Galaxy Gaming, Inc.
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001193125-26-215114
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001193125-26-340606
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 42 previous paragraphs and 59 current paragraphs.
22 unchanged; 18 reworded; 11 added; 2 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
On July 18, 2024, we entered into the Merger Agreement providing for the Company’s acquisition by Evolution Malta Holding Limited in a cash transaction. Evolution failed to either waive or meet the conditions to close the Merger on or before the Extended Outside Date of July 17, 2026. On July 21, 2026, Evolution notified us that Evolution terminated the Merger Agreement. Under the terms of the Merger Agreement, Evolution paid us a cash termination fee in the amount of $5,234,678.
Current report
Selling, general and administrative expenses increased by $639,136, or 15.2% for the three months ended June 30, 2026, as compared to the same period in the prior year. The increase includes $505,361 of state tax expense recorded in connection with the preliminary results of a managed audit that the Company voluntarily initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026 (see Note 6, Commitments and Contingencies), and $168,128 of professional fees and transaction-related costs, primarily related to the proposed acquisition of the Company by Evolution, which was terminated on July 21, 2026. Excluding these items and comparable costs of $243,682 in the prior-year period, selling, general and administrative expenses increased by $209,329, driven by higher distributor costs on increased placements of land-based products in foreign jurisdictions, higher royalty fees on licensed content, and increased travel costs supporting expanded sales efforts and placements of our progressive gaming systems.
Current report
Revenue
Current report
Recurring core license revenue increased by $491,162, or 4.7% for the six months ended June 30, 2026, as compared to the same period in the prior year. Recurring core license revenue grew across all geographies. The Americas grew slightly faster than Europe, Middle East and Africa, and GOS progressive system placements contributed in all regions. Royalties netted against gross core revenue were relatively flat, increasing by $8,912, or 0.6% for the six months ended June 30, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $147,549, representing a 80.6% decrease for the six months ended June 30, 2026, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. We continue to prioritize recurring placements of our progressive systems, which we believe generate greater value per installation over the life of the placement than a one-time sale, while continuing to offer perpetual license sales selectively, primarily in connection with strategic customer opportunities where that structure is preferred. We expect perpetual license sales for the full year 2026 to be slightly lower than the prior year as we work toward the optimal balance between perpetual sales and recurring placements. Gross digital revenues of $8,557,721, increased by $701,147, or 8.9% for the six months ended June 30, 2026, as compared to the same period in the prior year. This favorable growth reflects the ongoing expansion of our digital content into new markets and the continued success of our competitive, branded product offerings. Net of royalties, digital revenues increased by $419,569, representing growth of 7.5% for the six months ended June 30, 2026, as compared to the same period in the prior year.
Current report
Costs and Expenses
Current report
Selling, general and administrative expenses increased by $673,207, or 7.9% for the six months ended June 30, 2026, as compared to the same period in the prior year. The increase includes $505,361 of state tax expense recorded in connection with the preliminary results of a managed audit that the Company voluntarily initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026 (see Note 6, Commitments and Contingencies), and $287,511 of professional fees and transaction-related costs, primarily related to the proposed acquisition of the Company by Evolution, which was terminated on July 21, 2026. Excluding these items and comparable costs of $451,955 in the prior-year period, selling, general and administrative expenses increased by $332,290, driven by higher distributor costs on increased placements of land-based products in foreign jurisdictions and higher royalty fees on licensed content.
Current report
Research and development expenses decreased by $325,327, or 53.7% for the six months ended June 30, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount and increased capitalization of internal labor costs associated with development activities.
Current report
(4) Represents a charge of state tax expense recorded in connection with the preliminary results of a managed audit that the Company voluntarily initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026.
Current report
(8) Represents cash paid for interest during the period, net of interest income received.
Current report
(9) Represents cash paid for income taxes during the period, net of refunds received.
Current report
Share Repurchase Program. On July 22, 2026, the Company’s Board of Directors authorized a share repurchase program of up to $4,000,000 of the Company’s outstanding common stock. Repurchases under the share repurchase program may be made from time to time through open market purchases, privately negotiated transactions, or a trading plan intended to qualify under Rule 10b5-1 under the Exchange Act, with the timing and amount determined based on market conditions and other factors, including constraints specified in the Rule 10b5-1 repurchase plan. The share repurchase program, which has no fixed expiration date, supersedes the Company’s prior authorization to repurchase up to $750,000 of its common stock, under which no shares were repurchased.
Removed paragraphs (2)
Previous report
On July 18, 2024, we entered into the Merger Agreement providing for the Company’s acquisition by Evolution Malta Holding Limited in a cash transaction. The Merger is subject to the satisfaction or waiver of certain closing conditions, including stockholder approval of the Merger Agreement and the receipt of certain gaming regulatory approvals. At the special meeting of the Company’s stockholders held on November 12, 2024, stockholders voted to approve the Merger. Under the terms of the Merger Agreement, the outside date for completion of the Merger was automatically extended from July 18, 2025 to October 18, 2025 and then subsequently automatically extended to January 18, 2026, in each case, due to the condition with respect to the receipt of gaming regulatory approvals not being satisfied as of such outside dates. On November 24, 2025, pursuant to an amendment to the Merger Agreement, the outside date for completion of the Merger was extended from January 18, 2026 to July 17, 2026. The Company and Evolution continue to be actively engaged with gaming regulators to secure the remaining regulatory approvals to satisfy the gaming approval closing condition. However, no assurance can be given that the required regulatory approvals will be obtained and, even if all such approvals are obtained, no assurance can be given to the timing of the regulatory approvals. We expect the Merger to be completed by the Amended Outside Date of July 17, 2026 subject to satisfaction or waiver of the closing conditions. Upon completion of the Merger, the Company will become a privately held company and shares of Company’s common stock will no longer be listed on any public market.
Previous report
Selling, general and administrative expenses increased $34,071, or 0.8% for the three months ended March 31, 2026, as compared to the same period in the prior year. This increase was primarily driven by a change in the form of board compensation, as our directors elected during the three months ended March 31, 2026 to receive cash compensation in lieu of restricted shares of our common stock, whereas in the prior-year period director compensation consisted both of cash and equity-based components. Included in the results are costs associated with special projects, most notably expenses incurred related to the acquisition by Evolution. Normalized for the impact of special projects and excluding the related fees of $119,383 and $208,273 for the three months ended March 31, 2026 and March 31, 2025, respectively, selling, general, and administrative expenses increased $122,961 for the three months ended March 31, 2026, as compared to the same period in the prior year. The increase was primarily driven by higher distributor costs associated with increased placements of land-based products in foreign jurisdictions, as well as higher royalty fees related to licensed content and the timing of audit fees.
Reworded paragraphs (18)
Previous wording
The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources as of and for the three months ended March 31, 2026 and 2025. This discussion should be read together with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Financial Information included in our 2025 Form 10-K. Some of the information contained in this discussion includes forward-looking statements that involve risks and uncertainties; therefore our "Special Note Regarding Forward-Looking Statements" should be reviewed for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, such forward-looking statements.
Current wording
The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources as of and for the three and six months ended June 30, 2026 and 2025. This discussion should be read together with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Financial Information included in our 2025 Form 10-K. Some of the information contained in this discussion includes forward-looking statements that involve risks and uncertainties; therefore our "Special Note Regarding Forward-Looking Statements" should be reviewed for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, such forward-looking statements.
Previous wording
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as do other materials or oral statements we release to the public. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, as of the date on which this report is filed. Forward-looking statements often, but do not always, contain words such as “may,” “will,” “should,” “could,” “might,” “expect,” “intend,” "target," “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only predictions. We have based these forward-looking statements on our current expectations, assumptions and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the ability to complete the Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary gaming regulatory approvals and satisfaction of other closing conditions to consummate the proposed Merger; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; risks that the proposed Merger disrupts the Company’s current plans and operations or diverts the attention of the Company’s management or employees from ongoing business operations; the risk that certain restrictions during the pendency of the Merger may impact the Company's ability to pursue certain business opportunities or strategic transactions; the risk of potential difficulties with the Company’s ability to retain and hire key personnel and maintain relationships with customers and other third parties as a result of the proposed Merger, including during the pendency of the Merger; the risk that the proposed Merger may involve unexpected costs and/or unknown or inestimable liabilities; the risk that the Company’s business may suffer as a result of uncertainty surrounding the proposed Merger; the risk that stockholder litigation in connection with the proposed Merger may affect the timing or occurrence of the proposed Merger or result in significant costs of defense, indemnification and liability; effects relating to the announc…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as do other materials or oral statements we release to the public. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, as of the date on which this report is filed. Forward-looking statements often, but do not always, contain words such as “may,” “will,” “should,” “could,” “might,” “expect,” “intend,” "target," “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only predictions. We have based these forward-looking statements on our current expectations, assumptions and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the effects of the termination of the Merger with Evolution on the Company’s business and on the market price of the Company’s common stock; the ability of Galaxy Gaming to enter and maintain strategic alliances, product placements or installations in land based casinos or grow its iGaming business, garner new market share, secure licenses in new jurisdictions or maintain existing licenses, successfully develop or acquire and sell proprietary products, comply with regulations, including changes in gaming related and non-gaming related statutes and regulations that affect the revenues of our customers in land-based casino and, online casino markets, have its games approved by relevant jurisdictions, unfavorable economic conditions in the US and worldwide; changes in international trade policies and the impact of tariffs imposed by U.S. and foreign governments; the negative effects if any of currency conversions or changes in the valuation of digital currency that may impact iGaming revenues; our level of indebtedness; restrictions and covenants in our loan agreement; dependence on major customers; protection of intellectual property and our ability to license the intellectual property rights of third parties; failure to maintain the integrity of our information technology systems, including without limitation, cyber-attacks or other failures in our telecommunications or information technology systems, or those of our collabor…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Recurring core revenue increased $171,549, or 3.3% for the three months ended March 31, 2026, as compared to the same period in the prior year. The increase was primarily driven by higher licensing revenue across the United States, Europe, Middle East and Africa, partially driven by placements of our new GOS progressive gaming system. Royalties netted against gross core revenue were relatively flat, increasing $1,448, or 0.2% for the three months ended March 31, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $96,367, representing a 80.9% decrease for the three months ended March 31, 2026, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. Gross digital revenues of $4,202,684, increased $367,099, or 9.6% for the three months ended March 31, 2026, as compared to the same period in the prior year. This favorable growth reflects the positive impact of foreign currency exchange and, to a lesser extent, the ongoing expansion of our digital content into new markets and the continued success of our competitive, branded product offerings. Net of royalties, digital revenues increased by $116,280, representing growth of 4.2% for the three months ended March 31, 2026, as compared to the same period in the prior year.
Current wording
Recurring core license revenue increased by $319,613, or 6.2% for the three months ended June 30, 2026, as compared to the same period in the prior year. Recurring core license revenue grew across all geographies, led slightly by Europe, Middle East and Africa on higher participation-based game revenue, and GOS progressive system placements contributed in all regions. Royalties netted against gross core revenue were relatively flat, increasing by $7,464, or 1.0% for the three months ended June 30, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $51,182, representing an 80.0% decrease for the three months ended June 30, 2026, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. Gross digital revenues of $4,355,037, increased by $334,048, or 8.3% for the three months ended June 30, 2026, as compared to the same period in the prior year. This favorable growth reflects the ongoing expansion of our digital content into new markets and the continued success of our competitive, branded product offerings. Net of royalties, digital revenues increased by $303,289, representing growth of 10.7% for the three months ended June 30, 2026, as compared to the same period in the prior year.
Previous wording
Cost of ancillary products and assembled component expense decreased $120,814, or 64.3% for the three months ended March 31, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.
Current wording
Cost of ancillary products and assembled component expense decreased by $106,008, or 56.4% for the three months ended June 30, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.
Previous wording
Research and development expenses decreased $210,718, or 58.1% for the three months ended March 31, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount, as well as reduced outside services in the period.
Current wording
Research and development expenses decreased by $114,609, or 47.1% for the three months ended June 30, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount and increased capitalization of internal labor costs associated with development activities.
Previous wording
Depreciation and amortization increased $90,134, or 11.6% for the three months ended March 31, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations.
Current wording
Depreciation and amortization increased by $133,307, or 17.0% for the three months ended June 30, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations.
Previous wording
Stock-based compensation expenses decreased $113,414, or 68.2% for the three months ended March 31, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to a change in the form of board compensation, as our directors elected during the first quarter of 2026 to receive cash compensation in lieu of restricted shares, representing $57,375 of the decrease, with the remaining balance attributable to employee-related stock-based compensation.
Current wording
Stock-based compensation expenses decreased by $97,323, or 63.6% for the three months ended June 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to a change in the form of board compensation, as our directors elected during the second quarter of 2026 to receive cash compensation in lieu of restricted shares, representing $57,375 of the decrease, with the remaining balance attributable to employee-related stock-based compensation.
Previous wording
Interest expense decreased $226,861, or 22.6% for the three months ended March 31, 2026, as compared to the same period in the prior year. The decrease was primarily due to the reduced principal balance of outstanding debt and to a lesser extent a lower average interest rate, for the three months ended March 31, 2026, as compared to the same period in the prior year. Interest income decreased $22,499, or 98.3% compared to the prior year period, primarily due to a lower average cash balance for the three months ended March 31, 2026, as compared to the same period in the prior year.
Current wording
Interest expense decreased by $93,115, or 10.3% for the three months ended June 30, 2026, as compared to the same period in the prior year. The decrease was driven by a reduced principal balance of outstanding debt and a lower average interest rate, for the three months ended June 30, 2026, as compared to the same period in the prior year. Interest income decreased by $15,444, or 97.3% compared to the prior year period.
Previous wording
Income tax provision decreased to $30,632 for the three months ended March 31, 2026, compared to income tax provision of $36,421 for the comparable prior-year period. The decrease was primarily attributable to changes in pre-tax book income and the related mix of rate-impacting components, including permanent items and changes in valuation allowance considerations, as compared to the prior-year period.
Current wording
Income tax provision decreased to $64,268 for the three months ended June 30, 2026, compared to income tax provision of $93,912 for the comparable prior year period. The decrease was primarily attributable to changes in pre-tax book income and the related mix of rate-impacting components, including permanent items and changes in valuation allowance considerations, as compared to the prior-year period.
Previous wording
Primarily as a result of the factors described above, we had net income of $1,367,556 for the three months ended March 31, 2026, as compared to a net loss of approximately $2,021,282 for the same period in the prior year.
Current wording
Primarily as a result of the factors described above, we had net income of $996,978 for the three months ended June 30, 2026, as compared to a net income of $950,357 for the same period in the prior year.
Previous wording
The Company recognized a loss on extinguishment of debt of $2,969,585 for the three months ended March 31, 2025 related to the refinancing of our debt from Fortress to BMO, primarily driven by the write-off of unamortized debt issuance costs.
Current wording
The Company recognized a loss on extinguishment of debt of $2,969,585 for the six months ended June 30, 2025 related to the refinancing of our debt from Fortress to BMO in January 2025, primarily driven by the write-off of unamortized debt issuance costs.
Previous wording
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"). Adjusted EBITDA includes adjustments to U.S. GAAP net loss to exclude interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency exchange loss (gain), and severance and other expenses related to litigation, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations, including loss on extinguishment of debt. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of the Adjusted EBITDA metric offers investors, regulators and other stakeholders a view of our operations in the same manner management evaluates our performance. When combined with U.S. GAAP results, management believes Adjusted EBITDA provides a comprehensive understanding of our financial results. Adjusted EBITDA should not be considered as an alternative to net income or (loss) to net cash provided by operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating our performance. A reconciliation of U.S. GAAP net loss to Adjusted EBITDA is as follows:
Current wording
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Free Cash Flow ("FCF"). Adjusted EBITDA includes adjustments to U.S. GAAP net income (loss) to exclude interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency exchange loss (gain), and severance and other expenses related to litigation, non-income tax assessments, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations, including loss on extinguishment of debt. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of the Adjusted EBITDA metric offers investors, regulators and other stakeholders a view of our operations in the same manner management evaluates our performance. When combined with U.S. GAAP results, management believes Adjusted EBITDA provides a comprehensive understanding of our financial results. Adjusted EBITDA should not be considered as an alternative to net income or (loss) to net cash provided by operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating our performance. We define Free Cash Flow as Adjusted EBITDA less cash paid for interest, net of interest income received, cash used in investing activities, and cash paid for income taxes, net of refunds. Free Cash Flow is not a measure of performance defined in accordance with U.S. GAAP. Management uses Free Cash Flow to evaluate the cash generated by our operations that is available to service and repay indebtedness and to reinvest in the business, and believes disclosure of Free Cash Flow provides investors, regulators and other stakeholders with useful information for the same purpose. Free Cash Flow should not be considered an alternative to net income (loss) as a measure of operating performance, or to net cash provided by operating activities as a measure of liquidity. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. Free Cash Flow may not be comparable to similarly titled measures used by other companies. A reconciliation of Adjusted EBITDA to Free Cash Flow is presented below, and Adjusted EBITDA is reconciled to net income (loss), the most directly comparable U.S. GAAP measure, in the same table. A reconciliation of U.S. GAAP net income (loss) to Adjusted EBITDA to FCF is as follows:
Previous wording
As of March 31, 2026, we had total current assets of $10,949,227 and total assets of $27,042,819. As of December 31, 2025, we had total current assets of $11,569,839 and total assets of $27,500,619. The decrease in current assets as of March 31, 2026 compared to December 31, 2025 was primarily driven by a decrease in our accounts receivable balance resulting from increased customer collection efforts. The decrease in total assets as of March 31, 2026 compared to December 31, 2025 was primarily due to the decrease of current assets noted above offset by an increase in cash and cash equivalents.
Current wording
As of June 30, 2026, we had total current assets of $10,813,584 and total assets of $26,958,720. As of December 31, 2025, we had total current assets of $11,569,839 and total assets of $27,500,619. The decrease in current assets as of June 30, 2026 compared to December 31, 2025 was primarily driven by a decrease in our accounts receivable balance resulting from increased customer collection efforts. The decrease in total assets as of June 30, 2026 compared to December 31, 2025 was primarily due to the decrease of current assets noted above offset by an increase in cash and cash equivalents.
Previous wording
Our total current liabilities as of March 31, 2026 compared to December 31, 2025 decreased to $7,320,803 from $8,055,001. This was primarily due to a decrease in costs associated with special projects, most notably legal expenses incurred related to the acquisition by Evolution offset by an increase in the current portion of long-term debt for upcoming payments to BMO.
Current wording
Our total current liabilities as of June 30, 2026 compared to December 31, 2025 decreased to $7,006,164 from $8,055,001. This decrease was primarily due to the payment of annual bonuses.
Previous wording
Our operating activities provided cash of $2,544,086 for the three months ended March 31, 2026, compared to $1,168,692 for the comparable prior year period. This change is mainly attributable to net income for the three months ended March 31, 2026, as compared to a net loss in the prior-year period, as well as a $1,002,419 variance in operating assets and liabilities. Additionally, the prior-year period included a loss on extinguishment of debt of $2,969,585 related to the refinancing of the Fortress loan to BMO. Stock-based compensation decreased by $113,414 due to a change in the composition of board compensation, partially offset by increased depreciation associated with higher level of assets deployed at client locations.
Current wording
Our operating activities provided cash of $4,167,486 for the six months ended June 30, 2026, compared to $4,345,791 for the comparable prior year period. This change is mainly attributable to net income for the six months ended June 30, 2026, as compared to a net loss in the prior year period, as well as a $602,544 variance in operating assets and liabilities. Additionally, the prior year period included a loss on extinguishment of debt of $2,969,585 related to the refinancing of the Fortress loan to BMO. Stock-based compensation decreased by $210,737 due to a change in the composition of board compensation.
Previous wording
Investing activities used cash of $1,030,320 for the three months ended March 31, 2026, compared to cash used of $283,330 for the three months ended March 31, 2025. This increase in cash used was primarily due to higher expenditures for assemblies in process and increased investment in internally developed software.
Current wording
Investing activities used cash of $2,096,256 for the six months ended June 30, 2026, compared to cash used of $1,161,744 for the six months ended June 30, 2025. This increase in cash used was primarily due to higher expenditures for assets deployed at client locations and increased investment in internally developed software.
Previous wording
Cash used in financing activities during the three months ended March 31, 2026, was $882,868. This compares to $13,849,213 cash used by financing activities for the three months ended March 31, 2025. The decrease in cash used was primarily due to the refinancing of our debt from Fortress to BMO in the prior-year period.
Current wording
Cash used in financing activities during the six months ended June 30, 2026, was $1,516,965. This compares to $16,493,898 cash used by financing activities for the six months ended June 30, 2025. The decrease in cash used was primarily due to the refinancing of our debt from Fortress to BMO in the prior year period.
Previous wording
Credit Facility. On January 6, 2025, we entered into a new credit agreement with BMO that provides for a $2,000,000 senior secured revolving credit facility and a $45,000,000 senior secured term loan. On January 6, 2025, we borrowed $45,000,000 under the new term loan and used this amount plus cash on hand to repay all amounts outstanding under the Fortress Credit Agreement, which was terminated. Pursuant to the terms of the Credit Agreement, the new term loan and new revolving credit facility will mature on January 6, 2028, as the merger with Evolution Malta Holding Limited was not completed by December 31, 2025.
Current wording
Credit Facility. On January 6, 2025, we entered into a new credit agreement with BMO that provides for a $2,000,000 senior secured revolving credit facility and a $45,000,000 senior secured term loan. On January 6, 2025, we borrowed $45,000,000 under the new term loan and used this amount plus cash on hand to repay all amounts outstanding under the Fortress Credit Agreement, which was terminated. Pursuant to the terms of the Credit Agreement, the new term loan and new revolving credit facility will mature on January 6, 2028.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Results of operations for the six months ended June 30, 2026 and 2025.
Current report — wording carried from elsewhere
Our net revenue consists of the following components:
Current report — wording carried from elsewhere
Cost of ancillary products and assembled component expense decreased by $226,822, or 60.3% for the six months ended June 30, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.
Current report — wording carried from elsewhere
Depreciation and amortization increased by $223,441, or 14.3% for the six months ended June 30, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations.
Current report — wording carried from elsewhere
Stock-based compensation expenses decreased by $210,737, or 66.0% for the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to a change in the form of board compensation, as our directors elected during the first half of 2026 to receive cash compensation in lieu of restricted shares, representing $114,750 of the decrease, with the remaining balance attributable to employee-related stock-based compensation.
Current report — wording carried from elsewhere
Interest expense decreased by $319,976, or 16.8% for the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease was due to the reduced principal balance of outstanding debt and a lower average interest rate, for the six months ended June 30, 2026, as compared to the same period in the prior year. Interest income decreased by $37,943, or 97.9% compared to the prior year period.
Current report — wording carried from elsewhere
Income tax provision decreased to $94,900 for the six months ended June 30, 2026, compared to income tax provision of $130,333 for the comparable prior year period. The decrease was primarily attributable to changes in pre-tax book income and the related mix of rate-impacting components, including permanent items and changes in valuation allowance considerations, as compared to the prior-year period.
Current report — wording carried from elsewhere
Primarily as a result of the factors described above, we had net income of $2,364,534 for the six months ended June 30, 2026, as compared to a net loss of $1,070,925 for the same period in the prior year.