GLXZ 10-K & 10-Q changes, risk factors and insider trading

The announcement and pendency of our agreement to be acquired by Parent may have an adverse effect on our business, operating results and our stock price, and may result in the loss of employees, customers, suppliers, and other business partners.

The consummation of the Merger is subject to a number of closing conditions, including, among other things, the receipt of certain gaming regulatory approvals. Under the terms of the Merger Agreement, the outside date for completion of the Merger was automatically extended from July 18, 2025 to October 18, 2025 and then subsequently automatically extended to January 18, 2026, in each case, due to the condition with respect to the receipt of gaming regulatory approvals not being satisfied as of such outside dates. On November 24, 2025, pursuant to an amendment to the Merger Agreement, the outside date for completion of the Merger was extended from January 18, 2026 to July 17, 2026. The failure to obtain or the delay in obtaining the required gaming regulatory approval has delayed and could further delay completion of the Merger or impose additional costs or limitations on us or may result in the termination of the Merger. There can be no assurance that these conditions to the completion of the Merger will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe or at all.  If the Merger is not completed, we may be subject to negative publicity or be negatively perceived by the investment or business communitiescommunities, and our stock price could fall to the extent that our current stock price reflects an assumption that the Merger will be completed. Furthermore, if the Merger is not completed, regardless of the reason, we may suffer other consequences that could adversely affect our business and results of our operations.

We develop, acquire, assemble and market technology and entertainment-based products and services for the gaming industry for placement on casino floorsfloors, card rooms and on legal internet gaming sites. Our products and services primarily relate to licensed casino operators’ table games activities and focus on either increasing their profitability and productivity or expanding their gaming entertainment offerings in the form of proprietary table games, electronically enhanced table game platforms, fully-automated electronic tables and other ancillary equipment. In addition, we license intellectual property to legal internet gaming operators. Our products and services are offered in various highly regulated markets and certain non-regulated (where such is not illegal) markets throughout the world. Our products are assembled at our headquarters in Las Vegas, Nevada, as well as outsourced for certain sub-assemblies in the United States.

On July 18, 2024, we entered into the Merger Agreement providing for the Company’s acquisition by Evolution Malta Holding Limited in a cash transaction. The Merger is subject to the satisfaction or waiver of certain closing conditions, including stockholder approval by at least a majority of the voting power of the outstanding shares of the Company’s common stock of the Merger Agreement and the transactions contemplated thereby, including the Merger, and the receipt of certain gaming regulatory approvals. At the special meeting of the Company’s stockholders held on November 12, 2024, stockholders voted to approve the Merger. TheUnder the terms of the Merger isAgreement, expectedthe outside date for completion of the Merger was automatically extended from July 18, 2025 to October 18, 2025 and then subsequently automatically extended to January 18, 2026, in each case, due to the condition with respect to the receipt of gaming regulatory approvals not being satisfied as of such outside dates. On November 24, 2025, pursuant to an amendment to the Merger Agreement, the outside date for completion of the Merger was extended from January 18, 2026 to July 17, 2026. The Company and Evolution continue to be actively engaged with gaming regulators to secure the remaining regulatory approvals to satisfy the gaming approval closing condition. However, no assurance can be given that the required regulatory approvals will be obtained and, even if all such approvals are obtained, no assurance can be given to the timing of the regulatory approvals. We expect the Merger to be completed inby mid-2025,the extended outside date of July 17, 2026 subject to satisfaction or waiver of the closing conditions. Upon completion of the Merger, the Company will become a privately held company and shares of Company’s common stock will no longer be listed on any public market.

Recurring core revenue increaseddecreased $4,301,373,$89,017, or 25.7%0.4% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. This growthdecrease was primarily driven by favorablethe impact of casino closures experienced in North America and partially offset by increased revenue from our EZ Baccarat distribution arrangement, which began in SeptemberEurope, 2023,Middle alongEast withand theAfrica continuedand successto a lesser extent placements of our sidenew bets andGOS progressive products.gaming system, which launched earlier in the year. Royalties netted against gross core revenue increaseddecreased $2,147,266$179,454 for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. This increasedecrease was attributabledue to lower royalties paid onto ourthird-parties EZfor Baccaratlicensed revenues.intellectual property. Perpetual license sales of our progressive gaming systems was $3,502,053,$1,181,379, representing a 3.4%66.3% percent decrease for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. This decline was primarily driven by a strategic decision by management to prioritize higher-margin, recurring revenue streams, as well as the timing of customer purchases. Gross digital revenues of $14,283,982,$16,326,504, increased $2,905,064,$2,042,522, or 25.5%14.3% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. This favorable growth reflects the ongoing expansion of digital content into new markets and the continued success of ouroffering competitive brandedproducts products,with particularlybrand the well-known 21+3.recognition. Net of royalties, digital revenues increased toby $1,917,579,$1,366,323, representing growth of 22.7%13.2% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year.

Cost of ancillary products and assembled component expense increaseddecreased $246,505,$729,399, or 19.5%48.3% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. ThisThe increaseactivity isin primarily driven by product mix, with a larger proportioncost of lower-marginancillary itemsproducts sold.and Additionally,assembled therecomponents wasreflects a secondary impact from higherthe component costs relatedassociated towith the perpetual license sales of our progressive gaming systems.

Selling, general and administrative expenses increaseddecreased $4,008,829,$2,453,285, or 25.6%12.5% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. This changedecrease was dueprimarily todriven expensesby a $2,335,202 reduction in costs associated with special projectsprojects, of $3,489,955,most notably legal expenses incurred related to the acquisition by EvolutionEvolution. andNormalized tofor athe lesser extent driven by higher internal labor and related expenses (base salary, commissions, payroll-related taxes, bonus accrual and travel), increased repair and maintenance costsimpact of leasedspecial machines, and increased information technology costs. Without the costs associated with the acquisition by Evolutionprojects and excluding the related transaction fees of $3,489,955,$1,154,753 and $3,489,955 for the years ended December 31, 2025 and December 31, 2024, respectively, selling, general, and administrative expenses increaseddecreased $518,874,$118,083, or 3%0.7% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. The decrease was primarily driven by lower legal and accounting expenses unrelated to special projects and partially offset by increased tradeshow expenses.

Research and development expenses for the twelve monthsyear ended December 31, 2024,2025, were $1,057,183$931,307 compared to $823,189$1,057,183 for the comparable prior-year period, representing ana increasedecrease of $233,994,$125,876, or 28.4%.11.9%. This increasedecrease was driven primarily by higherreduced payrollemployee compensation costs dueas towell increasedas headcount,reduced employeetravel bonuses, and the ongoing development of internal software placed in service.costs.

Depreciation and amortization increased $589,046,$346,172, or 25.9%12.1% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. This increase was primarily driven by amortization expense for certain intangible assets placed in service and to a lesser extent, depreciation expense associated with incremental placements of assets deployed at client locations.

Stock-based compensation expenses decreased 10.0%$379,242, or 41.2% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. The decrease was primarily dueattributable to changesreduced stock‑based compensation expense for employees, driven largely by the absence of a $194,600 RSU expense recognized in the levelprior andyear compositionfor ofan stock-basedexecutive, as well as reduced stock‑based compensation paidfor to members of ourthe Board of Directors in 2024,2025 which includedfollowing a reduction in the number of board membersmembership forfrom part of the year. Additionally, lower stock-based compensation for employees and consultants contributedfive to the decline.four.

Interest expense remaineddecreased relatively$5,478,282, flator at $9,066,20360.4% for the twelve monthsyear ended December 31, 2024,2025, as compared to the same period in the prior year. This decrease was due to reduced interest expenserates and a reduced principal balance as a result of $9,063,112 for the comparablerefinancing prior-yearof period.our long-term debt on January 6, 2025. Interest income increaseddecreased 27.8%$735,190, or 94.1% compared to the prior year period, benefittingprimarily fromdue higherto lower cash balances and interest rate fluctuations.balances.

Income tax provision was $57,647$144,349 for the twelve monthsyear ended December 31, 2024,2025, compared to income tax provision of $79,228$57,647 for the comparable prior-year period. The decreaseincrease in expense is primarilywas driven by higher state income taxes and the increasechange in lossvaluation beforeallowance. In addition, the prior-year tax provision forincluded incomea taxes.tax benefit from the release of an uncertain tax position reserve, which was not applicable in the current-year period.

Primarily as a result of the factors described above, we had a net lossincome of $2,627,110$1,483,619 for the twelve monthsyear ended December 31, 2024,2025, as compared to a net loss of approximately $1,807,586$2,627,110 for the same period in the prior year.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”). Adjusted EBITDA includes adjustments to U.S. GAAP net income (loss) to exclude interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency exchange (gain), and severance and other expenses related to litigation.litigation, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations, including loss on extinguishment of debt. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of the Adjusted EBITDA metric offers investors, regulators and other stakeholders a view of our operations in the same manner management evaluates our performance. When combined with U.S. GAAP results, management believes Adjusted EBITDA provides a comprehensive understanding of our financial results. Adjusted EBITDA should not be considered as an alternative to net income or (loss) to net cash provided by operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating our performance. A reconciliation of "U.S. GAAP" net income (loss) to Adjusted EBITDA is as follows:

(4) Represents professional fees and transaction relatedtransaction-related fees incurred related to acquisitions, mergers and professional fees incurred for other projects not considered part of the normal course of business.

(5) Represents non-cashgains chargeand losses related to the write off of certain fixed assets.

As of December 31, 2025, we had total current assets of $11,569,839 and total assets of $27,500,619. As of December 31, 2024, we had total current assets of $24,171,920 and total assets of $41,010,731. As of December 31, 2023, we had total current assets of $22,156,035 and total assets of $40,475,800. The increasedecrease in current assets as of December 31, 2024,2025, compared to December 31, 2023,2024, was primarily due to the increaseddecreased cash and cash equivalents driven by cash providedused byto operatingrefinance activitiesour anddebt increasedfrom accountsFortress receivable.to BMO. The increasedecrease in total assets as of December 31, 2024,2025, compared to December 31, 2023,2024, was primarily due to the increasedecrease of current assets noted above and offset by a decrease in other intangible assets and operating lease right-of-use assets as a result of amortization in 2024.2025.

Our total current liabilities as of December 31, 2024,2025, increased to $6,602,744$8,055,001 from $4,875,967$6,602,744 as of December 31, 2023,2024, primarily due to an increase in accountsthe payablecurrent relatedportion of long-term debt for upcoming payments to professional fees in connection with the acquisition by Evolution.BMO.

We continue to file applications for new or enhanced licenses in several jurisdictions, which may result in significant future legal and regulatory expenses. A significant increase in such expenses may require us to postpone growth initiatives or investments in personnel, inventorypersonnel and research and development of our products. It is our intention to continue such initiatives and investments.

Our operating activities provided cash of $7,697,622 for the year ended December 31, 2025, compared to cash provided of $4,098,634 for the year ended December 31, 2024, compared to cash provided of $2,729,477 for the year ended December 31, 2023.2024. This change is mainly attributable to net income in the current year compared to a favorablenet loss in the prior year period. This change also reflects a variance of $1,726,976$2,150,208 in use of assets and liabilities that relate to operations. Additionally, the Company recognized a loss on extinguishment of debt of $2,969,585 due to the refinancing of the Fortress loan to BMO, depreciation and amortization increased $589,046$346,172 primarily driven by amortization related to increased capitalization of intangible assets placed in service and offset byto a $102,304lesser extent, depreciation related to assets deployed at client locations, $1,375,377 decline in amortization of debt issuance costs and debt discounts, $379,242 decline in stock-based compensation fromand thean vestingincrease in bad debt of stock options and a $70,862 decrease in reserve for credit losses.$88,053.

Investing activities used cash of $2,825,540 for the year ended December 31, 2025, and $1,622,604 for the year ended December 31, 2024, and $2,955,681 for the year ended December 31, 2023.2024. This decreaseincrease in cash used was primarily due to the increasedecrease in the transfer of title of assets deployed at client locations to perpetual license customerscustomers, along with higher spending on assemblies in conjunctionprocess, withincreased a decreaseinvestment in cashinternally useddeveloped forsoftware, theand acquisitionadditional acquisitions of assetsproperty deployed.and equipment.

Cash used in financing activities for the year ended December 31, 2024,2025, was $886,126.$18,856,227. This compares to $1,367,304$886,126 cash used by financing activities for the twelve monthsyear ended December 31, 2023.2024. The decreaseincrease in cash used was primarily due to the absencerefinancing of our debt from Fortress to BMO and principal payments on our borrowings basedmade on the "ExcessBMO Cashterm Flow" calculation as defined by the termsloan in the Fortresscurrent Credit Agreement (Note 9), in the 2024 period.year.

Credit Facility. InOn NovemberJanuary 2021,6, we entered into a $60,000,000 senior secured term loan agreement. Subsequent to December 31, 2024,2025, we entered into a new credit agreement with BMO that provides for a $2,000,000 senior secured revolving credit facility and a $45,000,000 senior secured term loan. On January 6, 2025, we borrowed $45,000,000 under the new term loan and used this amount plus cash on hand to repay all amounts outstanding under the previous term loan agreement, which was terminated. Pursuant to the terms of the Credit Agreement, the new term loan and new revolving credit facility will mature on January 6, 2028, as the merger with Evolution Malta Holding Limited was not completed by December 31, 2025.

The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources as of and for the three and six months ended MarchJune 31,30, 2026 and 2025. This discussion should be read together with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Financial Information included in our 2025 Form 10-K. Some of the information contained in this discussion includes forward-looking statements that involve risks and uncertainties; therefore our "Special Note Regarding Forward-Looking Statements" should be reviewed for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, such forward-looking statements.

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as do other materials or oral statements we release to the public. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, as of the date on which this report is filed. Forward-looking statements often, but do not always, contain words such as “may,” “will,” “should,” “could,” “might,” “expect,” “intend,” "target," “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only predictions. We have based these forward-looking statements on our current expectations, assumptions and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the ability to complete the Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary gaming regulatory approvals and satisfactioneffects of other closing conditions to consummate the proposed Merger; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; risks that the proposed Merger disrupts the Company’s current plans and operations or diverts the attention of the Company’s management or employees from ongoing business operations; the risk that certain restrictions during the pendency of the Merger may impact the Company's ability to pursue certain business opportunities or strategic transactions; the risk of potential difficulties with theEvolution Company’s ability to retain and hire key personnel and maintain relationships with customers and other third parties as a result of the proposed Merger, including during the pendency of the Merger; the risk that the proposed Merger may involve unexpected costs and/or unknown or inestimable liabilities; the risk thaton the Company’s business may suffer as a result of uncertainty surrounding the proposed Merger; the risk that stockholder litigation in connection with the proposed Merger may affect the timing or occurrence of the proposed Merger or result in significant costs of defense, indemnification and liability; effects relating to the announcement of the proposed Merger or any further announcements or the consummation of the proposed Merger on the market price of the Company’s common stock or the Company’s operating results; the ability of Galaxy Gaming to enter and maintain strategic alliances, product placements or installations in land based casinos or grow its iGaming business, garner new market share, secure licenses in new jurisdictions or maintain existing licenses, successfully develop or acquire and sell proprietary products, comply with regulations, including changes in gaming related and non-gaming related statutes and regulations that affect the revenues of our customers in land-based casino and, online casino markets, have its games approved by relevant jurisdictions, unfavorable economic conditions in the US and worldwide; changes in international trade policies and the impact of tariffs imposed by U.S. and foreign governments; the negative effects if any of currency conversions or changes in the valuation of digital currency that may impact iGaming revenues; our level of indebtedness; restrictions and covenants in our loan agreement; dependence on major customers; protection of intellectual property and our ability to license the intellectual property rights of third parties; failure to maintain the integrity of our information technology systems, including without limitation, cyber-attacks or other failures in our telecommunications or information technology systems, or those of our collaborators, third-party logistics providers, distributors or other contractors or consultants, could result in information theft, data corruption and significant disruption of our business; labor strikes, materials shortages, government shutdowns, pandemics, acts of God and other matters out of our reasonable control; and other factors. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Results of operations for the three months ended MarchJune 31,30, 2026 and 2025.

Recurring core license revenue increased $171,549,by $319,613, or 3.3%6.2% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. TheRecurring increasecore was primarily driven by higher licensinglicense revenue grew across theall Unitedgeographies, States,led slightly by Europe, Middle East and Africa,Africa partiallyon drivenhigher byparticipation-based placementsgame ofrevenue, our newand GOS progressive gamingsystem system.placements contributed in all regions. Royalties netted against gross core revenue were relatively flat, increasing $1,448,by $7,464, or 0.2%1.0% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $96,367,$51,182, representing aan 80.9%80.0% decrease for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. Gross digital revenues of $4,202,684,$4,355,037, increased $367,099,by $334,048, or 9.6%8.3% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. This favorable growth reflects the positive impact of foreign currency exchange and, to a lesser extent, the ongoing expansion of our digital content into new markets and the continued success of our competitive, branded product offerings. Net of royalties, digital revenues increased by $116,280,$303,289, representing growth of 4.2%10.7% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year.

Cost of ancillary products and assembled component expense decreased $120,814,by $106,008, or 64.3%56.4% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.

Research and development expenses decreased $210,718,by $114,609, or 58.1%47.1% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount,headcount asand wellincreased ascapitalization reducedof outsideinternal serviceslabor incosts theassociated period.with development activities.

Depreciation and amortization increased $90,134,by $133,307, or 11.6%17.0% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations.

Stock-based compensation expenses decreased $113,414,by $97,323, or 68.2%63.6% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to a change in the form of board compensation, as our directors elected during the firstsecond quarter of 2026 to receive cash compensation in lieu of restricted shares, representing $57,375 of the decrease, with the remaining balance attributable to employee-related stock-based compensation.

Interest expense decreased $226,861,by $93,115, or 22.6%10.3% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. The decrease was primarilydriven dueby to thea reduced principal balance of outstanding debt and to a lesser extent a lower average interest rate, for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. Interest income decreased $22,499,by $15,444, or 98.3%97.3% compared to the prior year period, primarily due to a lower average cash balance for the three months ended March 31, 2026, as compared to the same period in the prior year.period.

Income tax provision decreased to $30,632$64,268 for the three months ended MarchJune 31,30, 2026, compared to income tax provision of $36,421$93,912 for the comparable prior-yearprior year period. The decrease was primarily attributable to changes in pre-tax book income and the related mix of rate-impacting components, including permanent items and changes in valuation allowance considerations, as compared to the prior-year period.

Primarily as a result of the factors described above, we had net income of $1,367,556$996,978 for the three months ended MarchJune 31,30, 2026, as compared to a net lossincome of approximately $2,021,282$950,357 for the same period in the prior year.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Free Cash Flow ("FCF"). Adjusted EBITDA includes adjustments to U.S. GAAP net income (loss) to exclude interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency exchange loss (gain), and severance and other expenses related to litigation, non-income tax assessments, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations, including loss on extinguishment of debt. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of the Adjusted EBITDA metric offers investors, regulators and other stakeholders a view of our operations in the same manner management evaluates our performance. When combined with U.S. GAAP results, management believes Adjusted EBITDA provides a comprehensive understanding of our financial results. Adjusted EBITDA should not be considered as an alternative to net income or (loss) to net cash provided by operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating our performance. We define Free Cash Flow as Adjusted EBITDA less cash paid for interest, net of interest income received, cash used in investing activities, and cash paid for income taxes, net of refunds. Free Cash Flow is not a measure of performance defined in accordance with U.S. GAAP. Management uses Free Cash Flow to evaluate the cash generated by our operations that is available to service and repay indebtedness and to reinvest in the business, and believes disclosure of Free Cash Flow provides investors, regulators and other stakeholders with useful information for the same purpose. Free Cash Flow should not be considered an alternative to net income (loss) as a measure of operating performance, or to net cash provided by operating activities as a measure of liquidity. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. Free Cash Flow may not be comparable to similarly titled measures used by other companies. A reconciliation of Adjusted EBITDA to Free Cash Flow is presented below, and Adjusted EBITDA is reconciled to net income (loss), the most directly comparable U.S. GAAP measure, in the same table. A reconciliation of U.S. GAAP net income (loss) to Adjusted EBITDA to FCF is as follows:

As of MarchJune 31,30, 2026, we had total current assets of $10,949,227$10,813,584 and total assets of $27,042,819.$26,958,720. As of December 31, 2025, we had total current assets of $11,569,839 and total assets of $27,500,619. The decrease in current assets as of MarchJune 31,30, 2026 compared to December 31, 2025 was primarily driven by a decrease in our accounts receivable balance resulting from increased customer collection efforts. The decrease in total assets as of MarchJune 31,30, 2026 compared to December 31, 2025 was primarily due to the decrease of current assets noted above offset by an increase in cash and cash equivalents.

Our total current liabilities as of MarchJune 31,30, 2026 compared to December 31, 2025 decreased to $7,320,803$7,006,164 from $8,055,001. This decrease was primarily due to a decrease in costs associated with special projects, most notably legal expenses incurred related to the acquisition by Evolution offset by an increase in the current portionpayment of long-termannual debt for upcoming payments to BMO.bonuses.

Our operating activities provided cash of $2,544,086$4,167,486 for the threesix months ended MarchJune 31,30, 2026, compared to $1,168,692$4,345,791 for the comparable prior year period. This change is mainly attributable to net income for the threesix months ended MarchJune 31,30, 2026, as compared to a net loss in the prior-yearprior year period, as well as a $1,002,419$602,544 variance in operating assets and liabilities. Additionally, the prior-yearprior year period included a loss on extinguishment of debt of $2,969,585 related to the refinancing of the Fortress loan to BMO. Stock-based compensation decreased by $113,414$210,737 due to a change in the composition of board compensation, partially offset by increased depreciation associated with higher level of assets deployed at client locations.compensation.

Investing activities used cash of $1,030,320$2,096,256 for the threesix months ended MarchJune 31,30, 2026, compared to cash used of $283,330$1,161,744 for the threesix months ended MarchJune 31,30, 2025. This increase in cash used was primarily due to higher expenditures for assembliesassets indeployed processat client locations and increased investment in internally developed software.

Cash used in financing activities during the threesix months ended MarchJune 31,30, 2026, was $882,868.$1,516,965. This compares to $13,849,213$16,493,898 cash used by financing activities for the threesix months ended MarchJune 31,30, 2025. The decrease in cash used was primarily due to the refinancing of our debt from Fortress to BMO in the prior-yearprior year period.

Credit Facility. On January 6, 2025, we entered into a new credit agreement with BMO that provides for a $2,000,000 senior secured revolving credit facility and a $45,000,000 senior secured term loan. On January 6, 2025, we borrowed $45,000,000 under the new term loan and used this amount plus cash on hand to repay all amounts outstanding under the Fortress Credit Agreement, which was terminated. Pursuant to the terms of the Credit Agreement, the new term loan and new revolving credit facility will mature on January 6, 2028, as the merger with Evolution Malta Holding Limited was not completed by December 31, 2025.2028.

As of MarchJune 31,30, 2026 and December 31, 2025, we had no outstanding borrowings under the revolving credit facility Critical accounting policies and estimates. Our significant accounting policies and estimates are described in our 2025 Form 10-K. There have been no material changes to those policies.facility.

Off-balance sheet arrangements. As of MarchJune 31,30, 2026, there were no off-balance sheet arrangements.