Meridian Holdings Inc./NV

Current report

Regulatory developments and operational uncertainties in Brazil could adversely affect our business, financial condition and results of operations.

Current report

The gaming and sports betting industry in Brazil is subject to an evolving regulatory environment, including licensing requirements, operating restrictions, taxation and other compliance obligations. In September 2026, the Brazilian government introduced significant regulatory changes affecting the gaming and sports betting market, which have created substantial uncertainty regarding the Company's existing operations and future business prospects in Brazil.

Current report

These regulatory developments have adversely affected the recoverability of certain assets associated with the Company's Brazilian operations. As a result, during the quarter ended September 30, 2026, the Company recognized impairment losses of approximately $5.5 million, consisting of $4.1 million related to its Brazilian gaming license, and $1.4 million related to the Magicbet777 domain and associated player database.

Current report

In light of these regulatory developments and the resulting operational restrictions, the Company does not expect to resume its gaming operations in Brazil during the remainder of 2026. The Company currently anticipates maintaining a limited local presence, including an office and minimal operating expenditures, primarily to support certain administrative and regional activities, including activities related to Portugal, while monitoring ongoing legal proceedings and judicial decisions that may affect its ability to resume operations in Brazil.

Current report

The timing and feasibility of any potential resumption of gaming operations in Brazil remain uncertain and will depend on future regulatory developments, the outcomes of relevant legal proceedings and management's assessment of the commercial viability of such operations. There can be no assurance that the Company will be able to resume its operations in Brazil or recover any additional investments or expenditures previously incurred.

Current report

The continued suspension of operations, together with the costs associated with maintaining a limited local presence, could result in additional operating losses, employee-related costs, contractual obligations, regulatory compliance expenses or other financial losses. The Company may also be required to further reduce or permanently discontinue its Brazilian operations depending on the outcome of ongoing legal proceedings and regulatory developments.

Current report

The ultimate impact of these developments remains uncertain. Any further adverse regulatory changes, unfavorable judicial decisions, prolonged suspension of operations or additional financial losses could materially adversely affect the Company's business, financial condition, cash flows and results of operations.

Current report

Changes in Australian gambling laws and regulations could materially and adversely affect our use of Australian trade promotion lottery as part of our business.

Current report

Our Australian subsidiary, Classics for a Cause ("CFAC"), operates trade promotion lotteries as part of its business that is subject to Australian federal, state and territory gambling laws and regulations. Changes in the regulatory framework governing online gambling and trade promotion lotteries could materially and adversely affect CFAC's business model, operations, financial performance and ability to continue operating.

Current report

On August 26, 2026, the Australian Government enacted the Interactive Gambling Amendment (Gambling Reform) Act 2026 (Cth), which amends the Interactive Gambling Act 2001 (Cth) (“Act”) and introduces additional restrictions on certain online gambling activities, including trade promotion gambling services. The relevant amendments are scheduled to take effect on January 1, 2027.

Current report

Under the amended legislation, trade promotion gambling services must satisfy more restrictive requirements to qualify for an exclusion from the prohibitions applicable to interactive gambling services. These requirements generally include that the sole or primary purpose of the promotion must be to promote trade, that the promotion must be incidental to the supply of goods or services, that participation must not require payment other than for goods or services at fair market value, and that participation must not be offered on an ongoing or recurring basis as part of a system of continuous or repeated draws. Certain statutory exceptions or ministerial determinations may apply.

Current report

These legislative changes may significantly affect CFAC's existing business model, particularly arrangements involving membership or subscription fees and recurring prize draws. If CFAC's trade promotion activities do not qualify for an applicable exclusion or other lawful authorization under the amended regulatory framework, certain aspects of its operations could be classified as prohibited interactive gambling services.

Current report

As a result, CFAC may be required to substantially modify its business model, restructure its operations, suspend certain activities, or discontinue some or all of its business operations. There can be no assurance that CFAC will be able to implement the necessary changes within the required timeframe or that any alternative business model would be commercially viable.

Current report

Any suspension, restructuring or discontinuation of CFAC's operations could result in a significant reduction or elimination of revenue generated by the business, increased compliance and restructuring costs, employee termination expenses, contractual obligations, asset impairment charges and other financial losses. In addition, any failure to comply with applicable gambling laws and regulations could expose CFAC and the Company to regulatory investigations, enforcement actions, substantial monetary penalties and reputational damage.

Current report

The Company continues to assess the potential impact of these legislative changes on CFAC's operations and available compliance alternatives. However, uncertainty remains regarding the interpretation and application of the amended legislation to CFAC's specific business activities, the availability of applicable exemptions or authorizations, and the commercial feasibility of any necessary operational changes. At this stage, the Australian regulator responsible for enforcement of the Act, the Australian Communications and Media Authority, is not currently proposing to issue guidance on the relevant amendments, which continues to impact certainty in relation to the interpretation of the amendments.

Current report

If CFAC is unable to continue operating under the amended regulatory framework, or if compliance requires substantial changes to its existing business model, such developments could materially and adversely affect the Company's business, financial condition, results of operations and cash flows.

Current report

Our UK prize competition business may be subject to significant historical and future value-added tax liabilities, which could materially adversely affect our business, financial condition, results of operations and cash flows.

Current report

Our subsidiary, RKings Competitions Limited ("RKings"), operates prize draw competitions in the United Kingdom, offering participants the opportunity to win vehicles, cash and other prizes through paid entries, with an alternative free postal entry route. Historically, RKings has not been registered for UK value-added tax ("VAT") and has not accounted for VAT on paid competition entries, consistent with the historical treatment adopted by certain operators in the UK prize competition industry.

Current report

In February 2026, the UK government indicated, in response to a Parliamentary Question, that paid entries to prize competitions offering a free entry route should generally be subject to VAT at the standard rate of 20%. Since August 2026, His Majesty's Revenue and Customs ("HMRC") has reportedly commenced contacting operators within the prize competition sector regarding their VAT treatment. As of the date of this report, RKings has not received a formal notice or assessment from HMRC in connection with this matter.

Current report

The applicability of VAT to prize draw competitions remains subject to significant legal and regulatory uncertainty. In October 2026, the UK First-tier Tribunal heard an appeal involving another prize competition operator, Omaze, concerning whether prize draws offering a free entry route qualify for the VAT exemption applicable to lotteries. The proceedings focused primarily on the interpretation of the term "lottery" under UK VAT legislation and whether the availability of a free entry route prevents such competitions from qualifying for the exemption. A decision is expected in 2027, although the timing remains uncertain and any decision may be subject to further appeal.

Current report

The Company has engaged external tax advisers to assess the potential VAT implications for RKings. Significant uncertainties remain regarding whether paid competition entries qualify for VAT exemption, the appropriate taxable amount if VAT is determined to apply, and the jurisdiction in which such transactions may be subject to VAT. In particular, a substantial proportion of RKings' customers are located in the Republic of Ireland, and the Company is evaluating whether certain transactions may be treated as electronically supplied services for VAT purposes. Depending on the outcome of this assessment, certain transactions may fall outside the scope of UK VAT but could potentially give rise to VAT obligations in Ireland.

Current report

In addition, uncertainty remains regarding the basis upon which any VAT liability would be calculated, including whether VAT would apply to gross competition entry revenues or to a net amount after deducting the cost of prizes. The potential financial exposure could vary significantly depending on the ultimate interpretation and application of the relevant tax legislation.

Current report

Separately, RKings has historically received services from suppliers located outside the United Kingdom, including digital advertising, technology and other services. Such transactions may give rise to VAT registration and reverse-charge obligations, irrespective of the ultimate VAT treatment of competition entry revenues. The extent to which any related input VAT may be recoverable remains subject to further assessment.

Current report

If HMRC determines that VAT is payable on some or all of RKings' historical competition revenues, or that additional VAT obligations arise in respect of services received from overseas suppliers, the Company could incur substantial historical tax liabilities, together with applicable interest and penalties. Such liabilities could extend to multiple prior reporting periods and may be material to the Company's financial position. Additionally, if VAT is payable on RKings’ competition revenues, or additional VAT obligations arise in respect of services received from overseas suppliers, RKings results of operations may be significantly negatively affected.

Current report

The Company continues to evaluate these matters with its professional advisers, including the potential scope of historical VAT obligations, the applicable assessment periods, the appropriate taxable base, and the availability of input VAT recovery. Due to the significant uncertainties surrounding these matters, the Company is currently unable to reasonably estimate the amount or range of potential financial exposure.

Current report

The timing and ultimate outcome of these matters remain uncertain. Any adverse determination, including the imposition of retrospective VAT liabilities or additional VAT obligations on future operations, could materially adversely affect the Company's business, financial condition, results of operations and cash flows.

Current report

We have in the past, and may in the future, impair goodwill and intangible assets, including in-process research and development.

Current report

We review long-lived assets and certain identifiable assets (including intangible assets) for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. An impairment exists when the carrying value of the intangible asset (including goodwill) is not recoverable and exceeds its estimated fair value. Goodwill represents the difference between the purchase price and the fair value of assets and liabilities acquired in a business combination. We review goodwill yearly, or more frequently whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered, for impairment by initially considering qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, as a basis for determining whether it is necessary to perform a quantitative analysis. If it is determined that it is more likely than not that the fair value of reporting unit is less than its carrying amount, a quantitative analysis is performed to identify goodwill impairment.

Current report

During the three months ended September 30, 2026, the Company identified impairment indicators related to its Brazilian gaming operations due to adverse regulatory developments and continued operating losses. Following the issuance of Brazilian Provisional Measure No. 1,394/2026 on September 25, 2026, which, prohibits fixed-odds sports betting and online casino-style betting throughout Brazil, including offerings by foreign operators to persons in Brazil, management performed an impairment assessment in accordance with ASC 360, considering projected future cash flows, estimated fair values, and the expected future economic benefits of the underlying intangible assets. Based on this assessment, the Company concluded that certain intangible assets were impaired and recognized an impairment loss of approximately $5.5 million during the three months ended September 30, 2026, consisting of $4.1 million related to its Brazilian gaming license and $1.4 million related to the Magicbet777 domain and associated player database, due to the regulatory restrictions imposed on online gaming operations in Brazil, which significantly reduced the expected future cash flows and economic benefits associated with these assets.

Current report

The $4.1 million impairment of the Brazilian gaming license included approximately $2.0 million of the remaining net book value of the license and approximately $2.1 million of license costs previously reclassified to investments in the local statutory books in connection with a silent partnership (Sociedade em Conta de Participação, or “SCP”) arrangement with a third-party operator. As the Company retained legal ownership of the gaming license, the previously reclassified amount was determined to remain part of the capitalized gaming license costs under U.S. GAAP and was accordingly reclassified from investments to intangible assets for consolidated financial reporting purposes.

Current report

Additionally, the Company recognized an impairment loss of approximately $92,000 related to trademarks acquired in connection with the acquisition of Media Games Malta, following the cessation of its operations.

Current report

The impairment losses were recognized in the consolidated statements of operations and comprehensive loss. As a result, the carrying amounts of the Brazilian gaming license, the Magicbet777 domain and associated player database, and the Media Games Malta trademarks were reduced to zero as of September 30, 2026.

Current report

Intangible assets that have finite useful lives are amortized over their useful lives. The Company incurred amortization expenses of $1,356,786 and $2,575,834 during the three months ended September 30, 2026, and 2025, respectively, and $3,913,460 and $7,193,854 during the nine months ended September 30, 2026 and 2025, respectively.

Current report

Goodwill is tested for impairment at the reporting unit level. In accordance with ASC Topic 350 Intangibles - Goodwill and Other (“ASC 350”), our business is classified into two reporting units: Golden Matrix and MeridianBet Group. We review and evaluate our goodwill for potential impairment at a minimum annually, or more frequently if circumstances indicate that impairment is possible.

Current report

During the three months ended September 30, 2026, the Company identified indicators that the fair value of its Golden Matrix reporting unit may be below its carrying amount, including continued operating losses and a revised forecast. The Company performed an interim quantitative impairment test as of September 30, 2026, estimating fair value using a weighted combination of a discounted cash flow method and a market capitalization method. The carrying amount exceeded the estimated fair value, and the Company recognized a goodwill impairment charge of $5.9 million. Following the charge, goodwill allocated to the Golden Matrix reporting unit was $2.0 million.

Current report

An impairment recognized in one period may not be reversed in a subsequent period, even if the value of the impaired asset increases in the future. We have in the past and could in the future incur additional impairments of intangible assets, including goodwill, which may have a material effect on our results of operations, balance sheet and financial statements, which may cause the value of our common stock to decline in value.