVID-19, could intensify the efforts of governments to raise revenue through increases in gaming taxes and/or other taxes. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration or interpretation or enforcement of such laws. Any material increases in taxes or fees, or the adoption of new taxes or fees, could have a material adverse effect on our business, financial condition and results of operations.
Additionally, tax authorities may impose indirect taxes on internet-related commercial activity based on existing statutes and regulations which, in some cases, were established prior to the advent of the internet. Tax authorities may interpret laws originally enacted for mature industries and apply it to newer industries, such as ours. The application of such laws may be inconsistent from jurisdiction to jurisdiction. Our in-jurisdiction activities may vary from period to period which could result in differences in nexus from period to period. Further, a number of jurisdictions have proposed or enacted taxes applicable to digital services. The interpretation and implementation of the various digital services taxes (especially if there is inconsistency in the application of these taxes across tax jurisdictions) could materially affect our business, financial condition and results of operations.
We are subject to periodic review and audit by domestic and foreign tax authorities. Tax authorities may disagree with certain positions we have taken or that we will take, and any adverse outcome of such a review or audit could have a negative effect on our business, financial condition and results of operations. Although we believe that our tax provisions, positions and estimates are reasonable and appropriate, tax authorities may disagree with certain positions we have taken. In addition, economic and political pressures to increase tax revenue in various jurisdictions may make resolving tax disputes favorably more difficult.
We expect to be treated as resident in the U.K. for tax purposes, but may be treated as a dual resident company for U.K. tax purposes.
Our board of directors conducts our affairs so that the central management and control of our company is exercised in the United Kingdom. As a result, we expect to be treated as resident in the United Kingdom for U.K. tax purposes. Accordingly, we expect to be subject to U.K. taxation on our income and gains, subject to any exemption. However, we may be treated as a dual resident company for U.K. tax purposes. As a result, our right to claim certain reliefs from U.K. tax may be restricted, and changes in law or practice in the United Kingdom could result in the imposition of further restrictions on our right to claim U.K. tax reliefs.
If a United States person is treated as owning at least 10% by vote or value of our shares, such holder may be subject to adverse U.S. federal income tax consequences.
Because our group consists of one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries will be treated as “controlled foreign corporations” ​(“CFCs”), as such term is defined in Section 957 of the Code, regardless of whether or not we are treated as a CFC. If a United States person (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the “Code”)) is treated as owning (directly, indirectly, or constructively) at least 10% of the total combined voting power of all classes of our shares entitled to vote or at least 10% of the total value of shares of all classes of our shares, such person may be treated as a “United States shareholder” with respect to each CFC in our group (if any), which may subject such person to adverse U.S. federal income tax consequences. Specifically, a United States shareholder of a CFC may be required to report annually and include in its U.S. taxable income its pro rata share of such CFC’s “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property, whether or not we make any distributions of profits or income of such CFC to such United States shareholder. If you are treated as a United States shareholder of a CFC, failure to comply with applicable reporting obligations may subject you to significant monetary penalties and may extend the statute of limitations with respect to your U.S. federal income tax return for the year for which reporting was due.
 
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Additionally, a United States shareholder of a CFC that is an individual generally would be denied certain tax deductions or foreign tax credits in respect of its income that may otherwise be allowable to a United States shareholder that is a U.S. corporation. We do not expect that we will assist holders of our shares in determining whether we or any of our non-U.S. subsidiaries are treated as CFCs or whether any holder of the ordinary shares is treated as a United States shareholder with respect to any such CFC, nor do we expect to furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. The U.S. Internal Revenue Service has provided limited guidance regarding the circumstances in which investors may rely on publicly available information to comply with their reporting and taxpaying obligations with respect to CFCs. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our shares.
If we or any of our subsidiaries are characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes, U.S. Holders may suffer adverse U.S. federal income tax consequences.
A non-U.S. corporation generally will be treated as a PFIC for U.S. federal income tax purposes, in any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income.
Whether we or any of our subsidiaries are a PFIC for any taxable year is a factual determination that depends on, among other things, the composition of our income and assets, our market value and the market value of our subsidiaries’ shares and assets. Changes in the composition of our or our subsidiaries’ income or assets may cause us to be or become a PFIC for the current or subsequent taxable years. Whether we are treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to significant uncertainty. Accordingly, there can be no assurances that we will not be treated as a PFIC in any taxable year. Moreover, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you that the U.S. Internal Revenue Service (“IRS”) will not take a contrary position or that a court will not sustain such a challenge by the IRS.
If we are a PFIC for any taxable year, a U.S. Holder of our ordinary shares may be subject to adverse tax consequences and may incur certain information reporting obligations. For a further discussion, see “Material Tax Considerations — Certain Material U.S. Federal Income Tax Considerations for U.S. Holders — Passive Foreign Investment Company Considerations.” U.S. Holders of our ordinary shares are strongly encouraged to consult their own advisors regarding the potential application of these rules to us and the ownership of our ordinary shares.
We operate in an industry and across jurisdictions that increase our tax risk profile, and subject us to anti-avoidance legislation that is generally complex, requires detailed analysis, and the application of which is often not certain due to the breadth of the anti-avoidance rules. In addition, the indirect tax treatment of the services we provide in certain countries is often unclear. As a result of these risks, we may have significant tax exposures that we have not accounted for, including in key markets, which could adversely affect our business, financial condition and results of operations.
Due to the international scope of our operations and the industry in which we operate, we are subject to tax laws and regulations, including anti-avoidance rules, imposed by taxing authorities around the world, which are complex and subject to varying interpretations. Furthermore, tax laws are dynamic and therefore subject to change as new laws are passed and new interpretations of existing laws are issued or applied. Our existing corporate structure and intercompany arrangements have been implemented in a manner that we consider to be in compliance with current prevailing tax laws, including applicable transfer pricing rules and regulations. However, the tax treatment of our structure and the offerings we provide in certain jurisdictions is often unclear and could be subject to material adjustment. For example, the taxing authorities in the jurisdictions in which we operate may interpret tax laws and regulations differently than we do or challenge tax positions that we have taken, including, among other things, our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies. This may result in differences in the treatment of revenue, deductions and/or credits
 
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or otherwise expose us to additional taxes, interest and/or penalties, including in key markets, which could adversely affect our business, financial condition and results of operations. In addition, future changes to tax laws and regulations could increase our tax obligations in jurisdictions where we do business or are deemed to do business for tax purposes, or require us to change the manner in which we conduct certain aspects of our business.
Risks Related to Being a Public Company
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel are not experienced in managing a public company and will be required to devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly, particularly where we engage with third parties to assist with these activities. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.
As a result of being a public company, we will be obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our ordinary shares.
Upon becoming a publicly traded company, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the end of the fiscal year that coincides with the filing of our second annual report on Form 20-F. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the SEC following the date we are no longer an “emerging growth company.”
We have historically not been required to document and test our internal controls over financial reporting, our management have not been required to certify the effectiveness of our internal controls and our auditors have not been required to opine on the effectiveness of our internal control over financial reporting. However, as a public company in the United States, we will be required to document and test our internal controls over financial reporting and, beginning with the filing of our annual report on Form 20-F for the fiscal year ending March 31,         , our management will be required to certify the effectiveness of our internal controls and we will become subject to the SEC’s auditor attestation requirements.
Our current controls and any new controls that we develop may become inadequate because of poor design or changes in conditions in our business, including increased complexity resulting from any international expansion and from the integration of newly acquired businesses and their management teams. In addition, changes in accounting principles or interpretations could also challenge our internal controls and require that we establish new business processes, systems and controls to accommodate such changes. Additionally, if these new systems, controls or standards and the associated process changes do not give rise to the benefits that we expect or do not operate as intended, it could materially and adversely affect our financial reporting systems and processes, our ability to produce timely and accurate financial reports or the effectiveness of internal control over financial reporting. Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise. Any failure to implement and maintain effective internal controls over financial reporting could adversely affect the results of assessments
 
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by our independent registered public accounting firm and their attestation reports. If we are unable to certify the effectiveness of our internal controls, or if our internal controls have a material weakness, we may not detect errors timeously, our consolidated and combined financial statements could be misstated, and we could be subject to regulatory scrutiny and a loss of confidence by stakeholders, which could harm our business and adversely affect the market price of our shares.
During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective. We have identified a material weakness in our internal control over financial reporting, and we cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our ordinary shares could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
The growth and expansion of our business places a continuous, significant strain on our operational and financial resources. Further growth of our operations to support our customer base, our software, games and our internal controls and procedures may not be adequate to support our operations. As we continue to grow, we may not be able to successfully implement requisite improvements to these systems, controls and processes, such as system access and change. The growth and expansion of our business places a continuous, significant strain on our operational and financial resources. Further growth of our operations to support our customer base, our information technology systems and our internal controls and procedures may not be adequate to support our operations. As we continue to grow, we may not be able to successfully implement requisite improvements to these systems, controls and processes, such as system access and change management controls, in a timely or efficient manner. Our failure to improve our systems and processes, or their failure to operate in the intended manner, whether as a result of the growth of our business or otherwise, may result in our inability to accurately forecast our revenue and expenses, or to prevent certain losses. Moreover, the failure of our systems and processes could undermine our ability to provide accurate, timely and reliable reports on our financial and operating results and could impact the effectiveness of our internal control over financial reporting. In addition, our systems and processes may not prevent or detect all errors, omissions or fraud.
We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses or if we are unable to develop and maintain an effective system of internal controls, we may not be able to produce timely and accurate financial statements or comply with applicable laws and regulations, which may adversely affect our business and the price of our ordinary shares.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the preparation of our consolidated and combined financial statements for the year ended March 31, 2023, we have identified material weaknesses in the design and operating effectiveness of our internal control over financial reporting.
Material weaknesses were identified with respect to each of the five components of the Internal Control — Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), relating to: (1) our control environment, as we have been a private company and have not had a sufficient number of resources with appropriate competencies for a public company, and we did not exercise appropriate oversight responsibilities through established structures, or enforce accountability; (2) our risk assessment, as we have not designed or implemented risk assessment processes to allow for the identification of business and fraud risks or assess the significance of such risks,
 
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including the likelihood of their occurrence, and to identify and assess changes in the business that could affect our system of internal controls; (3) our control activities, as we did not design and implement effective control activities, including proper segregation of duties and general information technology controls, across substantially all financial statement account balances and disclosures; (4) information and communication, as we have not established or maintained a system to support the identification, capture and exchange of information in a form and time frame to support the functioning of internal controls; and (5) monitoring activities to ascertain whether the components of internal control are present and functioning.
These material weaknesses could in the future result in misstatement of our annual or interim consolidated financial statements that would not be prevented or detected. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the price of our ordinary shares and our ability to access the capital markets in the future.
We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to these material weaknesses, and we have established a dedicated team, supported by external advisors, including individuals who have SEC and IFRS reporting experience, to oversee the enhancements of our control environment. Led by this team and supported by our external advisors, we have commenced a program of remediation work including: (i) performing a risk assessment and scoping process to identify relevant controls that will be designed, implemented, and tested by management; (ii) establishing compliant risk and control matrices for applicable processes across our company; (iii) enhancing general IT related controls; (iv) developing controls over the completeness and accuracy of reports used in the operation of controls; (v) formalizing the processes around management review of controls, in particular around areas of complex accounting or significant judgment and/or estimation uncertainty; (vi) enhancing the monitoring of our system of internal control to identify and communicate on a timely basis internal control deficiencies to those responsible for taking corrective action; and (vii) designing or reassessing existing entity-level controls and, as necessary, implementing enhancements to such controls. It is not possible at this time to provide an estimate of the time, and as such the costs, that it will take to complete this remediation plan.
While implementation of this remediation plan is ongoing, to date we have identified a roadmap to remediate all deficiencies related to our key controls, including general IT related controls, management review controls and entity level controls mapped to the COSO framework. We have established a regular steering committee meeting to evaluate the progress of all remediation plans, and individual control owners have been assigned to each control, at an appropriate level of authority and competence, who will be responsible for the remediation of the control reporting to the steering committee. All other actions required to complete the implementation of our remediation plan remain to be completed at this time. We cannot assure you that the measures taken to date by us, and actions that we may take in the future, will be sufficient to remediate the control deficiencies that led to these material weaknesses in our internal control over financial reporting or that we will prevent or avoid potential future material weaknesses. In addition, neither us nor an independent registered public accounting firm have performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act. If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identify any additional material weaknesses, the accuracy and timing of our financial reporting may be negatively impacted, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and the price of our ordinary shares may decline as a result.
We are eligible to be treated as an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our shares less attractive to investors.
We are eligible to be treated as an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, the auditor
 
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attestation requirements of Section 404 of the Sarbanes-Oxley Act, and, to the extent that we no longer qualify as a foreign private issuer pursuant to which standards we are not required to provide detailed compensation disclosures or file proxy statements, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the date on which we are deemed to be a large accelerated filer, which means the market value of our common equity that was held by non-affiliates exceeded $700 million as of the last business day of our most recently completed second fiscal quarter; and (iv) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
We cannot predict if investors will find our ordinary shares less attractive if we choose to rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares, and our share price may be more volatile.
As a foreign private issuer, we are permitted to, and do, follow certain home country corporate governance practices instead of otherwise applicable NYSE requirements, and we will not be subject to certain U.S. securities laws including, but not limited to, U.S. proxy rules and the filing of certain Exchange Act reports.
As a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of the NYSE, provided that we disclose the requirements we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to the NYSE rules for shareholder meeting quorums and shareholder approval requirements. We may in the future elect to follow home country practices with regard to other matters. As a result, our corporate governance practices may differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the NYSE, and our shareholders will not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.
In addition, as a foreign private issuer, we are not subject to all of the disclosure requirements applicable to companies organized within the United States. For example, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements, including the applicable compensation disclosure requirements. Our officers, directors and principal shareholders are also exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act and we are exempt from filing quarterly reports with the SEC under the Exchange Act. Moreover, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information, although we have voluntarily adopted a corporate disclosure policy substantially similar to Regulation FD. These exemptions and leniencies reduce the frequency and scope of information and protections to which you may otherwise have been eligible in relation to a U.S. domestic issuer.
We would lose our foreign private issuer status if a majority of our shares are owned by U.S. residents and a majority of our executive officers or non-executive directors are U.S. citizens or residents or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, including the U.S. federal proxy requirements, which are more detailed and extensive than the forms available to a foreign private issuer, and our executive officers, board of directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. We also would lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of the NYSE, which may require us to modify certain of our policies to comply with accepted governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we would lose our ability
 
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to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.
We will be a “controlled company” within the meaning of the applicable NYSE listing rules and, as a result, will qualify for exemptions from certain corporate governance requirements even if we lose our foreign private issuer status. If we rely on these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to such requirements.
Upon the closing of this offering, Zinnia Limited will control a majority of the voting power of our outstanding share capital. As a result, we will be a “controlled company” within the meaning of applicable NYSE listing rules, and will be eligible to elect the “controlled company” exemption from certain corporate governance requirements. For example, controlled companies are not required to have:

a board that is composed of a majority of “independent directors,” as defined under the NYSE rules;

a remuneration committee that is composed entirely of independent directors; and

director nominations be made, or recommended to the full board of directors, by its independent directors, or by a nominations/governance committee that is composed entirely of independent directors.
While we have not elected to rely on the “controlled company” exemptions, we may choose to do so in the future for so long as we qualify as a “controlled company,” even if we lose our status as a foreign private issuer. If we choose to take advantage of the “controlled company” exemptions in the future, you will not have the same protections afforded to shareholders of companies that are subject to all the corporate governance requirements of the NYSE, and our status as a controlled company could cause our ordinary shares to be less attractive to certain investors or otherwise harm our trading price. Following this offering, we intend to utilize these exemptions. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all the corporate governance requirements of the NYSE, and our status as a controlled company could cause our ordinary shares to be less attractive to certain investors or otherwise harm our trading price.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in our consolidated and combined financial statements and related notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Application of Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated and combined financial statements include those related to amortization of intangible assets, preparation of the carve-out financial statements, acquisitions, including relating to acquired intangible assets and valuation of consideration paid, capitalization and impairment of intangible assets and the call option on the B2B assets and operations of DGC. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our ordinary shares.
Risks Related to Our Ordinary Shares and this Offering
Concentration of ownership of our ordinary shares by Zinnia Limited may prevent new investors from influencing significant corporate decisions.
Prior to this offering, 100% of our ordinary shares are owned by Zinnia Limited. Following this offering, Zinnia Limited will beneficially own approximately     % of our outstanding share capital (or
 
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approximately     % if the underwriters exercise in full their option to purchase additional ordinary shares), based on the number of shares outstanding as of December 31, 2023. As a result, Zinnia Limited will be able to exercise significant influence over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership will limit the ability of other shareholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to you or that may not be aligned with your interests. This control may adversely affect the market price of our ordinary shares.
In addition, our amended and restated memorandum and articles of association (“Articles of Association”) to be in effect upon the closing of this offering contains provisions that provide that Zinnia Limited will have no duty to communicate or present to us investments or business opportunities in or with respect to which we may have an interest or expectancy that such opportunities will be offered to us, nor will Zinnia Limited be deemed to have breached any fiduciary or other duty or obligation (including any duty of loyalty) to us by reason of the fact that such shareholder pursued or acquired such any such business opportunity. Accordingly, Zinnia Limited may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, Zinnia Limited may have an interest in our pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to us and our other shareholders. Such provisions may make our ordinary shares less attractive to investors.
The price of our ordinary shares may be volatile, and you may lose some or all of your investment.
We cannot predict the prices at which our ordinary shares will trade. The initial public offering price for our ordinary shares has been determined by negotiations between us and the representatives of the underwriters and may not bear any relationship to the market price at which our ordinary shares will trade after completion of this offering or to any other established criteria of the value of our business and prospects, and the market price of our ordinary shares following completion of this offering may be highly volatile and may substantially as a result of a variety of factors, including:

actual or anticipated fluctuations in our financial condition or results of operations;

variance in our financial performance from expectations of securities analysts;

changes in the pricing of our games;

changes in our projected operating and financial results;

changes in laws or regulations applicable to our software;

announcements by us or our competitors of significant business developments, acquisitions or new offerings;

significant data breaches, disruptions to or other incidents involving our games, software or services;

our involvement in litigation;

conditions or developments affecting the gaming industry;

future sales of our shares by us or our shareholders, as well as the anticipation of lock-up releases;

changes in our senior management or key personnel;

the trading volume of our ordinary shares;

changes in the anticipated future size and growth rate of our markets;

publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

general economic and market conditions; and

other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events.
 
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Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our ordinary shares. In addition, the market for technology stocks and the stock market in general have recently experienced significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may continue to negatively impact investor confidence and the market price of equity securities, including our ordinary shares following this offering. In the past, companies who have experienced volatility in the market price of their securities have been subject to securities class action litigation. If the market price of our ordinary shares is volatile, we may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.
No public market for our ordinary shares currently exists, and an active public trading market may not develop or be sustained following this offering.
No public market for our ordinary shares currently exists. An active public trading market for our ordinary shares may not develop following the completion of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your ordinary shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of your ordinary shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling ordinary shares and may impair our ability to acquire other companies or technologies by using our ordinary shares as consideration.
We are a holding company with no operations of our own, and, as such, we depend on our subsidiaries for cash to fund our operations and expenses, including future dividend payments, if any.
Because we are a holding company, our principal source of cash flow will be distributions or payments from our operating subsidiaries. Therefore, our ability to fund and conduct our business, service our debt and pay dividends, if any, in the future will depend on the ability of our subsidiaries and intermediate holding companies to make upstream cash distributions or payments to us, which may be impacted, for example, by their ability to generate sufficient cash flow or limitations on the ability to repatriate funds whether as a result of currency liquidity restrictions, monetary or exchange controls or otherwise. Our operating subsidiaries and intermediate holding companies are separate legal entities, and although they are directly or indirectly wholly owned and controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends or otherwise. To the extent the ability of any of our subsidiaries to distribute dividends or other payments to us is limited in any way, our ability to fund and conduct our business, service any future debt and pay dividends, if any, could be harmed.
We will have broad discretion in the use of the net proceeds to us from this offering and may not use them effectively.
We will have broad discretion in the application of the net proceeds to us from this offering, including for any of the purposes described in the section titled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, our ultimate use may vary substantially from our currently intended use. Investors will need to rely upon the judgment of our management with respect to the use of proceeds. Pending use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing instruments that may not generate a high yield for our shareholders. We may use a portion of the net proceeds to acquire complementary businesses, products, services or technologies. At this time, we do not have agreements or commitments to enter into any material acquisitions. If we do not use the net proceeds that we receive in this offering effectively, our business, financial condition, results of operations and prospects could be harmed and the market price of our ordinary shares could decline.
You will experience immediate and substantial dilution in the net tangible book value of the ordinary shares you purchase in this offering.
The initial public offering price of our ordinary shares is substantially higher than the net tangible book value per ordinary share immediately after this offering. If you purchase our ordinary shares in this
 
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offering, you will suffer immediate dilution of $     (€    ) per share, or $     (€    ) per share if the underwriters exercise their over-allotment option in full, representing the difference between our as adjusted net tangible book value per share as of December 31, 2023, after giving effect to the sale of ordinary shares in this offering at the public offering price of $     (€    ) per share. See “Dilution” for more information.
Future sales of our ordinary shares in the public market, or the perception that sales might occur, could cause the market price of our ordinary shares to decline.
Sales of a substantial number of our ordinary shares in the public market following the closing of this offering, or the perception that these sales might occur, could depress the market price of our ordinary shares and could impair our ability to raise capital through the sale of additional equity securities. Many of our existing equity holders have substantial unrecognized gains on the value of the equity they hold based upon the price of this offering, and therefore they may take steps to sell their shares or otherwise secure the unrecognized gains on those shares. We are unable to predict the timing of or the effect that such sales may have on the prevailing market price of our ordinary shares.
All of the ordinary shares sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933, as amended (the “Securities Act”), except for any shares held by our affiliates as defined in Rule 144 under the Securities Act.
All of our directors, executive officers and the holders of all of our share capital and securities convertible into our share capital, including the selling shareholder, are subject to lock-up agreements that restrict their ability to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any of our share capital, any options or warrants to purchase any of our share capital or any securities convertible into or exchangeable for or that represent the right to receive our shares for 180 days from the date of this prospectus, subject to certain exceptions.                 may, in their sole discretion, permit our shareholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements, subject to applicable notice requirements. If not earlier released, all of the ordinary shares subject to such lock-up restrictions will become eligible for sale upon expiration of the 180 day lock-up period, except for any shares held by our affiliates as defined in Rule 144.
In addition, the restricted period may be shortened with respect to a portion of the locked-up securities held by certain lock-up parties, and the lock-up agreements are subject to a number of exceptions. These agreements are further described in the sections titled “Shares Eligible for Future Sale” and “Underwriting.” If not earlier released, all of the ordinary shares not sold in this offering will become eligible for sale upon expiration of the restricted period, except for any shares held by our affiliates as defined in Rule 144.
Our issuance of additional ordinary shares in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other shareholders.
We expect to issue additional ordinary shares in the future that will result in dilution to all other shareholders. We expect to grant equity awards to employees, directors and consultants under our equity incentive plan in the form of ordinary shares and/or securities derivative thereof. We may also raise capital through equity financings in the future through the issuance of ordinary shares and/or securities derivative thereof. As part of our business strategy, we may also acquire or make investments in companies, products or technologies and issue such equity securities to pay for any such acquisition or investment. Any such issuances of additional ordinary shares or securities derivative thereof may cause shareholders to experience significant dilution of their ownership interests and the per share value of our ordinary shares to decline.
If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
The trading market for our ordinary shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts or the content that they publish about us. If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our ordinary shares or change their opinion of
 
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our ordinary shares, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our ordinary shares or trading volume to decline.
We do not intend to pay dividends for the foreseeable future following this offering and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our ordinary shares.
Following this offering, we currently intend to retain any future earnings to finance the growth and development of the business and, therefore, we do not anticipate that we will pay any cash dividends on our ordinary shares, including on the ordinary shares, in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors and will be dependent upon our future financial condition, results of operations and capital requirements, general business conditions and other relevant factors as determined by our board of directors. Accordingly, investors must rely on sales of their ordinary shares after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Risks Related to Our Incorporation under the Laws of the Isle of Man
As the rights of shareholders under Isle of Man law differ from those under U.S. law, you may have fewer protections as a shareholder.
Upon the closing of this offering, our corporate affairs are governed by our Articles of Association, the Isle of Man Companies Act and the common law of the Isle of Man. The rights of shareholders to take legal action against our directors, actions by minority shareholders and the fiduciary responsibilities of directors under Isle of Man law are governed by the Isle of Man Companies Act and the common law of the Isle of Man. The common law of the Isle of Man is derived in part from comparatively limited judicial precedent in the Isle of Man. Relevant non-Isle of Man judicial decisions can be persuasive authority in Isle of Man courts. The rights of our shareholders and the fiduciary responsibilities of our directors under Isle of Man law are partially codified in the Isle of Man Companies Act but are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. The duties and liabilities of directors of an Isle of Man company are governed by a combination of statute and common law (based primarily on English common law). The laws in the Isle of Man do not expressly set out the directors’ common law fiduciary duties in statute. In particular, the Isle of Man has a less exhaustive body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law. There is no statutory recognition in the Isle of Man of judgments obtained in the United States, although the courts of the Isle of Man will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. As a result of all of the above, holders of our ordinary shares may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or major shareholders than they would as shareholders of a U.S. company.
Our Articles of Association to be in effect upon the closing of this offering will contain certain provisions, including anti-takeover provisions, that limit the ability of shareholders to take certain actions and could delay or discourage takeover attempts that shareholders may consider favorable.
Our Articles of Association to be in effect upon the closing of this offering contain provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. For example, our Articles of Association authorize our board of directors to determine the rights, preferences, privileges and restrictions of unissued shares without any vote or action by our shareholders. Thus, our board of directors can for example authorize and issue preferred shares with voting or conversion rights that could adversely affect the voting or other rights of holders of our ordinary shares. These rights may have the effect of delaying, discouraging or preventing a takeover attempt of our Company even if a takeover attempt might be beneficial to our shareholders. These provisions could also limit the price that investors might be willing to pay in the future for our ordinary shares, and therefore depress the trading price. These provisions could also make it difficult for shareholders to take certain actions, including electing directors who are not nominated by the incumbent members of our board of directors or
 
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taking other corporate actions, including effecting changes in our management, and may inhibit the ability of an acquiror to effect an unsolicited takeover attempt. Shareholders may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the jurisdictions in which we are incorporated or in which we operate based on U.S. or other foreign laws against us, our management or the experts named in this prospectus.
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
We are incorporated under Isle of Man law. The rights of holders of ordinary shares are governed by Isle of Man law, including the Isle of Man Companies Act, and by our Articles of Association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. See “Differences in Corporate Law” in this prospectus for a description of the principal differences between the provisions of the Isle of Man Companies Act applicable to us and the Delaware General Corporation Law relating to shareholders’ rights and protections.
The Isle of Man is a self-governing British crown dependency, and is an island in the British Isles located between Ireland and the United Kingdom. The Isle of Man, like the United Kingdom, is not a member of the European Union. Isle of Man legislation regarding companies is largely based on English corporate law principles. However, there can be no assurance that Isle of Man law will not change in the future or that it will serve to protect investors in a similar fashion afforded under corporate law principles in the United States, which could adversely affect the rights of investors.
U.S. shareholders may not be able to obtain judgments or enforce civil liabilities against us, our executive officers, our board of directors or the selling shareholder.
We are an Isle of Man incorporated company, and substantially all of our assets and operations are located outside of the United States. In addition, most of our directors and officers reside outside the United States, and the substantial majority of their assets are located outside of the United States. Our selling shareholder is also an Isle of Man incorporated entity, and substantially all of its assets and operations are located outside of the United States. As a result, it may be difficult to effect service of process within the United States or elsewhere upon these persons. It may also be difficult to enforce judgments in the jurisdictions in which we operate or in Isle of Man courts against us and our executive officers and directors. It may be difficult or impossible to bring an action against us in the Isle of Man if you believe your rights under the U.S. securities laws have been infringed. In addition, there is uncertainty as to whether the courts of the Isle of Man or jurisdictions in which we operate would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state, and it is uncertain whether such Isle of Man courts or courts in jurisdictions in which we operate would hear original actions brought in the Isle of Man or jurisdictions in which we operate against us or such persons predicated upon the securities laws of the United States or any state. See “Enforceability of Civil Liabilities” for more information.
The United States and the Isle of Man do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards rendered pursuant to the “Convention on the settlement of investment disputes between States and nationals of other States,” which was opened for signature in Washington D.C. on March 18, 1965, in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, may not be enforceable in the Isle of Man, as applicable.
The U.K. City code on Takeovers and Mergers (the “Takeover Code”) may apply to us.
The Takeover Code applies, among other things, to an offer for a company whose registered office is in the United Kingdom, the Channel Islands or the Isle of Man and whose securities are not admitted to trading on a regulated market in the United Kingdom (or the Channel Islands or the Isle of Man) if the company is considered by the Panel on Takeovers and Mergers (the “Takeover Panel”) to have its place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man (the “residency test”) and, in the case of an Isle of Man company incorporated under the Isle of Man Companies Act, if certain criteria are satisfied, for example if there has been some public trading or marketing of their shares in the previous ten years. Under the Takeover Code, the Takeover Panel will determine our place of central
 
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management and control by looking at various factors, including the structure of our board of directors, the functions of the directors of our board of directors and where they are resident.
If at the time of a takeover offer, the Takeover Panel determines that our place of central management and control is in the United Kingdom or the Channel Islands or the Isle of Man, and we are within the Takeover Code, we would be subject to a number of rules and restrictions, including but not limited to the following: (i) our ability to enter into deal protection arrangements with a bidder would be extremely limited; (ii) we might not, without the approval of shareholders, be able to perform certain actions that could have the effect of frustrating an offer, such as issuing shares or carrying out acquisitions or disposals; and (iii) we would be obliged to provide equality of information to all bona fide competing bidders.
Upon completion of the offering, we expect to continue to hold meetings of our board of directors in the United Kingdom and to be resident for U.K. tax purposes in the United Kingdom. Accordingly, based upon this expectation, for the purposes of the Takeover Code, we may be considered by the Takeover Panel to have our place of central management and control in the United Kingdom and the Takeover Code may apply to us.
 
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements include, without limitation, statements concerning the following:

our expectations regarding our revenue, operating expenses and other operating results;

our ability to acquire new customers and successfully retain existing customers;

our ability to maintain profitability;

anticipated trends, the size and growth rates of the markets in which we compete;

future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;

our ability to develop or acquire new games and bring them to market in a timely manner;

the costs and success of our marketing efforts and our ability to maintain and enhance our brand;

our growth strategies;

our ability to manage expansion into the United States and other markets;

the estimated addressable market opportunity for our products and services generally;

our reliance on key personnel and our ability to attract and retain highly qualified personnel;

our ability to obtain, maintain, protect and enforce our intellectual property rights and any costs associated therewith;

the effect of global events, such as the Russia-Ukraine and Hamas-Israel wars, on our business, industry and the global economy;

our ability to compete effectively with existing competitors and new market entrants;

our ability to comply with applicable laws and regulations, including our ability to maintain required licenses, in the jurisdictions in which we operate;

the effect of regulatory developments in the jurisdictions in which we currently and may in the future operate; and

our anticipated use of the net proceeds from this offering.
You should not place undue reliance on forward-looking statements as predictions of future events, which reflect current beliefs and are based on information currently available as of the date the forward-looking statement is made. Forward-looking statements set forth herein speak only as of the date of this prospectus. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe,” and similar statements, reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this prospectus. While we believe such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have
 
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conducted an exhaustive inquiry into, or review of, all relevant information. Forward-looking statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
 
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MARKET AND INDUSTRY DATA
This prospectus contains estimates, projections, statistical data and other information concerning our industry, including market size and growth of the markets in which we participate, that are based on publicly available information and industry publications and reports and forecasts prepared by third parties such as Eilers & Krejcik and H2GC. In addition, certain statements and information in this prospectus reflect our internal estimates and research, as well as management’s beliefs as of the date of this prospectus based on our understanding of our business and the industry in which we operate. In some cases, we do not expressly refer to the sources from which these estimates and information are derived. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in these publications and reports.
 
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USE OF PROCEEDS
We estimate that the net proceeds to us from this offering will be approximately $     million (€     million), based on the assumed initial public offering price of $     per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their option to purchase additional ordinary shares from us in full, we estimate that the net proceeds to us from this offering will be approximately $     million (€     million), after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
We will not receive any proceeds from the sale of ordinary shares by the selling shareholder.
Each $1.00 increase (decrease) in the assumed initial public offering price of $     (€    ) per ordinary share would increase (decrease) the net proceeds from this offering to us by $     million (€     million), assuming that the total number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions. Similarly, an increase (decrease) of 1,000,000 in the number of ordinary shares offered by us would increase (decrease) the net proceeds from this offering to us by $     million (€     million), assuming the assumed initial public offering price of $     per ordinary share remains the same, and after deducting the underwriting discounts and commissions.
The principal purposes of this offering are to obtain additional working capital, to facilitate an orderly distribution of our ordinary shares for the selling shareholder, to create a public market for our ordinary shares and to facilitate our future access to the public equity markets. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from this offering. However, we currently intend to use the net proceeds we receive from this offering for working capital and other general corporate purposes, including: developing and enhancing our technical infrastructure, solutions and services; expanding our research and development efforts and sales and marketing operations; meeting the increased compliance requirements associated with our transition to and operation as a public company; and expanding into new markets. We may also use a portion of the proceeds to acquire or invest in businesses, products, services or technologies; however, we do not have agreements or commitments for any material acquisitions or investments at this time.
We will have broad discretion over how to use the net proceeds to us from this offering. We intend to invest the net proceeds to us from this offering that are not used as described above in investment-grade, interest-bearing instruments.
 
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DIVIDEND POLICY
Between January 1, 2024 and the date of this offering, we have paid an aggregate of €     million in cash dividends to our sole shareholder. Following this offering, we currently intend to retain any earnings for use in our business and do not anticipate declaring or paying any dividends on our ordinary shares in the foreseeable future. The declaration and payment of any future dividends will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, any future debt agreements or applicable laws and other factors that our board of directors may deem relevant.
Accordingly, holders of ordinary shares must rely on sales of their ordinary shares after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Under the laws of the Isle of Man, we may only pay dividends if the board of directors are satisfied, on reasonable grounds, that we will, immediately after payment of the dividend, satisfy a solvency test under the Isle of Man Companies Act, which we will satisfy if we are able to pay our debts as they become due in the normal course of our business and the value of our assets exceeds the value of our liabilities.
 
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CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2023:

on an actual basis;

on a pro forma basis to reflect the payment of cash dividends in the aggregate amount of €        million between January 1, 2024 and the date of this offering; and

on a pro forma as adjusted basis to reflect: (i) the pro forma adjustments set forth above and (ii) the issuance and sale of         ordinary shares in this offering at the assumed initial public offering price of $       per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
Our capitalization following the closing of this offering will depend on the actual initial public offering price and other terms of this offering determined at pricing. You should read this information in conjunction with our consolidated and combined financial statements and the related notes thereto included elsewhere in this prospectus and the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
As of December 31, 2023
(in thousands)
Actual
Pro Forma
Pro Forma
As Adjusted
Cash and cash equivalents
55,481              
Lease liabilities
5,726
Total debt
5,726
Equity:
Share capital
Share premium
162,068
Foreign exchange reserve
(7,611)
Retained earnings
173,344
Total equity attributable to shareholders of Games Global
327,801
Total capitalization
333,527
Each $1.00 increase (decrease) in the assumed initial public offering price of $       per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) each of our cash and cash equivalents, share premium, total equity attributable to shareholders and total capitalization by approximately $      million (€      million), assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions. Similarly, an increase (decrease) of 1,000,000 in the number of ordinary shares offered by us would increase (decrease) each of our cash and cash equivalents, share premium, total equity attributable to shareholders and total capitalization by approximately $        million (€      million), assuming the assumed initial public offering price of $      per ordinary share remains the same and after deducting the underwriting discounts and commissions.
The number of ordinary shares that will be outstanding after this offering is based on 106,018,500 ordinary shares outstanding as of December 31, 2023 and excludes:

           ordinary shares reserved for future issuance under the 2024 EIP, plus any future increases in the number of ordinary shares reserved for issuance thereunder, as more fully described in the section titled “Management — 2024 Equity Incentive Plan” and

an aggregate of            ordinary shares underlying equity awards that we expect to grant to certain of our officers, directors, contractors and employees under our 2024 EIP upon the closing of this offering, based on the assumed initial public offering price of $        per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus.
 
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DILUTION
If you invest in our ordinary shares in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per ordinary share and the net tangible book value per share after this offering. Net tangible book value per ordinary share is determined by dividing our total assets less our intangible assets, goodwill and total liabilities by the number of ordinary shares outstanding.
As of December 31, 2023, we had a historical net tangible book value of $127.8 million (€115.5 million), corresponding to a net tangible book value of $1.21 (€1.09) per ordinary share.
As of December 31, 2023, our pro forma net tangible book value was $       million (€     million), or $       (€     ) per ordinary share, as adjusted for the payment of cash dividends in the aggregate amount of €      million between January 1, 2024 and the date of this offering.
After giving effect to (i) the pro forma adjustments described above and (ii) the sale by us of           ordinary shares in this offering at the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2023 would have been approximately $      million (€        million), representing $      (€       ) per ordinary share. This represents an immediate increase in pro forma net tangible book value of $      (€       ) per ordinary share to existing shareholders and an immediate dilution in pro forma as adjusted net tangible book value of $       (€     ) per ordinary share to new investors purchasing ordinary shares in this offering. Dilution per ordinary share to new investors is determined by subtracting pro forma as adjusted net tangible book value per ordinary share after this offering from the assumed initial public offering price per ordinary share paid by new investors.
The following table illustrates this dilution to new investors purchasing ordinary shares in this offering.
Assumed initial public offering price per ordinary share
$      
Historical net tangible book value per ordinary share as of December 31, 2023
$      
Increase in net tangible book value per ordinary share attributable to pro forma adjustments described above
Pro forma net tangible book value per ordinary share as of December 31, 2023
Increase in pro forma net tangible book value per ordinary share attributable to this offering
Pro forma as adjusted net tangible book value per ordinary share as of December 31, 2023
Dilution per ordinary share to new investors
$
If the underwriters exercise their option to purchase additional ordinary shares from us in full, our pro forma as adjusted net tangible book value per ordinary share after this offering would be $      (€     ) per ordinary share, representing an immediate increase in pro forma net tangible book value per ordinary share of $      (€       ) per ordinary share to existing shareholders and immediate dilution of $       (€      ) per ordinary share in pro forma as adjusted net tangible book value to new investors purchasing ordinary shares in this offering, based on the assumed initial public offering price of $       per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus.
Shares Purchased
Total Consideration
Average Price
Per Share
Number
Percent
Amount
Percent
Existing shareholders
    
% %
New investors
Total
100.0% $      100.0%
 
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Each $1.00 increase (decrease) in the assumed initial public offering price of $      per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, respectively, would increase (decrease) the pro forma as adjusted net tangible book value after this offering by $      (€      ) per ordinary share and the dilution per ordinary share to new investors in this offering by $      (€      ) per ordinary share, assuming that the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions.
The number of ordinary shares that will be outstanding after this offering is based on 106,018,500 ordinary shares outstanding as of December 31, 2023 and excludes:

         ordinary shares reserved for future issuance under the 2024 EIP, plus any future increases in the number of ordinary shares reserved for issuance thereunder, as more fully described in the section titled “Management — 2024 Equity Incentive Plan” and

an aggregate of            ordinary shares underlying equity awards that we expect to grant to certain of our officers, directors, contractors and employees under our 2024 EIP upon the closing of this offering, based on the assumed initial public offering price of $       per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus.
To the extent we issue new share options or RSUs under our equity compensation plans or we issue additional ordinary shares in the future, there will be further dilution to the new investors purchasing ordinary shares in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders.
 
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information (the “Pro Forma Financial Information”), which includes the unaudited pro forma combined statement of profit or loss for the year ended March 31, 2023 (the “pro forma statement of profit or loss”), has been prepared on the basis set out in the notes below to illustrate the effect of both of the MahiGaming LLC (“Mahi”) acquisition (the “Mahi Acquisition”) and the Snowborn Games AB, JFTW Games Development AB, Spinplay Holdings Limited, and Riversun Holdings Inc. (collectively, the “Velo Studios”) acquisition (the “Velo Studios Acquisition”).
The Pro Forma Financial Information gives effect to the Mahi Acquisition and the Velo Studios Acquisition (together, the “Pro Forma Transactions”) as if the Pro Forma Transactions had taken place on April 1, 2022 for purposes of the pro forma statement of profit or loss. Mahi had a financial year end of March 31, and the Velo Studios had a financial year end of December 31.
There is no pro forma balance sheet as Mahi and Velo Studios have been consolidated by Games Global as of August 4, 2022 and February 28, 2023, respectively and therefore are already reflected in our consolidated and combined financial statements as of March 31, 2023. All pro forma adjustments and their underlying assumptions are described in the notes to the Pro Forma Financial Information. The Pro Forma Financial Information also does not include pro forma adjustments for any other acquisitions completed by us during the period presented.
The Pro Forma Financial Information has been prepared for illustrative and informational purposes only in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 21, 2020 (“Article 11”). The Pro Forma Financial Information is not necessarily indicative of what our results of operations actually would have been had the Pro Forma Transactions been completed as of the dates indicated. In addition, the Pro Forma Financial Information does not purport to project our future financial position or operating results. The pro forma adjustments are based on the information available at the time of the preparation of this prospectus. The Pro Forma Financial Information should be read in conjunction with:

our consolidated and combined financial statements and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”

the Mahi condensed unaudited interim financial statements as of June 30, 2022 and 2021 and for the three month periods then ended (“Mahi Interim Financial Statements”);

the Velo Studios combined financial statements for the year ended December 31, 2022 (“Velo Studios Annual Financial Statements”); and

the other information contained in this prospectus.
The Mahi Interim Financial Statements were prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), which differs in certain respects from IFRS as utilized by us. Adjustments were made to the Mahi financial data appearing in the Pro Forma Financial Information to convert them from U.S. GAAP to IFRS. Further adjustments were made to translate the Mahi Interim Financial Statements from U.S. dollars to Euro, based on applicable historical exchange rates. The historical exchange rates used may differ from future exchange rates.
The Velo Studios Annual Financial Statements were prepared in accordance with IFRS. Adjustments were made to the Velo Studios financial data appearing in the Pro Forma Financial Information to conform Velo Studios’ historical accounting presentation to our accounting presentation.
The Mahi Acquisition has been accounted for as a business combination using the acquisition method of accounting in accordance with IFRS 3, Business Combinations (“IFRS 3”) with Games Global treated as the accounting acquirer for the Mahi Acquisition. The IFRS 3 acquisition method of accounting applies the fair value concepts defined in IFRS 13, Fair Value Measurement (“IFRS 13”) and requires, among other things, that the identifiable assets acquired and liabilities assumed in a business combination are recognized at their fair values as of the acquisition date, with limited exceptions to this recognition and measurement
 
86

 
principle. Any excess of the purchase consideration over the fair value of identifiable net assets acquired is recognized as goodwill. The purchase price calculation and purchase price allocation presented for the Mahi Acquisition are based on the purchase price allocation determined in our consolidated and combined financial statements for the year ended March 31, 2023. The measurement period ended on July 31, 2023.
The Velo Studios Acquisition has been accounted for as a business combination using the acquisition method of accounting in accordance with IFRS 3 with Games Global treated as the accounting acquirer for the Velo Studios Acquisition. The IFRS 3 acquisition method of accounting applies the fair value concepts defined in IFRS 13 and requires, among other things, that the identifiable assets acquired and liabilities assumed in a business combination are recognized at their fair values as of the acquisition date, with limited exceptions to this recognition and measurement principle. Any excess of the purchase consideration over the fair value of identifiable net assets acquired is recognized as goodwill. The purchase price calculation and purchase price allocation presented for the Velo Studios Acquisition are based on the purchase price allocation determined in our consolidated and combined financial statements for the year ended March 31, 2023. The measurement period ends on February 27, 2024 and therefore the assets acquired, liabilities assumed and goodwill recognized are subject to change.
The pro forma statement of profit or loss reflects the transaction accounting adjustments attributable to the Pro Forma Transactions, which depict the accounting adjustments required by IFRS. The pro forma adjustments are based upon the best information available to us and certain assumptions that we believe to be reasonable.
The Pro Forma Financial Information is provided for informational purposes only and is not necessarily indicative of our results of operations that would have been realized had the Pro Forma Transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated future results of operations that we will experience. The actual results of operations will differ, perhaps significantly, from the Pro Forma Financial Information due to a variety of factors, including access to additional information, changes in value not currently identified and changes in operating results following the date of the Pro Forma Financial Information. The Pro Forma Financial Information does not reflect any adjustment for liabilities or related costs of any integration and similar activities, or benefits that may be derived in future periods, from the Mahi Acquisition or the Velo Studios Acquisition.
All amounts are in thousands of Euros, except where noted otherwise.
 
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Games Global Limited
Unaudited Pro Forma Combined Statement of Profit or Loss for the year ended March 31, 2023
Adjustments
Adjustments
(in thousands,
except share and per share data)
Games
Global
Year ended
March 31,
2023
Mahi
April 1, 2022 to
July 31, 2022
Mahi
Acquisition
Transaction
Accounting
Adjustments
Velo Studios
Group
February 1,
2022 to
December 31,
2022
Velo Studios
Acquisition
Transaction
Accounting
Adjustments
Unaudited
Pro forma
Games
Global
(Note 1)
(Note 2)
(Note 3)
(Note 4)
(Note 5)
Revenue
€306,926
€5,164
€(5,164)
(Note 3a)
22,565
€(21,918)
(Note 5a)
€307,573
Cost of services
(135,289) (4,648)
5,253
(Notes 3a, 3b)
(9,599)
17,179
(Notes 5a, 5b)
(127,104)
Sales, general and administrative expenses
(59,881) (1,065)
138
(Note 3b)
(1,392)
138
(Note 5b)
(62,062)
Profit from
operations
111,756 (549)
227
11,574
(4,602)
118,406
Financial income
1,314 1 1,315
Financial expenses
(2,468) (152) (211) (2,831)
Profit before tax
110,602 (701)
227
11,364
(4,602)
116,890
Taxation (2,766) (2,107)
427
(4,446)
Profit for the year/
period
107,836 (701)
227
9,257
(4,175)
112,445
Attributable to:
Shareholders of Games
Global Limited or
parent
107,389 (701)
227
5,701
2,533
115,149
Non-controlling interest
447 3,556
1,642
5,645
Weighted average shares
outstanding, basic
102,362,645 106,018,500
Net profit per share
attributable to
ordinary shareholders,
basic and diluted
1.05 1.09
 
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Notes to Unaudited Pro Forma Combined Financial Information
1.
Basis of Presentation
The pro forma statement of profit or loss reflects the transaction accounting adjustments attributable to the Pro Forma Transactions, which depict the accounting adjustments required by IFRS.
The Pro Forma Financial Information reflects pro forma adjustments that management believes are necessary to fairly present our pro forma results of operations following the closing of the Pro Forma Transactions for the periods indicated. The Pro Forma Financial Information does not reflect any adjustment for the costs of any integration and similar activities, or benefits that may be derived in future periods, from the Mahi Acquisition or Velo Studios Acquisition.
The Mahi Interim Financial Statements were prepared in accordance with U.S. GAAP, which differs in certain respects from IFRS. Adjustments were made to the Mahi Interim Financial Statements to convert them from U.S. GAAP to IFRS.
The Velo Studios Annual Financial Statements were prepared in accordance with IFRS. Adjustments were made to the Velo Studios Annual Financial Statements to convert them to our existing accounting policies after evaluating potential areas of differences. In addition, reclassifications have been made to align Velo Studios financial statement presentation to our financial statement presentation.
We have used the following historical exchange rates to translate the Mahi Interim Financial Statements and calculate certain adjustments to the Pro Forma Financial Information from U.S. dollars to Euros:
Average exchange rate for the four-month period ended July 31, 2022: USD 1 / Euro 0.9498
The estimated income tax impacts of the pre-tax adjustments that are reflected in the Pro Forma Financial Information are calculated using an estimated blended statutory rate, which is based on preliminary assumptions related to the jurisdictions in which the income (expense) adjustments will be recorded. Our blended statutory rate and the effective tax rate following the Pro Forma Transactions could be significantly different depending on post-Pro Forma Transactions activities and the geographical mix of our profits or losses before taxes.
2.
Adjustments to Mahi Interim Financial Statements
The financial information below illustrates the impact of adjustments made to the Mahi Interim Financial Statements as prepared in accordance with U.S. GAAP, in order to present them on a basis consistent with our accounting policies in accordance with IFRS.
The Mahi historical U.S. GAAP financial information as of and for the period ended June 30, 2022 presented below has been derived from the Mahi Interim Financial Statements as of June 30, 2022 and 2021 and for the three-month periods then ended included elsewhere in this prospectus.
 
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MahiGaming LLC
Unaudited Adjusted Statement of Profit or Loss for the four months ended July 31, 2022
Reclassifications of U.S. GAAP to IFRS Adjustments
Mahi statement of
operations line items
Mahi
statement of
operations
line items for
the three months
ended
June 30, 2022
Mahi
statement of
operations
line items for
the month
ended
July 31, 2022
Mahi
statement of
operations for
the four months
ended
July 31, 2022
IFRS
adjustments
Notes
Games Global
statement of profit and
loss presentation
Mahi
statement of
operations
for the four
month period
ended
July 31, 2022
under Games
Global
statement of
profit of
loss presentation
and IFRS
adjustments
Translated
into Games
Global’s
presentation
currency
(in thousands)
(Note 2a)
(Note 2b)
(Note 2c)
(in thousands)
(Note 2d)
(Note 2e)
Total revenue
$ 4,085 $ 1,352 $ 5,437
Revenues
$ 5,437 5,164
Cost of services
(3,500) (1,394) (4,894)
Cost of services
(4,894) (4,648)
General and administrative
(978) (310) (1,287) 166
Sales, general and
administrative expenses
(1,121) (1,065)
Profit from operations
Interest expense
(160)
Financial income
Financial expenses
(160) (152)
Profit before tax
(738) (701)
Taxation
Net loss
(392) (352) (744) 6
Profit for the year/period
(738) (701)
(a)
The Mahi statement of operations for the three months ended June 30, 2022 has been extracted from the condensed unaudited interim financial statements of Mahi as of June 30, 2022 and 2021 and for the three month periods then ended, which are included elsewhere in this prospectus.
(b)
The Mahi statement of operations for the one month period ended July 31, 2022 has been derived from Mahi’s unaudited accounting records.
(c)
The following adjustment has been made to convert the Mahi statement of operations to IFRS:
a.
Under IFRS, all lessee leases are classified in a consistent manner similar to financing leases under U.S. GAAP, whereas under U.S. GAAP leases are classified as operating or financing. Under U.S. GAAP a straight-line expense is recorded over the lease term by a lessee for operating leases whereas IFRS lessee accounting generally yields a “front-loaded” expense with more expense recognized in earlier years of the lease. Additionally, under U.S. GAAP for operating leases, the lessee records the lease expense as a single line item of expense in the income statement. Under IFRS, interest expense on the lease liability and amortization of the right-of-use asset are presented separately in the income statement. The adjustment represents the reversal of general and administrative expense of $0.2 million for the four month period ended July 31, 2022 recognized under U.S. GAAP and the recording of a $0.2 million increase in financial expense on the lease liabilities for the four month period ended July 31, 2022 under IFRS.
(d)
The presentation of Mahi’s statement of operations is consistent with our statement of profit and loss. No reclassification adjustments were required to align the financial statements of Mahi and Games Global.
(e)
The Mahi statement of operations information has been converted from U.S. dollars to Euros using an average rate of $1:€0.9498 for the four months ended July 31, 2022.
 
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3.
Adjustments Related to the Mahi Acquisition
The pro forma statement of profit or loss gives effect to the following assumptions and adjustments.
a)
Existing Trading Relationships
Prior to the Mahi Acquisition, we had an existing trading relationship with Mahi, whereby Mahi provided exclusive design and development of gaming software and related maintenance, support and consultancy services to us. For the four months ended July 31, 2022, Mahi derived 100% of its revenue from services performed in connection with Games Global.
This adjustment reflects the elimination of combined intragroup revenue and cost of services provided by Mahi to us of €5.2 million.
b)
Allocation of Consideration for the Mahi Acquisition
The pro forma adjustments to depreciation and amortization expense for the period April 1, 2022 to July 31, 2022 are calculated as follows:
Pro forma
adjusted carrying
value
Weighted-Average
Estimated Useful life
Annual Depreciation
and Amortization
(in thousands)
(in years)
(in thousands)
Identifiable intangible assets
13,500
5
900
Less historical amortization expense
(989)