Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

General Information

The following discussion should be read in conjunction with the financial statements for the fiscal year ended December 31, 2024 and notes thereto, which the Company filed with the Securities and Exchange Commission (the "SEC") on March 24, 2025 as part of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission on March 24, 2025 (the "2024Annual Report") and Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our 2024 Annual Report.

On April 9, 2024 (the "Closing Date"), Golden Matrix Group, Inc. (the "Company", "we" and "us"), consummated the transactions contemplated by that certain June 30, 2023, Amended and Restated Sale and Purchase Agreement of Share Capital (as amended and restated from time to time, the "Purchase Agreement"), between the Company and Aleksandar Milovanović, Zoran Milošević and Snežana Božović (collectively, the "Meridian Sellers"), the owners of the MeridianBet Group. On the Closing Date, the Company acquired 100% of MeridianBet Group (the "Meridian Purchase"), effective for all purposes as of April 1, 2024. The Meridian Purchase was accounted for as a reverse merger. As a result, all historical financial information presented in the unaudited consolidated financial statements in this report represents the accounts of MeridianBet Group as if MeridianBet Group is the predecessor to the Company. References to "Golden Matrix" refer to the Company prior to the Purchase which was effective as of April 1, 2024.

Statements made in this "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" are subject to forward-looking statements and various risks and should be read in connection with the "Special Note Regarding Forward-Looking Statements", above and "Risk Factors", described below and incorporated by reference into this Report, as described below.

Our Business

We (i) operate online sports betting, online casino, and gaming operations in more than 15 jurisdictions across Europe, Africa and Central and South America, (ii) are an innovative provider of enterprise Software-as-a-Service ("SaaS") solutions for online casino operators and online sports betting operators, commonly referred to as iGaming operators, and (iii) offer pay-to-enter prize competitions in the United Kingdom (UK) and lead trade promotions in Australia, providing members with free prizes.

Online Sports Betting, Online Casino, And Gaming Operations

We are a well-established brand and operator in the sports betting and gaming industry, spanning across over 15 markets in Europe, Central and South America, and Africa. We employ approximately 1,200 personnel, operating both online (mobile and web) and approximately 700 company-owned or franchised betting shops, with a primary focus (in those shops) on sports betting, online casino games, and virtual games. Of those 700 shops, approximately 250 are owned by our subsidiaries and approximately 450 shops are owned by franchisees. This is complemented by a variety of slot machines and online casinos, eSports, fixed odds games, and other entertainment options, contingent on the regulatory parameters of the specific jurisdictions. While sports betting is a primary focus, our online casino revenue has grown significantly over the past several years.

Our proprietary technology enables the development of scalable systems capable of operating in multiple jurisdictions and currencies, all the while leveraging the same technical infrastructure for odds setting and risk management. Our technology platform ensures consistency in odds setting and risk management across all the markets that they operate in.

Additionally, our approach to our markets is flexible and omni-channel, encompassing (for example) iOS, Android, mobile browser, desktop, SMS (Short Message Service), SST (Simplified Service Text), and USSD (Unstructured Supplementary Service Data) applications (discussed in greater detail below) and technologies (as well as customary retail operations). This omni-channel approach seeks to ensure that consumers can access our offerings in different ways, but is also, in certain jurisdictions, essential to overcoming some of the technological challenges faced by consumers in those territories. This approach ensures our customers across diverse regions and connectivity levels can engage with our content and have the same level of user experience.

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A significant component of our revenue is derived from our comprehensive sports betting offerings, which cover over 800 different leagues, providing more than 11 million bets on over 20,000 sporting events each month, inclusive of in-play betting. Notably, the sports betting technology, odds setting, and our proprietary risk management platforms.

Our sports betting services cover a wide range of sports, events, and markets to cater to diverse player local preferences. They offer betting options for traditional sports such as soccer (football), basketball, tennis, table tennis, volleyball, handball, ice hockey, American football, baseball, rugby, cricket, horse racing, and more. Additionally, they provide opportunities for betting on emerging trends like e-football and e-sports. In addition to conventional sports, our portfolio extends to niche markets like futsal, floorball, snooker, badminton, beach volleyball, darts, water polo, golf, biathlon, cycling, boxing, martial arts, alpine skiing, skiing, Formula 1, motor sports, NASCAR, kabaddi, and even sports specials related to major competitions. Moreover, we offer betting on political events where regulatory conditions permit, and even allow customers to propose their own bets, provided they meet ethical and legal requirements and are measurable.

We offer a diverse and multifaceted portfolio of betting options that extends beyond traditional sports betting. We offer a portfolio of gaming products including casino games, slots, roulette, and other random number generator (RNG) games. We also own our own casino development studio, which has thus far produced 52 slot games, which are available online, where regulatory approval is granted, catering to customers on its proprietary casino platform. RNG games are games in which the outcome is determined by a random element generated by a computer algorithm. These games rely on chance rather than skill or strategy to determine the results.

Our casino offerings include a mix of in-house developed games from Expanse Studios and a selection of titles from renowned third-party casino providers. These providers include Games Global, BluOcean, Relax, Oryx, Playtech, iSoftbet, Leap, Evolution, Easit, Amusnet, Thunderkick, Spribe, Habanero, PG Soft, Greentube, EvoPlay, Wazdan, Pragmatic Play, Playson, Fazi, Endorphina, Spearhead, CT Interactive, Kiron, and Platipus. We have established revenue-sharing agreements with such providers to offer a wide variety of casino games, ensuring a diverse and engaging casino experience for our players via a vibrant and ever-expanding casino game library.

We have a dedicated iGaming section that covers eSports competitions and allows betting on gaming tournaments. This section caters to the growing interest in competitive gaming and includes popular titles such as CS:GO, Dota 2, Fortnite, LoL, Valorant, Rainbow Six, Crossfire, King of Glory, and more. This diverse range allows us to cater to the preferences of eSports enthusiasts.

We also provide extensive coverage of eSports events, encompassing major tournaments such as The International (Dota 2), League of Legends World Championship, and CS:GO Majors. Additionally, we align our coverage with significant European and international eSports tournaments according to the European competition calendar. This approach ensures that customers have access to a broad spectrum of eSports events, adhering to regulatory guidelines. We also utilize ethical advertising practices and partnerships with specialized gaming websites to connect with eSports enthusiasts effectively.

We offer in-play betting for eSports matches, enabling customers to place bets during the live progression of the games. This real-time betting feature enhances the eSports betting experience while ensuring that we comply with regulatory standards. To maintain the integrity of eSports betting and prevent unethical practices like match-fixing, we collaborate closely with international eSports federations. This partnership allows us to monitor eSports events and swiftly respond to any suspicious activities. In the event of any concerns, we proactively engage with national law enforcement authorities to uphold fair play and regulatory compliance.

With regard to competitive conditions, the betting industry continues to be highly competitive, with new entrants emerging frequently. However, we have maintained a robust competitive position, owing to our advanced technological infrastructure, diversified product portfolio, personalized customer experience, and prudent regulatory compliance. We are focused on maintaining and enhancing this competitive edge through continuous innovation, customer-centricity, and adaptability.

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A Provider of Enterprise Software-as-a-Service ("SaaS") Solutions

We also develop and own online gaming intellectual property (IP) and build configurable and scalable, turn-key, and white-label gaming platforms for international customers, located primarily in the Asia Pacific region. We own a proprietary Internet gaming enterprise software system that provides for unique casino and live game operations on the platforms that include GM-X System ("GM-X") and GM-Ag System, Turnkey Solution and White Label Solutions. These platforms are provided to Asia Pacific Internet-based and land-based casino operators as a turnkey technology solution for regulated real money Internet gaming ("RMiG"), Internet sports gaming, and virtual simulated gaming ("SIM").

The GM-X and GM-Ag System turn-key solutions (including modular, configurable and scalable gaming platforms), are complete software packages for starting an online gaming business, incorporating all the tools and gaming content necessary to run an online Casino and/or Sportsbook and offer a full suite of tools and features for successfully operating and maintaining an online gaming website: from player registration to user management and content management.

The GM-X and GM-Ag Systems have been deployed primarily in the Asia Pacific and we are currently focused on expanding our deployment into Europe, U.S., South America, and Africa. The online gambling industry, in the U.S., is essentially regulated at the state level. The Company is in continued discussions with multiple specialist gaming attorneys in the U.S. and has plans to engage one of these gaming specialists to represent the Company in its applications for a gaming license in the U.S. in the future.

The GM-X and GM-Ag Systems provide platforms that facilitate our gaming customers' operating online casinos, sportsbooks, lottery, and live games, as well as providing customers with seamless access to large portfolios of licensed gaming content, provided by established, licensed and accredited gaming content providers. We have distribution agreements with third party content providers to resell their game content. The game content includes games such as slots, table games (e.g., roulette, blackjack, and poker), sportsbooks and "live games." A "live game" is when a live casino game is shown via a live streaming video link in real time from a casino table where live dealers deal cards from a licensed studio and allow players to place an online bet on the outcome of the card game. We have been granted distribution rights for the gaming content that we provide to our customers.

Our GM-X and GM-Ag Systems provide the core platforms for our online casino and sportsbook operators. The systems contain back-office tools necessary for the customer to run a successful online iGaming operation. These tools include player account registration and creation, sophisticated payment services and gateways, geolocation, marketing, loyalty management, real-time analytics, and comprehensive reporting. Our platform can be accessed through both desktop and mobile applications.

Our customers are primarily licensed online gaming operators. We also provide services and resell third party gaming content to licensed online gaming distributors. The majority of our customers hold gaming licenses in Asia, South America, and Europe.

A Provider of Pay To Enter Prize Competitions And Online Trade Promotions Platform

We engage in the competition operations in the United Kingdom via our subsidiary RKingsCompetitions Ltd., ("RKings"). We operate competitions to win prizes online such as cars, motorbikes, watches, technology, holidays, luxury gadgets and other items by offering pay to enter prize competitions throughout the UK which are not gambling or a lottery and RKings does not offer B2C online sports betting and/or online casino services. The prize competitions require entrants to demonstrate sufficient skill, knowledge, or judgment to have a chance of winning and participants are provided with a route to free entry to the prize competitions as required by UK law. We refer to these as "pay to enter prize competitions".

As a purely online business, we have been focusing on enhancing the products and experience we offer to both new and existing players by improving the functionality and responsiveness of the RKingsCompetitions.com website, enhancing the prize values, and reducing the ticket prices.

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In addition, through GMG Assets Limited, we provide the winners of RKings' prizes with the option of accepting the cash value of the prize. In doing so, GMG Assets purchases the prize from the winner for cash and sells the prize to wholesalers at a margin.

On August 21, 2024 (effective August 1, 2024), we acquired an 80% ownership interest in Classics Holdings Co. Pty Ltd., an Australian proprietary limited company ("Classics Holdings"). Classics Holdings, through its wholly-owned subsidiary, Classics For A Cause Pty Ltd ("Classics for a Cause"), is an independent online trade promotions company, located in Australia, which operates a well-established business-to-consumer (B2C) platform that offers paid members access to a wide range of discounts from retailers across Australia. Classics for a Cause rewards its members with free entries into promotional giveaways, which feature luxury and classic motor vehicles, exotic motor vehicles, caravans, jet skis, boats, and exclusive holiday experiences.

Cash Requirements, Liquidity and Capital Resources

We had $22,136,319 cash on hand and a working capital deficit of $24,599,062 as of June 30, 2025. We believe our cash on hand is sufficient to meet our current working capital and capital expenditure requirements for a period of at least twelve months. We will continue to evaluate our long-term operating performance and cash needs and we believe we are well positioned to continue to fund the long-term operations of our business. We may raise additional equity and debt funding in the future, including up to $18.76 million that is available to be sold under our November 22, 2024, Equity Distribution Agreement in at-the-market offerings, as discussed in greater detail below under "Equity Distribution Agreement" as of the date of this Report.

Our material cash requirements include the following contractual obligations:

Debt:

The Company currently has the following outstanding debts:

	1.	Unicredit Bank Facility;
	2.	Hipotekarna Bank Facility; and
	3.	Igor Salindrija Facility.

See "NOTE 15 - LONG TERM LIABILITIES" in the notes to the financial statements included under "Part I. Financial Information-Item 1. Financial Statements", for more details on these debts.

Consideration payable to the former owners of MeridianBet Group:

As discussed in greater detail in "NOTE 22 - MERIDIANBET GROUP PURCHASE AGREEMENT", in the notes to the financial statements included under "Part I. Financial Information-Item 1. Financial Statements", the Company incurred the following payment obligations in connection with the Meridian Purchase:

Consideration payable to the former owners of MeridianBet Group		Cash Consideration Due				Cash Consideration Paid				Paid In Golden Matrix Shares				Cash Consideration Balance as of June 30, 2025
Closing Cash Consideration		$	12,000,000			$	12,000,000			$	-			$	-
Deferred Cash Consideration			18,000,000				11,498,409				6,501,591				-
Contingent Post-Closing Cash Consideration due 5 days after the six-month anniversary of the Closing			5,000,000				1,684,642				3,290,358				25,000
12 Month Non-Contingent Post-Closing Cash Consideration			10,000,000				179,540				9,570,460				250,000
18 Month Non-Contingent Post-Closing Cash Consideration			10,000,000				100,700				-				9,899,300
Promissory Note Consideration			15,000,000				-				-				15,000,000
Total		$	70,000,000			$	25,463,291			$	19,362,409			$	25,174,300

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Contingent obligation:

The Company had a possible holdback payment of approximately $645,500 (GBP 500,000) as part of the consideration for the acquisition of RKings. The holdback is contested by the Company and currently subject to ongoing claims.

Liquidity and capital resources

Description		As of June 30, 2025				As of December 31, 2024
Cash and cash equivalents		$	22,136,319			$	30,125,944
Working capital (deficit)		$	(24,599,062	)		$	(18,484,062	)
Shareholders' equity		$	124,982,523			$	108,950,580

The Company had $22,136,319 of cash on hand at June 30, 2025 and total assets of $210,274,502 ($38,967,045 of which were current assets) and a working capital deficit of $24,599,062 as of June 30, 2025. The working capital deficit was mainly due to $11,178,710 of current portion of long-term loans included in current liabilities, as well as $25,174,300 of consideration payable to the Meridian Sellers. Included in total assets at June 30, 2025 was $71,262,351 of goodwill and $57,758,135 in net intangible assets, as discussed in greater detail above under "NOTE 8 - INTANGIBLE ASSETS- SOFTWARE, LICENSES, TRADEMARKS, DEVELOPED TECHNOLOGY, CUSTOMER RELATIONSHIPS, AND NON-COMPETE AGREEMENTS", in the notes to the financial statements included under "Part I. Financial Information-Item 1. Financial Statements".

The Company had $30,125,944 of cash on hand at December 31, 2024, and total assets of $213,717,593 ($45,066,481 of which were current assets) and a working capital deficit of $18,484,062 as of December 31, 2024. The working capital deficit was mainly due to $17,291,241 of current portion of long-term loans included in current liabilities as well as $22,520,460 of current consideration payable to the Meridian Sellers. Included in total assets at December 31, 2024 was $71,249,119 of goodwill and $56,393,457 in net intangible assets, as discussed in greater detail above under "NOTE 8 - INTANGIBLE ASSETS- SOFTWARE, LICENSES, TRADEMARKS, DEVELOPED TECHNOLOGY, CUSTOMER RELATIONSHIPS, AND NON-COMPETE AGREEMENTS", in the notes to the financial statements included under "Part I. Financial Information-Item 1. Financial Statements".

The decrease in cash of $7,989,625 between December 31, 2024 and June 30, 2025, was mainly due to the repayment of debt.

Our financial focus is on long-term, sustainable growth in revenue with the goal of marginal increases in expenses. We believe that our operations are highly scalable, and we plan to continuously add new products to our offerings with the anticipation that they will provide successful revenue growth.

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In the future, we may be required to seek additional capital, including to pay amounts due pursuant to the terms of the MeridianBet Group Purchase Agreement, and to repay outstanding debt as discussed above, by selling additional debt or equity securities, which may include up to $18.76 million that is available to be sold under our November 22, 2024, Equity Distribution Agreement in at-the-market offerings (as discussed below), or may otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. Financing may not be available in amounts or on terms acceptable to us, or at all. In the event we are unable to raise additional funding and/or obtain revenues sufficient to support our expenses, we may be forced to scale down our operations, which could cause our securities to decline in value.

On April 28, 2025, the Company voluntarily prepaid in full, the then $7,200,000 remaining balance of the Secured Convertible Note.

See "NOTE 15 - LONG TERM LIABILITIES" in the notes to the financial statements included under "Part I. Financial Information-Item 1. Financial Statements", for more details on the Company's debts and lending facilities.

Cash flows

		Six Months Ended June 30,
		2025				2024
Cash provided by operating activities		$	10,117,167			$	2,553,394
Cash used in investing activities		$	(11,903,508	)		$	(11,186,276	)
Cash provided by (used in) financing activities		$	(14,301,175	)		$	23,166,197

Cash flows from operating activities include net income adjusted for certain non-cash expenses, and changes in operating assets and liabilities. Non-cash expenses for the six months ended June 30, 2025, mainly include stock-based compensation, amortization expenses on intangible assets, depreciation on property plant and equipment and non-cash interest expense related to debt discount amortization.

The Company generated cash from operating activities of $10,117,167 during the six months ended June 30, 2025, due primarily to a $4,530,082 increase in accounts payable and accrued liabilities, $2,456,639 of stock-based compensation, $1,950,094 of non-cash interest expense related to debt discount amortization, $4,618,020 of amortization expenses relating to intangible assets, and $2,780,271 of depreciation expenses, which was mainly offset by a $3,990,108 net loss, an $804,244 increase in taxes payable, and a $1,190,337 increase in accounts receivable.

The Company generated cash from operating activities of $2,553,394 during the six months ended June 30, 2024, due primarily to $3,964,648 of net income, $1,638,052 of stock-based compensation, $2,355,366 of amortization expenses, and $2,028,263 of depreciation expenses, which was offset by a $2,395,597 decrease in accounts payable, a $3,739,539 decrease in taxes payable, and a $1,017,633 increase in prepaid expenses.

During the six months ended June 30, 2025, cash used in investing activities was $11,903,508, which was primarily due to $1,610,343 of consideration paid to the former owners of MeridianBet Group in connection with the Meridian Purchase, $715,650 of consideration paid to acquire subsidiaries, $5,976,880 spent on intangible assets, and $3,574,317 spent on property, plant and equipment.

During the six months ended June 30, 2024, cash used in investing activities was $11,186,276, which was primarily due to $23,000,000 consideration paid to the former owners of MeridianBet Group in connection with the Purchase, $4,025,569 spent on intangible assets, and the $1,523,493 spent on property, plant and equipment, and partially offset by $17,355,360 in cash assumed from investment in Golden Matrix.

During the six months ended June 30, 2025, cash used in financing activities totaled $14,301,175. This was primarily driven by debt repayments of $15,060,133 and lease repayments of $1,093,927, partially offset by $1,172,000 in loan proceeds, attributable to short-term credit line agreement in the amount of EUR 1,000,000 (approximately $1,173,560) from UniCredit Bank, and $632,813 in net proceeds after commissions, from the sale of common stock under the Distribution Agreement as part of at-the-market sales.

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During the six months ended June 30, 2024, cash provided by financing activities was $23,166,197, which was primarily due to proceeds from loans of $25,451,100, attributable to the Unicredit Bank facility, Hipotekarna Bank facility and the Igor Salindrija borrowing, which was offset by repayment of lease of $1,266,056.

The Company experienced a net decrease in cash of $7,989,625 for the six months ended June 30, 2025, primarily due to repayments of loans and borrowings as noted above. This was partially offset by an $8,097,891 increase in cash resulting from exchange rate fluctuations, driven by the depreciation of the U.S. Dollar against other currencies, including the Euro (EUR), Serbian Dinar (RSD), Peruvian Sol (PEN), Tanzanian Shilling (TZS), and Brazilian Real (BRL).

Equity Distribution Agreement

On November 22, 2024, we entered into an Equity Distribution Agreement with Craig-Hallum Capital Group LLC. Pursuant to the Distribution Agreement, the Company may sell, at its option, up to an aggregate of $20 million in shares of its common stock through Craig-Hallum, as sales agent. Sales of the common stock made pursuant to the Distribution Agreement, if any, will be made under a Registration Statement on Form S-3. Subject to the terms and conditions of the Distribution Agreement, Craig-Hallum may sell the shares, if any, only by methods deemed to be an "at the market" offering as defined in Rule 415 promulgated under the Securities Act, including without limitation sales made directly through The Nasdaq Capital Market, by means of ordinary brokers' transactions, in negotiated transactions, to or through a market maker other than on an exchange or otherwise, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices and/or any other method permitted by law. The Company is not obligated to sell, and Craig-Hallum is not obligated to buy or sell, any shares of common stock under the Distribution Agreement.

The Company will pay Craig-Hallum a commission equal to 3.00% of any gross proceeds from the sale of shares of the Company's common stock under the Distribution Agreement. Pursuant to the terms of the Distribution Agreement, the Company also provided Craig-Hallum with customary indemnification rights and has agreed to reimburse Craig-Hallum for certain specified expenses up to $50,000, plus up to $5,000 for each future quarterly period that the Distribution Agreement remains in place. The offering of common stock pursuant to the Distribution Agreement will terminate upon the earlier of (i) the sale of all of the common stock subject to the Distribution Agreement and (ii) the termination of the Distribution Agreement by the Company or Craig-Hallum. Either party may terminate the agreement in its sole discretion at any time upon written notice to the other party.

No assurance can be given that the Company will sell any shares of common stock under the Distribution Agreement, or, if it does, as to the price or amount of shares of common stock that it sells or the dates when such sales will take place.

During the six months ended June 30, 2025, we sold an aggregate of 374,919 shares of our common stock under the ATM Program for net proceeds of approximately $662,600, after deducting commissions. Of this amount, $29,787 was received in July 2025. Since June 30, 2025 and through the date of this Report, we have sold an aggregate of 320,934 shares of our common stock under the ATM Program for net proceeds of approximately $535,560, after deducting commissions.

As of the date of this Report, we are eligible to sell up to an additional $18.76 million under the Distribution Agreement, subject to the terms thereof and subject to the limitations of Form S-3, which prohibit us, for so long as our non-affiliate market capitalization remains below $75 million, from selling securities valued at more than one-third of our non-affiliate float every 12 months.

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Adjusted EBITDA - Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization

In addition to our results calculated under generally accepted accounting principles in the United States ("GAAP"), we also present EBITDA and Adjusted EBITDA below. EBITDA and Adjusted EBITDA are "non-GAAP financial measures" presented as a supplemental measure of the Company's performance. They are not presented in accordance with GAAP. The Company uses EBITDA and Adjusted EBITDA as a metric of profits and successful operations management. In particular, we use Adjusted EBITDA as a milestone for the purposes of certain incentive compensation programs applicable to some of our officers and directors, in order to evaluate our company's performance and determine whether certain restricted stock units vest as of the end of December 31, 2025. EBITDA means net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA means EBITDA before stock-based compensation, and restructuring costs which include charges or expenses attributable to acquisition related costs. EBITDA and Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for net income or loss calculated in accordance with GAAP.

EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. EBITDA and Adjusted EBITDA are unaudited, and have limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, capital expenditures or working capital needs; EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. In addition, other companies in this industry may calculate EBITDA and Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure. The Company's presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of such non-GAAP measures to the most comparable GAAP measure, below. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view non-GAAP measures in conjunction with the most directly comparable GAAP financial measure.

Reconciliation of EBITDA and Adjusted EBITDA to Net income (loss):

		Three Months Period Ended								Six Months Period Ended
		June 30, 2025				June 30, 2024				June 30, 2025				June 30, 2024
Net income (loss)		$	(3,731,891	)		$	15,626			$	(3,990,108	)		$	3,964,648
+ Interest expense			1,481,669				32,484				2,953,029				36,855
- Interest income			(16,884	)			(69,666	)			(60,820	)			(104,548	)
+ Taxes			490,377				524,969				154,324				806,666
+ Depreciation			1,344,024				826,664				2,780,271				2,028,263
+ Amortization			2,465,380				1,913,047				4,618,020				2,355,366
EBITDA		$	2,032,675			$	3,243,124			$	6,454,716			$	9,087,250
+ Stock-based compensation			1,416,314				1,638,052				2,456,639				1,638,052
+ Restructuring costs			-				546,986				149,934				593,349
Adjusted EBITDA		$	3,448,989			$	5,428,162			$	9,061,289			$	11,318,651

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Results of Operations

Three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The following table summarizes the consolidated results of operations for the interim periods indicated, and the changes between the periods. Effective on April 1, 2024, the Company acquired 100% of the MeridianBet Group (the "Meridian Purchase"), which was accounted for as a reverse merger. As a result, the historical financial information below represents the accounts of MeridianBet Group. Golden Matrix's operations before the Meridian Purchase were excluded prior to April 1, 2024, the effective closing date of the Purchase.

		Three Months Ended June 30,
		2025				2024				$Change				%Change
Revenue		$	43,245,368			$	39,415,242			$	3,830,126				10	%
Cost of goods sold (COGS)			18,868,349				17,729,700				1,138,649				6	%
Gross profit			24,377,019				21,685,542				2,691,477				12	%
General and administrative expenses			26,681,869				21,560,430				5,121,439				24	%
Income (loss) from operations			(2,304,850	)			125,112				(2,429,962	)			-1,942	%
Interest expense			1,481,669				32,484				1,449,185				4,461	%
Interest earned			16,884				69,666				(52,782	)			-76	%
Foreign exchange gain/(loss)			(63,455	)			(131,458	)			68,003				-52	%
Other income			591,576				509,759				81,817				16	%
Provision for income taxes			490,377				524,969				(34,592	)			-7	%
Net income (loss)			(3,731,891	)			15,626				(3,747,517	)			-23,983	%
Net income (loss) attributable to noncontrolling interest			(147,546	)			(49,299	)			(98,247	)			199	%
Net income (loss) attributable to GMGI			(3,584,345	)		$	64,925				(3,649,270	)			-5,621	%

Revenue. Revenue increased by $3,830,126, or 10%, to $43,245,368 for the three months ended June 30, 2025, from $39,415,242 for the three months ended June 30, 2024. The following table sets forth a summary of the key components of revenues for the interim periods indicated.

		For the three months ended
Revenue by product		June 30, 2025				June 30, 2024				$Change				%Change
Online casino		$	12,723,710			$	9,833,025			$	2,890,685				29	%
Online sports betting		$	9,870,514			$	8,985,332			$	885,182				10	%
Retail sports betting and retail casino		$	5,806,601			$	5,656,849			$	149,752				3	%
GMAG segment		$	3,630,068			$	4,595,897			$	(965,829	)			-21	%
RKings		$	8,376,630			$	9,656,962			$	(1,280,332	)			-13	%
Classics for a Cause		$	2,029,926				-			$	2,029,926				-

Revenues from online casino increased by $2,890,685, or 29%, mainly due to the increase in the offer of online casino games from different providers to 2,500+, the integration of nine new providers: 3 Oaks Gaming, Turbo Games, Tada Gaming, Onlyplay, Mancala, Caleta, Gamzix, Fugaso and Felix Gaming, the launching of the new game "Gates of Olympia" from the Company's studio Expanse, which became a top 10 most popular game in the second quarter of 2025; revenues from online sports betting which increased by $885,182, or 10%, mainly due to the launch of our fifth-generation sports betting and online casino platform - ATLAS - in 2024, which includes three key new features, such as: Bet Boost - enhanced odds on selected bets, Auto Cashout - automatic cashout based on predefined conditions, and Early Payout - settlement of bets before the final result, as well as a complete redesign of the entire sports webpage, improvements to the live betting offered through the Watch & Bet feature, and an increase in live streams, especially for tennis; revenues from retail sports betting and retail casino increased by $149,751, or 3%, mainly due to the increase in the offer of the 60 brand new latest-generation IMPERA brand slot machines and the impact of betting shop promotions, especially during the period of historically reduced sports activity (i.e., June); revenues from the GMAG segment decreased by $965,829, or 21%, primarily due to reduced usage by several key customers, driven by increased market competition, and the Company focusing on expanding the range of products offered through the GMAG system and enhancing product margins; revenues from RKings decreased by $1,280,332, or 13%, mainly due to cost-cutting changes in marketing strategy during 2025 Q2; and revenues from Classics for a Cause were $2,029,926, reflecting the contribution from the business following its acquisition, which became effective on August 1, 2024. Additionally, gross profit after marketing expenses improved by $291,458 in 2025 Q2 compared to 2025 Q1. The Company has since implemented a new marketing system and hired a specialist to boost efficiency and support future growth.

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COGS. Costs of goods (COGS) sold increased by $1,138,649, or 6%, to $18,868,349 for the three months ended June 30, 2025, from $17,729,700 for the three months ended June 30, 2024. COGS from online casino, online sports betting, retail casino and retail sports betting increased by $1,886,152 in total, or 28%, to $8,708,402 for the three months ended June 30, 2025, from $6,822,250 for the three months ended June 30, 2024, mainly due to the increase in the variable amounts of gaming tax and software fee costs which were in line with the increase in income from online casinos, online sports betting, retail casinos and retail sports betting; COGS from the GMAG segment decreased by $768,653, or 23%, to $2,543,947, down from $3,312,600 in the prior-year period, mainly due to reduced usage by several key customers; COGS from RKings declined by $700,259, or 9%, to $6,894,591, compared to $7,594,850 for the three months ended June 30, 2024, primarily due to the decreased number of competitions; and COGS from the recently acquired Classics for a Cause business totaled $721,409 for the quarter-there were no comparable costs in the same period last year, as the acquisition became effective on August 1, 2024.

Gross profit. Gross profit increased by $2,691,477, or 12%, to $24,377,019 for the three months ended June 30, 2025, from $21,685,542 for the three months ended June 30, 2024. Gross profit from online casinos increased by $1,852,126 or 26%; gross profit from online sports betting increased by $243,393, or 4%, and gross profit from retail sports betting and retail casino decreased by $7,136, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in gross profit was mainly due to the increase in the revenues as discussed above. Gross profit for the three months ended June 30, 2025, from GMAG decreased by $197,176, or 15%, and gross profit from RKings decreased by $580,073, or 28%, due to the decrease in revenues as discussed above. Gross profit from Classics for a Cause was $1,308,517.

General and administrative expenses (G&A). General and administrative expenses increased by $5,121,439, or 24%, to $26,681,869 for the three months ended June 30, 2025, from $21,560,430 for the three months ended June 30, 2024. General and administrative expenses consisted primarily of stock-based compensation, depreciation expenses, amortization expenses, salary and wages, professional fees, marketing expenses, rents and utilities.

Stock-based compensation (within G&A) for the three months ended June 30, 2025, was $1,327,711, compared to $1,558,296 for the three months ended June 30, 2024, a $230,585 decrease from the prior period, which was due mainly to the reduced number of RSUs granted during the period.

Amortization expenses for the three months ended June 30, 2025, were $2,465,380, compared to $1,913,047 for the three months ended June 30, 2024, a $552,333, or 29% increase from the prior period, which was due mainly to the capitalization of a significant portion of software that had been in development during the current period.

Salaries and wages for the three months ended June 30, 2025, were $6,841,937, compared to $5,253,249 for the three months ended June 30, 2024, a $1,588,688 or 30% increase from the prior period, which was due to increased headcount to both support revenue growth and to enable the entry into new markets for the current period, as well as an increase in employee salaries, compared to the prior period.

Professional fees for the three months ended June 30, 2025, were $1,155,410, compared to $1,238,223 for the three months ended June 30, 2024, an $82,813 or 7% decrease from the prior period. The higher professional fees in the prior year were mainly due to the acquisition with Golden Matrix.

Marketing expenses for the three months ended June 30, 2025, were $6,705,582, compared to $4,458,004 for the three months ended June 30, 2024, a $2,247,577 or 50% increase from the prior period. The increase in marketing fees was primarily driven by increased budgets across all advertising channels (Google, Meta, etc.), as well as new sponsorship agreements with BLS - the Basketball League of Serbia, new collaborations with influencers (TikTok creators), and the deployment of promotional teams across the countries in which the Company operates. Additionally, marketing expenses for Q2 2025 included $523,182 related to the recently acquired Classics for a Cause business, which costs were not incurred in the prior-year period.

Rents and utilities for the three months ended June 30, 2025, were $1,766,242, compared to $1,749,529 for the three months ended June 30, 2024, a $16,713 or 1% increase from the prior period.

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Interest expense. Interest expense increased by $1,449,185, or 4,461%, to $1,481,669 for the three months ended June 30, 2025, from $32,484 for the three months ended June 30, 2024. The significant increase was primarily driven by the amortization of debt discounts related to the issuance of the October 2024 Secured Convertible Note and the Unicredit Bank Facility, as well as accrued interest on borrowings from commercial banks.

Interest earned. Interest earned decreased by $52,782, or 76%, to $16,884 for the three months ended June 30, 2025, from $69,666 for the three months ended June 30, 2024. The decrease was due to the decrease in the term deposits with our banks.

Foreign exchange gain. The foreign exchange loss decreased by $68,003, to $63,455 for the three months ended June 30, 2025, from a loss of $131,458 for the three months ended June 30, 2024. This decrease was primarily driven by favorable fluctuations in the EUR/RSD/USD exchange rate, which positively impacted the revaluation of the Company's monetary assets and liabilities denominated in euros and dinars. The appreciation of the euro and dinars against the U.S. dollar during the reporting period resulted in higher unrealized foreign exchange gains.

Other Income. Other income is related to income from marketing services for third-party advertising in MeridianBet Group betting shops, sale of fixed assets, value-added-tax (VAT) refunds, income from compensation for damages, income from reduction of liabilities and other income that is not directly related to the Company's core activity. For the three months ended June 30, 2025, and 2024, other income amounted to $591,576 and $509,759, respectively. The increase of $81,817 is attributable to other operating income from the franchise partners such as marketing services, customer support services, staff training services, etc.

Provision for income taxes. Our effective tax rate was (16.3)% and 97.1% for the three months ended June 30, 2025 and June 30, 2024, and (4.0)% and 16.9% for the six months ended June 30, 2025 and June 30, 2024, respectively. The decrease in the effective income tax rate for the three and six months ended June 30, 2025 compared to the same periods in 2024 is primarily due to changes in the mix of our earnings and tax expenses between the U.S. and foreign countries.

Net income (loss) attributable to noncontrolling interest. Net income (loss) attributable to noncontrolling interest in the acquired entity is measured at their proportionate share of the acquired entity's and for (a) Meridian Gaming Brazil SPE Ltda in the percentage of 30% (b) Fair Champions Meridian Ltd. Cyprus in the percentage of 49%, and (c) Classics Holding Pty Ltd Australia in the percentage of 20%. For the three months ended June 30, 2025, and 2024, net loss attributable to noncontrolling interest amounted to $147,546 and $49,299, respectively. The increase was primarily driven by a higher net loss attributable to the noncontrolling interest in the acquired entities.

Net income (loss) attributable to GMGI. Net loss attributable to GMGI increased by $3,649,270, or 5,621%, to a net loss of $3,584,345 for the three months ended June 30, 2025, compared to net income of $64,925 for the three months ended June 30, 2024. The increase in net loss was mainly due to an increase in the general and administrative expenses, and interest expenses, each as discussed above.

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Sixmonths ended June 30, 2025, compared to the sixmonths ended June 30, 2024.

The following table summarizes the consolidated results of operations for the interim periods indicated, and the changes between the periods. Effective on April 1, 2024, the Company acquired 100% of the MeridianBet Group, which was accounted for as a reverse merger. As a result, the historical financial information below represents the accounts of MeridianBet Group. Golden Matrix's operations before the Purchase were excluded prior to April 1, 2024, the effective closing date of the Purchase.

		Six Months Ended June 30,
		2025				2024				$Change				%Change
Revenue		$	85,968,421			$	64,265,829				21,702,592				34	%
Cost of goods sold (COGS)			37,395,441				24,888,357				12,507,084				50	%
Gross profit			48,572,980				39,377,472				9,195,508				23	%
General and administrative expenses			50,983,847				35,558,239				15,425,608				43	%
Income (loss) from operations			(2,410,867	)			3,819,233				(6,230,100	)			-163	%
Interest expense			2,953,029				36,855				2,916,174			7913%
Interest earned			60,820				104,548				(43,728	)			-42	%
Foreign exchange gain/(loss)			370,213				(118,521	)			488,734				412	%
Other income			1,097,079				1,002,909				94,170				9	%
Provision for income taxes			154,324				806,666				(652,342	)			-81	%
Net income (loss)			(3,990,108	)			3,964,648				(7,954,756	)			-201	%
Net income (loss) attributable to noncontrolling interest			(174,155	)			(91,011	)			(83,144	)			91	%
Net income (loss) attributable to GMGI			(3,815,953	)			4,055,659				(7,871,612	)			-194	%

Revenue. Revenue increased by $21,702,592, or 34%, to $85,968,421 for the six months ended June 30, 2025, compared to $64,265,829 for the same period in 2024. The following table sets forth a summary of the key components of revenues for the interim periods indicated.

		For the six months ended
Revenue by product		June 30, 2025				June 30, 2024				$Change				%Change
Online casino		$	24,119,139			$	19,620,329			$	4,498,810				23	%
Online sports betting		$	19,721,849			$	17,898,195			$	1,823,654				10	%
Retail sports betting and retail casino		$	11,482,653			$	11,087,908			$	394,745				4	%
GMAG segment		$	7,471,339			$	4,595,897			$	2,875,442				63	%
RKings		$	17,227,980			$	9,656,962			$	7,571,018				78	%
Classics for a Cause		$	4,334,642				-			$	4,334,642				-

Revenues from online casino increased by $4,498,809, or 23%, mainly due to the increase in the offer of online casino games from different providers to 2,500+, the integration of eleven new providers: Skywind, Quickfire, 3 Oaks Gaming, Turbo Games, Tada Gaming, Onlyplay, Mancala, Caleta, Gamzix, Fugaso and Felix Gaming, the launching of the new games: "Candy's Bonanza" & "Gates of Olympia" from the Company's studio Expanse, which became part of the top 10 most popular games in the first six months of 2025; revenues from online sports betting which increased by $1,823,654, or 10%, mainly due to the launch of our fifth-generation sports betting and online casino platform - ATLAS - in 2024, which includes three key new features, such as: Bet Boost - enhanced odds on selected bets, Auto Cashout - automatic cashout based on predefined conditions, and Early Payout - settlement of bets before the final result, as well as a complete redesign of the entire sports webpage, improvements to the live betting offered through the Watch & Bet feature, and an increase in live streams, especially for tennis; revenues from retail sports betting and retail casino which increased by $394,745, or 4%, mainly due to the increase in the offer of the 60 brand new latest-generation IMPERA brand slot machines and the impact of betting shop promotions, especially during the period of traditionally reduced sports activity (in June); and increased revenues from the GMAG segment, RKings, and Classics for a Cause compared to the same period in the prior year, primarily due to the acquisition of Golden Matrix becoming effective on April 1, 2024, and as a result, revenues generated by these segments for the period from January to March 2024 were not included in the prior-year comparative figures.

COGS. Costs of goods sold increased by $12,507,084, or 50%, to $37,395,441 for the six months ended June 30, 2025, from $24,888,357 for the six months ended June 30, 2024. COGS from online casino, online sports betting, retail casino and retail sports betting increased by $2,593,538 in total, or 19%, to $16,574,445 for the six months ended June 30, 2025, from $13,980,907 for the six months ended June 30, 2024, mainly due to the increase in the variable amounts of gaming tax and software fee costs in line with the increase in income from online casinos, online sports betting, retail casinos and retail sports betting. COGS from the GMAG segment, RKings, and Classics for a Cause increased by $9,913,546, or 91%, compared to the same period in the prior year, primarily due to the acquisition of Golden Matrix becoming effective on April 1, 2024, and because, as a result, COGS generated by these segments for the period from January to March 2024 were not included in the prior-year comparative figures.

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Gross profit. Gross profit increased by $9,195,508, or 23%, to $48,572,980 for the six months ended June 30, 2025, from $39,377,472 for the six months ended June 30, 2024. Gross profit from online casino increased by $3,048,628 or 22% and gross profit from online sports betting increased by $952,288, or 7%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase in the gross profit was mainly due to the increase in the revenues as discussed above. Gross profit from the GMAG segment, RKings, and Classics for a Cause increased by $4,867,556, or 145%, compared to the same period in the prior year, primarily due to the acquisition of Golden Matrix becoming effective on April 1, 2024, and because, as a result, gross profits generated by these segments for the period from January to March 2024 were not included in the prior-year comparative figures.

General and administrative expenses. The general and administrative expenses increased by $15,425,608, or 43%, to $50,983,847 for the six months ended June 30, 2025, from $35,558,239 for the six months ended June 30, 2024. The general and administrative expenses consisted primarily of stock-based compensation, depreciation expenses, amortization expenses, salary and wages, professional fees, marketing expenses, rents and utilities.

Stock-based compensation (within G&A) for the six months ended June 30, 2025, was $2,368,036, compared to $1,558,296 for the six months ended June 30, 2024, an $809,740 increase from the prior period, which was due mainly to the RSUs granted to employees and directors of the Company in the current period, as well as shares issued for services during the period.

Amortization expenses for the six months ended June 30, 2025, were $4,618,020, compared to $2,355,366 for the six months ended June 30, 2024, a $2,262,654, or 96% increase from the prior period, which was due mainly to the amortization of new intangible assets recognized as a result of the acquisition of Golden Matrix and Classics Holdings.

Salaries and wages for the six months ended June 30, 2025, were $13,132,804, compared to $9,581,773 for the six months ended June 30, 2024, a $3,551,031 or 37% increase from the prior period, which was due partially to a $1,538,091 increase in salaries to employees of Golden Matrix after the acquisition of Golden Matrix. Salaries paid to employees of MeridianBet Group increased by $2,012,940, which was due mainly to increased headcount to both support revenue growth and to enable the entry into new markets

Professional fees for the six months ended June 30, 2025, were $2,075,650, compared to $1,586,112 for the six months ended June 30, 2024, a $489,538 or 31% increase from the prior period. The increase was primarily due to the fact that professional fees incurred from January to March 2024 of Golden Matrix were not included in the prior-year comparative period, as the acquisition of Golden Matrix became effective on April 1, 2024.

Marketing expenses for the six months ended June 30, 2025, were $12,751,378, compared to $7,519,938 for the six months ended June 30, 2024, a $5,231,440 or 70% increase from the prior period, which was mainly due to increased advertising budgets across all Ads channels (Google, Meta, etc.), as well as new sponsorship agreements with: FNC - Fight Nation Championship, BLS - the Basketball League of Serbia, the football club AEL from Cyprus, the women's basketball club Red Star, the basketball club Vršac, new collaborations with influencers (TikTok creators), and the deployment of promotional teams across the countries. Additionally, marketing expenses incurred from January to March 2024 of Golden Matrix were not included in the prior-year comparative period, as the acquisition of Golden Matrix became effective on April 1, 2024.

Rents and utilities for the six months ended June 30, 2025, were $3,509,304, compared to $3,381,521 for the six months ended June 30, 2024, a $127,783 or 4% increase from the prior period.

Interest expense. Interest expense increased by $2,916,174, or 7,913%, to $2,953,029 for the six months ended June 30, 2025, from $36,855 for the six months ended June 30, 2024. The significant increase was primarily driven by the amortization of debt discounts related to the issuance of the Secured Convertible Note and the Unicredit Bank Facility, as well as accrued interest on borrowings from commercial banks.

Interest earned. Interest earned decreased by $43,728, or 42%, to $60,820 for the six months ended June 30, 2025, from $104,548 for the six months ended June 30, 2024. The decrease was due to the decrease in the term deposits with our banks.

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Foreign exchange loss. Foreign exchange results improved by $488,734, resulting in a gain of $370,213 for the six months ended June 30, 2025, compared to a loss of $118,521 for the same period in 2024. The improvement was primarily driven by favorable fluctuations in the EUR/RSD/USD exchange rate, which positively impacted the revaluation of the Company's monetary assets and liabilities denominated in euros and dinars. The appreciation of the euro and dinars against the U.S. dollar during the reporting period resulted in higher unrealized foreign exchange gains.

Other Income. Other income is related to income from marketing services for third-party advertising in Meridian betting shops, sale of fixed assets, VAT refunds, income from compensation for damages, income from reduction of liabilities and other income that is not directly related to the Company's core activity. For the six months ended June 30, 2025, and 2024, other income amounted to $1,097,079 and $1,002,909, respectively. The increase of $94,170 for the six months ended June 30, 2025, versus the six months ended June 30, 2024, is attributable to other operating income from franchise partners such as marketing services, customer support services, and staff training services.

Provision for income taxes. Our effective tax rate was (16.3)% and 97.1% for the three months ended June 30, 2025 and June 30, 2024, and (4.0)% and 16.9% for the six months ended June 30, 2025 and June 30, 2024, respectively. The decrease in the effective income tax rate for the three and six months ended June 30, 2025 compared to the same periods in 2024 is primarily due to changes in the mix of our earnings and tax expenses between the U.S. and foreign countries.

Net income (loss) attributable to noncontrolling interest. Net income (loss) attributable to noncontrolling interest in the acquired entity is measured at their proportionate share of the acquired entity's and for (a) Meridian Gaming Brazil SPE Ltda in the percentage of 30%; (b) Fair Champions Meridian Ltd. Cyprus in the percentage of 49%; and (c) Classics Holding Pty Ltd Australia in the percentage of 20%. For the six months ended June 30, 2025, and 2024, net loss attributable to noncontrolling interest amounted to $174,155 and $91,011, respectively. The increase in net loss was primarily driven by a higher net loss attributable to the noncontrolling interest in the acquired entity.

Net income (loss) attributable to GMGI. Net loss attributable to GMGI increased by $7,871,612, or -194%, to a net loss of $3,815,953 for the six months ended June 30, 2025, from net income of $4,055,659 for the six months ended June 30, 2024. The decrease was mainly due to an increase in the general and administrative expenses, and interest expenses, each as discussed above.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of the Company's financial condition and results of operations are based upon its consolidated unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates past judgments and estimates, including those related to bad debts, accrued liabilities, goodwill and contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies and related risks described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Commission on March 24, 2025, are those that depend most heavily on these judgments and estimates. As of June 30, 2025, there had been no material changes to any of the critical accounting policies contained therein. "NOTE 2 - SUMMARY OF ACCOUNTING POLICIES," of the notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Commission on March 24, 2025, describes the significant accounting policies and methods used in the preparation of the Company's consolidated financial statements. The critical accounting estimates include transactions, assets, liabilities and obligations that are stated in foreign local currency and their conversion to US currency. Resulting loss on currency conversions related to assets and liabilities is recognized in shareholders' equity in accumulated other comprehensive income (loss) on the Company's consolidated balance sheets and realized foreign currency translation adjustments are recognized in other income in the consolidated statements of operations and comprehensive income.

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