Meridian Holdings Inc.: Form 10-Q for the period ended Mar 31, 2026

General Information

The following discussion should be read in conjunction with the financial statements for the fiscal year ended December 31, 2025 and notes thereto, which the Company filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2026 as part of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2025 Annual Report.

Statements made in this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” are subject to forward-looking statements and various risks and should be read in connection with the “Special Note Regarding Forward-Looking Statements”, above and “Risk Factors”, described below and incorporated by reference into this Report, as described below.

As used in this Report, “EUR”, “€” or “Euros” means the official currency of the member states of the European Union; “GBP”, “£” or “Pounds” means the currency of the United Kingdom and its associated territories; “USD”, “$” or “dollars” means U.S. dollars; “RSD” or “dinars” means the Serbian Dinar, the official currency of Serbia; “AUD” means Australian dollars, “BRL” or “R$” means the Brazilian Real, the official currency of Brazil, “PEN” means the Peruvian Sol, the official currency of Peru, and “TZS” means the Tanzanian Shilling, the official currency of Tanzania, provided that all dollar amounts in this Report are in U.S. dollars unless otherwise stated.

Our Business

We (i) operate online sports betting, online casino, and gaming operations in more than 15 jurisdictions across Europe, Africa and Central and South America, (ii) are an innovative provider of enterprise Software-as-a-Service (“SaaS”) solutions for online casino operators and online sports betting operators, commonly referred to as iGaming operators, and (iii) offer pay-to-enter prize competitions in the United Kingdom (UK) and lead trade promotions in Australia, providing members with free prizes.

Online Sports Betting, Online Casino, And Gaming Operations

We are a well-established brand and operator in the sports betting and gaming industry, spanning across over 15 markets in Europe, Central and South America, and Africa. We employ approximately 1,200 personnel, operating both online (mobile and web) and approximately 700 company-owned or franchised betting shops, with a primary focus (in those shops) on sports betting, slot machines, and virtual games. Of those 700 shops, approximately 260 are owned by our subsidiaries and approximately 440 shops are owned by franchisees. This is complemented by a variety of slot machines and online casinos, eSports, fixed odds games, and other entertainment options, contingent on the regulatory parameters of the specific jurisdictions. While sports betting is a primary focus, our online casino revenue has grown significantly over the past several years.

Our proprietary technology enables the development of scalable systems capable of operating in multiple jurisdictions and currencies, all the while leveraging the same technical infrastructure for odds setting and risk management. Our technology platform ensures consistency in odds setting and risk management across all the markets that they operate in.

Additionally, our approach to our markets is flexible and omni-channel, encompassing (for example) iOS, Android, mobile browser, desktop, SMS, SST, and USSD applications (discussed in greater detail below) and technologies (as well as customary retail operations). This omni-channel approach seeks to ensure that consumers can access our offerings in different ways, but is also, in certain jurisdictions, essential to overcoming some of the technological challenges faced by consumers in those territories. This approach ensures our customers across diverse regions and connectivity levels can engage with our content and have the same level of user experience.

More specifically, our technological platforms include:

• iOS and Android services: We offer dedicated mobile applications for both iOS and Android users, providing a seamless and user-friendly experience for those who prefer betting on the go.
• Mobile Browser: Our mobile website is optimized for various mobile browsers, ensuring that customers can access these services conveniently from their mobile devices, even without the need for a dedicated app.
• Desktop: For customers who prefer a traditional desktop experience, we offer a comprehensive desktop platform that provides a wide range of betting options.
• SMS (Short Message Service): In regions with limited internet connectivity, such as parts of Africa, we offer SMS betting services. Customers can place bets and receive updates through text messages, making sports betting accessible to a broader audience.
• SST (Simplified Service Text): Similar to SMS, SST allows customers to place bets and receive information via text messages, ensuring that users with basic mobile phones or limited internet access can still enjoy our services.
• USSD (Unstructured Supplementary Service Data): USSD is a critical channel in regions where internet access is limited. It enables users to interact with our platform through a simple, menu-based system on their mobile phones. Customers can place bets, check odds, and manage their accounts using USSD, providing inclusivity in markets with varying levels of technological infrastructure.

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A significant component of our revenue is derived from our comprehensive sports betting offerings, which cover over approximately 800 different leagues, providing more than approximately 11 million bets on over approximately 20,000 sporting events each month, inclusive of in-play betting. Notably, the sports betting technology, odds setting, and risk management platforms are proprietary to us.

Our sports betting services cover a wide range of sports, events, and markets to cater to diverse player local preferences. They offer betting options for traditional sports such as soccer (football), basketball, tennis, table tennis, volleyball, handball, ice hockey, American football, baseball, rugby, cricket, horse racing, and more. Additionally, they provide opportunities for betting on emerging trends like e-football and e-sports. In addition to conventional sports, our portfolio extends to niche markets like futsal, floorball, snooker, badminton, beach volleyball, darts, water polo, golf, biathlon, cycling, boxing, martial arts, alpine skiing, skiing, Formula 1, motor sports, NASCAR, kabaddi, and even sports specials related to major competitions. Moreover, we offer betting on political events where regulatory conditions permit, and even allow customers to propose their own bets, provided they meet ethical and legal requirements and are measurable.

Our innovative use of machine learning technologies within our platform serves enhanced customer experiences by offering tailored bets and continuously updated odds over an extensive range of events. This significantly reduces the requirement for manual oversight and intervention.

We offer a diverse and multifaceted portfolio of betting options that extends beyond traditional sports betting. We offer a portfolio of gaming products including casino games, slots, roulette, and other random number generator (RNG) games. We also own our own casino development studio, which has thus far produced 75 slot games, which are available online, where regulatory approval is granted, catering to customers on our proprietary casino platform. RNG games are games in which the outcome is determined by a random element generated by a computer algorithm. These games rely on chance rather than skill or strategy to determine the results.

Our casino offerings include a mix of in-house developed games from Expanse Studios and a selection of titles from renowned third-party casino providers. These providers include Games Global, BluOcean, Relax, Oryx, Playtech, iSoftbet, Leap, Evolution, Easit, Amusnet, Thunderkick, Spribe, Habanero, PG Soft, Greentube, EvoPlay, Wazdan, Pragmatic Play, Playson, Fazi, Endorphina, Spearhead, CT Interactive, Kiron, and Platipus. We have established revenue-sharing agreements with such providers to offer a wide variety of casino games, ensuring a diverse and engaging casino experience for our players via a vibrant and ever-expanding casino game library.

We have a dedicated iGaming section that covers eSports competitions and allows betting on gaming tournaments. This section caters to the growing interest in competitive gaming and includes popular titles such as CS:GO, Dota 2, Fortnite, LoL, Valorant, Rainbow Six, Crossfire, King of Glory, and more. This diverse range allows us to cater to the preferences of eSports enthusiasts.

We also provide extensive coverage of eSports events, encompassing major tournaments such as The International (Dota 2), League of Legends World Championship, and CS:GO Majors. Additionally, we align our coverage with significant European and international eSports tournaments according to the European competition calendar. This approach ensures that customers have access to a broad spectrum of eSports events, adhering to regulatory guidelines. We also utilize ethical advertising practices and partnerships with specialized gaming websites to connect with eSports enthusiasts effectively.

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We offer in-play betting for eSports matches, enabling customers to place bets during the live progression of the games. This real-time betting feature enhances the eSports betting experience while ensuring that we comply with regulatory standards. To maintain the integrity of eSports betting and prevent unethical practices like match-fixing, we collaborate closely with international eSports federations. This partnership allows us to monitor eSports events and swiftly respond to any suspicious activities. In the event of any concerns, we proactively engage with national law enforcement authorities to uphold fair play and regulatory compliance.

We understand that player preferences and market dynamics can vary significantly. To address these differences across the group’s many jurisdictions, we have implemented several unique features and tailored offerings, including:

• Localized content: In all markets, we provide localized content and promotions to align with city, country, and regional preferences. This includes language-specific interfaces, promotions tied to local events, and culturally relevant gaming experiences and consumer patterns.
• Customer engagement: We prioritize responsible gaming and offers tools such as deposit and loss limits, time-out features, and self-exclusion options. These tools empower players to manage their gaming experiences responsibly.
• Innovative Betting Options: Our “Empty Bets” feature allows customers to propose their own bets, fostering a sense of engagement and personalization. These bets are subject to stringent ethical and legal criteria and must be measurable. These bets are strictly prohibited from involving any unethical or illegal events or activities. We maintain a strong commitment to upholding the highest ethical standards in all aspects of their operations, including innovative betting options.

Beyond our direct B2C operations, we also operate an indirect B2B franchise model. Under this model, we license our proprietary sports betting technology to local partners, who can operate under our brand or their own brand. This diversifies our revenue stream, enabling us to leverage our technology for added income, while expanding our brand presence.

Status of Development Efforts for New or Enhanced Products, Trends in Market Demand and Competitive Conditions

We are diligently invested in research and development initiatives to attempt to stay at the forefront of our industry and meet the ever-evolving needs of our diverse customer base. As part of this strategy, our developmental efforts are primarily focused on enhancing product offerings, refining user experience, and bolstering our proprietary sports betting technology.

Our products and services compete in a market characterized by rapid technological advances, which means evolving standards in software technology and frequent new product introductions and enhancements that may render the existing ones obsolete. We attempt to continuously refine our software and technology offerings especially in terms of more intensive customer specification, segmentation and personalization, as well as to address regulatory changes in the markets in which we operate and plan to operate. We believe that in order to remain competitive, we need to continuously modify and enhance our technology platform and service offerings.

In the realm of technological advancement, one of the key development initiatives currently in progress is our integration of advanced Machine Learning (ML) technologies into our sports betting platform. The incorporation of these sophisticated technologies aims to personalize and enrich the betting experience for individual users by offering tailored bets, real-time updating of odds across a vast range of events, and further reducing the need for human oversight. This is expected to not only create a more dynamic, responsive, and intuitive betting experience, but also present a significant competitive advantage in a market where customer experience is paramount.

In terms of market trends, we believe that demand for online betting is on a significant upward trajectory globally, partially due to the lasting impact of the COVID-19 pandemic, which has accelerated the shift from traditional, physical betting shops to online platforms. The industry-wide transition towards mobile betting is another recent major trend, spurred on by the increased penetration of smartphones and improved internet connectivity. In response to these trends, we have successfully implemented an omni-channel approach to our markets, including iOS, Android, mobile browser, desktop, SMS, SST, USSD as well as retail segment (each as discussed above).

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With regard to competitive conditions, the betting industry continues to be highly competitive, with new entrants emerging frequently. However, we have maintained a robust competitive position, owing to our advanced technological infrastructure, diversified product portfolio, personalized customer experience, and prudent regulatory compliance. We are focused on maintaining and enhancing this competitive edge through continuous innovation, customer-centricity, and adaptability.

A Provider of Enterprise Software-as-a-Service (“SaaS”) Solutions

Following the closing of the MeridianBet Acquisition and effective April 1, 2024, we, through Golden Matrix, own and operate a proprietary online gaming aggregation and enterprise software platform (the “GM-Ag System”) that serves international customers, primarily in the Asia Pacific region.

The GM-Ag System is an integrated iGaming platform that connects licensed gaming content providers with licensed online gaming operators. The system aggregates gaming content from multiple third-party suppliers and makes such content available to customers through a single technical integration.

Under distribution agreements with licensed and accredited gaming content providers, we have the right to distribute and resell third-party game content to our customers. The content portfolio includes slot games, table games (such as roulette, blackjack and poker), sportsbook offerings, lottery products and live dealer games.

The GM-Ag System provides two principal advantages to licensed online gaming operators.

• First, the platform enables operators to access a broad portfolio of third-party gaming content providers through a single technical integration. This aggregation model significantly reduces the time, cost and operational complexity typically associated with establishing multiple direct integrations with individual content suppliers.
• Second, the GM-Ag System offers operators a suite of technology-driven tools designed to support customer acquisition, engagement and retention. These tools include marketing automation capabilities, loyalty program management systems, real-time player analytics and reporting functionalities, which allow operators to manage and optimize player activity across multiple gaming verticals.

A Provider of Pay To Enter Prize Competitions And Online Trade Promotions Platform

We engage in competition operations in the United Kingdom via our subsidiary RKingsCompetitions Ltd., (“RKings”). We operate competitions to win prizes online such as cars, motorbikes, watches, technology, holidays, luxury gadgets and other items by offering pay to enter prize competitions throughout the UK which are not gambling or a lottery and RKings does not offer B2C online sports betting and/or online casino services. The participants are provided with a route to free entry to the prize competitions as required by UK law. We refer to these as “pay to enter prize competitions”.

As a purely online business, we have been focusing on enhancing the products and experience we offer to both new and existing players by improving the functionality and responsiveness of the RKingsCompetitions.com website, enhancing the prize values, and reducing the ticket prices.

In addition, we, through GMG Assets Limited, provide the winners of RKings’ prizes with the option of accepting the cash value of the prize. In doing so, GMG Assets purchases the prize from the winner for cash and sells the prize to wholesalers at a margin.

On August 16, 2024, we entered into a Share Exchange Agreement to acquire an 80% ownership interest in Classics Holdings Co. Pty Ltd (“Classics Holdings”). Classics Holdings, through its wholly-owned subsidiary, Classics For A Cause Pty Ltd (“Classics For a Cause”), is an independent online trade promotions company, located in Australia, which operates a well-established business-to-consumer (B2C) platform that offers paid members access to a wide range of discounts from retailers across Australia. Classics For a Cause rewards its members with free entries into promotional giveaways, which feature luxury and classic motor vehicles, and exotic motor vehicles. On August 21, 2024, we closed the transactions contemplated by the Share Exchange Agreement, which was effective as of August 1, 2024.

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Cash Requirements, Liquidity and Capital Resources

We had $16,234,441 cash on hand and a working capital deficit of $22,777,000 as of March 31, 2026. 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 1/3rd of our float every 12 months.

Our material cash requirements include the following contractual obligations:

Debt:

The Company currently has the following outstanding debts:

1. Unicredit Bank Facility;

2. Hipotekarna Bank Facility;

3. Igor Salindrija Facility; and

4. Makerplay Entretenimento & Marketing Limitada Facility

The outstanding balances of these debt facilities as of March 31, 2026 and December 31, 2025 are presented below:

See “Note 15 – Long-Term Liabilities” in the notes to the financial statements included under “Part I. Financial Information—Item 1. Financial Statements”, for more details on these debts.

Consideration payable to the former owners of MeridianBet Group:

As discussed in greater detail in “Note 22 – MeridianBet Group Purchase Agreement”, in the notes to the financial statements included under “Part I. Financial Information—Item 1. Financial Statements”, the Company incurred the following payment obligations in connection with the MeridianBet Acquisition:

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The Company has received confirmation from the former owners of MeridianBet Group that they will not demand repayment or conversion of the consideration until such time as the Company has the ability to repay.

Liquidity and capital resources

The Company had $16,234,441 of cash on hand at March 31, 2026 and total assets of $111,867,270 ($30,482,524 of which were current assets) and a working capital deficit of $22,777,000 as of March 31, 2026. The working capital deficit was mainly due to $8,032,261 of current portion of long-term loans included in current liabilities, as well as $15,905,672 of current consideration payable to the Meridian Sellers. Included in total assets at March 31, 2026 was $8,844,034 of goodwill and $26,226,694 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 “Part I. Financial Information—Item 1. Financial Statements”.

The Company had $18,078,300 of 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 “Part I. Financial Information—Item 1. Financial Statements”.

The decrease in cash of $1,843,859 between March 31, 2026, and December 31, 2025, was mainly due to the repayment of debt and cash used in investing activities, offset by cash provided by operating activities.

Our financial focus is on long-term, sustainable growth in revenue with the goal of marginal increases in expenses. We believe that our operations are highly scalable, and we plan to continuously add new products to our offerings with the anticipation that they will provide successful revenue growth.

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.

See “Note 15 – Long-Term Liabilities” in the notes to the financial statements included under “Part I. Financial Information—Item 1. Financial Statements”, for more details on the Company’s debts and lending facilities.

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Cash flows

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 three months ended March 31, 2026, mainly include stock-based compensation, amortization expenses on intangible assets, depreciation on property plant and equipment and non-cash interest expense related to debt discount amortization.

The Company generated cash from operating activities of $5,155,437 during the three months ended March 31, 2026, due primarily to $2,168,157 of net income, a $2,357,254 decrease in accounts receivable, $248,057 of stock-based compensation, $1,025,175 of amortization expenses relating to intangible assets, and $1,435,955 of depreciation expenses, which was mainly offset by a $1,863,677 decrease in accounts payable.

The Company generated cash from operating activities of $7,739,637 during the three months ended March 31, 2025, due primarily to a $4,122,296 increase in accounts payable and accrued liabilities, $1,040,325 of stock-based compensation, $952,546 of non-cash interest expense related to debt discount amortization, $2,152,640 of amortization expenses relating to intangible assets, and $1,436,247 of depreciation expenses, which was mainly offset by a $258,217 net loss, an $820,433 increase in inventory, an $897,968 increase in accounts receivable, and an $880,465 decrease in taxes payable.

During the three months ended March 31, 2026, cash used in investing activities was $2,468,595, which was primarily due to $806,390 paid to acquire subsidiaries, and $1,405,432 spent on intangible assets.

During the three months ended March 31, 2025, cash used in investing activities was $5,340,839, which was primarily due to $1,459,642 of consideration paid to the former owners of MeridianBet Group in connection with the MeridianBet Acquisition, $426,700 of consideration paid to acquire 80% of Classics Holdings, $2,339,700 spent on intangible assets, and $1,107,424 spent on property, plant and equipment.

During the three months ended March 31, 2026, cash used in financing activities was $4,573,457, which was primarily due to repayments on debt of $3,791,674 and a repayment of lease of $780,668.

During the three months ended March 31, 2025, cash used in financing activities was $5,000,064, which was primarily due to repayments on debt of $4,428,626 and a repayment of lease of $571,438.

The Company had a net decrease in cash of $1,843,859 for the three months ended March 31, 2026, which is mainly due to repayment of debt, cash used in investing activities, offset by cash provided by operating activities.

Equity Distribution Agreement

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.

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The Company will pay Craig-Hallum a commission equal to 3.00% of any gross proceeds from the sale of shares of the Company’s common stock under the Distribution Agreement. Pursuant to the terms of the Distribution Agreement, the Company also provided Craig-Hallum with customary indemnification rights and has agreed to reimburse Craig-Hallum for certain specified expenses up to $50,000, plus up to $5,000 for each future quarterly period that the Distribution Agreement remains in place. The offering of common stock pursuant to the Distribution Agreement will terminate upon the earlier of (i) the sale of all of the common stock subject to the Distribution Agreement and (ii) the termination of the Distribution Agreement by the Company or Craig-Hallum. Either party may terminate the agreement in its sole discretion at any time upon written notice to the other party.

As of the date of this Report, we are eligible to sell up to an additional $16.9 million under the Distribution Agreement, subject to the terms thereof and subject to the limitations of Form S-3, which prohibit us, for so long as our non-affiliate market capitalization remains below $75 million, from selling securities valued at more than one-third of our non-affiliate float every 12 months.

Adjusted EBITDA – Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization

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 bonuses 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, unrealized foreign exchange gain or loss, 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.

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.

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

Results of Operations

Three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The following table summarizes the consolidated results of operations for the interim periods indicated, and the changes between the periods.

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Revenue. Revenue increased by $7,380,817, or 17%, to $50,103,870 for the three months ended March 31, 2026, from $42,723,053 for the three months ended March 31, 2025. Revenues from online casino from MeridianBet Group increased by $3,856,840, or 33%, to $15,252,268 for the three months ended March 31, 2026, from $11,395,428 for the three months ended March 31, 2025, mainly due to the increase in the offer of online casino games from different providers to 2,500+, the integration of 10+ new providers (some of which are AIR Dice, Push Gaming, and EGT Digital), launching of the new game "Gates of Olympia" from the Company’s studio Expanse, which became a top 3 most popular game in the first quarter of 2026, and revenues from online sports betting which increased by $1,848,088, or 17%, to $11,699,423 for the three months ended March 31, 2026, from $9,851,335 for the three months ended March 31, 2025, mainly due to the launch of our fifth-generation sports betting and online casino platform – ATLAS – in 2024, which includes three key new features, such as: Bet Boost – enhanced odds on selected bets, Auto Cashout – automatic cashout based on predefined conditions, and Early Payout –settlement of bets before the final result, as well as a complete redesign of the entire sports webpage, improvements to the live betting offered through the Watch & Bet feature, an increase in live streams, especially for tennis and optimizing the loyalty program for our online players. Revenues from retail sports betting and retail casino increased by $1,291,334, or 19%, to $6,967,386 for the three months ended March 31, 2026, from $5,676,052 for the three months ended March 31, 2025, mainly due to a series of strategic operational enhancements. We expanded our slot capacity by adding over 100 machines, representing approximately 10% growth of the total installed base. Additionally, we opened 10 new locations, completed renovations and adaptations across 50 betshops, and relocated underperforming betshops to more optimal positions. We also introduced a new loyalty application and deployed additional operational systems that enhanced customer engagement and internal efficiency. Alongside these investments, we implemented a comprehensive field reorganization aimed at improving operational efficiency and service quality, resulting in a stronger and more optimized retail network.

COGS. Costs of goods (COGS) sold increased by $3,432,538, or 19%, to $21,959,630 for the three months ended March 31, 2026, from $18,527,092 for the three months ended March 31, 2025. MeridianBet Group COGS from online casino, online sports betting, retail casino, retail sports betting, bars and franchise fees increased by $2,853,120 in total, or 38%, to $10,408,219 for the three months ended March 31, 2026, from $7,555,098 for the three months ended March 31, 2025, 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.

Gross profit. Gross profit increased by $3,948,279, or 16%, to $28,144,240 for the three months ended March 31, 2026, from $24,195,961 for the three months ended March 31, 2025. MeridianBet Group gross profit from online casinos increased by $2,401,540 or 29%; gross profit from online sports betting increased by $1,046,799, or 15%, and gross profit from retail sports betting and retail casino increased by $760,027 or 19% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in gross profits was due to the increase in the revenues as discussed above.

General and administrative expenses (G&A). General and administrative expenses increased by $685,138, or 3%, to $24,987,116 for the three months ended March 31, 2026, from $24,301,978 for the three months ended March 31, 2025. General and administrative expenses consisted primarily of stock-based compensation, depreciation expenses, amortization expenses, salary and wages, professional fees, marketing expenses, rents and utilities, as discussed below.

Stock-based compensation (within G&A) for the three months ended March 31, 2026, was $248,057, compared to $1,040,325 for the three months ended March 31, 2025, representing a $792,268 decrease from the prior period. The decrease was primarily attributable to fewer RSUs granted to the Company’s employees and directors, as well as fewer shares issued for services during the period.

Amortization expenses for the three months ended March 31, 2026, were $1,025,175, compared to $2,152,640 for the three months ended March 31, 2025, a $1,127,465, or 52% decrease from the prior period. The decrease was primarily attributable to the impairment of intangible assets recognized in the prior year, which reduced the amortizable asset base.

Salaries and wages for the three months ended March 31, 2026, were $7,088,229, compared to $6,290,867 for the three months ended March 31, 2025, a $797,362 or 13% increase from the prior period, 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.

Professional fees for the three months ended March 31, 2026, were $901,492, compared to $920,240 for the three months ended March 31, 2025, an $18,748 or 2% decrease from the prior period. The higher fees in the prior-year period were primarily attributable to legal and audit services related to the MeridianBet Acquisition.

Marketing expenses for the three months ended March 31, 2026, were $6,392,458, compared to $6,045,796 for the three months ended March 31, 2025, a $346,662 or 6% increase from the prior period, which was primarily driven by increased budgets across all Ads channels (Google, Meta, etc.), as well as increased promotional activities in Brazil. Despite this, marketing costs have been significantly optimized, resulting in a single-digit growth rate compared to the same quarter last year.

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Rents and utilities for the three months ended March 31, 2026, were $2,242,256, compared to $1,743,062 for the three months ended March 31, 2025, a $499,194 or 29% 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.

Interest expense. Interest expense decreased by $1,117,634, or 76%, to $353,726 for the three months ended March 31, 2026, from $1,471,360 for the three months ended March 31, 2025. The decrease primarily reflects the repayment of an October 2024 Secured Convertible Note in early April 2025, resulting in no interest accruals for the Secured Convertible Note during the current quarter.

Interest earned. Interest earned decreased by $37,937, or 86%, to $5,999 for the three months ended March 31, 2026, from $43,936 for the three months ended March 31, 2025. The decrease was mainly due to the maturity of term deposit agreements with banks during the period. The funds were subsequently reallocated into Eurobonds, which are expected to generate interest income in future periods.

Foreign exchange gain. Foreign exchange results decreased by $845,862, to a loss of $412,194 for the three months ended March 31, 2026, compared to a gain of $433,668 for the three months ended March 31, 2025. The decrease was primarily driven by volatility and unfavorable fluctuations in the EUR/RSD/USD exchange rates, which impacted the remeasurement of the Company’s monetary assets and liabilities denominated in euros and Serbian dinars. Volatility in the euro and Serbian dinar against the U.S. dollar, as well as across other currencies used by the Group, including differences between average and period-end exchange rates, resulted in higher unrealized foreign exchange losses.

Other Income. Other income is related to income from marketing services for third-party advertising in MeridianBet Group betting shops, 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 three months ended March 31, 2026, and 2025, other income amounted to $467,088 and $505,503, respectively.

Provision for income taxes. We are subject to federal and state income taxes in the United States, as well as income taxes in the foreign jurisdictions in which we operate. Our effective tax rate was 24.3% and 56.5% for the three months ended March 31, 2026 and 2025, respectively. The decrease in the effective tax rate for the three months ended March 31, 2026, compared with the same period in 2025, was primarily due to a change in the jurisdictional mix of income.

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 three months ended March 31, 2026, and 2025, net loss attributable to noncontrolling interest amounted to $92,638 and $26,609, respectively. The increase in loss was primarily driven by higher net losses generated by these entities during the three months ended March 31, 2026.

Net income (loss) attributable to MRDN. Net income attributable to MRDN increased by $2,492,403 to $2,260,795 for the three months ended March 31, 2026, from a net loss of $231,608 for the three months ended March 31, 2025. The increase was mainly due to higher revenues and gross profits as discussed above.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated unaudited 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 December 31, 2025, filed with the Commission on March 31, 2026, are those that depend most heavily on these judgments and estimates. As of March 31, 2026, there had been no material changes to any of the critical accounting policies contained therein. “Note 1 – Basis of Presentation and Accounting Policies,” of the notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Commission on March 31, 2026, 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.

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Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Disclosure controls and procedures

The Company’s Chief Executive Officer (the principal executive officer) and Chief Financial Officer (principal financial/accounting officer) have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2026. Based upon such evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed with the Commission pursuant to the Exchange Act, is recorded properly, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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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”, and investors should review the risks provided in the Form 10-K, 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”, 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.