Inspired Entertainment, Inc.

1. Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies

Company Description and Nature of Operations

We are a global gaming technology company, supplying content, platform and other products and services to licensed online and land-based lottery, betting and gaming operators worldwide through a broad range of distribution channels, on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our customers operating digital channels, on aggregator platforms, and in licensed betting offices, adult gaming centers, pubs, bingo halls and motorway service areas for our customers operating land-based venues.

Management Liquidity Plans

As of March 31, 2026, the Company’s cash on hand, excluding restricted cash, was $41.1 million, and the Company had working capital in addition to cash and restricted cash of $33.4 million. The Company recorded a net loss of $0.5 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively. Net losses include non-cash stock-based compensation of $1.4 million for both the three months ended March 31, 2026 and the three months ended March 31, 2025, respectively.

Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows provided by operations amounted to $26.7 million and $25.5 million for the three months ended March 31, 2026 and 2025, respectively.

Management currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s net cash requirements through May 2027.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2025. The financial information as of December 31, 2025 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 10, 2026 (the “2025 Form 10-K”). The financial information for the three months ended March 31, 2025 is derived from the unaudited condensed consolidated financial statements presented in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2025 filed with the SEC on May 8, 2025. The interim results for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any future interim periods.

2. Allowance for Credit Losses

Changes in the allowance for credit losses are as follows:

3. Inventory

Inventory consists of the following:

Component parts include parts for gaming terminals. Our finished goods inventory primarily consists of gaming terminals which are ready for sale.

4. Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

5. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

6. Contract Related Disclosures

The following table summarizes contract related balances:

Revenue recognized that was included in the deferred income balance at the beginning of the period amounted to $2.8 million and $1.7 million for the three months ended March 31, 2026 and 2025, respectively.

For the three-month periods ended March 31, 2026 and 2025 respectively, there was no significant amounts of revenue recognized as a result of changes in contract transaction price related to performance obligations that were satisfied in the respective prior periods.

Transaction Price Allocated to Remaining Performance Obligations

At March 31, 2026, in respect of contracts exceeding one year duration**, t**he aggregate amount of the transaction price allocated to the performance obligations which are unsatisfied (or partially unsatisfied) at the end of the reporting period was approximately $120.8 million. Of this amount, we expect to recognize as revenue approximately 25% through December 31, 2026, approximately 50% through December 31, 2028, approximately 24% through December 31, 2030, and the remaining 1% through December 31, 2031.

7. Long Term Debt

Senior Notes

Long-term debt consists of £260.0 million ($342.9 million) of Senior Notes that mature on June 9, 2030, less $16.6 million of capitalized debt fees, which are being amortized over the length of the Senior Notes. The Senior Notes bear interest at a rate per annum equal to the Sterling Overnight Index Average (“SONIA”) rateplus a margin (based on the Company’s consolidated senior secured net leverage ratio) ranging from 5.50% to 6.00% per annum.

The Notes Purchase Agreement which governs the Senior Notes requires that the Company maintain a maximum consolidated senior secured net leverage ratio of 5.0x on the test date for the relevant periods ending September 30, 2025, December 31, 2025, March 31, 2026, June 30, 2026, September 30, 2026, December 31, 2026 and March 31, 2027, stepping down to 4.75x on June 30, 2027 and each relevant period thereafter (the “Notes Financial Covenant”). The Notes Financial Covenant is calculated as the ratio of consolidated senior secured net debt to consolidated pro forma EBITDA (defined as consolidated net income after adding back certain items including (without limitation) interest expense, taxes, depreciation and amortization expenses and exceptional or non-recurring costs and losses and after adjusting for certain projected savings and synergies) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly on a rolling basis. The Notes Purchase Agreement does not include a minimum interest coverage ratio or other financial covenants. Covenant testing at March 31, 2026 showed covenant compliance with a net leverage of 2.88x.

On March 6, 2026, as permitted by the Notes Purchase Agreement, the Company repaid £10.0 million ($13.3 million) principal, and associated accrued interest of £0.2 million ($0.3 million), of its issued and outstanding Senior Notes. As permitted by the Notes Purchase Agreement, the repayment was made without penalty using some of the funds received from the November 7, 2025 sale of the Company’s UK holiday parks business and certain associated leisure assets.

8. Derivatives and Hedging Activities

On November 12, 2025, subsidiaries of the Company entered into two interest rate swap agreements with Macquarie Bank Limited designed to manage our exposure to interest rate volatility associated with our Senior Notes. The swaps are effective from December 9, 2025, until maturity on December 9, 2027. The swaps fix the interest rate at 3.6208% on a notional amount of £250.0 million ($329.7 million), payable to Macquarie Bank Limited, with Macquarie Bank Limited paying an amount to the Company on the notional amount of £250.0 million ($329.7 million) at an interest rate equal to the floating amount due on the Senior Notes, subject to a floor of 3.00%.

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the three months ended March 31, 2026, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve-months, the Company estimates that an additional $1.8 million will be reclassified as a decrease to interest expense.

As of March 31, 2026, and December 31, 2025, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of March 31, 2026 and December 31, 2025.

There was no effect of offsetting of the derivative financial instruments at March 31, 2026 or December 31, 2025.

The tables below present the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended March 31, 2026 and March 31, 2025.

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2026 and March 31, 2025.

Credit-risk-related Contingent Features

In November 2025, each of Inspired Gaming (UK) Limited and Gaming Acquisitions Limited, wholly owned (indirect) subsidiaries of the Company (each, a “Hedging Subsidiary”), entered into an industry standard ISDA Master Agreement, with a negotiated Schedule thereto (each, an “ISDA Agreement”), with Macquarie Bank Limited, the counterparty to the derivative transactions, and which ISDA Agreements set forth various provisions which govern the relationship between each such Hedging Subsidiary and the counterparty with respect to such derivative instruments. Such provisions include certain events which, if triggered by either party, may give rise to a termination of the relevant derivative instruments, which may trigger a requirement for the exchange of a breakage payment between the parties.

Each ISDA Agreement contains a provision whereby if any of the Company’s subsidiaries that has granted credit support in respect of such derivative transactions defaults on any of its indebtedness above a threshold amount, including default where repayment of such indebtedness has not been accelerated by the relevant creditor, then the relevant Hedging Subsidiary could also be declared in default on its derivative obligations. Each ISDA Agreement also contains a provision where the relevant Hedging Subsidiary could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the relevant Hedging Subsidiary’s default on its indebtedness.

As of March 31, 2026, no derivatives were in a net liability position. As of March 31, 2026, no Hedging Subsidiary has posted any collateral related to the ISDA Agreement, as no collateral is required under the terms thereof. If the Hedging Subsidiaries had breached any of the provisions under the terms which resulted in an acceleration of the ISDA Agreements, as at March 31, 2026, no assets would have been required for the Company to settle its obligations under the respective ISDA Agreements.

9. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset and liability in an orderly transaction between market participants at the measurement date. We estimate the fair value of our assets and liabilities utilizing an established three-level hierarchy. The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments approximates their recorded values.

For each period, derivative financial instrument assets and liabilities measured at fair value on a recurring basis are included in the financial statements as per the table below.

Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s Principal Financial and Accounting Officer determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Principal Financial and Accounting Officer.

At March 31, 2026 and December 31, 2025, there were no Level 3 inputs, and no transfers in or out of Level 3 from other levels in the fair value hierarchy.

10. Stock-Based Compensation

A summary of the Company’s restricted stock unit (“RSU”) activity during the three months ended March 31, 2026 is as follows:

The Company issued a total of 186,064 shares during the three months ended March 31, 2026, in connection with the Company’s equity-based plans, which primarily reflected the net settlement of RSUs that vested on December 31, 2025.

11. Accumulated Other Comprehensive (Income) Loss

The accumulated balances for each classification of comprehensive (income) loss are presented below:

12. Net Income (Loss) per Share

Basic income/loss per share (“EPS”) is computed by dividing net income/loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period, including stock options and RSUs, unless the inclusion would be anti-dilutive.

The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because they were either contingently issuable shares or because their inclusion would be anti-dilutive:

There were no reconciling items for the three months ended March 31, 2026 or March 31, 2025.

The calculation of Basic EPS includes the effects of 2,299,363 and 2,160,393 shares for the three months ended March 31, 2026 and 2025, respectively, with respect to RSU awards that have vested but have not yet been issued.

13. Repurchase of Common Stock

On November 1, 2025, the Board of Directors authorized the Company to use up to $25.0 million to repurchase common shares of the Company, subject to repurchases being effected on or before November 30, 2028 (the “Share Repurchase Program”). Management has discretion as to whether to repurchase shares of the Company.

During the three months ended March 31, 2026, the Company repurchased 387,230 shares under the Share Repurchase Program for gross payments of approximately $2.6 million, which were canceled and retired immediately as of the trade date. As of March 31, 2026, approximately $22.0 million remained available for future repurchases under the Share Repurchase Program.

Refer to Part II, Item 2 of this report for further details regarding shares repurchased during the three months ended March 31, 2026.

14. Other Finance Income (Expense)

Other finance income (expense) consisted of the following:

15. Income Taxes

The effective income tax rate for the three months ended March 31, 2026 and 2025 was 60.4% and 97.3%, respectively, resulting in a $0.7 million and $5.1 million income tax benefit, respectively.

The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including the level of pre-tax income or loss, the income mix between jurisdictions, and any discrete items that may occur.

16. Related Parties

Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”) (an arranger and lending party under our previous Revolving Credit Facility (“RCF”) Agreement) and Macquarie Bank Limited (“Macquarie Bank”) (a party to our interest rate swap agreements, as described in Note 8) are affiliates of MIHI LLC, which beneficially owned approximately 11.3% of our common stock as of March 31, 2026. Macquarie UK held 11% of the loans outstanding under our previous RCF which was repaid on June 9, 2025. Interest expense payable to Macquarie UK for the previous RCF for the three months ended March 31, 2025 (including non-utilization fees) amounted to $0.1 million. With respect to Macquarie Bank, for the three months ended March 31, 2026, no periodic net settlements had occurred under the swap agreements, and as of March 31, 2026, no amounts were payable to or receivable from Macquarie Bank (the first scheduled payment date under the swap agreements, which became effective December 9, 2025, is June 9, 2026). MIHI LLC is also a party to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant to which, subject to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors to be nominated for election as directors of the Company at any annual or special meeting of stockholders at which directors are to be elected, until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold less than 5% of the outstanding shares of the Company.

Richard Weil, the brother of A. Lorne Weil, our Executive Chairman, provides consulting services to the Company relating to our lottery operations under a consultancy agreement dated December 31, 2021, as amended and extended. The aggregate amount incurred by the Company in consulting fees was $37,500 and $37,500 for the three months ended March 31, 2026 and 2025, respectively.

17. Leases

Certain of our arrangements include leases for equipment installed at customer locations. As the lessor, we combine lease and non-lease components for all classes of underlying assets in arrangements that involve operating leases. The single combined component is accounted for under ASC 606,Revenue from Contracts with Customers based on the consideration that the non-lease components are the predominant items in the arrangements. If a component cannot be combined, the consideration is allocated between the lease component and the non-lease component based on relative standalone selling price. The lease component is accounted for under ASC 842,Leasesand the non-lease component is accounted for under ASC 606.

Lease income from operating leases is not material for any of the periods presented. Lease income from sales type leases is as follows:

18. Commitments and Contingencies

Employment Agreements

We are party to employment agreements with our executive officers and other employees of the Company and our subsidiaries which contain, among other terms, provisions relating to severance and notice requirements.

Legal Matters

From time to time, the Company may become involved in lawsuits and legal matters arising in the ordinary course of business. While the Company believes that, currently, it has no such matters that are material, there can be no assurance that existing or new matters arising in the ordinary course of business will not have a material adverse effect on the Company’s business, financial condition or results of operations.

Purchase commitments

At March 31, 2026, the Company had commitments to purchase property and equipment amounting to $3.4 million.

19. Pension Plan

We operate a defined contribution plan in the US, and both defined benefit and defined contribution pension plans in the UK. The defined contribution plan assets are held separately from those of the Company in independently administered funds.

Defined Benefit Pension Plan

The defined benefit plan has been closed to new entrants since April 1, 1999 and closed to future accruals for services rendered to the Company for the entire financial statement periods presented. The actuarial valuation of the plan as at March 31, 2024, which was finalized in March 2025, determined that the statutory funding objective was not met, i.e., there were insufficient assets to cover the plan’s technical provisions and there was a funding shortfall.

In March 2025, a recovery plan was put in place to eliminate the funding shortfall. The recovery plan included a requirement for the plan actuary to assess the funding position of the plan at March 31, 2026 and if the funding level at that point was less than 100% the Company would pay a single lump sum contingent contribution calculated as the lower of the deficit calculated by the plan actuary at March 31, 2026 and £0.5 million ($0.7 million). The assessment has concluded that the funding position exceeded 100% at March 31, 2026 and consequently no contingent contribution will be payable.

The following table presents the components of our net periodic pension cost:

20. Segment Reporting and Geographic Information

Operating segments are identified as components of an enterprise for which separate and discrete financial information is available and is used by the chief operating decision maker, or decision-making group, (the “CODM”), in making decisions on how to allocate resources and assess performance. The Company’s CODM consists of the Executive Chairman and the President and Chief Executive Officer.

The Company’s CODM uses measures of segment profit and loss to evaluate the performance areas of 1) Achievement of revenue and gross margin; 2) Level of staff and non-staff expenses against budget; 3) Investment in capitalized software development; and 4) Additional cash expenditures impacting working capital. The decision-making group uses the information to allocate financial resources and drive operation decisions such as investing in new customers, products, geographies and refocusing commercial teams to drive new sales, accelerating or delaying staffing or other selling, general and administrative expenditures and ensuring technology staff utilization on new product development.

During the first quarter of 2026, the Company changed its reportable segments to align with changes in its internal management reporting structure and the manner in which the CODM assesses performance and allocates resources.

As a result of these changes, the Company now reports the following reportable segments: Retail Solutions, Virtual Sports, and Interactive. Previously, the Company reported the following reportable segments: Gaming, Virtual Sports, Interactive, and Leisure. The change in reportable segments reflects organizational realignment and did not affect the Company’s consolidated financial position, results of operations, or cash flows.

Prior-period segment information has been recast to conform to the current period presentation. The recast had no impact on previously reported consolidated totals.

The Company operates its business along three operating segments, which are segregated on the basis of revenue stream: Retail Solutions, Virtual Sports, and Interactive. The Company believes this method ofsegment reporting reflects both the way its business segments are managed and the way the performance of each segment is evaluated.

Other segment items consist of costs incurred in restructuring activities.

The following tables present revenue, cost of sales, excluding depreciation and amortization, staff-related selling, general and administrative expenses, non-staff related selling, general and administrative expenses, labor costs capitalized, depreciation and amortization, stock-based compensation expense, other segment items, operating profit/(loss) and total capital and other long-lived asset expenditures for the periods ended March 31, 2026 and March 31, 2025, respectively, by business segment. Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical. Corporate function costs consist primarily of selling, general and administrative expenses, depreciation and amortization and capital expenditures relating to corporate/shared functions. Asset information by reportable segment is not given as this information is not provided to the Company’s CODM due to it not being considered necessary in order for the group to assess the reportable segments’ performance or to make decisions concerning the allocation of resources.

Segment Information

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

Geographic Information

Geographic information for revenue is set forth below:

UK revenue includes revenue from customers headquartered in the UK, but whose revenue is generated globally.

Geographic information of our non-current assets excluding goodwill and deferred tax is set forth below:

Software development costs are included as attributable to the market in which they are utilized.

21. Customer Concentration

During the three months ended March 31, 2026, there were two customers that represented at least 10% of the Company’s revenues, accounting for approximately 11% and 10% of the Company’s revenues, respectively. These customers were served by the Retail Solutions, Virtual Sports and Interactive segments. During the three months ended March 31, 2025, there were no customers that represented at least 10% of the Company’s revenues.

At March 31, 2026, there was one customer that represented at least 10% of the Company’s accounts receivable, accounting for approximately 10% of the Company’s accounts receivable. At December 31, 2025, there were no customers that represented at least 10% of the Company’s accounts receivable.

22. Subsequent Events

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The Company did not identify subsequent events that would have required adjustment or disclosure in the consolidated financial statements.