Meridian Holdings Inc./NV

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2025, filed with the Commission on March 31, 2026 (the “Form 10-K”), under the heading “Risk Factors”, except as discussed below, and investors should review the risks provided in the Form 10-K and below, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K, under “Risk Factors” and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial conditions and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

Failures, disruptions, defects or errors in our internally developed software and technology infrastructure could harm our business, reputation and results of operations.

Our online casino and sports wagering platforms depend on the continuous, reliable operation of complex, internally developed and proprietary software, as well as the underlying technology infrastructure, including servers, databases, cloud hosting environments, networks, and related systems, that together support real-time wagering, account management, payment processing, and responsible gaming controls. This software and infrastructure may contain undetected errors, bugs, or design defects, particularly as we update existing platforms, deploy new features, integrate acquired technology, or scale to accommodate increased user volume or new jurisdictions. Any such defects, or any failure, outage, or degradation in performance of our systems, whether caused by software errors, hardware failures, capacity constraints, power outages, natural disasters, human error, or other causes, could result in incorrect bet settlement, erroneous odds or payouts, inability of customers to place or settle wagers, or extended service interruptions, particularly during high-traffic periods such as major sporting events. Any of the foregoing could result in customer dissatisfaction and attrition, negative publicity, regulatory scrutiny or enforcement action, litigation, financial losses (including losses arising from mispriced or mis-settled wagers), and harm to our brand and competitive position, any of which could materially and adversely affect our business, financial condition, and results of operations.

We rely on third-party systems, platform providers, and content providers to operate our business, and any failure, disruption, or deterioration in these relationships or systems could materially harm our operations.

We depend on a variety of third parties to operate our online casino and sports betting products, including third-party gaming platform and content providers, payment processors and banking partners, cloud hosting and content-delivery providers, geolocation and identity-verification vendors, and other technology and service providers. We do not fully control the operation, security, or reliability of these third-party systems. If any of these providers experiences an outage, service degradation, security breach, financial distress, insolvency, or termination of its relationship with us, or if we are unable to renew agreements with key providers on commercially reasonable terms (or at all), we may be unable to offer affected games or services, may experience delayed or interrupted service to our customers, and may be required to transition to alternative providers on short notice, which could be costly, time-consuming, and disruptive. Certain of our third-party providers may also be single points of failure for particular products or markets, increasing our exposure to any disruption of their systems. Any of these events could result in loss of customers and revenue, reputational harm, and regulatory consequences, and could materially and adversely affect our business and results of operations.

We depend on external data feeds, including sports event and odds data, and any inaccuracy, delay, or interruption in this data could result in improper bet settlement, financial losses, and regulatory exposure.

Our sports wagering operations depend on data feeds licensed from third-party data providers for real-time sports scores, statistics, event outcomes, and in certain situations, pricing/odds information, which we use to offer markets, price wagers, and settle bets. We also rely on external data and content feeds to support certain online casino products. If these data feeds are delayed, interrupted, inaccurate, incomplete, or manipulated (whether due to technical failure, provider error, loss of a data licensing relationship, or other causes), we may be unable to offer or may be forced to suspend certain betting markets, may settle wagers incorrectly, or may be exposed to arbitrage or advantage betting by customers exploiting stale or erroneous data. Errors in official event data can also lead to disputes with customers over bet settlement, potential financial liability, negative publicity, and regulatory inquiries or sanctions in jurisdictions that impose specific integrity or data-accuracy requirements on licensed operators. Any loss of access to reliable, timely sports data, or a material increase in the cost of licensing such data, could impair our ability to compete effectively and could materially and adversely affect our business and results of operations.

Cybersecurity incidents, hacking, or other technology-related attacks against us or our third-party providers could disrupt our operations, compromise sensitive data, and expose us to significant liability and reputational harm.

Our business involves the collection, storage, and processing of large volumes of sensitive customer information, including personal, financial, and payment data, as well as proprietary business and wagering data. Our systems, and the systems of the third parties on which we rely, are targets for cyberattacks, including hacking, ransomware, denial-of-service attacks, phishing and social engineering, credential-stuffing and account takeover attempts, malware, and other efforts by increasingly sophisticated bad actors, including organized groups seeking to defraud our platform or manipulate wagering outcomes. Despite our investment in security controls, we may not be able to anticipate, detect, or prevent all such attempts, and a successful cybersecurity incident could result in unauthorized access to or disclosure, loss, or misuse of customer or company data; theft of funds; manipulation or corruption of wagering, payout, or account data; extended platform outages; and compromise of the integrity of our games and betting markets. Any such incident could subject us to significant remediation costs, litigation, regulatory investigations and penalties (including under applicable data privacy and gaming laws), loss of gaming licenses in one or more jurisdictions, increased insurance costs, loss of customer trust, and reputational harm, any of which could materially and adversely affect our business, financial condition, and results of operations. In addition, because techniques used to obtain unauthorized access change frequently and are often not recognized until launched against a target, we may be unable to implement adequate preventative measures in time.

Disruptions in the availability of our computer systems, through cyber-attacks or otherwise, could damage our computer or telecommunications systems, impact our ability to service our customers, adversely affect our operations and the results of operations, and have an adverse effect on our reputation. The costs to us to eliminate or alleviate security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and the efforts to address these problems could result in interruptions, delays, cessation of service and loss of existing or potential customers and may impede our sales, distribution and other critical functions. We may also be subject to regulatory penalties and litigation by customers and other parties whose information has been compromised, all of which could have a material adverse effect on our business, results of operations and cash flows.

We face cyber security risks that could result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits and restrictions on our use of data.

Our information systems and data, including those we maintain with our third-party service providers, may be subject to cyber security breaches. Computer programmers and hackers may be able to penetrate our network security and misappropriate, copy or pirate our confidential information or that of third parties, create system disruptions or cause interruptions or shutdowns of our internal systems and services. Our website may become subject to denial-of-service attacks, where a website is bombarded with information requests eventually causing the website to overload, resulting in a delay or disruption of service. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. There is a growing trend of advanced persistent threats being launched by organized and coordinated groups against corporate networks to breach security for malicious purposes.

The techniques used to obtain unauthorized, improper, or illegal access to our systems, our data or customers' data, disable or degrade service, or sabotage systems are constantly evolving and have become increasingly complex and sophisticated, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched. Although we have developed systems and processes designed to protect our data and customer data and to prevent data loss and other security breaches and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute security, as demonstrated by the incident described below.

There has been in the past, and may in the future be, losses or unauthorized access to or releases of confidential information, including personally identifiable information, that could subject the Company to significant reputational, financial, legal and operational consequences. It is increasingly difficult to differentiate legitimate from illegitimate claims and therefore take reasonable and appropriate action.

The Company's business requires it to use, transmit and store confidential information including, among other things, personally identifiable information ("PII") with respect to the Company's customers and employees. The Company devotes significant resources to network and data security, including through the use of encryption and other security measures intended to protect its systems and data. But these measures cannot provide absolute security, and losses or unauthorized access to or releases of confidential information have occurred, including the incident described above, and could occur again, and could materially adversely affect the Company's reputation, financial condition and operating results. The Company's business also requires it to share confidential information with third parties. Although the Company takes steps to secure confidential information that is provided to third parties, such measures are not always effective, and losses or unauthorized access to or releases of confidential information have occurred and could recur, which could materially adversely affect the Company's reputation, financial condition and operating results.

For example, on May 26, 2026, the Company received a communication from a threat actor claiming to have obtained sensitive customer information by accessing a former employee’s credentials. The threat actor demanded payment from the Company in exchange for not publicly disclosing this information. Following receipt of such communication, the Company could not confirm the details of the threat actor’s allegations. The collective claimed to have information including, in certain cases, unique citizen identification numbers, ID card and passport data, home addresses, and other identifying information.

Upon receipt of that threat actor’s claims, the Company immediately investigated various potential infiltration methods used by the threat actor and confirmed that it was likely that some information was exfiltrated. However, the Company has not been able to quantify the information taken. The Company then considered whether and how to patch its methods to contain, assess and remediate the alleged incident. The Company believes such prophylactic actions have been successful and, since the initiation of its responsive efforts, it has not observed any evidence of new unauthorized activity. Still, the Company’s investigation, monitoring, and related activities are ongoing. The Company is actively engaged with local law enforcement and government partners in connection with the incident described herein. The Company is and will continue implementing further measures to strengthen its security environment and protect its customers. Although the Company has taken remedial measures, the Company cannot guarantee that all effects of the incident have been fully identified, remediated, or mitigated. If this threat actor’s claims were realized, the Company could face lawsuits, purported class actions, regulatory investigations and enforcement actions (and related fines, penalties, consent decrees, or other regulatory obligations), remediation costs, notification costs, reputational harm, loss of customers, contractual and business impacts, insurance premium increases (or loss of coverage), and increased cybersecurity compliance costs. Any of the foregoing consequences, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations, and reputation, and consequently, the value of the Company’s securities.

The effects of the above may result in a material adverse effect on our operations, cash flow, future prospects, and the value of our securities.

Nevertheless, to the Company’s knowledge, the incident has not resulted in any material disruption to, or impact on, the Company's operations, its financial condition or results of operations.

Additionally, as with all companies, our security measures may not be sufficient for all eventualities and may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management or other irregularities. In addition to the risks relating to general confidential information described above, the Company is also subject to specific obligations relating to payment card data. Under payment card rules and obligations, if cardholder information is potentially compromised, the Company could be liable for associated investigatory expenses and could also incur significant fees or fines if the Company fails to follow payment card industry data security standards. The Company could also experience a significant increase in payment card transaction costs or lose the ability to process payment cards if it fails to follow payment card industry data security standards, which would materially adversely affect the Company’s reputation, financial condition and operating results.

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

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.