☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 9, 2021,~~May 6, 2022, there were ~~23,433,386~~26,891,266 shares of the Company’s common stock issued and outstanding.

Certain statements and other information set forth in this report, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, may relate to future events and expectations, and as such constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Our forward-looking statements include, but are not limited to, statements regarding our business strategy, plans and objectives and our expected or contemplated future operations, results, financial condition, beliefs and intentions. In addition, any statements that refer to projections, forecasts or other characterizations or predictions of future events or circumstances, including any underlying assumptions on which such statements are expressly or implicitly based, are forward-looking statements. The words “anticipate”, “believe”, “continue”, “can”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “scheduled”, “seek”, “should”, “would” and similar expressions, among others, and negatives expressions including such words, may identify forward-looking statements.

Our forward-looking statements reflect our current expectations about our future results, performance, liquidity, financial condition, prospects and opportunities, and are based upon information currently available to us, our interpretation of what we believe to be significant factors affecting our business and many assumptions regarding future events. Actual results, performance, liquidity, financial condition, prospects and opportunities could differ materially from those expressed in, or implied by, our forward-looking statements. This could occur as a result of various risks and uncertainties, including the following:

In light of these risks and uncertainties, and others discussed in this report, there can be no assurance that any matters covered by our forward-looking statements will develop as predicted, expected or implied. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. We advise you to carefully review the reports and documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”).

	September 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
	(Unaudited)						(Unaudited)
Assets
Cash	$	37.1		$	47.1		$	40.8		$	47.8
Accounts receivable, net		33.3			27.5			33.0			31.7
Inventory, net		14.6			17.6			28.9			16.9
Prepaid expenses and other current assets		26.0			16.8			28.6			29.7
Corporate tax and other current taxes receivable								0.6			0.3
Total current assets		111.0			109.0			131.9			126.4

Property and equipment, net		52.6			65.5			48.5			50.9
Software development costs, net		36.2			42.4			36.1			35.6
Other acquired intangible assets subject to amortization, net		6.9			7.7			17.2			18.9
Goodwill		82.7			83.7			80.7			82.7
Right of use asset		9.9			12.5
Operating lease right of use asset								9.3			10.1
Other assets		4.5			3.3			8.5			7.1
Total assets	$	303.8		$	324.1		$	332.2		$	331.7

Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	16.3		$	17.9		$	24.3		$	20.8
Accrued expenses		43.5			31.4			38.1			32.6
Corporate tax and other current taxes payable		10.3			14.4			5.3			12.3
Deferred revenue, current		8.5			11.5			7.2			7.7
Operating lease liabilities		3.2			3.6			3.0			3.3
Other current liabilities		4.6			2.5			4.0			3.9
Warrant liability		9.0			13.0
Current portion of finance lease liabilities		0.9			0.6			0.8			0.9
Total current liabilities		96.3			94.9			82.7			81.5

Long-term debt		308.7			297.5			302.2			309.0
Finance lease liabilities, net of current portion		0.9			0.2			1.9			1.9
Deferred revenue, net of current portion		7.6			11.4			6.4			6.8
Derivative liability		—			1.7
Operating lease liabilities		7.4			9.2			6.9			7.4
Other long-term liabilities		3.8			10.9			2.6			3.1
Total liabilities		424.7			425.8			402.7			409.7

Commitments and contingencies		-			-

Stockholders’ deficit
Preferred stock; $0.0001 par value; 1,000,000 shares authorized		—			—			—			—
Common stock; $0.0001 par value; 49,000,000 shares authorized; 22,754,597 shares and 22,430,475 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		—			—
Common stock; $0.0001 par value; 49,000,000 shares authorized; 26,880,622 shares and 26,433,562 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively								—			—
Additional paid in capital		331.2			324.6			375.0			372.3
Accumulated other comprehensive income		40.8			31.1			47.1			43.8
Accumulated deficit		(492.9	)		(457.4	)		(492.6	)		(494.1	)
Total stockholders’ deficit		(120.9	)		(101.7	)		(70.5	)		(78.0	)
Total liabilities and stockholders’ deficit	$	303.8		$	324.1		$	332.2		$	331.7

The accompanying notes are an integral part of these condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

													2022			2021
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Revenue:
Service	$	68.7		$	55.6		$	123.3		$	113.7		$	57.0		$	17.1
Product sales		8.9			4.5			18.6			14.3			3.6			5.7
Total revenue		77.6			60.1			141.9			128.0			60.6			22.8

Cost of sales, excluding depreciation and amortization:
Cost of service		(13.8	)		(10.8	)		(23.9	)		(21.8	)		(11.8	)		(2.1	)
Cost of product sales		(4.7	)		(3.3	)		(10.6	)		(9.8	)		(2.1	)		(3.2	)
Selling, general and administrative expenses		(33.0	)		(22.6	)		(76.7	)		(63.8	)		(29.6	)		(15.2	)
Acquisition and integration related transaction expenses		—			(1.2	)		(1.5	)		(5.6	)		(0.1	)		(1.4	)
Depreciation and amortization		(11.2	)		(14.0	)		(36.2	)		(39.9	)		(10.1	)		(13.1	)
Net operating income (loss)		14.9			8.2			(7.0	)		(12.9	)		6.9			(12.2	)

Other (expense) income
Interest income		0.1			0.1			0.2			0.5
Interest expense		(7.3	)		(8.3	)		(38.1	)		(22.5	)
Other expense
Interest expense, net														(6.5	)		(8.6	)
Change in fair value of warrant liability		17.3			0.2			3.8			6.1			—			(3.0	)
Loss from equity method investee		—			—			—			(0.5	)
Gain on disposal of business														0.9			—
Other finance income (expense)		0.3			0.3			5.5			(5.9	)		0.3			6.4

Total other income (expense), net		10.4			(7.7	)		(28.6	)		(22.3	)
Total other expense, net														(5.3	)		(5.2	)

Income (loss) before income taxes		25.3			0.5			(35.6	)		(35.2	)
Net income (loss) before income taxes														1.6			(17.4	)
Income tax (expense) benefit		(0.3	)		0			0.1			(0.3	)		(0.1	)		0.7
Net income (loss)		25.0			0.5			(35.5	)		(35.5	)		1.5			(16.7	)

Other comprehensive (loss)/income:
Other comprehensive income:
Foreign currency translation gain (loss)		3.2			(4.2	)		2.2			(0.7	)		2.4			(1.1	)
Change in fair value of hedging instrument		—			(0.4	)		0.3			(2.7	)		—			0.6
Reclassification of loss on hedging instrument to comprehensive income		0.3			0.3			1.3			1.0			0.2			0.5
Actuarial gains (losses) on pension plan		0.4			(0.3	)		5.9			(4.6	)
Other comprehensive income (loss)		3.9			(4.6	)		9.7			(7.0	)
Actuarial gains on pension plan														0.7			4.6
Other comprehensive income														3.3			4.6

Comprehensive income (loss)	$	28.9		$	(4.1	)	$	(25.8	)	$	(42.5	)	$	4.8		$	(12.1	)

Net income (loss) per common share – basic	$	1.10		$	0.02		$	(1.57	)	$	(1.59	)	$	0.06		$	(0.74	)
Net income (loss) per common share – diluted	$	0.30		$	0.02		$	(1.57	)	$	(1.59	)
Net income (loss) per common share - diluted													$	0.05			(0.74	)

Weighted average number of shares outstanding during the period – basic		22,744,022			22,405,376			22,641,188			22,396,652			26,850,326			22,584,609
Weighted average number of shares outstanding during the period – diluted		25,763,351			23,344,402			22,641,188			22,396,652			29,294,973			22,584,609

Supplemental disclosure of stock-based compensation expense
Stock-based compensation included in:
Selling, general and administrative expenses	$	(3.8	)	$	(1.1	)	$	(8.6	)	$	(3.1	)	$	(2.8	)	$	(1.4	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~FOR THE PERIOD JANUARY 1, 2021 TO SEPTEMBER 30, 2021~~THREE MONTHS ENDED MARCH 31, 2022

																	Shares		Amount		capital		income		deficit			deficit
	Common stock				Additional paid in			Accumulated other comprehensive			Accumulated			Total stockholders’			Common stock				Additional paid in		Accumulated other comprehensive		Accumulated			Total stockholders’
	Shares		Amount		capital			income			deficit			deficit			Shares		Amount		capital		income		deficit			deficit

Balance as of January 1, 2021		22,430,475	$	—	$	324.6		$	31.1		$	(457.4	)	$	(101.7	)
Balance as of December 31, 2021																		26,433,562		—		372.3		43.8		(494.1	)		(78.0	)
Foreign currency translation adjustments		—		—		—			(1.1	)		—			(1.1	)		—		—		—		2.4		—			2.4
Actuarial gains on pension plan		—		—		—			4.6			—			4.6			—		—		—		0.7		—			0.7
Change in fair value of hedging instrument		—		—		—			0.6			—			0.6
Reclassification of loss on hedging instrument to comprehensive income		—		—		—			0.5			—			0.5			—		—		—		0.2		—			0.2
Stock-based compensation expense – ESPP
Stock-based compensation expense – ESPP, shares
Shares issued in net settlement of RSUs		163,732		—		—			—			—			—
Stock-based compensation expense		—		—		1.4			—			—			1.4
Net loss		—		—		—			—			(16.7	)		(16.7	)
Balance as of March 31, 2021		22,594,207	$	—	$	326.0		$	35.7		$	(474.1	)	$	(112.4	)
Foreign currency translation adjustments		—		—		—			0.1			—			0.1
Actuarial gains on pension plan		—		—		—			0.9			—			0.9
Change in fair value of hedging instrument		—		—		—			(0.3	)		—			(0.3	)
Reclassification of loss on hedging instrument to comprehensive income		—		—		—			0.5			—			0.5
Stock-based compensation expense		—		—		3.3			—			—			3.3
Net loss		—		—		—			—			(43.8	)		(43.8	)
Balance as of June 30, 2021		22,594,207	$	—	$	329.3		$	36.9		$	(517.9	)	$	(151.7	)
Foreign currency translation adjustments		—		—		—			3.2			—			3.2
Actuarial gains on pension plan		—		—		—			0.4			—			0.4
Change in fair value of hedging instrument		—		—		—			—			—			—
Reclassification of loss on hedging instrument to comprehensive income		—		—		—			0.3			—			0.3
Shares issued in net settlement of RSUs		160,390		—		(1.6	)		—			—			(1.6	)
Shares issued in settlement of RSUs																		447,060		—		—		—		—			—
Stock-based compensation expense		—		—		3.5			—			—			3.5			—		—		2.7		—		—			2.7
Net income		—		—		—			—			25.0			25.0			—		—		—		—		1.5			1.5
Balance as of September 30, 2021		22,754,597	$	—	$	331.2		$	40.8		$	(492.9	)	$	(120.9	)
Balance as of March 31, 2022																		26,880,622	$	—	$	375.0	$	47.1	$	(492.6	)	$	(70.5	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~FOR THE PERIOD JANUARY 1, 2020 TO SEPTEMBER 30, 2020~~THREE MONTHS ENDED MARCH 31, 2021

	Common stock				Additional paid in		Accumulated other comprehensive			Accumulated			Total stockholders’			Common stock				Additional paid in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		income			deficit			deficit			Shares		Amount		capital		income			deficit			deficit

Balance as of January 1, 2020		22,230,768	$	—	$	320.6	$	45.1		$	(425.0	)	$	(59.3	)
Balance as of December 31, 2020																	22,430,475		—		324.6		31.1			(457.4	)		(101.7	)
Foreign currency translation adjustments		—		—		—		3.1			—			3.1			—		—		—		(1.1	)		—			(1.1	)
Actuarial gains on pension plan		—		—		—		4.4			—			4.4			—		—		—		4.6			—			4.6
Change in fair value of hedging instrument		—		—		—		(1.5	)		—			(1.5	)		—		—		—		0.6			—			0.6
Reclassification of loss on hedging instrument to comprehensive income		—		—		—		0.4			—			0.4			—		—		—		0.5			—			0.5
Shares issued in net settlement of RSUs		166,959		—		—		—			—			—
Shares issued in settlement of RSUs																	163,732		—		—		—			—			—
Stock-based compensation expense		—		—		1.0		—			—			1.0			—		—		1.4		—			—			1.4
Net loss		—		—		—		—			(9.8	)		(9.8	)		—		—		—		—			(16.7	)		(16.7	)
Balance as of March 31, 2020		22,397,727	$	—	$	321.6	$	51.5		$	(434.8	)	$	(61.7	)
Foreign currency translation adjustments		—		—		—		0.4			—			0.4
Actuarial losses on pension plan		—		—		—		(8.7	)		—			(8.7	)
Change in fair value of hedging instrument		—		—		—		(0.8	)		—			(0.8	)
Reclassification of loss on hedging instrument to comprehensive income		—		—		—		0.3			—			0.3
Stock-based compensation expense – ESPP		7,649		—		—		—			—			—
Stock-based compensation expense		—		—		1.0		—			—			1.0
Net loss		—		—		—		—			(26.2	)		(26.2	)
Balance as of June 30, 2020		22,405,376	$	—	$	322.6	$	42.7		$	(461.0	)	$	(95.7	)
Foreign currency translation adjustments		—		—		—		(4.2	)		—			(4.2	)
Actuarial losses on pension plan		—		—		—		(0.3	)		—			(0.3	)
Change in fair value of hedging instrument		—		—		—		(0.4	)		—			(0.4	)
Reclassification of loss on hedging instrument to comprehensive income		—		—		—		0.3			—			0.3
Stock-based compensation expense		—		—		1.1		—			—			1.1
Net income		—		—		—		—			0.5			0.5
Net income (loss)		—		—		—		—			0.5			0.5			—		—		—		—			(16.7	)		(16.7	)
Balance as of September 30, 2020		22,405,376	$	—	$	323.7	$	38.1		$	(460.5	)	$	(98.7	)
Balance as of March 31, 2021																	22,594,207	$	—	$	326.0	$	35.7		$	(474.1	)	$	(112.4	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

	2021			2020			2022			2021
	Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2022			2021
Cash flows from operating activities:
Net loss	$	(35.5	)	$	(35.5	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Net income (loss)							$	1.5		$	(16.7	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		36.2			39.9			10.1			13.1
Amortization of right of use asset		2.5			2.7			0.7			0.6
Stock-based compensation expense		8.6			3.1			2.8			1.4
Unrealized transactional currency gain/loss on senior bank debt								—			(6.1	)
Change in fair value of warrant liability		(3.8	)		(6.1	)		—			3.0
Impairment of investment in equity method investee		—			0.7
Foreign currency translation on senior bank debt		(4.6	)		6.6
Reclassification of loss on hedging instrument to comprehensive income		1.3			0.7			0.2			0.2
Non-cash interest expense relating to senior debt		16.7			2.2			0.4			1.3
Changes in assets and liabilities:
Accounts receivable		(7.0	)		(5.8	)		(2.1	)		6.7
Inventory		4.1			1.1			(11.9	)		0.7
Prepaid expenses and other assets		(10.2	)		2.8			0.9			4.3
Corporate tax and other current taxes payable		(5.4	)		5.2			(7.2	)		(8.6	)
Accounts payable		(1.4	)		4.1			4.3			3.0
Deferred revenues and customer prepayment		(3.8	)		(4.7	)		(0.3	)		(4.5	)
Accrued expenses		12.6			16.3			7.1			0.4
Operating lease liabilities		(2.0	)		(2.3	)		(0.7	)		(0.7	)
Other long-term liabilities		(1.3	)		0.5			(0.7	)		0.1
Net cash provided by operating activities		7.0			31.5
Net cash provided by (used in) operating activities								5.1			(2.0	)

Cash flows from investing activities:
Purchases of property and equipment		(8.5	)		(11.9	)		(5.2	)		(2.0	)
Disposals of property and equipment					—
Acquisition of subsidiary company assets								(0.6	)		—
Purchases of capital software		(9.7	)		(10.1	)		(5.1	)		(2.8	)
Net cash used in investing activities		(18.2	)		(22.0	)		(10.9	)		(4.8	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		333.1			—
Proceeds from issuance of revolver		—			9.2
Repayments of long-term debt		(320.6	)		—
Cash paid in connection with terminated interest rate swaps		(2.1	)		—
Debt fees incurred		(9.1	)		(3.1	)
Repayments of finance leases		(0.4	)		(0.7	)		(0.1	)		(0.2	)
Net cash provided by financing activities		0.9			5.4
Net cash used in financing activities								(0.1	)		(0.2	)

Effect of exchange rate changes on cash		0.3			(0.1	)		(1.1	)		1.1
Net (decrease) increase in cash		(10.0	)		14.8
Net decrease in cash								(7.0	)		(5.9	)
Cash, beginning of period		47.1			29.1			47.8			47.1
Cash, end of period	$	37.1		$	43.9		$	40.8		$	41.2

Supplemental cash flow disclosures
Cash paid during the period for interest	$	17.6		$	0.6		$	0.2		$	6.8
Cash paid during the period for income taxes	$	1.2		$	0.1		$	—		$	—
Cash paid during the period for operating leases	$	3.1		$	2.4		$	0.9		$	0.3

Supplemental disclosure of non-cash investing and financing activities
Supplemental disclosure of noncash investing and financing activities
Property and equipment acquired through finance lease	$	1.3		$	1.5		$	—		$	1.3
Property and equipment transferred to inventory	$	1.3		$	—		$	0.6		$	—
Additional paid in capital from net settlement of RSUs	$	(1.6	)	$	—
Lease liabilities arising from obtaining right of use assets	$	—		$	(6.1	)
Adjustment to goodwill arising from adjustment to fair value of assets acquired	$	—		$	(0.2	)
Capitalized interest payments	$	—		$	10.6
Assets arising from asset retirement obligations	$	—		$	0.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

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

We are a global gaming technology company, supplying content, platform and other products and services to online and land-based regulated lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly 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 interactive customers and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure parks.

As of ~~September 30, 2021,~~March 31, 2022, the Company’s cash on hand was $~~37.1~~40.8 million, and the Company had working capital of $~~14.7~~49.2 million. The Company recorded net income of $~~25.0~~1.5 million and net losses of $~~0.5~~16.7 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Net ~~income includes~~income/losses include non-cash stock-based compensation of $2.8 million and $1.4 million for the three months ended March 31, 2022 and 2021, respectively, and non-cash changes in fair value of warrant liability of $~~17.3~~ ~~million income and $0.2~~ ~~million income for the three months ended September 30, 2021 and 2020, respectively, and non-cash stock-based compensation of $3.8~~ ~~million and $1.1~~3.0 million for the three months ended ~~September 30, 2021 and 2020, respectively. The Company recorded net losses of $35.5~~ ~~million and $35.5~~ ~~million for the nine months ended September 30, 2021 and 2020, respectively. Net losses include non-cash debt fees expensed as part of the repayment of Prior Financing (see Note 4) of $14.4~~ ~~million and $0.0~~ ~~million for the nine months ended September 30, 2021 and 2020, respectively, non-cash changes in fair value of warrant liability of $3.8~~ ~~million income and $6.1~~ ~~million income for the nine months ended September 30, 2021 and 2020, respectively, excess depreciation and amortization over capital expenditure of $18.0~~ ~~million and $17.9~~ ~~million for the nine months ended September 30, 2021, and 2020, respectively, and non-cash stock-based compensation of $8.6~~ ~~million and $3.1~~ ~~million for the nine months ended September 30, 2021 and 2020, respectively.~~March 31, 2021. 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 $~~7.0~~5.1 million and cash flows used in operations amounted to $~~31.5~~2.0 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively with the change year on year due to ~~higher debt interest payments made in~~land based operations being subject to full lockdown restrictions for the ~~nine~~three months ended ~~September 30, 2021, as there was an agreement in place to defer and capitalize such payments in the nine months ended September 30, 2020.~~March 31, 2021. Working capital of $~~14.7~~49.2 million includes a non-cash settled item of $~~8.5~~7.2 million of deferred ~~income, and an item not expected to be cash settled of $9.0~~ ~~million comprising a warrant liability.~~income. Management currently believes that, absent any unanticipated COVID-19 impact (see below), 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 ~~November 2022.~~May 2023.

~~Governments in all of the major jurisdictions in which our land-based customers operate~~There have ~~now reopened land-based venues. As of April 12, 2021,~~been no COVID-19 restrictions in the United Kingdom licensed betting offices in England and Wales have reopened with certain restrictions including operating two of four gaming machines per venue, limited dwell time of 15 minutes, as well as a maximum of two visits per day per patron and an 8:00pm curfew. These restrictions remained in place until May 17, 2021. Gaming machines in pubs, holiday parks, motorway services, Scottish betting offices and adult gaming centers across the United Kingdom reopened on May 17,since July 2021, ~~with social distancing restrictions in place. All social distancing restrictions were removed in England as of July 19, 2021. As of August 9, 2021, no restrictions remain in the United Kingdom. There~~however, there remains an element of social distancing in venues in Greece and in ~~Italy, and there are restrictions in place that state only fully vaccinated people can enter our venues which came into place in Italy on August 20, 2021, and in Greece on September 13, 2021.~~Italy. It remains uncertain as to whether and when further restrictions or closures could happen in each jurisdiction and how long they may last. We continue to protect our existing available liquidity by pro-actively managing capital expenditures and working capital as well as identifying both immediate and longer-term opportunities for cost savings.

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 United States Securities and Exchange Commission (“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 consolidated financial statements and notes thereto for the years ended December 31, ~~2020~~2021 and ~~2019.~~2020. The financial information as of December 31, ~~2020~~2021 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K filed with the SEC on March ~~29, 2021 (the “Original 10-K”), as amended and filed on Form 10-K/A with the SEC on May 10, 2021 (the “10-K/A”).~~31, 2022. The interim results for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2021~~2022 or for any future interim periods.

On May 7, 2021, the Company’s independent registered public accounting firm, the Company’s management and the audit committee of the Company’s Board of Directors concluded that it was appropriate to restate the Company’s previously issued audited financial statements as of December 31, 2020, and December 31, 2019, and for the years ended December 31, 2020, and December 31, 2019, which were included in the Original 10-K.

The restatement related to the SEC’s public statement released on April 12, 2021, informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings.2.Acquisitions and Disposals

~~The effect of the restatement on previously reported information for the three months ended September 30, 2020 is as follows:~~

~~The effect of the restatement on previously reported information for the nine months ended September 30, 2020 is as follows:~~

In ~~prior periods, up to and including the interim period nine months ended September 30, 2020,~~January 2022, the Company ~~operated~~sold its Italian VLT business, ~~along three operating segments: Server Based Gaming, Virtual Sports (which included Interactive)~~including all terminal and ~~Acquired Businesses (which consisted~~other assets, staff costs and facilities and contracts to a non-connected party for total proceeds of ~~businesses acquired from Novomatic UK Ltd.~~€1.1 million ($1.2 million), recognizing a ~~division~~profit on disposal of ~~Novomatic Group, an international supplier of gaming equipment and solutions (the “NTG Acquisition”))~~€0.8 million ($0.9 million). During the period subsequent to September 30, 2020, the Company completed the process of changing its internal structure, which had been ongoing since the NTG Acquisition, and as a result changed the composition of its operating segments. The Company ~~now operates its business along four operating segments, which are segregated on~~continues to serve these Italian markets in the ~~basis~~form of ~~revenue stream: Gaming, Virtual Sports, Interactive~~the provision of platform and ~~Leisure. The Company believes this method of segment reporting reflects both the way its business segments are now managed and the way the performance of each segment is now evaluated.~~games.

On December 31, 2021, the Company acquired 100% of the membership interests of Sportech Lotteries, LLC. As part of the ~~recharacterization exercise, certain items~~transaction, the Company recorded the acquisition of ~~Revenue, Cost~~a customer contract as an intangible asset in the amount of ~~Sales~~$12.3 million. During the three months ended March 31, 2022, as a result of revisions made to management’s preliminary assessments, the Company has recognized an additional $0.9 million long-term receivable related to Sportech Lotteries, LLC, and ~~Selling, General and Administrative Expenses have been recharacterized to ensure consistency with similar items across~~has reduced the ~~Group. The revenue recharacterizations are to ensure spares and similar items are reflected with other items~~value of ~~hardware (Product Sales).~~the customer contract intangible asset accordingly.

~~The resulting impact on previously reported information for the three months ended September 30, 2020 is as follows: Service Revenue, previously reported $56.4~~3. ~~million, now $55.6~~Inventory ~~million; Product Sales Revenue, previously reported $3.7~~ ~~million, now $4.5~~ ~~million; Cost of Service, previously reported $11.2~~ ~~million, now $10.8~~ ~~million; Selling, General and Administrative Expenses (excluding Stock-based compensation), previously reported $21.9~~ ~~million, now $21.5~~ ~~million.~~

~~The resulting impact on previously reported information for the nine months ended September 30, 2020 is as follows: Service Revenue, previously reported $114.8~~ ~~million, now $113.7~~ ~~million; Product Sales Revenue, previously reported $13.2~~ ~~million, now $14.3~~ ~~million; Cost of Service, previously reported $20.9~~ ~~million, now $21.8~~ ~~million; Selling, General and Administrative Expenses (excluding Stock-based compensation), previously reported $61.6~~ ~~million, now $60.7~~ ~~million.~~

~~The recharacterization has no impact on the previously reported Net Operating Loss, Net Loss or Net Comprehensive Loss for the three and nine months ended September 30, 2020.~~

	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
	(in millions)				(in millions)
Component parts	$	11.5	$	12.1	$	16.2	$	10.8
Work in progress		—		1.7		2.2		1.6
Finished goods		3.1		3.8		10.5		4.5
Total inventories	$	14.6	$	17.6	$	28.9	$	16.9

Component parts include parts for gaming terminals. Included in inventory are reserves for excess and slow-moving inventory of $~~2.5~~2.2 million and $~~1.5~~2.0 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Our finished goods inventory primarily consists of gaming terminals which are ready for sale.

Revenue recognized that was included in the deferred income balance at the beginning of the period amounted to $~~8.5~~2.8 million and $~~10.3~~10.9 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and the year ended December 31, ~~2020,~~2021, respectively.

~~On May 20, 2021, Inspired Entertainment (Financing) PLC, a wholly owned subsidiary of the Company, issued £235.0~~ ~~million ($316.9~~ ~~million, as translated at September 30, 2021) aggregate principal amount of its~~ ~~7.875% senior secured notes due 2026 (the “Senior Secured Notes”). The Senior Secured Notes bear interest at a rate of~~ ~~7.875% per annum and mature on~~ ~~June 1, 2026. Interest is payable on the Senior Secured Notes on June 1 and December 1 of each year, commencing on December 1, 2021~~

The Senior Secured Notes and related guarantees were issued under an indenture (the “Indenture”), among Inspired Entertainment (Financing) PLC, as issuer, the Company and certain English and U.S. subsidiaries of the Company, as guarantors (collectively and together with the Company, the “Guarantors”), GLAS Trustees Limited, as trustee, GLAS Trust Corporation Limited, as security agent and GLAS Trust Company LLC as paying agent, transfer agent and registrar. The terms of the Senior Secured Notes and related guarantees are governed by the Indenture.

~~The Company used proceeds from the offering of the Senior Secured Notes to repay its £145.8~~ ~~million ($196.6~~ ~~million) senior secured term loan facility and €93.1~~ ~~million ($107.9~~ million) senior secured term loan facility and accrued interest thereon (the “Prior Financing”), to close-out derivative contracts entered into in connection with the Prior Financing and to pay fees, commissions and expenses incurred in connection with the refinancing.

The Senior Secured Notes are fully and unconditionally guaranteed on a senior secured first-priority basis by the Guarantors on a joint and several basis. The Senior Secured Notes and related guarantees are secured, subject to certain permitted collateral liens, on a first-priority basis by substantially all assets of the Guarantors and all claims of the Inspired Entertainment (Financing) PLC under an intercompany loan to Gaming Acquisitions Limited, a private limited liability company incorporated under the laws of England and Wales and an indirect wholly-owned subsidiary of the Company (“GAL”), of the proceeds of the offering of the Senior Secured Notes.

The Indenture contains incurrence covenants that limit the ability of the Company and the Company’s restricted subsidiaries to, among other things, (i) incur or guarantee additional debt and issue certain preferred stock of restricted subsidiaries; (ii) create or incur certain liens; (iii) make restricted payments, including dividends or distributions to the Company’s stockholders or repurchase the Company’s stock; (iv) prepay or redeem subordinated debt; (v) make certain investments, including participating joint ventures; (vi) create encumbrances or restrictions on the payment of dividends or other distributions by restricted subsidiaries; (vii) sell assets, or consolidate or merge with or into other companies; (viii) sell or transfer all or substantially all of the Company’s assets or those of the Company’s subsidiaries on a consolidated basis; (ix) engage in certain transactions with affiliates; and (x) create unrestricted subsidiaries. Certain of these covenants will be suspended if and for so long as the Senior Secured Notes have investment grade ratings from any two of Moody’s Investors Service, Inc., Standard & Poor’s Investors Ratings Services and Fitch Ratings, Inc. These covenants are subject to exceptions and qualifications as set forth in the Indenture.

Inspired Entertainment (Financing) PLC may redeem the Senior Secured Notes, in whole or in part, at any time and from time to time prior to June 1, 2023, at a redemption price equal to 100% of the principal amount thereof, plus a “make-whole” premium as set forth in the Indenture and form of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Inspired Entertainment (Financing) PLC may also redeem the Senior Secured Notes, in whole or in part, at any time and from time to time on or after June 1, 2023, at the redemption prices set forth in the Indenture and form of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to June 1, 2023, Inspired Entertainment (Financing) PLC may redeem up to 40% of the original aggregate principal amount of the Senior Secured Notes with the net cash proceeds of one or more equity offerings, as described in the Indenture, at a redemption price equal to 107.875% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time prior to June 1, 2023, Inspired Entertainment (Financing) PLC may redeem up to 10% of the aggregate principal amount of the Senior Secured Notes within each 12-month period at a redemption price equal to 103.000% of the aggregate principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In connection with the issuance of the Senior Secured Notes on May 20, 2021, the Company and certain of our direct and indirect wholly-owned subsidiaries, entered into a Super Senior Revolving Credit Facility Agreement (the “RCF Agreement”) with Global Loan Agency Services Limited, as agent, Barclays Bank plc (“Barclays”) and Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK” and together with Barclays, the “Arrangers”) as arrangers and each lender party thereto (the “Lenders”), pursuant to which the Lenders agreed to provide, subject to certain conditions, a secured revolving facility loan in an original principal amount of £20 ~~million ($27.0~~ ~~million) under which certain of our subsidiaries are able to draw funds (the “RCF Loan”). The RCF Loans will terminate on~~ ~~November 20, 2025~~.

The funding of the RCF Loan is subject to customary conditions set forth in the RCF Agreement. The undrawn commitment of each Lender under the RCF Loan will automatically terminate, unless previously terminated by the Company, on October 20, 2025.

The RCF Loans will bear interest at a rate per annum equal to (i) SONIA for borrowings in sterling, (ii) LIBOR (or, on and after December 31, 2021, SOFR) for borrowings in dollars, or (iii) EURIBOR for borrowings in Euro, as applicable, plus, in each case, a margin (based on the Company’s consolidated senior secured net leverage ratio) ranging from ~~4.25% to~~ ~~4.75% per annum. With respect to the RCF Loan, a commitment fee of~~ 30~~% of the then applicable margin is payable at any time on any unutilized portion of the RCF Loan.~~

The RCF Agreement contains various covenants (which include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject in each case to certain exceptions), representations, warranties, limitations and events of default (which include non-payment, breach of obligations under the financing documents, cross-default, insolvency and litigation) customary for similar facilities for similarly rated borrowers and subject to customary carve-outs and grace periods. Following the occurrence of an event of default which has not been waived or remedied, the Lenders who represent more than ~~66.67~~% of total commitments under the RCF may, subject to the terms of an intercreditor agreement (which governs the relationship between the Lenders and the holders of the Senior Secured Notes), instruct the agent to (i) accelerate the RCF Loans, (ii) instruct the security agent to enforce the transaction security and/or (iii) exercise any other remedies available to the Lenders.

The RCF Agreement requires that the Company maintain a maximum consolidated senior secured net leverage ratio of 6.25x on the test date for the relevant period ending June 30, 2021, stepping down to 6.0x on March 31, 2022, 5.75x on March 31, 2023 and 5.50x from March 31, 2024 and thereafter (the “RCF Financial Covenant”). The RCF Financial Covenant is calculated as the ratio of consolidated senior secured net debt to consolidated pro forma EBITDA (defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly on a rolling basis, subject to the Initial Facility (as defined in the RCF Agreement) being drawn on the relevant test date. The RCF Agreement does not include a minimum interest coverage ratio or other financial covenants.

The outstanding principal amount of each advance under the RCF Loans is payable on the last day of the interest period relating to such advance, unless such advance is rolled over on a cashless basis in accordance with customary rollover provisions contained in the RCF Agreement, with a final repayment on November 20, 2025.

~~The Company’s previous debt consisted of two tranches of senior secured term loans in a principal amount of £145.8~~ ~~million ($196.6~~ ~~million) with a cash interest rate of~~ ~~8.25% plus 3-month LIBOR and €93.1~~ ~~million ($107.9~~ ~~million) with a cash interest rate of~~ ~~7.75% plus 3-month EURIBOR, respectively and a secured revolving facility loan in a principal amount of £20.0~~ ~~million ($27.0~~ ~~million) with a cash interest rate on any utilization of~~ ~~6.50% plus 3-month LIBOR.~~

In connection with the issuance of the Senior Secured Notes and the entry into the RCF Agreement, on May 20, 2021, the Prior Financing was repaid in full and the senior facilities agreement (dated September 27, 2019, as amended and restated on June 25, 2020) relating to the Prior Financing was terminated. No prepayment premium applied to the repayment (although customary break cost provisions applied). Debt fees of $~~14.4~~ million were expensed to the Consolidated Statements of Operations and Consolidated Loss within Interest Expense as part of the repayment. In addition, on May 19, 2021, we terminated the interest rate swaps relating to the Prior Financing and applicable termination fees were settled on May 20, 2021 (see Note 5).

~~The following reflects outstanding debt and finance leases as of the dates indicated below:~~

~~The Company is in compliance with all relevant financial covenants and the long-term debt portion is correctly classified as such in line with the underlying agreements.~~

~~The~~In connection with the Company’s prior debt facilities, on January 15, 2020, the Company ~~was party to~~entered into two interest rate swaps with UBS AG that were designed to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of the previous floating rate debt facilities. The swaps fixed the variable interest rate of the debt facilities and provided protection over potential interest rate increases by providing a fixed rate of interest payment in return. The interest rate swaps were for £95 million ($~~128.1~~125.0 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and for €60 million ($~~69.5~~66.7 million) at a fixed rate of 0.102% based on the 6-month EURIBOR rate.

In connection with the issuance of ~~the~~ Senior Secured Notes and the entry into ~~the~~an RCF Agreement, on May 19, 2021, the Company terminated its two interest rate swaps. The termination fees were settled on May 20, 2021, for £1.3 million ($1.9 million) and €0.1 million ($0.2 million), respectively.

The Company’s objectives in using interest rate derivatives were to add stability to interest and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily used 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.

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~~accumulated other comprehensive income related to derivatives will be reclassified to interest expense ~~over~~as interest payments are made on the ~~life of the original instruments.~~Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $~~0.7~~0.8 million will be reclassified as an increase to interest expense.

As of September 30, 2021, the company did not have any derivatives. As of December 31, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

The Company did not have any ~~derivative financial instruments~~derivatives as of ~~September 30, 2021. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet~~March 31, 2022 or as of December 31, ~~2020.~~2021. Losses reclassified from accumulated other comprehensive income into interest expense in the consolidated statements of operations and income for the three months ended March 31, 2022 amounted to $0.2 million.

The table below presents the effect of fair value and cash flow hedge accounting on ~~Accumulated Other Comprehensive Income~~accumulated other comprehensive income for the ~~nine~~three months ended ~~September 30,~~March 31, 2021.

~~The table below presents the effect of fair value and cash flow hedge accounting on Accumulated Other Comprehensive Income for the nine months ended September 30, 2020.~~

	Amount of Gain/(Loss) Recognized in Other Comprehensive Income on Derivative				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into Income			Amount of Gain/(Loss) Recognized in Other Comprehensive Income on Derivative			Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)				(in millions)			(in millions)			(in millions)
Interest Rate Products	$	(2.7	)	Interest Expense	$	(1.0	)	$	0.6	Interest Expense	$	(0.5	)
Total	$	(2.7	)		$	(1.0	)	$	0.6		$	(0.5	)

The table below presents the effect of the Company’s derivative financial instruments on the ~~Consolidated Statements~~consolidated statements of ~~Operations~~operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2021.

	Interest Expense			Interest Expense
	(in millions)			(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	38.2		$	8.6

Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	(1.3	)	$	(0.5	)

~~The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the nine months ended September 30, 2020.~~

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2020. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheet.

The ISDA Master Agreement between Gaming Acquisitions Limited, a wholly-owned subsidiary of the Company, and UBS AG was documented using the 2002 Form and the ISDA standard set-off provision in Section 6(f) of the ISDA Master Agreement applied to both parties and was only modified to include Affiliates of the Payee. There was no CSA and thus there was no collateral posting.

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.

Schedule of Derivative Financial Instrument Assets and Liabilities Measured at Fair Value on Recurring Basis

The fair value of our long-term senior debt as of ~~September 30, 2021,~~March 31, 2022, was $~~323.2~~311.9 million, based upon quoted prices in the marketplace, which are considered Level 2 inputs.

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 officer, who reports to the principal executive 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 Officer and approved by the Principal Executive Officer.

At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.

The Company’s stock-based compensation plans authorize awards of restricted stock units (“RSUs”), stock options and other equity-related awards. The Company’s 2021 Omnibus Incentive Plan (“2021 Plan”) was adopted by the Company’s Board of Directors on April 12, 2021 and approved by our stockholders on May 11, 2021. The 2021 Plan succeeds the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”) such that shares subject to the 2018 Plan’s unused reserve (e.g., as a result of termination or forfeiture of awards) are instead rolled over to the 2021 Plan. The Company has two other predecessor plans, the 2016 Long-Term Incentive Plan and the Second Long-Term Incentive Plan (collectively, the “Prior Plans”), whose available balances were terminated in connection with approval of the 2018 Plan. Although outstanding awards under the Prior Plans remain governed by the terms of the Prior Plans, no new awards may be granted or become available for grant under the Prior Plans.

~~As of September 30, 2021, there were~~ ~~(i)~~ ~~1,628,467~~ ~~shares subject to outstanding awards under the 2021 Plan, including~~ ~~514,220~~ ~~shares subject to performance-based target awards,~~ ~~232,500~~ ~~shares subject to market-price vesting conditions and~~ ~~165,000~~ ~~shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement; (ii)~~ ~~1,464,440~~ ~~shares subject to outstanding awards under the 2018 Plan, including~~ ~~75,000~~ ~~shares subject to performance-based target awards,~~ ~~254,121~~ shares subject to awards that were previously subject to performance criteria that were determined to have been met for the applicable performance year which awards continue to remain subject to a time-based vesting schedule and ~~87,613~~ ~~shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement; and (iii)~~ ~~2,411,319~~ ~~shares subject to outstanding awards under the Prior Plans, including~~ ~~1,092,633~~ ~~shares subject to market-price vesting conditions that have a satisfaction deadline of December 23, 2021 and~~ ~~1,318,686~~ ~~shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement. As of September 30, 2021, there were~~ ~~1,521,434~~ shares available for new awards under the 2021 Plan (which includes shares rolled over from the 2018 Plan) and no shares available for new awards under the Prior Plans. All awards consist of RSUs and Restricted Stock.

~~The Company also has an employee stock purchase plan (“ESPP”) that authorizes the issuance of up to an aggregate of~~ ~~500,000~~ shares of common stock pursuant to purchases thereunder by employees. The ESPP, which was approved by stockholders in July 2017, is administered by the Compensation Committee which has discretion to designate the length of offering periods and other terms subject to the requirements of the ESPP. As of September 30, 2021, a total of ~~467,751~~ ~~shares remain available for purchase under the ESPP.~~

A summary of the Company’s RSU activity during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 is as follows:

The Company issued a total of ~~324,122~~447,060 shares during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022 which included an aggregate of ~~160,390~~442,817 ~~in connection with the net settlement of RSUs that vested on June 30, 2021 and~~ ~~163,732~~shares issued in connection with the net settlement of RSUs that vested on December 31, ~~2020.~~2021.

Stock-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. For performance awards that are contingent upon the Company achieving certain pre-determined financial performance targets, compensation expense is calculated based on the number of shares expected to vest after assessing the probability that the performance criteria will be met. Determining the probability of achieving a performance target requires estimates and judgment. For market-based awards that are contingent upon the Company’s stock achieving certain pre-determined price targets, compensation expense is calculated based upon the determination of the fair value of the awards as derived through multiple running of the Monte Carlo valuation model, with the fair value recognized on a straight-line basis over the requisite service period.

~~The Company recognized stock-based compensation expense amounting to $3.8~~ ~~million and $1.1~~ ~~million for the three months ended September 30, 2021 and 2020, respectively, and $8.6~~ ~~million and $3.1~~ million for the nine months ended September 30, 2021 and 2020, respectively. Total unrecognized compensation expense related to unvested stock awards and unvested RSUs at September 30, 2021 amounts to $~~14.6~~ ~~million and is expected to be recognized over a weighted average period of~~ ~~1.7~~ ~~years~~.

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

Included within accumulated other comprehensive income is an amount of $~~1.2~~0.8 million relating to the change in fair value of discontinued hedging instruments. This amount will be amortized as a charge to income over the life of the original instruments, in accordance with US GAAP.

Basic ~~income (loss)~~income/loss per share (“EPS”) is computed by dividing net ~~income (loss) available~~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, restricted stock, RSUs and warrants, using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted ~~method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is~~method, unless the inclusion would be anti-dilutive.

The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share

Other finance income (expense) consisted of the ~~following for the three and nine months ended September 30, 2021 and 2020:~~following:

	2021			2020			2021			2020			2022			2021
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
	(in millions)						(in millions)						(in millions)
Pension interest cost	$	(0.4	)	$	(0.5	)	$	(1.2	)	$	(1.6	)	$	(0.6	)	$	(0.4	)
Expected return on pension plan assets		0.7			0.8			2.1			2.3			0.9			0.7
Foreign currency translation on senior debt		—			—			4.6			(6.6	)
Foreign currency translation on senior bank debt														—			6.1
Other finance income (Costs)	$	0.3		$	0.3		$	5.5		$	(5.9	)	$	0.3		$	6.4

The effective income tax rate for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~1.1~~5.5% and ~~0.0%, respectively, resulting in a $0.3~~ ~~million and a $0.0~~ ~~million income tax expense, respectively. The effective income tax rate for the nine months ended September 30, 2021 and 2020 was~~ ~~0.3% and~~ ~~0.7~~4.0%, respectively, resulting in a $0.1 million income tax ~~benefit~~expense and a $~~0.3~~0.7 million income tax ~~expense,~~benefit, respectively. The Company’s effective income tax rate has fluctuated primarily as a result of the income mix between jurisdictions.

The income tax expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ differs from the amount that would be expected after applying the statutory U.S. federal income tax rate primarily due to ~~pre-tax losses for which no~~changes in tax ~~benefit can be recorded, and foreign earnings being taxed at rates different than the US statutory rate.~~attributes in jurisdictions where realization of benefits is not expected to occur.

~~HG Vora Special Opportunities Master Fund Limited (“HG Vora”) (a purchaser of our Senior Secured Notes issued on May 20, 2021) was the beneficial owner of approximately~~ ~~13.04% of our common stock as of September 30, 2021, including~~ ~~400,000~~ ~~shares underlying warrants to purchase common stock, and such ownership level declined to below~~ 5% ~~during the quarter ending December 31, 2021. The portion of the Company’s aggregate senior debt of $316.9million at September 30, 2021, and $313.3million at December 31, 2020, held by HG Vora at September 30, 2021 and December 31, 2020 was $53.9~~ ~~million and $0.0~~ ~~million, respectively. Interest expense payable to HG Vora for the three months ended September 30, 2021 and 2020 amounted to $1.1~~ ~~million and $0.0~~ ~~million, respectively, and for the nine months ended September 30, 2021 and 2020 amounted to $1.6~~ ~~million and $0.0~~ ~~million, respectively. In addition, $1.5~~ ~~million and $0.0~~ million of accrued interest payable was due to HG Vora at September 30, 2021 and December 31, 2020, respectively. HG Vora was also an investor in Leisure Acquisition Corp., a special purpose acquisition company affiliated with two members of our management which completed its business combination on June 30, 2021.

Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”), (an arranger and lending party under our RCF Agreement) is an affiliate of MIHI LLC, which beneficially owned approximately ~~16.51~~11.25% of our common stock as of ~~September 30, 2021, including~~ ~~1,000,000~~ ~~shares underlying warrants to purchase common stock.~~March 31, 2022. Macquarie UK was also one of the lending parties with respect to our ~~previous senior secured term loans and revolving credit facility under our~~ prior ~~senior facilities agreement. The portion~~financing. Macquarie UK did not hold any of the Company’s aggregate senior debt ~~of $316.9~~ ~~million~~ at ~~September 30, 2021, and $313.3~~ ~~million at~~March 31, 2022 or December 31, ~~2020 held by Macquarie UK at September 30, 2021 and December 31, 2020 was $0.0~~ ~~million and $30.7~~ ~~million, respectively.~~2021. Interest expense payable to Macquarie UK for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ amounted to $0.0 million and $0.6 million, ~~respectively, and for the nine months ended September 30, 2021 and 2020 amounted to $0.9~~ ~~million and $1.7~~ ~~million, respectively. In addition, $0.0~~ ~~million and $0.6~~ ~~million of accrued interest payable was due to Macquarie UK at September 30, 2021 and December 31, 2020,~~ respectively. 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.

~~We incurred certain offering expenses~~On December 31, 2021, the Company entered into a consultancy agreement with Richard Weil, the brother of A. Lorne Weil, our Executive Chairman, under which he received a success fee in the amount of $0.1 million for services he provided in connection with ~~an underwritten public offering~~our acquisition of ~~shares held by a significant stockholder,~~Sportech Lotteries, LLC. The success fee was paid during the ~~Landgame Trust, which closed on June 1, 2021, as to which our expenses were reimbursed by the stockholder. For the nine~~three months ended ~~September 30, 2021,~~March 31, 2022. Under the ~~aggregate amount invoiced for reimbursement was $0.2~~ ~~million. The selling stockholder sold an aggregate of~~ ~~6,217,628~~ ~~shares~~agreement, he will provide consulting services relating to the lottery in the ~~offering (including~~ ~~810,995~~ ~~shares subject to an over-allotment option that was exercised in full)~~Dominican Republic for a period of twelve months at ~~an offering price~~a rate of $~~9.25~~10,000 per ~~share, less underwriting discounts and commissions of $0.4625~~ ~~per share. One of the participating underwriters in the offering was Macquarie Capital (USA) Inc., an affiliate of MIHI LLC (see paragraph above), pursuant to which it purchased~~ ~~870,468~~ ~~of the shares including~~ ~~113,539~~ ~~shares subject to the over-allotment option.~~month.

The Company is party to leases with third parties with respect to various gaming machines. Gaming machine leases typically include a lease (of the machine) and a non-lease (provision of software services) component.

	2021		2020		2021		2020		2022		2021
	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021
	(in millions)				(in millions)				(in millions)
Interest receivable from sales type leases	$	—	$	0.1	$	—	$	0.1
Operating lease income		1.3		0.9		1.8		1.9	$	1.6	$	—
Variable income from sales type leases		—		0.3		0.1		0.5
Total	$	1.3	$	1.3	$	1.9	$	2.5	$	1.6	$	—

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.

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.

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

The defined benefit scheme 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. On March 15, 2019, it was agreed that no further deficit reduction contributions would be made to the scheme, except in the event that the scheme funding level does not progress as expected, in which case contingent contributions would be made subject to an agreed maximum amount.

In January ~~2021,~~2022, the funding level of the scheme was tested against the expected position at December 31, ~~2020~~2021 and it was determined that further contingent contributions of $~~1.2~~1.1 million and expense contributions of $~~0.4~~0.3 million will be payable during the year ending December 31, ~~2021.~~2022.

The funding level of the scheme will next be tested against the expected position at December 31, ~~2021~~2022 to determine whether further contingent contributions are payable during the year ending December 31, ~~2022.~~2023.

The total amount of employer contributions paid during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 amounted to $~~1.1~~0.1 ~~million relating to the nine months ended September 30, 2021, and $0.4~~ ~~million of contributions relating to the year ending December 31, 2020 agreed with the trustees of the scheme to be deferred into the year ending December 31, 2021.~~million.

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

	2021			2020			2022			2021
	Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2022			2021
	(in millions)						(in millions)
Components of net periodic pension benefit cost:
Interest cost	$	1.2		$	1.6		$	0.6		$	0.4
Expected return on plan assets		(2.1	)		(2.3	)		(0.9	)		(0.7	)
Net periodic benefit	$	(0.9	)	$	(0.7	)
Net periodic (benefit) cost							$	(0.3	)	$	(0.3	)

The following table sets forth the estimate of the combined funded status of the pension plans and their reconciliation to the related amounts recognized in our consolidated financial statements at the respective measurement dates:

	September 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
	(in millions)						(in millions)
Change in benefit obligation:
Benefit obligation at beginning of period	$	127.8		$	110.4		$	114.7		$	127.8
Interest cost		1.2			2.2			0.6			1.6
Actuarial (gain) loss		(7.3	)		14.5
Actuarial gain								(10.3	)		(9.8	)
Benefits paid		(1.9	)		(4.1	)		(0.5	)		(3.5	)
Foreign currency translation adjustments		(1.4	)		4.8			(2.7	)		(1.4	)
Benefit obligation at end of period	$	118.4		$	127.8		$	101.8		$	114.7
Change in plan assets:
Fair value of plan assets at beginning of period	$	118.7		$	107.3		$	117.7		$	118.7
Actual gain on plan assets		—			9.8
Actual (loss) gain on plan assets								(8.9	)		2.5
Employer contributions		1.1			1.6			0.1			1.5
Benefits paid		(1.9	)		(4.1	)		(0.5	)		(3.5	)
Foreign currency translation adjustments		(1.6	)		4.1			(2.7	)		(1.5	)
Fair value of assets at end of period	$	116.3		$	118.7		$	105.7		$	117.7
Amount recognized in the consolidated balance sheets:
Unfunded status (non-current)	$	(2.1	)	$	(9.1	)
Overfunded status (non-current)							$	3.9		$	3.0
Net amount recognized	$	(2.1	)	$	(9.1	)	$	3.9		$	3.0

The Company operates its business along 4four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are managed and the way the performance of each segment is evaluated.

In prior periods, up to and including the interim period nine months ended September 30, 2020, the Company operated its business along three operating segments: Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses (which consisted of the businesses acquired from the NTG Acquisition). During the period subsequent to September 30, 2020, the Company completed the process of changing its internal structure, which had been ongoing since the NTG Acquisition, and as a result changed the composition of its operating segments.

The following tables present revenue, cost of sales, excluding depreciation and amortization, selling, general and administrative expenses, depreciation and amortization, stock-based compensation expense and acquisition related transaction expenses, operating profit/(loss), total assets and total capital expenditures for the periods ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ 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, capital expenditures, right of use assets, cash, prepaid expenses and property and equipment and software development costs relating to corporate/shared functions. All acquisition and integration related transaction expenses are allocated as corporate function costs. Amounts previously disclosed for the three and nine months ended September 30, 2020 have been recharacterized in line with the current operating segments and categories. The tables also reflect the recharacterization of previously reported information as described in Note 1.

		1			2			3			4			5			6
	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total			Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)																		(in millions)
Revenue:
Service	$	19.7		$	10.5		$	6.1		$	32.4		$	—		$	68.7		$	21.1		$	11.6		$	5.3		$	19.0		$	—		$	57.0
Product sales		7.9			—			—			1.0			—			8.9			3.0			—			—			0.6			—			3.6
Total revenue		27.6			10.5			6.1			33.4			—			77.6			24.1			11.6			5.3			19.6			—			60.6
Cost of sales, excluding depreciation and amortization:
Cost of service		(4.1	)		(0.5	)		(1.0	)		(8.2	)		—			(13.8	)		(4.7	)		(0.6	)		(1.0	)		(5.5	)		—			(11.8	)
Cost of product sales		(4.2	)		—			—			(0.5	)		—			(4.7	)		(1.8	)		—			—			(0.3	)		—			(2.1	)
Selling, general and administrative expenses		(8.4	)		(1.4	)		(1.7	)		(11.7	)		(6.0	)		(29.2	)		(6.8	)		(1.6	)		(1.4	)		(11.3	)		(5.7	)		(26.8	)
Stock-based compensation expense		(0.5	)		(0.3	)		(0.2	)		(0.1	)		(2.7	)		(3.8	)		(0.3	)		(0.1	)		(0.1	)		(0.2	)		(2.1	)		(2.8	)
Acquisition and integration related transaction expenses					—			—			—			—			—			(0.1	)		—			—			—			—			(0.1	)
Depreciation and amortization		(5.3	)		(0.7	)		(0.9	)		(3.9	)		(0.4	)		(11.2	)		(4.6	)		(0.6	)		(0.7	)		(3.7	)		(0.5	)		(10.1	)
Segment operating income (loss)		5.1			7.6			2.3			9.0			(9.1	)		14.9			5.8			8.7			2.1			(1.4	)		(8.3	)		6.9

Net operating income																$	14.9																	$	6.9

Total assets at September 30, 2021	$	82.0		$	61.0		$	13.1		$	94.0		$	53.7		$	303.8

Total goodwill at September 30, 2021	$	1.4		$	47.4		$	0.4		$	33.5		$	—		$	82.7
Total capital expenditures for the three months ended September 30, 2021	$	2.4		$	0.6		$	0.9		$	1.5		$	0.3		$	5.7
Total capital expenditures for the three months ended March 31, 2022																			$	3.4		$	0.9		$	1.2		$	4.0		$	1.2		$	10.7

									2022		2021
	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021
	(in millions)				(in millions)				(in millions)
Total revenue
UK	$	58.6	$	47.8	$	99.4	$	95.4	$	45.6	$	10.9
Greece		6.2		5.7		12.4		13.1		5.7		2.3
Rest of world		12.8		6.6		30.1		19.5		9.3		9.6
Total	$	77.6	$	60.1	$	141.9	$	128.0	$	60.6	$	22.8
Total revenue									$	60.6	$	22.8

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

	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
	(in millions)				(in millions)
UK	$	88.6	$	101.8	$	89.0	$	90.0
Greece		11.6		18.2		10.9		11.6
Rest of world		9.9		11.4		19.7		21.0
Total	$	110.1	$	131.4	$	119.6	$	122.6
Total non- current assets excluding goodwill					$	119.6	$	122.6

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

During the three months ended ~~September 30, 2021, no customers~~March 31, 2022, there was one customer that represented at least 10% of the Company’s ~~revenues. During the three months ended September 30, 2020, one customer represented at least 10% of~~ revenues, accounting for 2112% of the Company’s revenues. This customer was served by the ~~Gaming,~~ Virtual Sports and Interactive segments.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, nothere were two customers that represented at least 10% of the Company’s ~~revenues. During the nine months ended September 30, 2020, two customers represented at least 10% of~~ revenues, accounting for 1216% and 1014% of the Company’s revenues. These customers were served by the Gaming, Virtual Sports and Interactive segments, and the ~~Gaming~~Virtual Sports and ~~Virtual Sports~~Interactive segments, respectively.

At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, there were no customers that represented at least 10% of accounts receivable.

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. Other than as described below, ~~which would not result in adjustment or disclosure in the consolidated financial statements,~~ the Company did not identify subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

The Board has authorized that the Company may use up to ~~the balance sheet date, holders of the Company’s public warrants exercised~~ ~~109,346~~ ~~warrants for a total exercise price of~~ $~~0.6~~ 25.0million ~~resulting in the issue of~~ ~~54,673~~ to repurchase Inspired common ~~shares. As of November 9, 2021, there were~~ ~~23,433,386~~shares, subject to repurchases being effected on or before May 10, 2025. Management has discretion as to whether to repurchase shares of the ~~Company’s common stock outstanding.~~Company and there is no assurance that buybacks will occur.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual future results could differ materially from the historical results discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included ~~herein and~~elsewhere in ~~our annual report on Form 10-K for the fiscal year ended December 31, 2020.~~this report.

We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. For definitions of the term Forward-Looking Statements, see the definitions provided in the Cautionary Note Regarding Forward-Looking Statements at the start of ~~the Annual~~this Quarterly Report on Form ~~10-K~~10-Q for the period ended March 31, 2022.

Our results of operations can fluctuate due to seasonal trends and other factors. Sales of our gaming machines can vary quarter on quarter due to both supply and demand factors. Player activity for our Holiday parks is generally higher in the second and third quarters of the year, ~~ended December 31, 2020.~~ particularly during the summer months and slower during the first and fourth quarters of the year. Historical seasonality has been impacted by COVID-19 business disruptions and could continue to be impacted in future periods.

~~Governments in~~For the three months ended March 31, 2021, all ofland based operations were subject to full lockdown restrictions, therefore year on year comparisons may not be meaningful due to the ~~major jurisdictions in which our land-based customers operate~~COVID-19 impacts.

There have ~~now reopened land-based venues. As of April 12, 2021,~~been no COVID-19 restrictions in the United Kingdom licensed betting offices in England and Wales have reopened with certain restrictions including operating two of four gaming machines per venue, limited dwell time of 15 minutes, as well as a maximum of two visits per day per patron and an 8:00pm curfew. These restrictions remained in place until May 17, 2021. Gaming machines in pubs, holiday parks, motorway services, Scottish betting offices and adult gaming centers across the United Kingdom reopened on May 17,since July 2021, ~~with social distancing restrictions in place. All social distancing restrictions were removed in England as of July 19, 2021. As of August 9, 2021, no restrictions remain in the United Kingdom. There~~however, there remains an element of social distancing in venues in Greece and in ~~Italy, there are restrictions in place that state only fully vaccinated people can enter our venues which came into place in Italy on August 20, 2021, and in Greece on September 13, 2021.~~Italy. It remains uncertain as to whether and when further restrictions or closures could happen in each jurisdiction and how long they may last. We continue to protect our existing available liquidity by pro-actively managing capital expenditures and working capital as well as identifying both immediate and longer-term opportunities for cost savings.

For full information on this, see Part IV, Item 15 of the Annual Report on Form 10-K for the year ended December 31, 2020, ‘Exhibits, Financial Statement Schedules’ Note 26 ‘Segment Reporting and Geographic Information’.

We generate revenue in four principal ways: i) on a participation basis, ii) on a fixed rental fee basis, iii) through product sales and iv) through software license fees. Participation revenue generally includes a right to receive a share of our customers’ gaming revenue, typically as a share of net win but sometimes as a share of the handle or “coin in” which represents the total amount wagered.

Geographically, a majority of our revenue is derived from, and majority of our non-current assets are attributable to our UK operations. The remainder of our revenue is derived from, and non-current assets attributable to, Greece ~~Canada, Italy~~ and the rest of the ~~world.~~world (including North America).

For the three months ended ~~September 30, 2021,~~March 31, 2022, we ~~earned~~derived approximately ~~76%~~75% of our revenue infrom the UK, ~~8% in~~10% from Greece and the remaining ~~16%~~15% across the rest of the world. During the three months ended ~~September 30, 2020,~~March 31, 2021, we ~~earned~~derived approximately ~~78%~~48%, 10% and ~~12%~~42% of our revenue ~~in those regions, respectively.~~

For the nine months ended September 30, 2021, we earned approximately 70% of our revenue in the UK, 9% in Greece and the remaining 21% across the rest of the world. During the nine months ended September 30, 2020, we earned approximately 73%, 10% and 17% of our revenue infrom those regions, respectively.

As of ~~September 30, 2021,~~March 31, 2022, our non-current assets (excluding goodwill) ~~attribution approximately 80% in~~were attributable as follows: 74% to the UK, ~~11% in~~9% to Greece and 9%17% across the rest of the world.

Our results are affected by changes in foreign currency exchange rates as a result of the translation of foreign functional currencies into our reporting currency and the re-measurement of foreign currency transactions and balances. The impact of foreign currency exchange rate fluctuations represents the difference between current rates and prior-period rates applied to current activity. The ~~largest~~ geographic region in which ~~we operate~~the largest portion of our business is operated is the UK and the British pound (“GBP”) is considered to be our functional currency. Our reporting currency is the U.S. dollar (“USD”). Our results are translated from our functional currency of GBP into the reporting currency of USD using average rates for profit and loss transactions and applicable spot rates for period-end balances. The effect of translating our functional currency into our reporting currency, as well as translating the results of foreign subsidiaries that have a different functional currency into our functional currency, is reported separately in Accumulated Other Comprehensive Income.

During the three months ended ~~September 30, 2021,~~March 31, 2022, we derived approximately ~~24%~~25% of our revenue from sales to customers outside the UK, compared to ~~22%~~52% during the three months ended ~~September 30, 2020.~~

~~During the nine months ended September 30, 2021, we derived approximately 30% of our revenue from sales to customers outside the UK, compared to 27% during the nine months ended September 30, 2020.~~March 31, 2021.

In the section “Results of Operations” below, currency impacts shown have been calculated as the current-period average GBP:USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP:USD rate. This is not a U.S. GAAP measure, but is one which management believes gives a clearer indication of results. In the tables below, variances in particular line items from period to period exclude currency translation movements, and currency translation impacts are shown independently.

We use certain financial measures that are not compliant with U.S. GAAP (“Non-GAAP financial measures”), including EBITDA and Adjusted EBITDA, to analyze our operating performance. In this discussion and analysis, we present certain non-GAAP financial measures, define and explain these measures and provide reconciliations to the most comparable U.S. GAAP measures. See “Non-GAAP Financial Measures” below.

Our results are affected by changes in foreign currency exchange rates, primarily between our functional currency (GBP) and our reporting currency (USD). During the three-month periods ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ the average GBP:USD rates were ~~1.38~~1.34 and ~~1.29, respectively. During the nine-month periods ended September 30, 2021 and September 30, 2020, the average GBP:USD rates were~~ 1.38, ~~and 1.28,~~ respectively.

The following discussion and analysis of our results of operations has been organized in the following manner:

In the discussion and analysis below, certain data may vary from the amounts presented in our consolidated financial statements due to rounding. Year-on-year comparisons may not be meaningful due to COVID-19 impacts in prior period, as noted above.

For all reported variances, refer to the overall company and segment tables shown below. All variances discussed in the overall company and segment results are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

Three ~~and Nine~~ Months ended ~~September 30, 2021,~~March 31, 2022, compared to Three ~~and Nine~~ Months ended ~~September 30, 2020~~March 31, 2021

See “Segments Results” below for a more detailed explanation of the significant changes in our components of revenue within the individual segment results of operations.

“VAT-related revenue” are payments from UK customers related to our contractual revenue share of their value-added tax rebate

For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, revenue on a functional currency (at constant rate) basis increased by ~~$12.4 million and $3.2~~$39.5 million, or ~~20.6%~~166%. Leisure revenue grew by $19.7 million due to COVID-19 related closures in prior year. Gaming revenue increased by $16.1 million, due to COVID-19 related closures and ~~2.5%, respectively. The three-month increase included an increase from Leisure of $13.8 million, Interactive of $2.2 million and Virtual Sports of $1.6 million,~~restrictions in 2021, partly offset by ~~a decrease in Gaming~~$2.2 million of ~~$5.1 million, driven by $9.4 million~~additional VAT-related revenue ~~in the prior period. The nine-month increase included an increase from Leisure of $6.9~~during 2021. Virtual Sports and Interactive grew by $5.6 million and ~~Interactive of $6.5~~$0.2 million, ~~offset by decreases from Gaming of $9.5 million and Virtual Sports of $0.7 million.~~respectively.

Cost of Sales, excluding depreciation and amortization, for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022 increased by ~~$3.2 million and $0.3~~$9.0 million, or ~~22.7% and 31.0% respectively.~~170%. Of ~~the three-month~~this increase, ~~$2.1~~$10.0 million was attributable to cost of Service ~~and~~due to COVID related closures in the prior period, partly offset by $1.1 million ~~was attributable to~~reduction of cost of ~~Product sales. Of the nine-month increase, $0.4 million was attributable to cost of Service.~~Product.

Selling, general and administrative (“SG&A”) expenses for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 increased by ~~$5.8 million and $2.1~~$13.7 million, or ~~27.2% and 3.5% respectively.~~99.1%. The ~~three-month~~ increase was driven primarily by ~~all~~the increase in staff ~~returning from furlough~~cost of $12.9 million due to the return of furloughed staff and return of full pay for the ~~whole~~current period, ~~($3.6 million), additional other employee costs ($0.4 million), additional IT costs due to returning staff ($0.3 million) and lower~~this was partly offset by higher labor capitalization ~~($0.3 million). The nine-month increase was driven by staff returning from furlough and additional distribution costs as markets and retail venues reopened. $1.2~~of $1.8 million ~~of the additional cost in the nine-month period was~~which increased for the provision following a settlement with the Italian Tax Authorities in respect of an audit of the Italian Branch of Inspired Gaming (International) Limited for the period 2015-2017 in respect of the historic VAT treatment of supplies.same reasons.

During the three months ~~and nine months~~ ended ~~September 30, 2021,~~March 31, 2022, the Company recorded an expense of ~~$3.8~~$2.8 million ~~and $8.6 million respectively, with respect~~compared to outstanding awards. The expense for the three-month and nine-month periods included $1.2 million and $4.1 million respectively, related to awards made under the 2018 Plan, $2.4 million and $4.2 million (includinga charge of $1.4 million ~~of upfront recognition) respectively related to awards made under the 2021 Plan and $0.2 million related to the vesting of awards from the 2018 Plan. The charge for stock-based compensation~~ for the three months ~~and nine months~~ ended ~~September 30, 2020, was $1.1 million and $3.1 million, respectively. The~~March 31, 2021. All expenses ~~for the three-month and nine-month periods included $1.1 million and $2.9 million, respectively, that were~~ related to ~~awards made under the 2018 Plan The nine-month period ended September 30, 2020, also included $0.2 million, related to costs from awards made under a 2016 long term incentive plan.~~outstanding awards.

Acquisition and integration related transaction expenses decreased ~~for both the three-month and nine-month periods~~ by $1.2 million, to ~~zero and by $4.4 million~~$0.1 million.

All expenses in the three months ended March 31, 2022 were integration costs in relation to ~~$1.5 million, respectively. Both~~ the ~~2021 and 2020~~Sportech Lotteries LLC acquisition. All expenses in the previous year were ~~primarily~~ integration costs in relation to the NTG acquisition.

Depreciation and amortization decreased for ~~both~~ the three-month period by $2.7 million, $2.0 million due to a decrease in software amortization, as software was fully amortized and ~~nine-month periods by $3.5~~$0.7 million ~~and $6.7 million respectively,~~ driven ~~primarily~~ by a decrease in ~~Gaming and Leisure due to certain assets being fully written down.~~ asset depreciation.

During the three-month period, net operating income was ~~$14.9~~$6.9 million, an increase of ~~$5.7~~$19.2 million. This was attributable primarily to the increase in revenue despite the $9.2 million of VAT-related income recorded in the prior period. The increase was due to retail venues across the majority of the business being open for the entire period, with social distancing restrictions being removed, growth in Leisure driven by ~~Leisure parks,~~the COVID-19 closures and restrictions in 2021, as well as growth in Interactive and Online Virtuals. During the nine-month period, net operating loss was $7.0 million which improved by $7.1 million. This was attributable to the increase in our Interactive and Online Virtuals segments as well as our Leisure segment, as well as the decrease in acquisition and integration related transaction expenses and depreciation and amortization.online revenue.

~~Net interest~~Interest expense, net decreased by ~~$1.5~~$2.0 million in the three-month period ~~this~~ended March 31, 2022. This decrease was due primarily to alower interest on term indebtedness and lower amortization of capitalised debt fees, $0.4 million and $0.6 million reduction in the level of debt fee amortization after the refinance in May 2021, a $0.2million lower revolver interest charge and a $0.5 million impact from currency movement. In the nine-month period net interest expense increased by $12.7 million. This was driven by a $14.4 million increase duerespectively. Currency movements were $0.9m favorable compared to the ~~write-off of previously capitalized debt fees following the refinancing in May~~three months ended March 31, 2021 and ~~a $2.0m higher debt~~ interest ~~charge, offset by a $3.2~~receivable $0.2 million ~~currency movement.~~favorable.

~~Change~~With the expiry of the warrants on December 23, 2021, the liability and the requirement to fair value ceased to exist. In the three months ended March 31, 2021, the change in fair value of the warrant liability ~~for the three and nine months ended September 30, 2021,~~ resulted in a ~~$17.3~~$3.0 million and $3.8 million credit respectively. The credit for both periods was related to changes in liability accounting pursuant to the statement made by the Office of Chief Accountant of the SEC, released on April 12, 2021, informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings. The credits for the three-month and nine-month periods reflect the decrease in the value of the warrants, driven by a decrease in the Company’s share price and a decrease in the time to warrant expiry, respectively. During the three-month period, the Company’s share price decreased from $12.75 on June 30, 2021, to $11.70 on September 30, 2021. Although the Company’s share price increased during the nine-month period, the time to expiry for the warrants decreased from approximately one year to three months which drove the decrease in the value of the warrants.loss.

For the three-months ended March 31, 2022, gain on disposal of business was $0.9 million due to the sale of part of our Italian Gaming operations (see Gaming key events for more information).

Other finance income for the ~~three and nine months~~three-months ended ~~September 30, 2021, resulted in a~~March 31, 2022, was $0.3 million. This compares to $6.4 million ~~credit and a $5.5 million credit, respectively. The three-month credit was in line with the prior year but the nine month credit was $11.4 million better than the corresponding period~~ in the ~~prior year due~~three-months ended March 31, 2021, giving a year-on-year movement of $6.1 million relating solely to ~~movements in~~ the retranslation ~~with respect to~~of the principal balance of our senior debt facilities in place at that time.

Our effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, was ~~(1.1%) and (0.3%~~(5.5%), ~~respectively. Our effective tax rate~~compared to (4.0%) for the three ~~and nine~~ months ended ~~September 30, 2020, was (6.9%) and 0.9%, respectively.~~March 31, 2021.

During the three-month period, we had a net income ~~was $25.0~~of $1.5 million, an increase of ~~$22.8~~$15.3 million, primarily due to the increase in net operating income ($~~5.7 million), the increase in credit of the change in fair value of warrant liability ($16.0~~19.2 million) and a decrease in ~~net~~ interest expense, net ($~~1.5~~2.0 million)~~. During~~, partially offset by the ~~nine-month period, net loss was $35.5 million, an improvement of $4.1 million, primarily due to the increase in net operating income ($7.1 million) and the increase~~decrease in other finance income ~~($11.2 million), partly offset by the increase in net interest expense ($12.7 million).~~of $6.1 million.

Segment Results (for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, compared to the three ~~and nine~~ months ended ~~September 30, 2020)~~March 31, 2021)

We generate revenue from our Gaming segment through the ~~selling~~sales and ~~rental~~rentals of our gaming machines. We receive rental fees for machines, typically ~~on a~~in conjunction with long-term ~~contract basis,~~contracts, on both a participation and fixed fee basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Gaming business is principally driven by changes in (i) the number of operator customers we have, (ii) the number of Gaming machines in operation, (iii) the net win performance of the machines and (iv) the net win percentage that we receive pursuant to our contracts with our customers.

																									For the Three-Month Period ended						Variance
	For the Three-Month Period ended												For the Nine-Month Period ended												Mar 31,			Mar 31,			2022 vs 2021
	Unaudited Sept 30,			Unaudited Sept 30,			Variance 2021 vs 2020						Unaudited Sept 30,			Unaudited Sept 30,			Variance 2021 vs 2020						2022			2021						%
Gaming	2021			2020						%			2021			2020						%

End of period installed base (# of terminals)		32,236			31,725			511			1.6	%		32,236			31,725			511			1.6	%		34,501			31,508			2,993			9.5	%
Total Gaming - Average installed base (# of terminals)		32,204			32,117			87			0.3	%		31,860			32,148			(288	)		(0.9	)%		34,693			31,509			3,183			10.1	%
Participation - Average installed base (# of terminals)		29,140			30,188			(1,048	)		(3.5	)%		29,295			30,297			(1,002	)		(3.3	)%		31,420			29,564			1,856			6.3	%
Fixed Rental - Average installed base (# of terminals)		3,064			1,929			1,135			58.8	%		2,565			1,851			714			38.6	%		3,273			1,945			1,328			68.3	%
Service Only - Average installed base (# of terminals)		21,439			21,377			63			0.3	%		21,564			21,386			178			0.8	%		17,915			21,738			(3,823	)		(17.6	)%
Customer Gross Win per unit per day ^{(1) (2)}	£	76.5		£	70.4		£	6.1			8.6	%	£	41.5		£	49.0		£	(7.5	)		(15.4	)%	£	86.7		£	0.6		£	86.2			15378.3	%
Customer Net Win per unit per day ^{(1) (2)}	£	56.3		£	51.4		£	4.9			9.6	%	£	31.2		£	36.0		£	(4.8	)		(13.3	)%	£	63.2		£	0.4		£	62.7			14554.2	%
Inspired Blended Participation Rate		6.5	%		6.7	%		(0.2	)%		(2.8	)%		6.3	%		6.6	%		(0.3	)%		(4.8	)%		5.6	%		7.5	%		(1.9	)%		(25.3	)%
Inspired Fixed Rental Revenue per Gaming Machine per week	£	37.7		£	37.9		£	(0	)		N/A		£	21.0		£	27.2		£	(6.2	)		(22.9	)%	£	42.9		£	0.0		£	42.9			N/A
Inspired Service Rental Revenue per Gaming Machine per week	£	4.5		£	4.5		£	(0.1	)		(2.0	)%	£	3.1		£	3.1		£	0.0			0.6	%	£	4.6		£	0.8		£	3.9			510.6	%
Gaming Long term license amortization (£’m)	£	1.3		£	1.3		£	(0.1	)		(4.0	)%	£	3.8		£	3.8		£	(0.0	)		(0.7	)%	£	1.2		£	1.3		£	(0.1	)		(7.5	)%
Number of Machine sales		1,747			363			1,384			381.3	%		2,625			1,561			1,064			68.2	%		319			482			(163	)		(33.8	)%
Average selling price per terminal	£	3,071		£	6,422		£	(3,351	)		(52.2	)%	£	4,141		£	4,851		£	(710	)		(14.6	)%	£	6,775		£	6,944		£	(169	)		(2.4	)%

“End of Period Installed Base” is equal to the number of deployed Gaming terminals at the end of each period that have been placed on a participation or fixed rental basis. Gaming participation revenue, which comprises the majority of Gaming Service revenue, is directly related to the participation terminal installed base. This is the medium by which our customers generate revenue and distribute a revenue share to the Company. To the extent all other KPIs and certain other factors remain constant, the larger the installed base, the higher the Company’s revenue would be for a given period. Management gives careful consideration to this KPI in terms of driving growth across the segment. This does not include Service Only terminals.

Revenue is derived from the performance of the installed base as described by the Gross and Net Win KPIs.

If the End of Period Installed Base is materially different from the Average Installed Base (described below), we believe this gives an indication as to potential future performance. We believe the End of Period Installed Base is particularly useful for assessing new customers or markets, to indicate the progress being made with respect to entering new territories or jurisdictions.

“Total Gaming - Average Installed Base” is the average number of deployed Gaming terminals during the period split by Participation terminals and Fixed Rental terminals. Therefore, it is more closely aligned to revenue in the period. We believe this measure is particularly useful for assessing existing customers or markets to provide comparisons of historical size and performance. This does not include Service Only terminals.

“Participation - Average Installed Base” is the average number of deployed Gaming terminals that generated revenue on a participation basis.

“Fixed Rental - Average Installed Base” is the average number of deployed Gaming terminals that generated revenue on a fixed rental basis.

“Service Only - Average Installed Base” is the average number of terminals that generated revenue on a Service only basis.

“Customer Gross Win per unit per day” is a KPI used by our management to ~~our Annual Report~~(i) assess impact on ~~Form 10-K for~~ the ~~year ended December 31, 2020, for definitions of terms used~~Company’s revenue, (ii) determine changes in the ~~above table.~~performance of the overall market and (iii) evaluate the impacts of regulatory change and our new content releases on our customers. Customer Gross Win per unit per day is the average per unit cash generated across all Gaming terminals in which the Company takes a participation revenue share across all territories in the period, defined as the difference between the amounts staked less winnings to players divided by the Average Installed Base in the period, then divided by the number of days in the period.

Gaming revenue accrued in the period is derived from Customer Gross Win accrued in the period after deducting gaming taxes (defined as a regulatory levy paid by the Customer to government bodies) and applying the Company’s contractual revenue share percentage.

Our management believes Customer Gross Win measures are meaningful because they represent a view of customer operating performance that is unaffected by our revenue share percentage and allow management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between customers and (3) identify strategies to improve operating performance in the different markets in which we operate.

“Customer Net Win per unit per day” is Customer Gross Win per unit per day after giving effect to the deduction of gaming taxes.

“Inspired Blended Participation Rate” is the Company’s average revenue share percentage across all participation terminals where revenue is earned on a participation basis, weighted by Customer Net Win per unit per day.

“Inspired Fixed Rental Revenue per Gaming Machine per week” is the Company’s average fixed rental amount across all fixed rental terminals where revenue is generated on a fixed fee basis, per unit per week.

“Inspired Service Rental Revenue per Gaming Machine per week” is the Company’s average service rental amount across all service only rental terminals where revenue is generated on a service only fixed fee basis, per unit per week.

“Gaming Long term license amortization” is the upfront license fee per terminal which is typically spread over the life of the terminal.

Our overall Gaming revenue from terminals placed on a participation basis can therefore be calculated as the product of the Participation - Average Installed Base, the Customer Net Win per unit per day, the number of days in the period, and the Inspired Blended Participation Rate, which is equal to “Participation Revenue”.

“Number of Machine sales” is the number of terminals sold during the period.

“Average selling price per terminal” is the total revenue in GBP of the Gaming terminals sold divided by the “number of Machine sales”.

Set forth below is a breakdown of our Gaming recurring revenue. Gaming recurring revenue principally consists ~~principally~~ of Gaming participation revenue and fixed rental revenue.

“Gaming Participation Revenue” includes our share of revenue generated from (i) our Gaming terminals placed in gaming and lottery venues; and (ii) licensing of our game content and intellectual property to third parties.

“Gaming Other Fixed Fee Recurring Revenue” includes service revenue in which the Company earns a periodic fixed fee on a contracted basis.

“Gaming Long term license amortization” – see the definition provided above

“Total Gaming Recurring Revenue” is equal to Gaming Participation Revenue plus Gaming Other Fixed Fee Recurring Revenue.

~~Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020, for definitions of terms used in the above table.~~

Set forth below is a breakdown of our Gaming service revenue by geographic region. Gaming Service revenue consists principally of Gaming participation revenue, Gaming other fixed fee revenue, Gaming long-term license amortization and Gaming other non-recurring revenue. See “Gaming Segment Revenue” below for a discussion of gaming service revenue between the periods under review.

	For the Three-Month Period ended												For the Nine-Month Period ended
	Unaudited September 30, 2021		Unaudited September 30, 2020		Variance								Unaudited September 30, 2021		Unaudited September 30, 2020		Variance								For the Three-Month Period ended				Variance
(In millions)					2021 vs 2020					Total Functional Currency %							2021 vs 2020					Total Functional Currency %			March 31, 2022		March 31, 2021		2021 vs 2020					Total Functional Currency %

Service Revenue:
UK LBO	$	10.5	$	9.7	$	0.8		8.5	%		1.7	%	$	19.4	$	20.0	$	(0.7	)	(3.4	)%		(10.5	)%	$	10.2	$	0.6	$	9.6		1583.0	%		1465.0	%
UK VAT - Related Income		-	$	9.3	$	(9.3	)	n/a			n/a			3.1		9.3	$	(6.2	)	(66.5	)%		(68.9	)%		0.9		3.1	$	(2.2	)	(70.1	)%		(69.1	)%
UK Other		3.0		2.2		0.8		35.0	%		26.9	%		4.4		4.9		(0.6	)	(11.9	)%		(18.7	)%		3.0		0.1		2.9		4243.3	%		5751.4	%
Italy		0.9		0.9		(0.0	)	(5.2	)%		(11.2	)%		1.2		1.9		(0.7	)	(36.9	)%		(41.2	)%		0.7		0.1		0.6		709.2	%		731.0	%
Greece		5.1		4.8		0.3		5.7	%		(0.9	)%		9.9		11.3		(1.4	)	(12.1	)%		(18.8	)%		4.8		1.7		3.1		181.5	%		189.1	%
Rest of the World		0.1		0.2		(0.0	)	(26.6	)%		(30.8	)%		0.2		0.4		(0.3	)	(64.4	)%		(66.8	)%		0.2		0.0		0.2		672.6	%		681.6	%
Lotteries																										1.3		-		1.3		NA			NA

Total Service revenue	$	19.7	$	27.2	$	(7.5	)	(27.7	)%		(32.7	)%	$	38.1	$	47.9	$	(9.8	)	(20.5	)%		(26.5	)%	$	21.1	$	5.6	$	15.5		275.4	%		283.6	%

Exchange Rate - $ to £		1.38		1.28										1.38		1.28										1.34		1.37

Note: Exchange rate in the table is calculated by dividing the USD total service revenue by the GBP total service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

Total Gaming Customer Gross Win per unit per day (in our functional currency, GBP) for the ~~three-month~~ period increased by ~~£6.08, or 8.6%, but~~£86.15 to £86.71. Despite a strong first quarter of trading, the majority of the increase is driven by retail venues being closed in the same period during 2021 as a result of COVID-19 restrictions, another factor being our first quarter recognizing the newly acquired lottery business in the Dominican Republic, which achieves Gross Win per unit per day figures above the average of the remaining Gaming sector.

The overall participation rate for our installed base decreased ~~by £7.54, or 15.4%, for the nine-month period.~~from 7.5% in 2021 to 5.6% in 2022. The ~~year-to-date~~2021 figure was higher than normal due to COVID-19 restrictions with just a small portion of UK customers live on higher than average terms. For reference our full year rate was 6.4%. Approximately a decrease ~~was~~of 0.5% is due to the ~~impact~~new lottery business, which delivers high gross win values at lower participation terms than the average of ~~COVID-19 as there was a longer period~~the remaining Gaming sector.

The lottery business operates more than 2,500 terminals in various locations and has an agreement for the supply of ~~retail venue closures compared to the prior period.~~these terminals until March 9, 2035. The first quarter of trading delivered $1.3 million of participation revenue.

During the three-month period, retail venues in the UK LBO estate showed significant year over year growth which contributed to the majority of the overall Gross Win per unit per day increase. Revenues returned to prior year levels in the Greek and Italy markets. During the nine-month period in 2021, retail venues across the business were in operation for approximately 53% of the period, compared to approximately 67% of the prior year period in 2020.

The participation rate for the three-month period decreased from 6.7% to 6.5% year over year. This was primarily due to the COVID-19 restriction in place in the prior period in UK venues compared to the 2021 as UK share terms are lower than the total blended Gaming average (due to the fact we have higher gross win levels in the UK). The participation rate for the nine-month decreased from 6.6% to 6.3% due to the same factors.

~~During the three-month~~ period ended ~~September 30, 2020,~~March 31, 2022, Inspired received VAT-related revenue of ~~$9.4~~$0.9 million ~~in July 2020~~ from a major UK customer. During the ~~nine-month~~same period ~~ended September 30,~~in 2021, Inspired received VAT-related revenue of ~~$2.9~~$3.1 million ~~in January 2021~~ from a major UK customer. ~~Both receipts in 2020 and 2021 were recorded as revenue in our results.~~

During the ~~three-month~~ period, ~~in the~~Inspired upgraded its UK ~~market, we sold 363 VLT’s to a major customer resulting in revenue of $2.4 million.~~

~~In addition, during the nine-month period we upgraded our UK Gaming~~gaming estate with the installation of ~~245~~104 “Flex” and ~~375~~152 “Prismatic” terminals through a combination of outright sales and lease agreements.

~~Inspired furthered its relationship with a major customer in~~In the Dutch gaming market, ~~with the sale and delivery of an additional 222 “Analogue” terminals during the nine-month period.~~

~~In the UK LBO market, during the three-month period~~ Inspired continued its strong relationship with a major customer, ~~by securing~~delivering outright sales of a ~~new three-year contract extension for the service of self-service betting terminals “SSBTs” which are charged on a rental basis.~~ further 60 digital terminals.

In the ~~same period~~UK market, Inspired ~~recognized hardware sales for an additional 150 SSBTs generating revenue~~installed the a further 55 “Sabre Hydra” terminals into casino venues taking the total installed to 75 of ~~$0.6 million.~~a 203 machine order with a major customer. The remaining terminals will be sited in the second quarter 2022.

In the North America market, Inspired sold a further 36 “Valor” terminals across a number of customers in Illinois taking the total since launch in December 2019 to 764.

During the ~~three-month~~ period, Inspired ~~recognized a 944 VLT hardware sale to a major Italian customer, generating revenue of $1.1 million. This completed a 1,624 VLT hardware sale.~~

During the three-month period, Inspired sold a further 60 “Valor™” terminals to a number of customers in Illinois, bringing the total terminals sold for the nine-month period to 171 and increasing the total number of North American unit sales since launch in December 2019 to 600. Retail venues in Illinois were shut down during January 2021, which negatively impacted sales during this period. As of February 2021, all eleven regions in Illinois had reopened.

~~During the nine-month period, Inspired delivered~~secured its ~~first sales to~~second machine order from Western Canada Lottery Corporation ~~(“WCLC”)~~(WCLC), our second jurisdiction in North America. Inspired ~~recorded~~expect to deliver a further 700 “Valor” terminals in the ~~sale of 100 “Valor™” terminals to WCLC during March 2021, generating revenue of $1.5 million.~~fourth quarter 2022.

During the period, we delivered the final 308 “Valor” terminals of a total 500 terminal award to OPAP in the Greek market. These machines carry an upfront licence fee. The terminals will be fully deployed by the end of second quarter 2022 and will take Inspired’s total contracted number of machines to 9,440.

In the Italian market, from January 1, 2022, Inspired has transitioned to a content and platform supplier only model, driving significant operating expense savings. Inspired sold a large portion of its business to a major machine operator, including customer contracts and “in country” staff.

Note: Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

All variances discussed in the Gaming results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

During the three-month period, ~~all COVID-19 closures and restrictions were removed for the key markets for the majority of both the current and prior periods. During the nine-month,~~ Gaming revenue increased by $13.9 million, or 129%, $16.0 million of which was ~~impacted~~driven by ~~COVID-19 closures and restrictions for~~Service revenue, partly offset by a ~~portion of both the current and prior periods (for more details please see the Gaming Revenue section~~$2.1 million decrease in Product revenue due to a large VLT sale in Canada in the ~~Quarterly Report on Form 10-Q for the period ended June 30, 2021).~~prior year.

~~During the three-month and nine-month period,~~The increase in Gaming Service revenue ~~decreased by $5.1 million and $9.5 million, or 16.7% and 15.9%, respectively. This~~ was driven by $12.8 million from the UK market, $3.2 million from the Greek market and $0.6 million from the Italian market all due to them being open for the entire period compared to the prior period when the majority of the UK estate, all Greece retail venues and all Italy retail venues were shut. $1.3 million of the increase was due to the addition of the new Lotteries market and $0.2 million from the Rest of the World. This was partly offset by a decrease in VAT-related revenue of ~~$9.4~~$2.2 million and the sale of part of the Italian business worth $0.3 million in the three-month period and $6.5 million in the nine-month period compared to the prior period. Excluding the VAT-related revenue, Gaming revenue during the three-month period increased by $4.3 million and decreased by $3.0 million during the nine-month period.

For the three-month period, Gaming Service revenue (excluding VAT-related revenue) increased by $0.6 million. This was primarily driven by an increase in UK sales (including Licensed Betting Offices (“LBOs”) and UK other) of $0.8 million due to the increase in UK LBO Net Win (a record high average for the period since the implementation of the Triennial regulation changes).

For the nine-month period, Gaming Service revenue (excluding VAT-related revenue) decreased by $6.2 million. This was driven by a decline in UK sales (including LBOs and UK other) of $3.0 million primarily driven by the COVID-19 closures, with both markets experiencing additional lockdowns and UK LBO capacity restrictions compared to the prior period. Greece and Italy experienced revenue declines of $2.1 million and $0.8 million, respectively, driven by the COVID-19 closures as both markets experienced additional lockdowns compared to the priorcurrent period.

Product revenue ~~increased~~decreased in the three-month ~~and nine-month~~ period by ~~$3.7 million and $3.2 million, respectively. The increase for both periods~~$2.1 million. This decrease was primarily driven by lower Product sales of ~~$2.0 million in the UK markets, $1.1 million sales to Italy and $0.8~~$1.7 million of Valor terminal sales in North America ~~all~~due to the sale in Canada in the prior year and $0.5 million of ~~which occurred during the three-month period.~~lower sales in Italy.

Operating Income ~~decreased~~increased during ~~both~~ the three-month ~~and nine-month periods~~period by ~~$4.9 million and $2.3 million, respectively.~~$9.8 million.

The ~~decrease~~increase in Operating Income in the three-month period was primarily due to the increase in revenue of $13.9 million, a $1.8 million primarily due to the decrease in ~~VAT-related income compared to the prior period ($9.2 million) and an increase in SG&A ($1.9 million)~~software amortization as ~~all staff returned from furlough for the whole period.~~software became fully amortized. This was partially offset by ~~the~~an increase of cost of sales of $3.1 million and an increase of $2.9 million in product revenue (detailed above), a $1.6 million decrease in depreciation and amortization driven by a decrease in depreciation in the UK LBO and Greece markets, and a decrease in Cost of Sales of $0.8 million.SG&A as staff returned from furlough or to full salary. Excluding the VAT-related Income, Operating Income would have increased by ~~$4.2~~$12.0 million in the period.

Income increased during the three-month ~~period.~~period by $10.7 million from a loss of $3.6 million to an income of $6.7 million this was due to the increase in operating income and a $0.9 million gain from the disposal of business from the sale of part of the Italian VLT operations (see Gaming key events for more information)

The decrease in Operating Income in the nine-month period was primarily due to the decrease in VAT-related income compared to the prior periods ($6.3 million) and the decrease in Gaming Service revenue (detailed above). This was partially offset by the increase in product revenue (detailed above), a decrease in cost of sales ($2.9 million), as well as a reduction in depreciation and amortization ($4.8 million) particularly in UK LBO as certain assets have been fully written down. Excluding the VAT-related Income, Operating Income would have increased by $4.0 million in the nine-month period.

We generate revenue from our Virtual Sports segment through the licensing of our products. We receive fees in exchange for the licensing of our products, typically on a long-term contract basis, on a participation basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Virtual Sports content placed on our customers’ websites or in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Virtual Sports segment is principally driven by the number of customers we have, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

	For the Three-Month Period ended										For the Nine-Month Period ended										For the Three-Month Period ended				Variance
	Unaudited Sept 30,		Unaudited Sept 30,		Variance 2021 vs 2020						Unaudited Sept 30,		Unaudited Sept 30,		Variance 2021 vs 2020						Mar 31,		Mar 31,		2022 vs 2021
Virtuals	2021		2020					%			2021		2020					%			2022		2021				%

No. of Live Customers at the end of the period		61		56		5			8.9	%		61		56		5			8.9	%		62		59		3		5.1	%
Average No. of Live Customers		60		56		4			6.5	%		60		58		2			3.0	%		62		59		3		4.5	%
Total Revenue (£’m)	£	7.6	£	6.4	£	1.2			19.3	%	£	18.1	£	18.6	£	(0.5	)		(2.9	)%	£	8.7	£	4.6	£	4.1		89.7	%
Total Revenue £’m - Retail	£	2.6	£	3.2	£	(0.6	)		(18.8	)%	£	4.7	£	7.5	£	(2.8	)		(37.5	)%	£	2.4	£	0.6	£	1.8		296.1	%
Total Revenue £’m - Online Virtuals	£	5.1	£	3.2	£	1.8			56.6	%	£	13.4	£	11.1	£	2.3			20.5	%	£	6.3	£	4.0	£	2.3		58.5	%

“No. of Live Customers at the end of the period” and “Average No. of Live Customers” represent the number of customers from which there is Virtual Sports revenue at the end of the period and the average number of customers from which there is Virtual Sports revenue during the period, respectively.

“Total Revenue (£m)” represents total revenue for the ~~year ended December 31, 2020, for definitions~~Virtual Sports segment, including recurring and upfront service revenue. Total revenue is also divided between “Total Revenue (£m) – Retail,” which consists of ~~terms used in the above table.~~revenue earned through players wagering at Virtual Sports venues, “Total Revenue (£m) – Online Virtuals,” which consists of revenue earned through players wagering on Virtual Sports online.

Set forth below is a breakdown of our Virtual Sports recurring revenue, which consists of Retail Virtuals and Online Virtuals recurring revenue as well as long-term license amortization. See “Virtual Sports Segment Revenue” below for a discussion of Virtual Sports Service revenue between the periods under review.

~~Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020, for definitions of terms used in the above table.~~

“Recurring Revenue” includes our share of revenue generated from (i) our Virtual Sports products placed with operators; (ii) licensing our game content and intellectual property to third parties; and (iii) our games on third-party online gaming platforms that are interoperable with our game servers.

“Virtual Sports Long term license amortization” is the upfront license fee which is typically spread over the life of the contract.

During the three months ended ~~September 30, 2021,~~March 31, 2022, we launched ~~our~~ Virtual Plug & Play (VPP) with Napoleon Sports ~~suite of products with BetMGM in New Jersey via our new proprietary VPP (Virtuals Plug~~(Belgium) and ~~Play) platform.~~Mozzartbet (Serbia).

~~Our largest online customer bet365 launched four channels of our brand-new V-Play Soccer 3 product. Furthermore, we signed new contracts~~Fortuna expanded their self-service betting terminals (SSBT) into Croatia with ~~Mozzarbet (Serbia), Betplay (Colombia), Novibet (Greece), Betshop (Greece), iBet~~an initial 200 units in January 2022 and ~~Fonbet~~another 1000 to ~~deliver Virtuals via~~follow in the ~~VPP platform.~~year.

Sisal (Italy) launched Multi-Stream Matchday, which is a new product that allows eight simultaneous soccer games to be streamed at the same time.

New signed contract with Scientific Games for content to be sold to Netherlands Lottery (NLO), Playport (Minnesota, Kansas, Wisconsin) and Leisure Sports (Sri Lanka).

Contract term extensions signed with Sisal (Italy), Niké, spol. s r.o (Slovakia) and contracted territories with Kaizen Gaming.

During August 2021, the Italian government introduced a proof of vaccination requirement to enter betting shops which has slowed recovery. Virtual Sports have not resumed in Belgium betting shops in 2021 due to evolution in regulations.

~~In Greece, US Basketball was deployed in September 2021 into the OPAP retail estate of approximately 3,500 venues.~~

~~In Pennsylvania, Inspired revenue share increased by approximately 70% during the nine-month period ended September 30, 2021, driven by our “Derby Cash” horse racing product.~~

~~Multiple Italian clients (including Snaitech) launched in July 2021 with new products Penalty Shootout, Matchday Ultra and Marbles.~~

	For the Three-Month Period ended																		For the Nine-Month Period ended
	Unaudited September 30,			Unaudited September 30,			Variance												Unaudited September 30,			Unaudited September 30,			Variance												For the Three-Month Period ended						Variance 2022 vs 2021
(In millions)	2021			2020			2021 vs 2020												2021			2020			2021 vs 2020												March 31, 2022			March 31, 2021			Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
							Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %									Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
Service Revenue	$	10.5		$	8.3		$	0.7		$	1.6			19.3	%		27.3	%	$	25.0		$	23.7		$	2.0		$	(0.7	)		(2.9	)%		5.4	%	$	11.6		$	6.3		$	(0.3	)	$	5.6			89.0	%		83.7	%

Cost of Service		(0.5	)		(0.7	)		(0.0	)		0.2			(32.7	)%		(28.2	)%		(1.3	)		(2.2	)		(0.1	)		1.0			(45.3	)%		(40.4	)%		(0.6	)		(0.3	)		0.0			(0.3	)		120.7	%		114.2	%

Selling, general and administrative expenses		(1.4	)		(0.8	)		0.1			(0.7	)		86.7	%		73.5	%		(5.2	)		(2.7	)		(0.4	)		(2.1	)		75.7	%		91.5	%		(1.6	)		(1.1	)		0.1			(0.6	)		58.8	%		46.6	%

Stock-based compensation		(0.3	)		(0.1	)		(0.0	)		(0.1	)		147.6	%		164.4	%		(0.5	)		(0.3	)		(0.0	)		(0.1	)		42.6	%		54.8	%		(0.1	)		(0.1	)		0.0			(0.0	)		3.4	%		0.7	%

Depreciation and amortization		(0.7	)		(1.0	)		(0.0	)		0.3			(29.7	)%		(25.0	)%		(2.5	)		(2.7	)		(0.1	)		0.3			(10.6	)%		(5.5	)%		(0.6	)		(1.1	)		0.0			0.5			(44.3	)%		(45.5	)%

Net operating Income (Loss)	$	7.6		$	5.7		$	0.7		$	1.3			23.0	%		35.0	%	$	15.5		$	15.8		$	1.3		$	(1.6	)		(10.2	)%		(2.2	)%	$	8.7		$	3.7		$	(0.2	)	$	5.2			136.2	%		132.6	%

Exchange Rate - $ to £		1.38			1.29															1.38			1.28															1.34			1.38

Note: Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

All variances discussed in the Virtual Sports results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

During the three-month period, revenue increased by ~~$1.6~~$5.6 million, or ~~19.3%~~89.0%. This increase was driven by a ~~$2.1~~$3.3 million increase in Online Virtuals, primarily driven by the ~~performance of one of~~growth from our ~~major~~existing online customers ~~which was partially offset by a decline~~and an increase in recurring Retail Virtuals of ~~$0.7~~$2.3 million ~~driven by slower recovery since reopening in all major markets~~due to retail venues being open for the whole of the period compared to the prior ~~year, as well as regulator changes in Belgium resulting in no revenues for 2021.~~

During the nine-month period, revenue decreased by $0.7 million, or 2.9%. This decrease was driven by a $3.0 million decrease in retail revenue due to the COVID-19 closures and a decline of $0.5 million from historical license fee amortization contracts reaching their expiration. This decline was partially offset by growth in recurring Online Virtuals of $3.4 million. Online revenues remain significantly higher than pre-Covid-19 levels.period.

Operating Income increased inby $5.2 million during the three-month ~~period by $1.3 million but declined in the nine-month period by $1.6 million.~~period.

The increase in the ~~three-month~~ period was primarily due to the increase in revenue of ~~$1.6~~$5.6 million and the decrease in Depreciation and Amortization of ~~$0.3 million and the decrease in Cost of Sales of $0.2~~$0.5 million. This was partly offset by the increase in Cost of Sales of $0.3 million and SG&A expenses of ~~$0.7~~$0.6 million, driven by ~~the~~an increase in staff costs as ~~all~~ staff returned from furlough and to full pay ~~for the period~~ and an increase in technology costs driven by the growth of Online Virtuals.

The decline in the nine-month period was primarily due to the decrease in revenue of $0.7 million and the increase in SG&A expenses of $2.1 million driven by the $1.2 million increase from the settlement with the Italian Tax Authorities as well as staff returning from furlough. This was partly offset by a decrease in Cost of Sales of $1.0 million.

We generate revenue from our Interactive segment through the licensing of our products. WeTypically, we receive fees in exchange for the licensing of our products, ~~typically~~ on a long-term contract basis, on a participation basis. Our participation contracts are ~~typically~~usually structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Interactive content placed on our customers’ websites. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Interactive segment is principally driven by the number of customers we have, the number of live games, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

	For the Three-Month Period ended									For the Nine-Month Period ended									For the Three-Month Period ended				Variance
	Unaudited Sept 30,		Unaudited Sept 30,		Variance 2021 vs 2020					Unaudited Sept 30,		Unaudited Sept 30,		Variance 2021 vs 2020					Mar 31,		Mar 31,		2022 vs 2021
Interactive	2021		2020				%			2021		2020				%			2022		2021				%

No. of Live Customers at the end of the period		104		76		28		36.8	%		104		76		28		36.8	%		112		96		16		16.7	%
Average No. of Live Customers		102		75		28		37.1	%		98		71		27		38.0	%		111		93		18		19.4	%
No. of Live Games at the end of the period		226		200		26		13.0	%		226		200		26		13.0	%		242		209		33		15.8	%
Average No. of Live Games		224		198		26		13.2	%		213		187		26		14.0	%		239		206		33		16.0	%
Total Revenue (£’m)	£	4.4	£	2.7	£	1.7		62.7	%	£	12.3	£	7.2	£	5.2		72.3	%	£	3.9	£	3.8	£	0.2		4.6	%

“No. of Live Customers at the end of the period” and “Average No. of Live Customers” represent the number of customers from which there is Interactive revenue at the end of the period and the average number of customers from which there is Interactive revenue during the period, respectively.

“No. of Live Games at the end of the period” and “Average No. of Live Games” represents the number of games from which there is Interactive revenue at the end of the period and the average number of games from which there is Interactive revenue during the period, respectively.

“Total Revenue (£m)” represents total revenue for the ~~year ended December 31, 2020, for definitions of terms used in the above table.~~Interactive segment, including recurring and upfront service revenue.

Set forth below is a breakdown of our Interactive recurring revenue which consists principally of Interactive participation revenue. See “Interactive Segment Revenue” below for a discussion of Interactive service revenue between the periods under review.

	For the Three-Month Period ended												For the Nine-Month Period ended												For the Three-Month Period ended						Variance
	Unaudited September 30,			Unaudited September 30,			Variance 2021 vs 2020						Unaudited September 30,			Unaudited September 30,			Variance 2021 vs 2020						March 31,			March 31,			2022 vs 2021
(In £ millions)	2021			2020						%			2021			2020						%			2022			2021						%
Interactive Recurring Revenue
Total Interactive Revenue	£	4.4		£	2.7		£	1.7			62.7	%	£	12.3		£	7.1		£	5.3			74.3	%	£	3.9		£	3.8		£	0.2			4.6	%

Total Recurring Revenue - Interactive	£	4.4		£	2.6		£	1.8			67.9	%	£	12.3		£	7.0		£	5.3			75.0	%	£	3.9		£	3.8		£	0.2			4.6	%
Interactive Recurring Revenue as a Percentage of Total Interactive Revenue		100.0	%		96.9	%		3.1	%					100.0	%		99.6	%		0.4	%					100.0	%		100.0	%		0.0	%

We undertook 8 new brand launches during first quarter 2022, and expanded territories with DraftKings in New Jersey and Connecticut and Rush Street Interactive in Michigan.

During the three-month period we were shortlisted for ~~the SBC Awards for Casino / Slots Developer of the year.~~three awards: -

There were twelve new brand launches during the quarter ended September 2021 including Draftkings in Michigan, four brands with The Stars Group, Pokerstars, Betstars, Full Tilt and Stars Casino and Leo Vegas in Spain.

There were twenty-eight new brand launches across the nine-month period including BetMGM in New Jersey and Michigan, Golden Nugget in Michigan, Gamesys, Draftkings in Michigan and four brands under The Stars Group. We also launched with our first operators in Spain, Luckia, 888 and Leo Vegas.

We deployed ~~twenty-three~~8 new games in ~~the nine-month period~~first quarter 2022 across the estate including “Catch of the Day”, “Tin Can Cash” and ~~eight~~a new ~~games in the three-month period including “William Hill Cash Spins”, “Big Piggy Bonus”, “Dice Spinner Megaways” and~~version of our branded game “Reel ~~Spooky~~ King ~~Megaways”~~– Reel LinKing”.

	For the Three-Month Period ended																		For the Nine-Month Period ended
	Unaudited September 30,			Unaudited September 30,			Variance												Unaudited September 30,			Unaudited September 30,			Variance												For the Three-Month Period ended						Variance 2022 vs 2021
(In millions)	2021			2020			2021 vs 2020												2021			2020			2021 vs 2020												March 31, 2022			March 31, 2021			Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
							Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %									Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
Service Revenue	$	6.1		$	3.5		$	0.4		$	2.2			62.7	%		73.4	%	$	17.1		$	9.0		$	1.4		$	6.7			74.3	%		90.2	%	$	5.3		$	5.2		$	(0.1	)	$	0.2			4.6	%		2.2	%

Cost of Service		(1.0	)		(0.4	)		(0.1	)		(0.5	)		111.5	%		125.1	%		(2.7	)		(1.0	)		(0.3	)		(1.4	)		129.7	%		170.4	%		(1.0	)		(0.8	)		0.0			(0.3	)		35.5	%		31.7	%

Selling, general and administrative expenses		(1.7	)		(0.9	)		(0.2	)		(0.7	)		79.0	%		102.1	%		(4.0	)		(2.7	)		(0.2	)		(1.1	)		41.6	%		49.0	%		(1.4	)		(1.0	)		0.0			(0.4	)		38.6	%		35.1	%

Stock-based compensation		(0.2	)		(0.1	)		(0.0	)		(0.1	)		50.7	%		60.6	%		(0.4	)		(0.2	)		(0.0	)		(0.1	)		63.3	%		80.3	%		(0.1	)		(0.1	)		0.0			(0.0	)		24.9	%		22.1	%

Depreciation and amortization		(0.9	)		(0.5	)		(0.1	)		(0.3	)		60.6	%		71.2	%		(2.5	)		(1.7	)		(0.2	)		(0.6	)		32.8	%		44.8	%		(0.7	)		(0.7	)		0.0			(0.0	)		2.3	%		0.0	%

Net operating Income (Loss)	$	2.3		$	1.6		$	0.1		$	0.7			41.6	%		44.9	%	$	7.5		$	3.4		$	0.7		$	3.5			103.2	%		122.5	%	$	2.1		$	2.6		$	(0.0	)	$	(0.5	)		(18.3	)%		(19.7	)%

Exchange Rate - $ to £		1.38			1.29															1.39			1.27															1.35			1.38

All variances discussed in the Interactive results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

During the three-month ~~and nine-month periods,~~period, revenue increased by ~~$2.2~~$0.2 million, ~~and $6.7 million, respectively. These increases were~~primarily driven by recurring revenue growth due to the consistent launch of new content across the estate, growth in the customer base in new, emerging and core markets and increased promotional activity through exclusive deals with tier-one customers.

Operating Income ~~increased~~decreased in the three-month ~~and nine-month periods~~period by ~~$0.7 million and $3.3 million, respectively.~~$0.5 million.

The ~~increase in both periods~~decrease was primarily due to ~~the increase in revenue (detailed above), partly offset by~~ an increase in cost of sales ($~~0.5 million and $1.4 million for the three-month and nine-month periods, respectively) driven~~0.3 million) caused by an increase in third party platform provider costs, ~~(in line with the revenue increase for the periods)~~ as well as an increase in SG&A expenses ($~~0.7 million and $1.1 million for the three-month and nine-month periods, respectively)~~0.4 million) driven by the investment in the segment to help drive ~~the increasing~~ revenues. Partly offset by an increase in revenue (detailed above).

We typically generate revenue from our Leisure segment through the rental of our gaming and amusement machines. We receive rental fees for machines, typically on a long-term contract basis, on both a participation and fixed fee basis, with our newer digital pub machines typically contracted on a fixed fee basis. Our participation contracts are ~~typically~~usually structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed in our customers’ facilities. ~~Typically, we~~We generally recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Leisure segment is principally driven by the number of customers we have, the number of gaming machines in operation, the net win performance of the machines and the net win percentage that we receive pursuant to our contracts with our customers.

	For the Three-Month Period ended										For the Nine-Month Period ended										For the Three-Month Period ended				Variance
	Unaudited Sept 30,		Unaudited Sept 30,		Variance 2021 vs 2020						Unaudited Sept 30,		Unaudited Sept 30,		Variance 2021 vs 2020						Mar 31,		Mar 31,		2022 vs 2021
Leisure	2021		2020					%			2021		2020					%			2022		2021					%

End of period installed base Gaming machines (# of terminals)		11,546		11,964		(418	)		(3.5	)%		11,546		11,964		(418	)		(3.5	)%		11,060		11,610		(550	)		(4.7	%)
Average installed base Gaming machines (# of terminals)		11,548		12,101		(553	)		(4.6	)%		11,626		12,165		(539	)		(4.4	)%		11,248		11,631		(383	)		(3.3	%)
End of period installed base Other (# of terminals)		6,989		7,719		(730	)		(9.5	)%		6,989		7,719		(730	)		(9.5	)%		6,356		7,169		(813	)		(11.3	%)
Average installed base Other (# of terminals)		7,062		7,935		(873	)		(11.0	)%		7,134		8,059		(925	)		(11.5	)%		6,524		7,193		(669	)		(9.3	%)
Pub Digital Gaming Machines - Average installed base (# of terminals)		6,238		5,772		465			8.1	%		5,978		5,764		214			3.7	%		6,326		5,801		524			9.0	%
Pub Analogue Gaming Machines - Average installed base (# of terminals)		1,969		2,602		(634	)		(24.3	)%		2,146		2,677		(531	)		(19.8	)%		1,720		2,236		(516	)		(23.1	%)
MSA and Bingo Gaming Machines - Average installed base (# of terminals)⁽¹⁾		3,085		3,464		(379	)		(10.9	)%		3,239		3,497		(258	)		(7.4	)%		3,189		3,338		(149	)		(4.5	%)
Inspired Leisure Revenue per Gaming Machine per week	£	60.4	£	40.4	£	20.0			49.4	%	£	28.3	£	31.4	£	(3.1	)		(9.8	)%	£	64.2	£	0.1	£	64.1			N/A
Inspired Pub Digital Revenue per Gaming Machine per week	£	57.5	£	49.2	£	8.3			16.8	%	£	27.8	£	36.5	£	(8.6	)		(23.7	)%	£	66.1	£	0.0	£	66.1			N/A
Inspired Pub Analogue Revenue per Gaming Machine per week	£	37.2	£	25.3	£	11.9			46.9	%	£	16.8	£	21.2	£	(4.4	)		(20.7)	%	£	39.2	£	0.0	£	39.2			N/A
Inspired MSA and Bingo Revenue per Gaming Machine per week	£	83.2	£	39.4	£	43.8			111	%	£	37.8	£	32.1	£	5.7			17.9	%	£	87.3	£	0.2	£	87.1			35794	%
Inspired Other Revenue per Machine per week	£	19.8	£	4.3	£	15.5			356	%	£	8.2	£	7.8	£	0.4			5.3	%	£	20.2	£	0.0	£	20.1			N/A

Total Leisure Parks Revenue (Gaming and Non Gaming) (£’m)	£	12.5	£	5.4	£	7.1			132	%	£	15.8	£	7.1	£	8.7			123	%	£	2.5	£	0.0	£	2.5			N/A

~~Please refer to our Annual Report on Form 10-K for~~In the ~~year ended December 31, 2020, for definitions of terms used in the above table.~~table above:

“End of period installed base Gaming” and “Average installed base Gaming” represent the number of gaming machines installed (excluding Leisure park machines) that are Category B and Category C only, from which there is participation or rental revenue at the end of the period or as an average over the period.

“End of period installed base Other” and “Average installed base Other” represent the number of all other category machines installed (excluding Leisure park machines) from which there is participation or rental revenue at the end of the period or as an average over the period.

“Revenue per machine unit per week” represents the average weekly participation or rental revenue recognized during the period.

Set forth below is a breakdown of our Leisure recurring revenue which consists principally of Leisure participation revenue and Leisure other fixed fee revenue. See “Leisure Segment Revenue” below for a discussion of leisure service revenue between the periods under review.

During the nine-month period ending September 30, 2021, all major sectors of the Leisure segment (Pubs, Holiday Parks, Motorway Service Areas and Bingo Halls) remained closed due to the COVID-19 closures in the UK until May 17^th~~, 2021. Venues subsequently reopened with social distancing and other restrictions imposed due to COVID-19. All significant COVID-19 restrictions were lifted on July 19, 2021.~~

During the three-month period ending March 31, 2022, the leisure segment has seen a strong start to the year with all sectors of the business performing in line with or ahead of internal expectations, in spite of the challenges presented by the Omicron COVID-19 ~~restrictions resulted in frequent amendments to overseas travel policies~~variant which impacted footfall in the ~~UK. The additional costs and uncertainty~~early part of ~~overseas travel during~~ the ~~quarter resulted in a strong summer season for our Leisure Parks business despite initial restrictions in Wales and Scotland.~~year.

~~During~~‘Centurion’ ‘Gold Cash Freespins’ and ‘Party Time Pub Addition’ were deployed across the ~~three-month period, new investments in cashless operations proved popular at an increased number of sites The MSA sector continued~~pub estate during the quarter demonstrating our commitment to ~~trade strongly due to increased travel within~~leveraging Inspired’s successful game portfolio for the ~~UK and increasing volume of road transport.~~pub sector.

Preparations for the 2022 Holiday Parks season began in earnest during the quarter with a considerable influx of new machines delivered and installed across our customers’ estates. Some parks opened early for the February half-term school holiday. In addition, we have added five new parks to our portfolio in the quarter.

	For the Three-Month Period ended																		For the Nine-Month Period ended
	Unaudited September 30,			Unaudited September 30,			Variance												Unaudited September 30,			Unaudited September 30,			Variance															For the Three-Month Period ended						Variance 2022 vs 2021
(In millions)	2021			2020			2021 vs 2020												2021			2020			2021 vs 2020															March 31, 2022			March 31, 2021			Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
							Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %									Total Variance $			Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
Revenue:
Service	$	32.4		$	�� 16.6		$	2.1		$	13.7			82.8	%		95	%	$	43.1		$	33.1		$	10.0		$	2.9		$	7.1			21.4	%		30.3	%	$	19.0		$	0.0		$	(0.6	)	$	19.6			NA			NA
Product		1.0			0.8			0.1			0.1			9.2	%		17	%		2.1			2.2			(0.1	)		0.2			(0.2	)		(10.8	)%		(4.0	)%		0.6			0.5			(0.0	)		0.1			14.8	%		11.5	%
Total revenue		33.4			17.4			2.1			13.8			79.3	%		92	%		45.2			35.3			9.9			3.1			6.9			19.4	%		28.2	%		19.6			0.5			(0.6	)		19.7			3652.5	%		3541	%

Cost of Sales, excluding depreciation and amortization:
Cost of Service		(8.2	)		(3.9	)		(0.5	)		(3.7	)		96.4	%		108	%		(11.6	)		(7.5	)		(4.1	)		(0.8	)		(3.3	)		43.9	%		54.8	%		(5.5	)		(0.4	)		0.2			(5.3	)		1158.7	%		1136	%
Cost of Product		(0.5	)		(0.6	)		0.0			0.0			(2.6	)%		(5	)%		(1.1	)		(1.5	)		0.4			(0.1	)		0.4			(28.7	)%		(25.4	)%		(0.3	)		(0.3	)		0.0			(0.0	)		15.4	%		13	%
Total cost of sales		(8.7	)		(4.5	)		(0.5	)		(3.7	)		83.8	%		94	%		(12.7	)		(9.0	)		(3.7	)		(0.9	)		(2.9	)		31.8	%		41.3	%		(5.8	)		(0.7	)		0.2			(5.3	)		742.9	%		724	%

Selling, general and administrative expenses		(11.7	)		(9.6	)		(0.7	)		(1.4	)		15.0	%		22	%		(23.1	)		(23.2	)		0.1			(1.8	)		1.9			(8.1	)%		(0.5	)%		(11.3	)		(3.2	)		0.3			(8.4	)		263.4	%		253	%

Stock-based compensation		(0.1	)		-			(0.0	)		(0.1	)		NA			NA			(0.3	)		(0.0	)		(0.3	)		(0.0	)		(0.3	)		627	%		680	%		(0.2	)		(0.1	)		0.0			(0.1	)		NA			NA

Depreciation and amortization		(3.9	)		(5.4	)		(0.2	)		1.8			(32.4	)%		(28.3	)%		(12.2	)		(13.2	)		1.0			(1.0	)		2.0			(15.1	)%		(7.6	)%		(3.7	)		(4.2	)		0.1			0.4			(9.2	)%		(11.9	)%

Net operating Income (Loss)		9.0			(2.1	)	$	0.7		$	10.3			(515	)%		(532	)%		(3.1	)		(10.1	)		7.0		$	(0.6	)	$	7.6			(72.5	)%		(69.5	)%		(1.4	)		(7.7	)	$	0.1		$	6.2			(81	)%		(81	)%

Exchange Rate - $ to £		1.38			1.29															1.38			1.29																		1.34			1.38

All variances discussed in the Leisure results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

The three-month period was the first quarter in 2021 when revenue was not impacted by COVID-19 closures and restrictions. For the three-month period, revenue increased by $13.8 million or 79.3%, as all social distancing restrictions were removed. For the nine-month period revenue increased by $6.9 million, or 19.4%.

For the three-month period, ~~Service~~ revenue increased by ~~$13.7~~$19.7 million, ~~to $32.4 million. This was driven by strong incomes~~or 3,653%, as our business benefitted from no COVID-19 closures and fewer social distancing restrictions during the period than in ~~leisure parks with~~ the ~~removal of all COVID-19 restrictions for the majority of the~~prior period. ~~Product revenue increased by $0.1 million.~~

~~For the nine-month period,~~ Service revenue increased by ~~$7.1~~$19.6 million ~~to $43.1 million. This was~~ driven by all markets being open for the ~~leisure park reopenings~~whole of the period, particularly Pubs, Motorway service areas, Holiday parks and ~~the removal of COVID-19 restrictions which began in the third quarter. Product revenue decreased by $0.2 million to $2.1 million.~~Bingo Halls.

Operating ~~Income~~Loss for the three-month period improved by ~~$10.3~~$6.2 million, to ~~income~~a loss of ~~$9.0~~$1.4 million. This was primarily due to the increase in revenue as venues reopened and COVID-19 restrictions were ~~removed.~~

~~Operating Loss for the nine-month period improved by $7.6 million to~~removed, as well as a ~~loss~~reduction in depreciation and amortization of ~~$3.1~~$0.4 million. This was ~~primarily due to the increase~~partially offset by increases in ~~revenue as venues reopened as well as~~ cost of sales ($5.3 million), and SG&A ~~savings driven by COVID-19 closures earlier in the period.~~expenses ($8.4 million), due to staff returning from furlough and to full pay.

We use certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to analyze our operating performance. We use these financial measures to manage our business on a day-to-day basis. We believe that these measures are also commonly used in our industry to measure performance. For these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in addition to standard U.S.

GAAP financial measures. There are no specific rules or regulations for defining and using non-GAAP financial measures, and as a result the measures we use may not be comparable to measures used by other companies, even if they have similar labels. The presentation of non-GAAP financial information should not be considered in isolation from, or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. You should consider our non-GAAP financial measures in conjunction with our U.S. GAAP financial measures.

EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense.

Adjusted EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense, and other additional exclusions and adjustments. Such additional excluded amounts include stock-based compensation U.S. GAAP charges where the associated liability is expected to be settled in stock, and changes in the value of earnout liabilities and income and expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed defined benefit pension schemes. Additional adjustments are made for items considered outside the normal course of business, including (1) restructuring costs, which include charges attributable to employee severance, management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and acquisition costs and (3) gains or losses not in the ordinary course of business. This does not include any adjustments related to COVID-19.

We believe Adjusted EBITDA, when considered along with other performance measures, is a particularly useful performance measure, because it focuses on certain operating drivers of the business, including sales growth, operating costs, selling and administrative expense and other operating income and expense. We believe Adjusted EBITDA can provide a more complete understanding of our operating results and the trends to which we are subject, and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income or loss, because it does not take into account certain aspects of our operating performance (for example, it excludes non-recurring gains and losses which are not deemed to be a normal part of underlying business activities). Our use of Adjusted EBITDA may not be comparable to the use by other companies of similarly termed measures. Management compensates for these limitations by using Adjusted EBITDA as only one of several measures for evaluating our operating performance. In addition, capital expenditures, which affect depreciation and amortization, interest expense, and income tax benefit (expense), are evaluated separately by management.

Functional Currency at Constant rate. Currency impacts discussed have been calculated as the current-period average GBP: USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP: USD rate, as a proxy for functional currency at constant rate movement.

Currency Movement represents the difference between the results in our reporting currency (USD) and the results on a functional currency (at constant rate) basis.

Reconciliations from net loss, as shown in our Consolidated Statements of Operations and Comprehensive Loss, to Adjusted EBITDA are shown below.

Reconciliation to Adjusted EBITDA by segment for the Three ~~and Nine~~ Months ended ~~September 30, 2021~~March 31, 2022

	For the Three-Month Period ended														For the Nine-Month Period ended																For the Three-Month Period ended
	Unaudited September 30,														Unaudited September 30,																March 31,
(In millions)	2021														2021																2022
	Total			Gaming		Virtual Sports		Interactive		Leisure		Corporate			Total			Gaming			Virtual Sports		Interactive		Leisure			Corporate			Total			Gaming			Virtual Sports		Interactive		Leisure			Corporate
Net Income/ (loss)	$	25.0		$	5.1	$	7.6	$	2.3	$	9.0	$	1.0		$	(35.5	)	$	(1.2	)	$	15.5	$	7.5	$	(3.1	)	$	(54.2	)	$	1.5		$	6.7		$	8.7	$	2.1	$	(1.4	)	$	(14.6	)

Items Relating to Legacy Activities:
Pension charges (1)		0.2											0.2			0.6													0.6			0.1													0.1

Items outside the normal course of business:
Acquisition and integration related transaction expenses ~~(3)~~(2)		-											-			1.5													1.5			0.1			0.1										-
Refinancing of Company Debt (4)		-											-			0.8													0.8
Italian tax related costs relating to prior years (5)		-					-						-			1.4						1.4							-

Stock-based compensation expense		3.8			0.5		0.3		0.2		0.1		2.7			8.6			1.1			0.5		0.4		0.3			6.3			2.8			0.3			0.1		0.1		0.2			2.1


Depreciation and amortization		11.2			5.3		0.7		0.9		3.9		0.4			36.2			17.7			2.5		2.5		12.2			1.3			10.1			4.6			0.6		0.7		3.7			0.5
Interest Income		(0.1	)										(0.1	)		(0.2	)												(0.2	)
Interest Expense		7.3											7.3			38.1													38.1
Interest expense net																																6.5													6.5
Change in fair value of warrant liability		(17.3	)										(17.3	)		(3.8	)												(3.8	)		-													-
Profit/Loss on disposal of trade & assets																																(0.9	)		(0.9	)									-
Other finance expenses / (income)		(0.3	)										(0.3	)		(5.5	)												(5.5	)		(0.3	)												(0.3	)
Income tax		0.3											0.3			(0.1	)												(0.1	)		0.1													0.1
Adjusted EBITDA	$	30.1		$	10.9	$	8.6	$	3.4	$	13.0	$	(5.8	)	$	42.0		$	17.6		$	19.9	$	10.4	$	9.4		$	(15.2	)	$	20.1		$	10.8		$	9.4	$	2.9	$	2.5		$	(5.5	)

Adjusted EBITDA	£	21.8													£	30.4															£	15.0

Exchange Rate - $ to £ (7)		1.38														1.38
Exchange Rate - $ to £ (3)																																1.34

Note: 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, these are shown in the Corporate category.

Reconciliation to Adjusted EBITDA by segment for the Three ~~and Nine~~ Months ended ~~September 30, 2020~~March 31, 2021

	For the Three-Month Period ended															For the Nine-Month Period ended															For the Three-Month Period ended
	Unaudited September 30,															Unaudited September 30,															March 31,
(In millions)	2020															2020															2021
	Total			Gaming		Virtual Sports		Interactive		Leisure			Corporate			Total			Gaming		Virtual Sports		Interactive		Leisure			Corporate			Total			Gaming			Virtual Sports		Interactive		Leisure			Corporate
Net Income/ (loss)	$	0.5		$	9.6	$	5.7	$	1.6	$	(2.1	)	$	(14.3	)	$	(35.5	)	$	1.3	$	15.8	$	3.4	$	(10.1	)	$	(45.9	)	$	(16.7	)	$	(3.6	)	$	3.7	$	2.6	$	(7.7	)	$	(11.7	)

Items Relating to Legacy Activities:
Pension charges (1)		0.2												0.2			0.5												0.5			0.2													0.2

Items outside the normal course of business:
Costs of group restructure (2)		0.4												0.4			0.8												0.8
Acquisition and integration related transaction expenses (3)		1.2												1.2			5.6												5.6
Impairment on interest in equity method investee(6)		-												-			0.7												0.7
Acquisition and integration related transaction expenses (2)																																1.4													1.4

Stock-based compensation expense		1.1			0.2		0.1		0.1		-			0.7			3.1			0.4		0.3		0.2		0.0			2.2			1.4			0.2			0.1		0.1		0.1			0.9


Depreciation and amortization		14.0			6.6		1.0		0.5		5.4			0.5			39.9			21.0		2.7		1.7		13.2			1.3			13.1			6.6			1.1		0.7		4.2			0.5
Interest Income		(0.1	)											(0.1	)		(0.5	)											(0.5	)
Interest Expense		8.3												8.3			22.5												22.5
Interest expense net																																8.6													8.6
Change in fair value of warrant liability		(0.2	)											(0.2	)		(6.1	)											(6.1	)		3.0													3.0
Other finance expenses / (income)		(0.3	)											(0.3	)		5.9												5.9			(6.4	)												(6.4	)
Income tax		0.0												0.0			0.3												0.3			(0.7	)												(0.7	)
Adjusted EBITDA	$	25.0		$	16.4	$	6.8	$	2.2	$	3.3		$	(3.7	)	$	37.2		$	22.7	$	18.8	$	5.3	$	3.1		$	(12.7	)	$	3.9		$	3.2		$	4.9	$	3.4	$	(3.4	)	$	(4.2	)

Adjusted EBITDA	£	19.5														£	29.0														£	2.8

Exchange Rate - $ to £ (7)		1.29															1.26
Exchange Rate - $ to £ (3)																																1.37

~~Nine~~Three Months ended ~~September 30, 2021,~~March 31, 2022, compared to ~~Nine~~Three Months ended ~~September 30, 2020~~March 31, 2021

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, net cash inflow provided by operating activities was ~~$7.0~~$5.1 million, compared to a ~~$31.5~~$2.0 million ~~inflow~~outflow for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, representing a ~~$24.5~~$7.1 million ~~decrease~~increase in cash generation. This ~~decrease~~increase was driven primarily by ~~interest timing differences resulting in interest payments of $17.6 million compared to $0.6 million~~trading levels given the worldwide trading restrictions in the ~~prior period. The prior period also included a receipt in relation to VAT related income.~~three months ended March 31, 2021, resulting from the COVID-19 pandemic.

Amortization of debt fees ~~increased~~decreased by ~~$14.5~~$0.9 million, to ~~$16.7~~$0.4 million, due to the ~~write-off~~reduction in ~~May 2021~~the level of capitalized debt fees ~~totaling $14.4 million~~after May 2021 following the ~~Company~~Company’s refinancing. The remainder of the current year’s non-cash interest expense related to amortization of debt fees incurred in relation to the business refinancing in October 2019 up to the refinancing. Post refinancing the amortization of debt fees related to those incurred and capitalized as part of the May 2021 refinancing. The prior year’s non-cash interest expense related to amortization of debt fees incurred in relation to the business refinancing in October 2019.

Change in fair value of derivative and warrant liabilities and stock-based compensation expense ~~increased~~decreased by ~~$8.4~~$1.6 million, from ~~an outflow of $2.3~~$4.6 million to ~~an inflow of $6.1~~$3.0 million. Movements in the fair ~~valuation~~value of warrant liabilities ~~increased the inflow~~decreased by ~~$2.3~~$2.9 million ~~$5.5~~with a $1.4 million increase related to stock-based compensation ~~expense and $0.6 million related to the movement in cross-currency swaps.~~expense.

~~Foreign~~Following the refinancing in May 2021, there has been no foreign currency translation on senior bank debt and cross currency swaps. In the three months ended March 31, 2021, the foreign currency translation on senior bank debt and cross currency swaps resulted in a loss ~~in the nine months ended September 30, 2021,~~ of ~~$4.6~~$6.1 million as a result of the movement in exchange rates during the ~~period, compared to a $6.6 million gain in the nine months ended September 30, 2020.~~period.

Depreciation and amortization decreased by ~~$3.9~~$2.9 million, to ~~$38.7~~$10.8 million, with reductions of ~~a $2.9~~$1.0 million in machine depreciation and ~~$1.5~~$1.9 million in amortization of intangible ~~assets offset through an increase of $0.6 million in development costs and licenses amortization.~~assets.

Other net cash utilized by operating activities decreased by ~~$31.6~~$11.8 million, to a ~~$14.4~~$10.6 million outflow following the ~~significant~~ impact of the COVID-19 ~~closures. Movements~~closures restricting activities in the previous year. Increases in inventory holding and higher trading receivables due to ~~different timing of interest payments following~~ the ~~May 2021 refinancing~~previous year having low receivable levels due to the restricted trading imposed worldwide due to the pandemic have resulted in a $15.6 million higher outflow in the nine months ended September 30, 2021. In addition a higher VAT accrual level at the start of 2021 resulted in a net $10.6 million adverse movement in the nine months ended September 30, 2021. Further adverse movements ~~were also seen on deferred revenue creditors ($3.3 million) long term liabilities ($1.8 million)~~of $12.6 million and ~~accounts receivable ($7.7 million), caused by the variability of trading levels caused by COVID-19 lockdowns and the unwind period needed when lockdown restrictions~~$9.4 million respectively. These were ~~eased are partly~~ offset by favorable movements in ~~accounts payable~~interest accruals ($6.3 million) and ~~accruals~~deferred revenue ($~~6.6~~4.1 million).

Net cash used in investing activities ~~decreased~~increased by ~~$3.8~~$6.1 million, to ~~$18.2~~$10.9 million in the ~~nine~~three months ended ~~September 30,~~March 31, 2022. This was driven by higher spend on plant, property and equipment ($3.3 million increase compared to 2021) and capitalized software ($2.3 million increase compared to 2021) due to spending in the previous year being low as a result of the pandemic. The first three months ended March 31, 2022, also included the final payment of $0.6 million related to the acquisition of Sportech Lotteries LLC which was acquired on December 31, 2021.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, net cash ~~generated~~utilized by financing activities was ~~an inflow of $0.9~~$0.1 million, compared to a ~~$5.4~~$0.2 million ~~inflow~~outflow in the ~~nine~~three months ended ~~September 30, 2020. The inflow in the nine months ended September 30, 2021,~~March 31, 2021. Both outflows related to the net movement from the May 2021 refinancing and finance lease spend of $0.4 million. During the nine months ended September 30, 2020, an increase in the amount drawn on the revolver provided a $9.2 million inflow which was partly offset by $3.1 million of debt fees incurred and $0.7 million of finance lease spend.

To fund our obligations, historically we have relied ~~historically~~ on a combination of cash flows provided by operations and the incurrence of additional debt or the refinancing of existing debt. As of ~~September 30, 2021,~~March 31, 2022, we had liquidity consisting of ~~$37.1~~$40.8 million in cash and cash equivalents and a further ~~$27.0~~$26.3 million of an undrawn revolver facility. This compares to ~~$43.9~~$41.2 million of cash and cash equivalents as of ~~September 30, 2020, but $12.9 million drawn on the revolver facility~~March 31, 2021, with a further ~~$12.9~~$27.6 million of revolver facilities undrawn. We had a working capital outflow of ~~$14.4~~$10.6 million for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, compared to an ~~$17.3~~$1.2 million inflow for the ~~nine~~three months ended ~~September 30, 2020.~~ March 31, 2021.

The level of our working capital surplus or deficit varies with the level of machine production we are undertaking and our capitalization as well as the seasonality evident in some of the ~~businesses purchased as part of the NTG Acquisition.~~businesses. In periods with minimal machine volumes and capital spend, our working capital is typically more stable. In periods where significant numbers of machines are being produced, the levels of inventory and creditors are typically higher ~~than typical~~ and there is a natural timing difference between converting the stock into sellable or capitalized plant and settling payments to suppliers. These factors, along with movements in trading activity levels which have been seen during 2020 and 2021 following the COVID-19 closures, can result in significant working capital volatility. In periods of low activity, our working capital volatility is reduced. Working capital is reviewed and managed with the aim of ensuring that current liabilities are covered by the level of cash held and the expected level of short-term receipts.

Some of our business operations require cash to be held within the machines. As of ~~September 30, 2021, $5.0~~March 31, 2022, $4.9 million of our ~~$37.1~~$40.8 million of cash and cash equivalents were held as operational floats within the machines.

Subsequent to the balance sheet date, holders of the Company’s public warrants exercised 109,346 warrants for a total exercise price of $0.6 million, resulting in the issue of 54,673 common shares. As of November 9, 2021, there were 23,433,386 shares of the Company’s common stock outstanding.

The Company may from time to time to purchase all or a portion of the Company’s outstanding debt, or a portion of the Company’s outstanding equity securities. Such purchases may be effected in the open market, through redemptions, or through privately negotiated transactions.

Management currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, and the ability to control and defer capital projects will be sufficient to fund the Company’s net cash requirements through ~~November 2022.~~June 2023.

~~See Note 4 Long Term and Other Debt of the Financial Statements for detail of the debts held during 2020 and 2021.~~

Under our debt facilities in place as of ~~September 30, 2021,~~March 31, 2022, we are not subject to covenant testing on the Senior Secured Notes. We are, however, subject to covenant testing at the level of Inspired Entertainment Inc., the ultimate holding company, on our Super Senior Revolving Credit Facility which requires the Company to maintain a maximum consolidated senior secured net leverage ratio of 6.25x on the test date for the relevant period ending June 30, 2021, stepping down to 6.0x on March 31, 2022, 5.75x on March 31, 2023 and 5.50x from March 31, 2024 and thereafter (the “RCF Financial Covenant”). The RCF Financial Covenant is calculated as the ratio of consolidated senior secured net debt to consolidated pro forma EBITDA (defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly on a rolling basis, subject to the Initial Facility (as defined in the RCF Agreement) being drawn on the relevant test date. The RCF Financial Covenant does not include a minimum interest coverage ratio or other financial covenants. ~~As the RCF has never been drawn~~Covenant testing at ~~any point since being in place, no~~March 21, 2022 showed covenant ~~testing was required at September 30, 2021.~~compliance.

Under our debt facilities in place as of September 30, 2020, we were subject to covenant testing on the Senior Secured Notes. The covenant testing is set at the level of Inspired Entertainment Inc., the ultimate holding company, and consists of a test on Leverage (Consolidated Total Net Debt/Consolidated Pro Forma EBITDA) and a test on the level of capital expenditure. These are measured under U.S. GAAP. Leverage was tested at quarterly intervals commencing for the period ending June 30, 2020, and capital expenditure was tested annually commencing on December 31, 2019.

Prior to reaching our first leverage covenant test on June 30, 2020, the covenants were reset as a direct result of the COVID-19 closures and subsequent loss of trading as a result of government lockdowns in many key trading countries around the world. Formal agreement of the revised covenants was achieved on June 25, 2020.

There were no breaches of the debt covenants in the periods ended ~~September 30, 2021, and September 30, 2020.~~March 31, 2022 or March 31, 2021.

As of ~~September 30, 2021,~~March 31, 2022, our senior bank debt was secured by the imposition of a fixed and floating charge in favor of the lender over all the assets of the Company and certain of the Company’s subsidiaries.

The Board has authorized that the Company may use up to $25.0 million to repurchase Inspired common shares, subject to repurchases being effected on or before May 10, 2025. Management has discretion as to whether to repurchase shares of the Company and there is no assurance that buybacks will occur.

As of ~~September 30, 2021,~~March 31, 2022, our contractual obligations were as follows:

As of ~~September 30, 2021,~~March 31, 2022, there were no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, promulgated by the U.S. Securities and Exchange Commission.

The preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenue and expenses, and our disclosure of commitments and contingencies at the date of the consolidated financial statements. Accounting policies concerning revenue recognition, inventories, software development costs, allowance for doubtful accounts and the pension asset/liability are considered by management to be critical, and further detail on these policies can be found in our Annual Report on Form 10-K filed with the SEC on March 31, 2022. On an on-going basis, we evaluate our estimates and judgments. We base our estimates and judgments on a variety of factors, including our historical experience, knowledge of our business and industry and current and expected economic conditions, 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. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

For a discussion of other recently issued accounting standards, and assessments as to their impacts on the Company, see Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies, Note 1 to the consolidated financial statements included elsewhere in this report.

Our principal market risks are our exposure to changes in foreign currency exchange rates.

Following the Company’s ~~refinance~~refinancing in May 2021, the external borrowings of £235.0 million ($~~324.7~~309.3 million) are provided at a fixed rate. Therefore movements in rates such as LIBOR do not impact on the current borrowings and the only fluctuation that is expected to be reported will be that solely caused by movements in the exchange rates between the Company’s functional currency and its reporting currency.

Our operations are conducted in various countries around the world and we receive revenue and pay expenses from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than GBP, which is our functional currency, or (ii) the functional currencies of our subsidiaries, which is not necessarily GBP. Excluding intercompany balances, our Euro functional currency net assets total approximately ~~$12.1~~$11.1 million and our US Dollar functional currency net liabilities total approximately ~~$9.3~~$2.8 million. We use a sensitivity analysis model to measure the impact of a 10% adverse movement of foreign currency exchange rates against the US Dollar. A hypothetical 10% adverse change in the value of the Euro and the US Dollar relative to GBP as of ~~September 30, 2021,~~March 31, 2022, would result in favorable translation ~~adjustments~~adjustment of approximately $1.0 million and ~~$0.9~~an unfavorable translation adjustment of $0.3 million, respectively, recorded in other comprehensive loss.

Included within our trading results are earnings outside of our functional currency. Retained ~~losses~~gains earned in Euros and retained losses earned in US Dollars in the ~~nine months~~twelve-months ended ~~September 30, 2021,~~March 31, 2022, were ~~€0.9~~€2.3 million and ~~$6.6~~$2.6 million, respectively. A hypothetical 10% adverse change in the value of the Euro and the US Dollar relative to GBP as of ~~September 30, 2021,~~March 31, 2022, would result in translation adjustments of approximately ~~$0.1million~~$0.2 million favorable and ~~$0.6~~$0.2 million unfavorable, respectively, recorded in trading operations.

The majority of the Company’s trading is in GBP, the functional currency, although the reporting currency of the Company is the US Dollar. As such, changes in the GBP:USD exchange rate have an effect on the Company’s results. A 10% weakening of GBP against the US Dollar would change the trading operational results favorably by approximately ~~$2.6~~$0.2 million and would result in unfavorable translation adjustments of approximately ~~$12.6~~$8.3 million, recorded in other comprehensive loss.

~~For further information regarding the new external borrowings, see Note 4 to the Consolidated Financial Statements, “Long Term and Other Debt”.~~

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of ~~September 30, 2021,~~March 31, 2022, due to the material weakness described in Item 9A of ~~Amendment No. 1 to~~ the Annual Report on Form ~~10-K/A~~10-K filed with the SEC on ~~May 10, 2021.~~March 31, 2022. Management have implemented additional controls designed to remediate this material weakness; however, these controls have not operated effectively over a sufficient period of time in order to conclude that the material weakness has been fully remediated.

Notwithstanding the identified material weakness and management’s assessment that our disclosure controls and procedures were not effective at the reasonable assurance level as of ~~September 30, 2021,~~March 31, 2022, management believes that the interim consolidated financial statements and footnote disclosures included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations, cash flows and disclosures as of and for the periods presented in accordance with generally accepted accounting principles.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may become involved in lawsuits and legal proceedings arising in the ordinary course of business. While we believe that, currently, we have 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 our business, financial condition or results of operations.

Our business is subject to a high degree of risk. In addition to information set forth in this report, including the risk factors below, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K for our fiscal year ended December 31, ~~2020 and Amendment No. 1 thereto (the “2020 Form 10-K”), as well as our Quarterly Report on Form 10-Q for the period ended June 30,~~ 2021 (the ~~“June 2021~~“2021 Form ~~10-Q”~~10-K”). You should carefully read and assess all of these risk factors. Any of these risks could materially and adversely affect our business, operating results, financial condition and prospects, and cause the value of our common stock to decline, which could cause investors in our common stock to lose all or part of their investments. Other than as set forth below, there have been no material changes to the risk factors previously disclosed in the ~~2020 Form 10-K and in the June~~ 2021 Form ~~10-Q.~~10-K.

Supply chain disruptions and inflation are having, and could continue to have, an adverse effect on our business, operating results and financial condition.

Our Gaming Sales segment in North America and Greece is being adversely affected by supply chain disruption which may result in lost sales (and which sales may not be recovered) and we are also exposed to inflation through the increased cost of goods sold and wage inflation as a result of current global economic conditions.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware		47-1025534
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

250 West 57th Street, Suite 415
New York, NY		10107
(Address of principal executive offices)		(Zip Code)

Large accelerated filer ☐		Accelerated filer ☐ ☒
Non-accelerated filer ☒ ☐		Smaller reporting company ☒
		Emerging growth company ☐

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		INSE		The NASDAQ Stock Market LLC

PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income	2

	Condensed Consolidated Statement of Stockholders’ Deficit	3

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2216

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4842

ITEM 4.	CONTROLS AND PROCEDURES	4943

PART II.	OTHER INFORMATION	4943

ITEM 1.	LEGAL PROCEEDINGS	4943

ITEM 1A.	RISK FACTORS	4943

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	5044

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	5044

ITEM 4.	MINE SAFETY DISCLOSURES	5044

ITEM 5.	OTHER INFORMATION	5044

ITEM 6.	EXHIBITS	5145

SIGNATURES		5246

	●	the persistence of the ongoing global coronavirus (COVID-19) pandemic on our business with respect to the potential duration and frequency of the various government-ordered emergency measures including travel restrictions, social distancing and/or shelter in place orders and closure of retail and leisure, resurgences in various regions and appearances of new variants requiring ongoing reinstitution of such government-ordered emergency measures;

	●	government regulation of our industries;

	●	our ability to compete effectively in our industries;

	●	the effect of evolving technology on our business;

	●	our ability to renew long-term contracts and retain customers, and secure new contracts and customers;

	●	our ability to maintain relationships with suppliers;

	●	our ability to protect our intellectual property;

	●	our ability to protect our business against cybersecurity threats;

	●	our ability to successfully grow by acquisition as well as organically;

	●	fluctuations due to seasonality;

	●	our ability to attract and retain key members of our management team;

	●	our need for working capital;

	●	our ability to secure capital for growth and expansion;

	●	changing consumer, technology and other trends in our industries;

	●	our ability to successfully operate across multiple jurisdictions and markets around the world;

	●	changes in local, regional and global economic and political conditions; and

	●	other factors.

	As Previously Reported			Adjustments			As Restated
	(in millions, except per share data)
Consolidated Statements of Stockholders’ Deficit as of July 1, 2020
Additional paid in capital	$	348.6		$	(26.0	)	$	322.6
Accumulated deficit		(483.1	)		22.1			(461.0	)

Consolidated Statement of Operations and Comprehensive Loss for the three months ended September 30, 2020
Change in fair value of warrant liability	$	—		$	0.2		$	0.2
Net income		0.3			0.2			0.5
Comprehensive loss		(4.3	)		0.2			(4.1	)

Net income per common share – basic and diluted	$	0.01		$	0.01		$	0.02

Consolidated Statements of Stockholders’ Deficit as of September 30, 2020
Additional paid in capital	$	349.7		$	(26.0	)	$	323.7
Accumulated deficit		(482.8	)		22.3			(460.5	)

	Accounts Receivable		Unbilled Accounts Receivable		Deferred Income			Customer Prepayments and Deposits
	(in millions)
At September 30, 2021	$	37.5	$	19.7	$	(16.1	)	$	(4.6	)
At December 31, 2020	$	30.4	$	8.2	$	(22.9	)	$	(1.6	)
At December 31, 2019	$	24.5	$	15.3	$	(27.8	)	$	(1.9	)

	Accounts Receivable		Unbilled Accounts Receivable		Deferred Income			Customer Prepayments and Deposits
	(in millions)
At March 31, 2022	$	38.6	$	17.4	$	(13.6	)	$	(4.0	)
At December 31, 2021	$	36.2	$	17.4	$	(14.5	)	$	(3.9	)
At December 31, 2020	$	30.4	$	8.2	$	(22.9	)	$	(1.6	)

	Principal			Unamortized deferred financing charge			Book value, September 30, 2021
	(in millions)
Senior debt	$	316.9		$	(8.2	)	$	308.7
Finance lease liabilities		1.8			—			1.8
Total long-term debt outstanding		318.7			(8.2	)		310.5
Less: current portion of long-term debt		(0.9	)		—			(0.9	)
Long-term debt, excluding current portion	$	317.8		$	(8.2	)	$	309.6

	Principal			Unamortized deferred financing charge			Book value, December 31, 2020
	(in millions)
Senior debt	$	313.3		$	(15.8	)	$	297.5
Finance lease liabilities		0.8			—			0.8
Total long-term debt outstanding		314.1			(15.8	)		298.3
Less: current portion of long-term debt		(0.6	)		—			(0.6	)
Long-term debt, excluding current portion	$	313.5		$	(15.8	)	$	297.7

Fiscal period:	Senior bank debt		Finance leases		Total
	(in millions)
2021	$	—	$	0.6	$	0.6
2022		—		0.4		0.4
2023		—		0.3		0.3
2024		—		0.5		0.5
2025		—		—		—
2026		316.9		—		316.9
Total	$	316.9	$	1.8	$	318.7

	Balance Sheet Classification	Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
		(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate Products	Fair Value of Hedging Instruments	$	—	Other Current Liabilities and Long Term Derivative Liability	$	(2.6	)
Total derivatives designated as hedging instruments		$	—		$	(2.6	)

	Gross Amounts		Gross Amounts Offset in the Statement		Net Amounts of Assets presented in the Statement		Gross Amounts Not Offset in the Statement of Financial Position
	of Recognized Assets		of Financial Position		of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	2.6	$	—	$	2.6	$	—	$	—	$	—

	Level 1:	Quoted prices in active markets for identical assets or liabilities.

	Level 2:	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions.

	Level 3:	Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the asset or liability. Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that are unable to be corroborated with observable market data.

			September 30,			December 31,
	Level		2021			2020
	��		(in millions)
Public Warrants (included in warrant liability)		1	$	(3.5	)	$	(3.2	)
Long term receivable (included in other assets)		2	$	3.8		$	1.4
Private Placement Warrants (included in warrant liability)		2	$	(5.5	)	$	(9.8	)
Derivative liability (see Note 5)		2	$	—		$	(2.6	)

	Number of Shares

Unvested Outstanding at January 1, ~~2021~~2022		~~2,149,118~~2,039,254
Granted		~~1,692,486~~500,170
Forfeited		(~~46,609~~1,572	)
Vested		(~~486,184~~23,225	)
Unvested Outstanding at ~~September 30, 2021~~March 31, 2022		~~3,308,811~~2,514,627

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument			Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2021	$	(71.1	)	$	2.8		$	37.2		$	(31.1	)
Change during the period		1.1			(1.1	)		(4.6	)		(4.6	)
Balance at March 31, 2021		(70.0	)		1.7			32.6			(35.7	)
Change during the period		(0.1	)		(0.2	)		(0.9	)		(1.2	)
Balance at June 30, 2021		(70.1	)		1.5			31.7			(36.9	)
Change during the period		(3.2	)		(0.3	)		(0.4	)		(3.9	)
Balance at September 30, 2021	$	(73.3	)	$	1.2		$	31.3		$	(40.8	)

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument			Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2022		(71.5	)		1.0			26.7			(43.8	)
Change during the period		(2.4	)		(0.2	)		(0.7	)		(3.3	)
Balance at March 31, 2022	$	(73.9	)	$	0.8		$	26.0		$	(47.1	)

	●	a discussion and analysis of the Company’s results of operations for the three-month period ~~and nine-month periods~~ ended ~~September 30, 2021,~~March 31, 2022, compared to the same ~~periods~~period in ~~2020;~~2021;

	●	a discussion and analysis of the results of operations for each of the Company’s segments (Gaming, Virtual Sports, Interactive and Leisure) for the three-month period ~~and nine-month periods~~ ended ~~September 30, 2021,~~March 31, 2022, compared to the same ~~periods~~period in ~~2020,~~2021, including KPI analysis.

	For the Three-Month Period ended																		For the Nine-Month Period ended
	Unaudited September 30,			Unaudited September 30,			Variance												Unaudited September 30,			Unaudited September 30,				Variance
(In millions)	2021			2020			2021 vs 2020												2021			2020				2021 vs 2020
							Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %										Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
Revenue:
Service	$	68.7		$	55.6		$	4.5		$	8.6			15.4	%		23.4	%	$	123.3		$	113.7			$	9.3		$	0.3			0.3	%		8.4	%
Product		8.9			4.5			0.6			3.8			85.7	%		97.7	%		18.6			14.3				1.3			2.9			20.6	%		29.9	%
Total revenue		77.6			60.1			5.0			12.4			20.6	%		29.0	%		141.9			128.0				10.6			3.2			2.5	%		10.8	%
Cost of Sales, excluding depreciation and amortization:
Cost of Service		(13.8	)		(10.8	)		(0.9	)		(2.1	)		19.0	%		27.1	%		(23.9	)		(21.8	)	)		(1.7	)		(0.4	)		1.7	%		9.6	%
Cost of Product		(4.7	)		(3.3	)		(0.3	)		(1.1	)		34.5	%		43.7	%		(10.6	)		(9.8	)	)		(0.8	)		0.0			(0.4	)%		8.1	%
Selling, general and administrative expenses		(29.2	)		(21.5	)		(1.8	)		(5.8	)		27.2	%		35.5	%		(68.1	)		(60.7	)	)		(5.3	)		(2.1	)		3.5	%		12.3	%
Stock-based compensation		(3.8	)		(1.1	)		(0.2	)		(2.4	)		221.4	%		242.9	%		(8.6	)		(3.1	)	)		(0.7	)		(4.8	)		154.7	%		177.7	%
Acquisition and integration related transaction expenses		-			(1.2	)		(0.1	)		1.2			(105.6	)%		(100.0	)%		(1.5	)		(5.6	)			(0.3	)		4.4			(77.0	)%		(73.8	)%
Depreciation and amortization		(11.2	)		(14.0	)		(0.7	)		3.5			(24.8	)%		(20.0	)%		(36.2	)		(39.9	)			(3.1	)		6.7			(16.7	)%		(9.2	)%
Net operating Income (Loss)		14.9			8.2			1.1			5.7			68.0	%		82.1	%		(7.0	)		(12.9	)			(1.3	)		7.1			(53.0	)%		(45.3	)%
Other income (expense)
Interest income		0.1			0.1			(0.0	)		0.0			11.4	%		(20.9	)%		0.2			0.5		)		0.0			(0.3	)		(62.4	)%		(58.5	)%
Interest expense		(7.3	)		(8.3	)		(0.5	)		1.5			(17.6	)%		(12.0	)%		(38.1	)		(22.5	)	)		(3.2	)		(12.4	)		54.7	%		69.4	%
Change in fair value of warrant liability		17.3			0.2			1.1			16.0			7526.4	%		8060.4	%		3.8			6.1		)		0.0			(2.3	)		(38.2	)%		(37.7	)%
Other finance income (expense)		0.3			0.3			0.0			(0.0	)		(5.4	%)		1.0	%		5.5			(5.9	)			0.2			11.2			(183.8	)%		(193.5	)%
Loss from equity method investee		-			-			-			-			NA			NA			-			(0.5	)			(0.0	)		0.5			(100.0	)%		(100.0	)%
Total other income (expense), net		10.4			(7.7	)		0.6			17.4			(228.1	)%		(236.0	)%		(28.6	)		(22.3	)	)		(3.0	)		(3.3	)		14.7	%		28.1	%
Net Income (loss) from continuing operations before income taxes		25.3			0.5			1.7			23.1			3419.8	%		4742.9	%		(35.6	)		(35.2	)	)		(4.2	)		3.8			(10.4	)%		1.3	%
Income tax expense		(0.3	)		(0.0	)		(0.0	)		(0.2	)		626.1	%		646.0	%		0.1			(0.3	)			0.0			0.4			(117.4	)%		(113.7	)%

Net Income (Loss)	$	25.0		$	0.5		$	1.7		$	22.8			3571.8	%		5047.4	%	$	(35.5	)	$	(35.5	)	)	$	(4.2	)	$	4.1			(11.4	)%		0.1	%

Exchange Rate - $ to £		1.38			1.29															1.38			1.28

	For the Three-Month						Variance
	Period ended						2022 vs 2021
(In millions)	March 31, 2022			March 31, 2021			Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
Revenue:
Service	$	57.0		$	17.1		$	(1.6	)	$	41.5			241.9	%		233.0	%
Product		3.6			5.7			(0.1	)		(2.0	)		(35.0	)%		(37.2	)%
Total revenue		60.6			22.8			(1.7	)		39.5			173.0	%		165.5	%
Cost of Sales, excluding depreciation and amortization:
Cost of Service		(11.8	)		(2.1	)		0.3			(10.0	)		479.8	%		463.3	%
Cost of Product		(2.1	)		(3.2	)		0.1			1.1			(32.8	)%		(35.0	)%
Selling, general and administrative expenses		(26.8	)		(13.8	)		0.7			(13.7	)		99.1	%		93.8	%
Stock-based compensation		(2.8	)		(1.4	)		0.0			(1.4	)		99.7	%		96.3	%
Acquisition and integration related transaction expenses		(0.1	)		(1.4	)		0.0			1.2			(87.2	)%		(89.5	)%
Depreciation and amortization		(10.1	)		(13.1	)		0.3			2.7			(20.3	)%		(22.6	)%
Net operating Income (Loss)		6.9			(12.2	)		(0.2	)		19.2			(158.6	)%		(156.4	)%
Other income (expense)
Interest expense, net		(6.5	)		(8.6	)		0.1			2.0			(22.6	%)		(24.4	)%
Change in fair value of warrant liability		-			(3.0	)		3.0			-			(100.0	%)		(100.0	)%
Profit/Loss on disposal of trade & assets		0.9			-			(0.0	)		0.9			N/A			N/A
Other finance income (expense)		0.3			6.4			(0.0	)		(6.1	)		(95.0	)%		(95.2	)%
Total other income (expense), net		(5.3	)		(5.2	)		3.1			(3.2	)		3.7	%		1.1	%
Net Income (loss) from continuing operations before income taxes		1.6			(17.4	)		2.9			16.1			(109.6	)%		(109.0	)%
Income tax expense		(0.1	)		0.7			(0.0	)		(0.8	)		(113.2	)%		(112.3	)%

Net Income (Loss)	$	1.5		$	(16.7	)	$	2.9		$	15.3			(109.4	)%		(108.9	)%

Exchange Rate - $ to £		1.34			1.38

*	Does not reflect VAT-related ~~revenue for the three-month period or nine-month period, there was no VAT-related income in the three-month period for 2021~~revenue.

†	Total Gaming Revenue for the ~~nine-month~~three-month period ended ~~September 30, 2021,~~March 31, 2022, includes the ~~£2.3~~£0.7 million for VAT-related revenue, which is not reflected in Gaming Recurring Revenue for that period. Excluding VAT-related revenue, Gaming Recurring Revenue was ~~66.4%~~90.9% of Total Gaming Revenue for such period.

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(2)	“Costs of group restructure” include redundancy costs, Payments In Lieu of Notice costs, any associated employer taxes and costs associated with onerous property leases. To qualify as being an adjusting item, costs must be part of a large restructuring project, which will net save ongoing future costs. These costs were primarily incurred in connection with the property consolidation.


~~(3)~~	Acquisition and integration related transaction expenses, Stock-based compensation expense, Depreciation and amortization, Total other expense, net and Income tax are as described above in the Results of Operations line item discussions. Total expense, net includes interest income, interest expense, change in fair value of earnout liability, change in fair value of derivative liability and other finance income.

~~(4)~~	~~In May 2021, the Company refinanced its debt. These are the one-off fees as a result of the refinance.~~

~~(5)~~	“Italian tax related costs relating to prior years invoicing” relate to a settlement with the Italian Tax Authorities in respect of an audit of the Italian Branch of Inspired Gaming (International) Limited for the period 2015-2017 in respect of the historic VAT treatment of supplies.

~~(6)~~	~~In April 2020, the Company disposed of its 40% non-controlling equity interest in Innov8 Gaming Limited which resulted in the investment of $0.7 million being written off.~~

~~(7)~~(3)	Exchange rate in the table is calculated by dividing the USD Adjusted EBITDA by the GBP Adjusted EBITDA, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

	3 Months ended						Variance
(in millions)	Mar 31,			Mar 31,
	2022			2021			2022 to 2021
Net profit/(loss)	$	1.5		($	16.7	)	$	18.2
Amortization of debt fees		0.4			1.3			(0.9	)
Change in fair value of derivative and warrant liabilities and stock-based compensation expense		3.0			4.6			(1.6	)
Foreign currency translation on senior bank debt and cross currency swaps		0.0			(6.1	)		6.1
Depreciation and amortization (incl RoU assets)		10.8			13.7			(2.9	)
Other net cash (utilized)/generated by operating activities		(10.6	)		1.2			(11.8	)
Net cash provided by operating activities		5.1			(2.0	)		7.1

Net cash used in investing activities		(10.9	)		(4.8	)		(6.1	)
Net cash used by financing activities		(0.1	)		(0.2	)		0.1
Effect of exchange rates on cash		(1.1	)		1.1			(2.2	)
Net decrease in cash and cash equivalents	($	7.0	)	($	5.9	)	($	1.1	)

	9 Months ended						Variance
(in millions)	Sept 30,			Sept 30,
	2021			2020			2021 to 2020
Net loss	$	(35.5	)	$	(35.5	)	$	(0.0	)
Amortization of debt fees		16.7			2.2			14.5
Change in fair value of derivative and warrant liabilities and stock-based compensation expense		6.1			(2.3	)		8.4
Impairment expense		0.0			0.7			(0.7	)
Foreign currency translation on senior bank debt and cross currency swaps		(4.6	)		6.6			(11.2	)
Depreciation and amortization (incl RoU assets)		38.7			42.6			(3.9	)
Other net cash (utilized)/generated by operating activities		(14.4	)		17.2			(31.6	)
Net cash provided by operating activities		7.0			31.5			(24.5	)

Net cash used in investing activities		(18.2	)		(22.0	)		3.8
Net cash generated by financing activities		0.9			5.4			(4.5	)
Effect of exchange rates on cash		0.3			(0.1	)		0.4
Net (decrease)/increase in cash and cash equivalents	$	(10.0	)	$	14.8		$	(24.8	)

			Less than						More than
Contractual Obligations (in millions)	Total		1 yr		1-3 years		3-5 years		5 yrs
Operating activities
Interest on long term debt	$	125.4	$	25.6	$	49.9	$	49.9	$	-

Financing activities
Senior bank debt - principal repayment		316.9		-		-		316.9		-
Finance lease payments		1.7		0.9		0.5		0.3		-
Operating lease payments		10.5		3.2		3.4		1.9		2.0
Interest on non-utilisation fees		1.7		0.4		0.8		0.5		-
Total	$	456.2	$	30.1	$	54.6	$	369.5	$	2.0

Exhibit Number		Description
~~10.1#~~10.1#*		~~Letter Agreement, dated July 21, 2021, by~~Non-Employee Director Compensation Policy (as amended and ~~between Inspired Entertainment, Inc. and Brooks H. Pierce (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 23, 2021)~~restated).
~~10.2#~~		Employment Agreement, dated August 3, 2021, by and between Inspired Gaming (UK) Limited and Stewart F.B. Baker (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 5, 2021).
~~10.3#~~		Employment Agreement, dated August 3, 2021, by and between Inspired Gaming (UK) Limited and Carys Damon (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 5, 2021).
31.1*		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**		Certification of Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2**		Certification of Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

#	Indicates management contract or compensatory plan.

*	Filed herewith.

**	Furnished herewith.

	INSPIRED ENTERTAINMENT, INC.

Date: ~~November 12, 2021~~May 10, 2022		/s/ A. Lorne Weil
	Name:	A. Lorne Weil
	Title:	Executive Chairman
		(Principal Executive Officer)

Date: ~~November 12, 2021~~May 10, 2022		/s/ Stewart F.B. Baker
	Name:	Stewart F.B. Baker
	Title:	Executive Vice President and
		Chief Financial Officer
		(Principal Financial and Accounting Officer)