Meridian Holdings Inc./NV

Previous wording

The following table summarizes the consolidated results of operations for the changes between the periods. Effective on April 1, 2024, the Golden Matrix 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 Meridian Purchase were excluded prior to April 1, 2024, the effective closing date of the Meridian Purchase.

Current wording

The following table summarizes the consolidated results of operations for the changes between the periods. Effective on April 1, 2024, the Golden Matrix 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 MeridianBet Acquisition were excluded prior to April 1, 2024, the effective closing date of the MeridianBet Acquisition.

Previous wording

COGS. Costs of goods sold increased by $37,793,114, or 153%, to $62,543,407 for the twelve months ended December 31, 2024, from $24,750,293 for the twelve months ended December 31, 2023. The increase was primarily attributable to the acquisition of Golden Matrix, which contributed $33,401,741 to COGS in the twelve months ended December 31, 2024. A total of $24,439,740 of the COGS was from prize competitions and trade promotions, and $8,783,959 of the COGS was from resale of third-party gaming content, both of which did not exist until the acquisition of Golden Matrix effective on April 1, 2024. COGS from online casinos, online sports betting, retail casinos and retail sports betting increased by $4,347,736 in total, or 18%, to $28,018,654 for the twelve months ended December 31, 2024, from $23,670,918 for the twelve months ended December 31, 2023, 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.

Current wording

COGS. Costs of goods sold increased by $16,863,246, or 27%, to $79,406,653 for the twelve months ended December 31, 2025, from $62,543,407 for the twelve months ended December 31, 2024. COGS from online casino, online sports betting, retail casino and retail sports betting increased by $7,828,887 in total, or 27%, to $36,970,553 for the twelve months ended December 31, 2025, from $29,141,666 for the twelve months ended December 31, 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 $9,034,359, or 27%, 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, COGS generated by these segments for the period from January to March 2024, were not included in the prior-year comparative figures. In addition, the Classics Holdings acquisition became effective on August 1, 2024, and accordingly revenues generated by Classics For a Cause from January 1, 2024 through July 31, 2024 were not included in the prior-year comparative period.

Previous wording

General and administrative expenses (G&A). General and administrative expenses increased by $31,344,423, or 58%, to $85,828,421 for the twelve months ended December 31, 2024, from $54,483,998 for the twelve months ended December 31, 2023. General and administrative expenses consisted primarily of stock-based compensation, depreciation expenses, amortization expenses, salary and wages, professional fees, marketing expenses, bad debt expense, rents and utilities. The reasons for the increase in the G&A are discussed in greater detail below:

Current wording

General and administrative expenses (G&A). General and administrative expenses increased by $113,797,307, or 133%, to $199,625,728 for the twelve months ended December 31, 2025, from $85,828,421 for the twelve months ended December 31, 2024. General and administrative expenses consisted primarily of stock-based compensation, depreciation expenses, amortization expenses, salary and wages, professional fees, marketing expenses, bad debt expense, impairment losses, rents and utilities. The reasons for the increase in the G&A are discussed in greater detail below:

Previous wording

Stock-based compensation (within G&A) for the twelve months ended December 31, 2024, was $4,627,557, compared to $0 for the twelve months ended December 31, 2023, a $4,627,557 increase from the prior period, which was due mainly to restricted stock units (RSUs) granted to employees and directors of the Company, as well as shares issued for services during the period.

Current wording

Stock-based compensation (within G&A) for the twelve months ended December 31, 2025, was $4,002,846, compared to $4,627,557, for the twelve months ended December 31, 2024, a $624,711, or 13% decrease from the prior period, which was due mainly to the reduced number of restricted stock units (RSUs) granted during the period.

Previous wording

Salaries and wages for the twelve months ended December 31, 2024, were $21,230,038, compared to $14,591,220 for the twelve months ended December 31, 2023, a $6,638,818 or 45% increase from the prior period, which was due partially to $2,506,238 of salaries paid to employees of Golden Matrix after the acquisition. Salaries paid to employees of MeridianBet Group increased by $4,132,580, which was due mainly 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.

Current wording

Salaries and wages for the twelve months ended December 31, 2025, were $27,715,365, compared to $21,230,038, for the twelve months ended December 31, 2024, a $6,485,327, or 31% increase from the prior period. Salaries paid to employees of MeridianBet Group increased by $3,478,266, or 19%, which was due mainly to increased headcount to both support increased operations and to enable the entry into new markets. Salaries paid to employees of Golden Matrix increased by $3,007,061, or 120%, which was due to the acquisition of Golden Matrix becoming effective on April 1, 2024, and because as a result, salaries for the period from January to March 2024 were not included in the prior-year comparative figures. The increase was further driven by severance payments to Anthony Brian Goodman, the former Chief Executive Officer, in the amount of $848,542, as well as $423,750 of accrued cash bonuses to executives and directors.

Previous wording

Rents and utilities for the twelve months ended December 31, 2024, were $6,845,588, compared to $5,691,895 for the twelve months ended December 31, 2023, a $1,153,693 or 20% increase from the prior period, which was mainly due to the opening of new betting shops, which contributed to the growth of rent and utility costs, as well as the general increase in heating, electricity, telephone and internet costs, due to inflationary trends.

Current wording

Rents and utilities for the twelve months ended December 31, 2025, were $7,978,790, compared to $6,845,588, for the twelve months ended December 31, 2024, a $1,133,202, or 17% increase from the prior period, which was mainly due to the opening of new betting shops, which contributed to the growth of rent and utility costs, as well as the general increase in heating, electricity, telephone and internet costs, due to inflationary trends.

Previous wording

Bad debt expense for the twelve months ended December 31, 2024 were $1,358,147, compared to $304,358 for the twelve months ended December 31, 2023, a $1,053,789 or 346% increase from the prior period, which was mainly due to the recognition of an allowance for doubtful accounts related to aged receivables from the Company’s resale of gaming content business that were deemed uncollectible.

Current wording

Bad debt expense for the twelve months ended December 31, 2025 were $725,061, compared to $1,358,147 for the twelve months ended December 31, 2024, a $633,086, or 47% decrease from the prior period. The decrease was primarily attributable to reduced bad debt associated with the Company’s resale of gaming content business.

Previous wording

Interest earned. The interest earned increased by $120,325, or 123%, to $218,145 for the twelve months ended December 31, 2024, from $97,820 for the twelve months ended December 31, 2023. The increase was mainly due to earned interest income from term deposits with banks.

Current wording

Interest earned. The interest earned increased by $22,578, or 10%, to $240,723 for the twelve months ended December 31, 2025, from $218,145 for the twelve months ended December 31, 2024. The increase was due to higher amounts of funds placed in term deposits with commercial banks.

Previous wording

Other Income.* *Other income is related to income from marketing services for third-party advertising in MeridianBet Group betting shops, the 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 twelve months ended December 31, 2024, and 2023, other income amounted to $2,262,782 and $1,572,256, respectively. The increase of $690,526 for the twelve months ended December 31, 2024, versus the twelve months ended December 31, 2023, is attributable to other operating income from the franchise partners such as marketing services, customer support services, staff training services, etc.

Current wording

Otherincome.* *Other income is related to income from marketing services for third-party advertising in Meridian betting shops, sale of fixed assets, value-added-tax (VAT) refunds, income from compensation for damages, and other income that is not directly related to the Company’s core activity. For the twelve months ended December 31, 2025, and 2024, other income amounted to $2,558,579 and $2,262,782, respectively. The increase of $295,797 for the twelve months ended December 31, 2025, versus the twelve months ended December 31, 2024, was primarily attributable to a higher operating income from franchise partners, including marketing services, customer support services, and staff training services.

Previous wording

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) Bit Tech Tanzania in the percentage of 10%, (b) Meridian Gaming Peru in the percentage of 24.5%, (c) Fair Champions Meridian Cyprus in the percentage of 49%, and (d) Classics Holding Pty Ltd Australia in the percentage of 20%. For the twelve months ended December 31, 2024, and 2023, net income attributable to noncontrolling interest amounted to $70,400 and $192,348, respectively. The decrease was primarily due to the net loss incurred by the companies for the twelve months ended December 31, 2024.

Current wording

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 twelve months ended December 31, 2025, and 2024, net income (loss) attributable to noncontrolling interest amounted to $(2,084,286) and $70,400, respectively. The increase in net loss was primarily driven by goodwill and intangible asset impairment charges associated with the acquisition of Classics Holdings, as well as higher general and administrative expenses related to the commencement of operations in Brazil.

Previous wording

Net income (loss) attributable to GMGI. Net income attributable to GMGI decreased by $15,182,787, or 111%, to a net loss of $1,480,249 for the twelve months ended December 31, 2024, from net income of $13,702,538 for the twelve months ended December 31, 2023. The decrease was mainly due to an increase in the general and administrative expenses, foreign exchange losses, and interest expenses as discussed above.

Current wording

Net loss attributable to**MRDN. Net loss attributable to MRDN increased by $88,417,601, or 5,973%, to a net loss of $89,897,850 for the twelve months ended December 31, 2025, from net loss of $1,480,249 for the twelve months ended December 31, 2024. The increase was mainly due to an increase in the impairment loss as discussed above.

Previous wording

We had $30,125,944 of cash on hand and a working capital deficit of $18,484,062 as of December 31, 2024. 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 $8.5 million that is available to be sold under our November 22, 2024, Equity Distribution Agreement in at-the-market offerings

Current wording

We had $18,078,300 cash on hand and a working capital deficit of $24,128,745 as of December 31, 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 $16.9 million that is available to be sold under our November 22, 2024, Equity Distribution Agreement in at-the-market offerings, subject to potential limitations on such sales pursuant to the “baby shelf” Form S-3 rules, which prevent us from selling more than 1/3 rd of our float every 12 months.

Previous wording

As discussed in greater detail in “NOTE 22 - MERIDIANBET GROUP PURCHASE AGREEMENT”, in the notes to the financial statements included under “Item 8. Financial Statements and Supplementary Data”, the Company incurred the following payment obligations in connection with the Meridian Purchase:

Current wording

As discussed in greater detail in “Note 22 – MeridianBet Group Purchase Agreement”, in the notes to the financial statements included under “Item 8. Financial Statements and Supplementary Data”, the Company incurred the following payment obligations in connection with the MeridianBet Acquisition:

Previous wording

The Company had $20,405,296 of cash on hand and total assets of $79,852,980 ($26,929,402 of which were current assets) at December 31, 2023. The Company had total working capital of $9,355,540 as of December 31, 2023. Included in total assets at December 31, 2023 was $15,107,422 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 “Item 8. Financial Statements and Supplementary Data”.

Current wording

The Company had $18,078,300 cash on hand at December 31, 2025 and total assets of $118,078,800 ($35,438,153 of which were current assets) and a working capital deficit of $24,128,745 as of December 31, 2025. The working capital deficit was mainly due to $10,581,035 of current portion of long-term loans included in current liabilities, as well as $16,199,672 of current consideration payable to the Meridian Sellers. Included in total assets at December 31, 2025 was $8,450,955 of goodwill and $26,463,965 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 “Item 8. Financial Statements and Supplementary Data”.

Previous wording

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 $19,870,460 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 “Item 8. Financial Statements and Supplementary Data”.

Current wording

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 $19,870,460 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 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 “Item 8. Financial Statements and Supplementary Data”.

Previous wording

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 $8.5 million that is available to be sold under our November 22, 2024, Equity Distribution Agreement in at-the-market offerings, 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.

Current wording

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 $16.9 million that is available to be sold under our November 22, 2024, Equity Distribution Agreement in at-the-market offerings, 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.

Previous wording

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 twelve months ended December 31, 2024, mainly include stock-based compensation, amortization expenses on intangible assets, and depreciation on property plant and equipment.

Current wording

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 twelve months ended December 31, 2025, mainly include stock-based compensation, amortization expenses on intangible assets, depreciation on property plant and equipment, impairment losses on Goodwill and other intangible assets, and bad debt expense.

Previous wording

The Company generated cash from operating activities of $23,689,511 during the twelve months ended December 31, 2023, due primarily to $13,894,886 of net income, $1,898,027 of amortization expenses, $3,519,083 of depreciation expenses, a $3,617,968 increase in accounts payable and accrued liabilities, an $843,595 increase in taxes payable, and a $1,839,949 increase in right of use liabilities, which was mainly offset by a $556,447 decrease in other liabilities.

Current wording

The Company generated cash from operating activities of $25,358,108 during the twelve months ended December 31, 2025, due primarily to $91,819,422 of impairment losses, a $7,690,470 increase in accounts payable and accrued liabilities, $4,091,449 of stock-based compensation, $2,765,453 of non-cash interest expense related to debt discount amortization, $9,165,798 of amortization expenses relating to intangible assets, and $5,984,384 of depreciation expenses, which was mainly offset by an $91,982,136 net loss, a $2,606,175 increase in accounts receivable, a $4,039,351 decrease in other liabilities mainly related to deferred tax liabilities, and a $1,278,092 increase in inventory.

Previous wording

During the twelve months ended December 31, 2023, cash used in investing activities was $13,065,811, which was primarily due to $7,345,778 spent on intangible assets, and $5,744,202 spent on property, plant and equipment.

Current wording

During the twelve months ended December 31, 2025, cash used in investing activities was $22,003,252, which was primarily due to $1,824,971 of consideration paid to the former owners of MeridianBet Group in connection with the MeridianBet Acquisition, $7,464,849 spent on intangible assets, $6,184,530 spent on property, plant and equipment, and $5,431,507 spent on investment.

Previous wording

During the twelve months ended December 31, 2024, cash used in investing activities was $37,434,035, which was primarily due to $23,852,949 of consideration paid to the former owners of MeridianBet Group in connection with the Meridian Purchase, $4,126,172 of consideration paid to acquire Classics, $14,827,206 spent on intangible assets, and the $7,164,733 spent on property, plant and equipment, which was partially offset by $17,355,360 in cash assumed from investment in Golden Matrix.

Current wording

During the twelve months ended December 31, 2024, cash used in investing activities was $37,434,035, which was primarily due to $23,852,949 of consideration paid to the former owners of MeridianBet Group in connection with the MeridianBet Acquisition, $4,126,172 of consideration paid to acquire Classics Holdings, $14,827,206 spent on intangible assets, and the $7,164,733 spent on property, plant and equipment, which was partially offset by $17,355,360 in cash assumed from investment in Golden Matrix.

Previous wording

During the twelve months ended December 31, 2024, cash provided by financing activities was $27,712,266, which was primarily due to proceeds from loans of $25,972,500, attributable to the Unicredit Bank facility, Hipotekarna Bank facility and the Igor Salindrija borrowing, and proceeds from convertible note and warrant of $8,747,556, relating to the Secured Convertible Note and Lind Warrants, discussed in greater detail above in the notes to consolidated financial statements under “NOTE 15 – LONG TERM LIABILITIES—Lind Global Asset Management VIII LLC Securities SPA / Promissory Note” in the notes to the financial statements included under “Item 8. Financial Statements and Supplementary Data”, for more details on these debts, which was offset by repayment of lease of $2,474,864 and repayment of debt of $3,675,091. During the twelve months ended December 31, 2023, cash used in financing activities was $4,153,625, which was primarily due to repayment of lease of $2,354,666 and payments of dividends of $1,798,959 to the former owners of MeridianBet Group.

Current wording

During the twelve months ended December 31, 2024, cash provided by financing activities was $27,712,266, which was primarily due to proceeds from loans of $25,972,500, attributable to the Unicredit Bank facility, Hipotekarna Bank facility and the Igor Salindrija borrowing, and proceeds from convertible note and warrant of $8,747,556, relating to the Secured Convertible Note and Lind Warrants sold to the Investor in July 2024, which was offset by repayment of lease of $2,474,864 and repayment of debt of $3,675,091.

Previous wording

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 the Company’s effective 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.

Current wording

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.

Previous wording

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, 2024. 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.

Current wording

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 and cash bonus will vest as of the end of December 31, 2025. EBITDA means net loss before interest, taxes, depreciation and amortization. Adjusted EBITDA means EBITDA before stock-based compensation, severance costs related to the termination of executive officers and directors, impairment losses related to goodwill and other intangible assets, 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.

Previous wording

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.

Current wording

EBITDA and Adjusted EBITDA are presented because management believes they provide useful supplemental information to investors regarding the Company’s operating performance by excluding certain non-cash items and non-recurring or one-time items, thereby facilitating period-to-period comparisons. 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.

Previous wording

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

Current wording

Reconciliation of EBITDA and Adjusted EBITDA to Net loss:

Previous wording

The discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated audited 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 October 31, 2023, filed with the Commission on January 17, 2024, are those that depend most heavily on these judgments and estimates. As of December 31, 2024, 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 October 31, 2023, filed with the Commission on January 17, 2024, 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.

Current wording

The discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated audited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these audited 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.“Note 1 – Basis of Presentation and Accounting Policies” in the notes to the financial statements included under “Item 8. Financial Statements and Supplementary Data”, describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements.