Galaxy Gaming, Inc.

Compensation discussion and analysis. Our current executive compensation plan consists of cash, stock and/or stock options compensation to the executive officers, who are primarily responsible for the day-to-day management and continuing development of our business.

Summary compensation table. The table below summarizes all compensation awarded to or earned by each named executive officer for each of the last two completed fiscal years.

(1)

For our executives, all other compensation includes standard benefits such as health insurance premiums and contributions to a defined contribution plan (“401k”). In addition, for Todd P. Cravens, all other compensation includes severance payments made by the Company pursuant to Mr. Cravens' separation, confidentiality, and general release agreement.

(2)

During the year ended December 31, 2024, Mr. Reback was granted 70,000 restricted stock units that vested immediately and were valued on the closing price of the business day immediately preceding the grant date. The fair value of the restricted stock unit grant was $194,600.

(3)

Steven J. Kopjo was appointed CFO, effective May 28, 2024. During the year ended December 31, 2024, Mr. Kopjo was granted options to purchase 300,000 shares of common stock, which vest yearly over a three-year period beginning May 28, 2024. The value of Mr. Kopjo's option awards were based on the closing price of the business day immediately preceding the grant date using the Black-Scholes option pricing model. The fair value of the option grant was $254,008.

(4)

Harry C. Hagerty transitioned from CFO to Strategic Advisor effective May 28, 2024. Mr. Hagerty's salary was reduced throughout 2024.

Outstanding equity awards at fiscal year-end table. The following table summarizes all unexercised options, stock that has not vested, and equity incentive plan awards outstanding for each named executive officer as of December 31, 2024.

(1)

Mr. Reback's remaining unvested 300,000 options will vest as follows: (1) 100,000 shares on November 13, 2025, (b) 100,000 on November 13, 2026, and (c) 100,000 shares on November 13, 2027.

(2)

Mr. Kopjo's 300,000 options will vest as follows: (1) 100,000 shares on May 28, 2025, (b) 100,000 on May 28, 2026, (c) 100,000 shares on May 28, 2027.

Compensation of directors table. Board compensation is paid 60% in cash and 40% in stock. Board compensation targets are agreed upon and voted on annually. For the year ended December 31, 2024, the annual compensation target is $127,500 for each non-employee director. Additionally, for 2024, the annual compensation target is $170,000 for the Chair of our Board of Directors and $148,750 for the Audit Committee Chair. The table below summarizes all compensation paid to each named director for the last completed fiscal year.

(1)

Mr. Lipparelli was appointed as the Chairman of the Board effective July 26, 2017. During the year ended December 31, 2024, Mr. Lipparelli received 34,588 shares of our restricted common stock in quarterly installments valued at $65,942, using the closing price of our stock on the last business day of each quarter. The shares vested immediately on the grant date. Mr. Lipparelli also received cash compensation of $102,000 paid in monthly installments throughout 2024.

(2)

Mr. Waters was appointed to the Board, effective April 1, 2015. During the year ended December 31, 2024, Mr. Waters received 25,941 shares of our restricted common stock in quarterly installments valued at $49,457, using the closing price of our stock on the last business day of each quarter. The shares vested immediately on the grant date. Mr. Waters also received cash compensation of $76,500 paid in monthly installments throughout 2024.

(3)

Ms. Kondra was appointed to the Board effective December 2, 2021, and the Board authorized the issuance of 75,000 restricted shares of our common stock, which vest yearly over a three-year period. During the year ended December 31, 2024, Ms. Kondra received 30,265 shares of our restricted common stock valued at $57,700, using the closing price of our stock on the last business day of each quarter. Ms. Kondra also received cash compensation of $89,250 paid in monthly installments throughout 2024.

(4)

Ms. Brill was appointed to the Board effective July 13, 2022. During the year ended December 31, 2024, Ms. Brill received 25,941 shares of our restricted common stock in quarterly installments valued at $49,457, using the closing price of our stock on the last business day of each quarter. Ms. Brill also received cash compensation of $76,500 paid in monthly installments throughout 2024.

(5)

Mr. Isaacs was appointed to the Board effective June 3, 2019 and resigned effective August 30, 2024. During the year ended December 31, 2024, Mr. Isaacs received 19,792 shares of our restricted common stock in quarterly installments valued at $32,486, using the closing price of our stock on the last business day of each quarter. Mr. Isaacs also received cash compensation of $51,000 paid in monthly installments through August 2024.

Reback Employment Agreement. We have entered into an employment agreement with Matt Reback to serve as our President and Chief Executive Officer. The Reback employment agreement has a three-year term; and provides for a base salary of $350,000 per year, an annual discretionary bonus target of up to 50% of his base salary, with the opportunity to earn additional amounts if certain financial objectives are achieved, and eligibility to participate in the employee benefit plans available to our employees. Under the Reback employment agreement, we agreed to pay a minimum bonus of $80,000 to Mr. Reback for the 2024 calendar year if 80% of the annual bonus target is achieved. Under the Reback employment agreement, Mr. Reback received a stock award that is eligible to vest based on achievement of performance-based vesting conditions (the “Long-Term Incentive Stock Grant”). The award is eligible to vest based on personal and business performance targets to be established by the Board for each of 2024, 2025 and 2026. The targets, if achieved, will provide Mr. Reback the opportunity to receive a total of 70,000 shares of common stock for calendar year 2024, 100,000 shares of common stock for calendar year 2025, and 130,000 shares of common stock for calendar year 2026, with final vesting determined following the assessment of achievement of the performance objectives during the first quarter of the following calendar year. To the extent any portion of this stock award remains outstanding at the effective time of the merger with Evolution Malta Holding Limited, such portion will convert into a contingent cash award at the effective time and will remain subject to the same vesting conditions, subject to the acceleration terms described below.

The Reback employment agreement provides that upon termination of employment by Mr. Reback for good reason or by the Company for any reason other than Mr. Reback’s death or disability or other than for cause, Mr. Reback is entitled to receive cash severance payments equal to 12 months of his annual base salary at the time of termination and continuation of his medical and health insurance benefits for a period equal to the lesser of (x) 12 months and (y) the period ending on the date he first becomes entitled to medical and health insurance benefits under any plan maintained by any person for whom Mr. Reback provides services as an employee or otherwise. In addition to the foregoing severance benefits, if Mr. Reback’s employment is terminated without cause following a change of control (including the merger with Evolution Malta Holding Limited), he is also entitled to: (i) additional cash severance payments equal in the aggregate to 12 months of his annual base salary at the time of termination and (ii) accelerated vesting of his “base” stock options granted under the Reback employment agreement. In addition, if the effective time occurs and Mr. Reback is not retained or is not provided the continuing opportunity to earn his stock award (or any contingent cash award issued to Mr. Reback in consideration of his stock award at the effective time), Mr. Reback will vest in the earned portion of such award (for any calendar year completed prior to the effective time) or if a calendar year is not yet complete (or has not commenced) as of the effective time of the merger Evolution Malta Holding Limited, the remaining unearned portion of the award.

On December 27, 2024, the Reback employment agreement was amended to provide for, among other things, (i) the accelerated vesting of certain of Mr. Reback’s performance-based equity awards granted pursuant to our 2014 Equity Incentive Plan on December 31, 2024, resulting in the vesting of 70,000 shares of common stock for calendar year 2024, and (ii) an accelerated bonus payment of $175,000 payable prior to December 31, 2024, in each case, subject to the conditions set forth in the amendment to the Reback employment agreement.

Kopjo Employment Agreement. We have entered into an employment agreement with Steven Kopjo, effective May 28, 2024. The Kopjo employment agreement provides for, among other things (i) a three-year term; (ii) a base compensation of $250,000 per year; (iii) annual bonus opportunities of up to 50% of his base salary based on the achievement of certain performance metrics as determined by the Board; and (iv) upon execution of the agreement, a grant of options to purchase 300,000 shares of our common stock with a strike price equal to the price per share as reported on OTC Markets on the date of grant. The option will vest in equal installments over a three-year period, commencing on May 28, 2025.

The Kopjo employment agreement provides that upon termination of employment by Mr. Kopjo for good reason or by the Company for any reason other than Mr. Kopjo’s death or disability or other than for cause, Mr. Kopjo is entitled to receive cash severance payments equal to 12 months of his annual base salary at the time of termination and continuation of his medical and health insurance benefits for a period equal to the lesser of (x) 12 months and (y) the period ending on the date he first becomes entitled to medical and health insurance benefits under any plan maintained by any person for whom Mr. Kopjo provides services as an employee or otherwise. In addition to the foregoing severance benefits, if Mr. Kopjo’s employment is terminated without cause following a change of control, he is also entitled to: (i) additional cash severance payments equal in the aggregate to 12 months of his annual base salary at the time of termination and (ii) accelerated vesting of his “base” stock options granted under the Kopjo employment agreement.

Hagerty Employment Agreement. We have entered into an employment agreement with Harry C. Hagerty, our former Chief Financial Officer and a current advisor to the Company. The Hagerty employment agreement has a term ending April 30, 2025, after which he intends to retire. The Hagerty agreement provides that Mr. Hagerty will serve as a strategic advisor during the remaining term of the agreement to assist with the transition to the Company of his successor, Steven Kopjo. Pursuant to the Hagerty employment agreement, Mr. Hagerty will continue to receive a base salary of $6,000 per month until April 30, 2025 unless his service is earlier terminated. In the event Mr. Hagerty is terminated without cause or terminates his employment for good reason, Mr. Hagerty is entitled to receive cash severance payments equal to 12 months of his annual base salary at the time of termination and continuation of his medical and health insurance benefits for a period equal to the lesser of (x) 12 months and (y) the period ending on the date he first becomes entitled to medical and health insurance benefits under any plan maintained by any person for whom Mr. Hagerty provides services as an employee or otherwise. In addition to the foregoing severance benefits, if Mr. Hagerty’s employment is terminated without cause following a change of control, he is also entitled to: (i) additional cash severance payments equal in the aggregate to 12 months of his annual base salary at the time of termination and (ii) accelerated vesting of his stock options.

Cravens Separation Agreement. In connection with the separation of Mr. Cravens’ employment as CEO effective November 10, 2023, we entered into a separation, confidentiality and general release agreement with Mr. Cravens, which provides for, among other things, salary continuation of $325,000 payable over 26 biweekly payments, and an extended ability to exercise certain vested options.

PAY VERSUS PERFORMANCE

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance measures of the Company. The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Company or the Compensation Committee view the link between the Company’s performance and named executive officer pay. For further information regarding our compensation philosophy and how we seek to align executive compensation with the Company’s performance, refer to “Executive Compensation.”

Pay versus performance table. The following table sets forth information concerning the compensation, as calculated under SEC rules, of our named executive officers ("NEOs"), which include our current CEO, Matthew D. Reback, our current CFO, Steven J. Kopjo, our former CEO, Todd P. Cravens, and our former CFO, Harry C. Hagerty, for each of the fiscal years ended December 31, 2024, 2023, and 2022, and our financial performance for each such fiscal year:

(1)

Represents the amounts of total compensation reported in our Summary Compensation Table reflected elsewhere in this Form 10-K.

(2)

Matthew D. Reback, our current principal executive officer ("Current PEO"), has served as our PEO since November 13, 2023.

(3)

Todd P. Cravens, our former principal executive officer ("Former PEO"), served as our PEO for the years ended December 31, 2021 and 2022 and through November 10, 2023.

(4)

Represents the amounts of “compensation actually paid”, as computed in accordance with SEC rules. The amounts do not reflect the actual compensation earned by or paid during the applicable year. In accordance with SEC rules, the following adjustments were made to total compensation to determine the compensation actually paid:

(a)

The reported value of equity awards represents the amount reported in the "Stock Awards" and "Option Awards" column of the Summary Compensation Table above and prior year proxy filings.

(b)

The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:

(5)

Since there is only one current Non-PEO NEO, Steven Kopjo, and one former Non-PEO NEO, Harry Hagerty, there is no need to calculate an average for the compensation amounts. Instead, the amounts reflected in the 'Total' column of the Summary Compensation Table for each applicable year are directly taken from the table for each individual. The figures represent the actual compensation amounts for Steven Kopjo, our current Non-PEO NEO, and Harry Hagerty, our former Non-PEO NEO, without averaging, as there is only one individual in each category.

(6)

The dollar amounts reported represent the average amount of “compensation actually paid” to the current and former Non-PEO NEOs (excluding our CEO), as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the Non-PEO NEOs (excluding our CEO) during the applicable year, as there is only one individual in each category. In accordance with the SEC rules, the following adjustments were made to average total compensation for the Non-PEO NEOs (excluding our CEO) for each year to determine the compensation actually paid, using the same methodology described above in Note 4.

(a)

The reported value of equity awards represents the amount reported in the "Stock Awards" and "Option Awards" column of the Summary Compensation Table above and prior year proxy filings.

(b)

The amounts deducted or added in calculating the equity award adjustments are as follows:

(7)

The Company's closing stock prices were $2.766, $1.900, $2.440, and $3.910 for the years ended December 31, 2024, 2023, 2022, and 2021, respectively.

(8)

The cumulative Total Shareholder Return (“TSR”) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period.

(9)

The Company's selected measures are net income (loss) and Adjusted EBITDA. Adjusted EBIDTA, is a non-GAAP financial metric and includes adjustments to net income (loss) to exclude interest, income taxes, depreciation, amortization, share based compensation, foreign currency exchange loss, change in fair value of interest rate swap liability, severance, other expenses related to litigation, CEO transition expenses, loss on disposal of assets, and professional fees, acquisition costs and other expenses.

Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures

As required by Item 402(v) of Regulation S-K, we are providing the following graphs to illustrate the relationship between the pay and performance figures that are included in the pay versus performance tabular disclosure above. The graphs below reflect the relationship of compensation actually paid, from the tables above, to our PEO and Non-PEO NEOs in 2024, 2023 and 2022 to (1) total shareholder return, (2) Net Income (loss) and (3) Adjusted EBITDA. As noted above, compensation actually paid for purposes of the tabular disclosure and the following graphs was calculated in accordance with SEC rules and does not reflect the amount of compensation earned by or actually paid to our NEOs during the applicable years.