10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


ASSETS	March 31, 2026			December 31, 2025
Current assets:
Cash and cash equivalents	$	4,853,794		$	4,306,683
Accounts receivable, net of allowance of $181,452 and $241,283, respectively		4,727,028			5,742,383
Income tax receivable		140,841			126,311
Prepaid expenses		1,227,564			1,394,462
Total current assets		10,949,227			11,569,839
Property and equipment, net		153,348			118,115
Operating lease right-of-use assets		237,595			280,429
Assets deployed at client locations, net		4,395,729			4,125,723
Goodwill		1,091,000			1,091,000
Other intangible assets, net		10,080,912			10,225,783
Other assets		135,008			89,730
Total assets	$	27,042,819		$	27,500,619
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,881,641		$	1,876,338
Accrued expenses		2,382,794			3,178,328
Current portion of operating lease liabilities		239,378			298,006
Current portion of long-term debt		2,626,990			2,416,108
Revenue contract liability		190,000			286,221
Total current liabilities		7,320,803			8,055,001
Long-term operating lease liabilities		9,408			2,944
Long-term debt and liabilities, net		35,837,453			36,867,804
Deferred tax liabilities, net		53,777			49,145
Total liabilities		43,221,441			44,974,894
Commitments and Contingencies (See Note 6)
Stockholders’ deficit
Preferred stock, 10,000,000 shares authorized; $0.001 par value; 0 shares issued and outstanding		—			—
Common stock, 65,000,000 shares authorized; $0.001 par value; 25,354,623 and 25,354,623 shares issued and outstanding, respectively		25,354			25,354
Additional paid-in capital		20,716,778			20,663,931
Accumulated deficit		(36,900,061	)		(38,267,617	)
Accumulated other comprehensive (loss) income		(20,693	)		104,057
Total stockholders’ deficit		(16,178,622	)		(17,474,275	)
Total liabilities and stockholders’ deficit	$	27,042,819		$	27,500,619

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

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended
	March 31, 2026			March 31, 2025
Revenue:
Licensing fees	$	7,662,561		$	7,784,933
Total revenue		7,662,561			7,784,933
Costs and expenses:
Cost of ancillary products and assembled components		67,188			188,002
Selling, general and administrative		4,346,852			4,312,781
Research and development		152,058			362,776
Depreciation and amortization		869,951			779,817
Stock-based compensation		52,847			166,261
Total costs and expenses		5,488,896			5,809,637
Income from operations		2,173,665			1,975,296
Other income (expense):
Interest income		379			22,878
Interest expense		(776,489	)		(1,003,350	)
Foreign currency exchange gain (loss)		633			(10,100	)
Loss on extinguishment of debt		—			(2,969,585	)
Total other expense, net		(775,477	)		(3,960,157	)
Income (loss) before provision for income taxes		1,398,188			(1,984,861	)
Provision for income taxes		(30,632	)		(36,421	)
Net income (loss)		1,367,556			(2,021,282	)
Foreign currency translation adjustment		(124,750	)		151,790
Comprehensive income (loss)	$	1,242,806		$	(1,869,492	)

Net income (loss) per share:
Basic	$	0.05		$	(0.08	)
Diluted	$	0.05		$	(0.08	)

Weighted-average shares outstanding:
Basic		26,132,943			25,912,327
Diluted		26,191,780			25,912,327

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

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)



	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital		Deficit			Income (Loss)			Deficit
Beginning balance, December 31, 2025		25,354,623	$	25,354	$	20,663,931	$	(38,267,617	)	$	104,057		$	(17,474,275	)
Net income		—		—		—		1,367,556			—			1,367,556
Foreign currency translation loss		—		—		—		—			(124,750	)		(124,750	)
Stock-based compensation		—		—		52,847		—			—			52,847
Balance, March 31, 2026		25,354,623	$	25,354	$	20,716,778	$	(36,900,061	)	$	(20,693	)	$	(16,178,622	)



	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital		Deficit			Loss			Deficit
Beginning balance, December 31, 2024		25,115,299	$	25,115	$	19,948,363	$	(39,751,236	)	$	(276,581	)	$	(20,054,339	)
Net loss		—		—		—		(2,021,282	)		—			(2,021,282	)
Foreign currency translation gain		—		—		—		—			151,790			151,790
Stock options exercised		100,000		100		126,900		—			—			127,000
Stock-based compensation		38,216		38		166,223		—			—			166,261
Balance, March 31, 2025		25,253,515	$	25,253	$	20,241,486	$	(41,772,518	)	$	(124,791	)	$	(21,630,570	)

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

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended
	March 31, 2026			March 31, 2025
Cash flows from operating activities:
Net income (loss)	$	1,367,556		$	(2,021,282	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		869,951			779,817
Amortization of right-of-use assets		67,040			63,929
Amortization of debt issuance costs and debt discount		63,400			53,988
Bad debt expense		951			22,609
Gain on disposal of property & equipment		—			(62	)
Deferred income tax		4,632			18,557
Stock-based compensation		52,847			166,261
Loss on extinguishment of debt		—			2,969,585
Changes in operating assets and liabilities:
Accounts receivable		943,536			(634,146	)
Income tax receivable		11,470			17,864
Prepaid expenses and other current assets		166,898			286,072
Other assets		(45,277	)		148,533
Accounts payable		6,552			(155,031	)
Accrued expenses		(792,879	)		(477,504	)
Revenue contract liability		(96,221	)		-
Operating lease liabilities		(76,370	)		(70,498	)
Net cash provided by operating activities		2,544,086			1,168,692
Cash flows from investing activities:
Investment in internally developed software		(409,202	)		(194,827	)
Acquisition of property and equipment		(63,845	)		(93,683	)
(Acquisition) transfer of assemblies in process		(184,314	)		163,355
Acquisition of assets deployed at client locations		(380,608	)		(306,725	)
Transfer of title of assets deployed at client locations to perpetual license customer		7,649			148,550
Net cash used in investing activities		(1,030,320	)		(283,330	)
Cash flows from financing activities:
Proceeds from BMO Credit Agreement		—			45,000,000
Principal payments on long-term debt (Fortress)		—			(57,576,929	)
Principal payments on long-term debt (BMO)		(812,500	)		(562,500	)
Principal payments on long-term debt (Insurance)		(70,368	)		(89,584	)
Payments of debt issuance costs		—			(608,967	)
Fees associated with debt transactions — prior debt		—			(138,233	)
Proceeds from stock option exercises		—			127,000
Net cash used in financing activities		(882,868	)		(13,849,213	)
Effect of exchange rate changes on cash		(83,787	)		151,444
Net increase (decrease) in cash and cash equivalents		547,111			(12,812,407	)
Cash and cash equivalents – beginning of period		4,306,683			18,118,043
Cash and cash equivalents – end of period	$	4,853,794		$	5,305,636
Supplemental cash flow information:
Cash paid for interest	$	713,518		$	939,583
Cash paid for income taxes	$	14,530		$	—
Supplemental schedule of non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities	$	24,206		$	—

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

GALAXY GAMING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. NATURE OF OPERATIONS

Unless the context indicates otherwise, references to “Galaxy,” “we,” “us,” “our,” or the “Company,” refer to Galaxy Gaming, Inc., a Nevada corporation (“Galaxy Gaming”).

We are an established global gaming company specializing in the design, development, acquisition, assembly, marketing and licensing of proprietary casino table games, side bets, and associated technology, platforms and systems for the casino and iGaming industries. Casinos use our proprietary products and services to enhance their gaming operations and improve their profitability and productivity, as well as to offer popular cutting-edge gaming entertainment content and technology to their players. We market our products and services to online and land-based casinos worldwide with products currently present in North America, the Caribbean, Central America, the United Kingdom, Europe, Africa, and to cruise ships exploring the world's oceans. We license our products and services for use in regulated land-based gaming markets. We also license our content and distribute content from other companies to licensed iGaming operators in gaming markets throughout the world where iGaming is not illegal.

On July 18, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Evolution Malta Holding Limited, a company registered in Malta (“Parent” or "Evolution"), and Galaga Merger Sub, Inc., a Nevada corporation and direct wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, and subject to the terms and conditions thereof, Merger Sub would merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent.

Upon the closing of the Merger, each share of common stock, par value $0.001 per share of the Company issued and outstanding immediately prior to the effective time of the Merger, other than any Company common stock (i) owned by Company stockholders who are entitled to demand and have properly and validly demanded their appraisal rights under Nevada law or (ii) owned by Parent, Merger Sub, the Company or by any of their respective subsidiaries, will be converted automatically into the right to receive $3.20 per share in cash, without interest and subject to any applicable withholding taxes.

Consummation of the Merger is subject to the satisfaction or waiver of certain closing conditions, including 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 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.

Under the terms of the Merger Agreement, if the Merger has not been consummated by October 18, 2025 (the "First Extended Outside Date"), either Galaxy or Evolution may terminate the Merger Agreement; provided that such date shall be automatically extended to January 18, 2026 (the "Second Extended Outside Date") if, on the First Extended Outside Date, all conditions to the Merger would have been satisfied or waived if the closing had taken place on the First Extended Outside Date, other than the closing conditions related to the absence of certain legal constraints, or the receipt of certain gaming regulatory approvals (the "Gaming Approval Closing Condition"). As of October 18, 2025, all conditions to the Merger would have been satisfied or waived if the closing occurred on such date, other than the Gaming Approval Closing Condition. In accordance with the foregoing terms, on October 18, 2025, the First Extended Outside Date was automatically extended to January 18, 2026. Pursuant to Amendment to No. 1 to Agreement and Plan of Merger dated November 24, 2025, the Second Extended Outside Date was further extended to July 17, 2026 (the "Amended Outside Date").

Galaxy and Evolution continue to be actively engaged with gaming regulators to secure the approvals required to satisfy the Gaming Approval Closing Condition, and, subject to regulatory approvals and satisfaction or waiver thereof of all closing conditions, the closing of the Merger is expected to occur by the Amended Outside Date. Upon completion of the Merger, the Company will become a privately held company and shares of the Company's common stock will no longer be listed on any public market.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation. The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules of the U.S. Securities and Exchange Commission ("SEC"). In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all necessary adjustments (including all those of a recurring nature and those necessary in order for the financial statements to not be misleading) and all disclosures to present fairly our financial position and the results of our operations and cash flows for the periods presented.

The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes as of and for the year ended December 31, 2025 included in our 2025 Form 10-K ("2025 10-K").

Use of estimates and assumptions. The preparation of financial statements in conformity with U.S. GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated.

Consolidation. The financial statements are presented on a consolidated basis and include the results of the Company and its wholly owned subsidiaries, Progressive Games Partner, LLC ("PGP") and Galaxy Gaming-01 LLC ("GG-01"). All intercompany transactions and balances have been eliminated in consolidation.

Cash and cash equivalents. Cash and cash equivalents consist primarily of deposits held at major banks and highly liquid investments with original maturities of three months or less. With the exception of funds held outside the U.S., these deposits are in insured banking institutions, which are insured up to $250,000 per account. To date, we have not experienced uninsured losses.

Accounts receivable and allowance for credit losses. Accounts receivable are stated at face value net of allowance for credit losses. Management estimates the allowance for expected credit losses balance using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in the current environmental economic conditions and reasonable and supportable forecast. The allowance for expected credit losses on financial instruments is measured on a collective (pool) basis when similar risk characteristics exist. Accounts receivable are non-interest bearing. Accounts are written off when management deems them to be uncollectible. Recoveries of accounts previously written off are recorded when received.

For the three months ended March 31, 2026, there was no material activity in allowance for credit losses.

Goodwill. The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed, is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when the carrying amount of the reporting unit exceeds the fair value of the reporting unit.

Other intangible assets, net. The following intangible assets have finite lives and are being amortized using the straight-line method over their estimated economic lives as follows:


Patents	4 - 20 years
Customer relationships	9 - 22 years
Trademarks	20 - 30 years
Intellectual property	12 years
Non-compete agreements	9 years
Software	3 years

Software relates primarily to assets where costs are capitalizable during the application development phase. External and internal labor-related costs associated with product development are included in software. The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount. No impairment was recorded for the three months ended March 31, 2026.

Fair value of financial instruments. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”), defines fair value and provides guidance on how to measure it. ASC 820 outlines required disclosures and describes valuation techniques, including the market approach (using comparable market prices), the income approach (present value of future income or cash flows), and the cost approach (replacement cost of an asset's service capacity). ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows:

•

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The carrying values of cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. The estimated fair value of our long-term debt approximates its carrying value based upon our expected borrowing rate for debt with similar remaining maturities and comparable risk (level 2). The Company currently has no financial instruments measured at estimated fair value on a recurring basis based on valuation reports provided by counterparties.

Leases. The Company classifies leases at inception as operating leases or finance leases in accordance with ASC Topic 842, Leases. We account for lease components (such as rent payments) separately from non-lease components (such as common-area maintenance costs, real estate and sales taxes and insurance costs). Operating and finance leases with terms greater than 12 months are recorded on the condensed consolidated balance sheets as right-of-use assets with corresponding lease liabilities. Lease liabilities are amortized over the lease term using the effective interest method, while lease assets are depreciated over the shorter of the asset's useful life or the lease term. The discount rate used to determine present value is typically the incremental borrowing rate at lease commencement, unless the implicit rate in the lease is readily determinable. Subsequent changes in lease terms or payments are adjusted accordingly.

Revenue recognition. We account for our revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.

Foreign currency translation. The functional currency for PGP is the Euro. Gains and losses from settlement of transactions involving foreign currency amounts are included in other income or expense in the Condensed Consolidated Statements of Operations. Gains and losses resulting from translating assets and liabilities from the functional currency to U.S. dollars are included in accumulated other comprehensive income (loss) in the Condensed Consolidated Statements of Changes in Stockholders’ Deficit.

Basic and diluted earnings (loss) per share. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, outstanding warrants, shares to be purchased under the employee stock purchase plan, and unvested restricted stock units (“RSUs”).

Segment information. Operating segments are defined as components of our enterprise for which separate financial information is regularly reviewed by the Chief Operating Decision Maker ("CODM"), CEO, Matthew Reback, to assess performance and make operational decisions. Currently, we have two revenue streams—land-based gaming and online gaming—that are aggregated into a single reporting segment based on their similar economic characteristics, products, and distribution methods.

The CODM evaluates performance and allocates resources based on consolidated net income (loss), which is the primary performance metric for the reporting segment. Additionally, the CODM reviews reporting segment revenue in conjunction with consolidated revenues, expenses, and net income (loss) to assess performance. The information provided by the CFO in the monthly reporting package is the same information the CODM has received in the past. The accounting policies of the reporting segment are consistent with those described in the summary of significant accounting policies.

Other significant accounting policies. Our significant accounting policies are described in our 2025 10-K. There have been no material changes to those policies.

Recently issued accounting pronouncements. Accounting Standard Update 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03"). In November 2024, the FASB issued ASU 2024-03, which requires public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

Accounting Standard Update 2025-06, Accounting for Internal-Use Software ("ASU 2025-06"). In September 2025, the FASB issued ASU 2025-06 to simplify the accounting for internal-use software by replacing the stage-based model with a principles-based approach. The amendments aim to align accounting with modern development practices and reduce complexity. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

We do not expect the adoption of these accounting standards to have a material impact on our results of operations, financial position or cash flow; however, adoption of ASU 2024-03 is expected to result in expanded disclosures in the notes to the consolidated financial statements.

NOTE 3. REVENUE RECOGNITION

Revenue recognition. We generate revenue primarily from the licensing of our intellectual property and the intellectual property that we license from third parties. We recognize revenue under recurring fee license contracts monthly as we satisfy our performance obligation, which consists of granting the customer the right to use said intellectual property. Amounts billed are determined based on flat rates or usage rates stipulated in the customer contract.

From time to time, we may sell the perpetual right to use our intellectual property for our progressive gaming systems, that is separate from the licensing of our game content and from time to time, sell the units used to deliver the progressive gaming systems. Control transfers and we recognize revenue at a point in time when the gaming system is available for use by a customer, which is no earlier than the shipment of the products to the customer or an intermediary for the customer.

From time to time, the Company licenses intellectual property from third-party owners and sub-licenses that intellectual property to its customers. In these arrangements, the Company usually agrees to pay the owner of the intellectual property a royalty based on the revenues the Company receives from licensing the intellectual property to its customers. Depending on the relationship between Galaxy and the licensor, those royalties are either deducted from gross revenue to arrive at net revenue or are included in operating expenses.

Disaggregation of revenue. The following table disaggregates our revenue by geographic location for the three months ended March 31, 2026, and 2025. All of the royalty expense that is charged to a contra-revenue in our online gaming revenue stream has been allocated to the Europe, Middle East and Africa region in both periods presented below.


	Three Months Ended March 31,
	2026		2025
The Americas	$	4,051,265	$	4,503,042
Europe, Middle East and Africa		3,611,296		3,281,891
Total revenue	$	7,662,561	$	7,784,933

Contract liabilities. Amounts billed and cash received in advance of performance obligations fulfilled are recorded as contract liabilities and recognized as revenue when performance obligations are fulfilled.

On May 10, 2023, the Company and a customer entered into an amended and restated agreement (the "Agreement"). The Agreement amends and restates a previous agreement between the parties, dated June 2, 2015, for the provision of licenses for certain table game content and related intellectual property which the Company, succeeded to as successor in interest by merger with PGP.

The Agreement guarantees a minimum payment from the customer of €6,000,000 Euros (converted to approximately $6,876,000 as of March 31, 2026) per each year ended March 31, 2024, 2025, 2026, and 2027 of the Agreement. The amount is to be billed and paid based on minimum monthly payments of €500,000 Euros (converted to approximately $573,000 as of March 31, 2026). Any usage amount lower than the minimum monthly payment is deferred until the end of the contract year when the revenue is considered earned and can be recognized. For the three months ended March 31, 2026, the Company recognized €21,271 Euros (converted to approximately

$24,377 as of March 31, 2026) of deferred revenue for the contract year ended March 31, 2026 as compared to no deferred revenue being recognized in the prior period.

Contract assets. The Company’s contract assets consist solely of unbilled receivables which are recorded when the Company recognizes revenue in advance of billings. Unbilled receivables are included in the balance of accounts receivable, net of allowance on the balance sheet and totaled $1,960,309, $2,091,932 and $1,573,999 as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

Intellectual property agreements. From time to time, the Company purchases or licenses intellectual property from third-parties and the Company, in turn, utilizes that intellectual property in certain games licensed to customers. In these agreements, the Company may agree to pay the seller of the intellectual property a fee if and when the Company receives revenue from games containing the intellectual property.

NOTE 4. OTHER INTANGIBLE ASSETS

Other intangible assets, net consisted of the following:


	March 31,			December 31,
	2026			2025
Patents	$	13,507,338		$	13,507,338
Customer relationships		14,040,856			14,040,856
Trademarks		2,880,967			2,880,967
Intellectual property		2,029,071			2,029,071
Non-compete agreements		660,000			660,000
Software		3,510,666			3,101,464
Other intangible assets, gross		36,628,898			36,219,696
Less: accumulated amortization		(26,547,986	)		(25,993,913	)
Other intangible assets, net	$	10,080,912		$	10,225,783

For the three months ended March 31, 2026 and 2025, amortization expense related to other intangible assets was $554,073 and $552,487, respectively.

NOTE 5. LONG-TERM DEBT AND LIABILITIES

Long-term debt and liabilities consisted of the following at:


	March 31,			December 31,
	2026			2025
BMO credit agreement	$	38,812,500		$	39,625,000
Insurance notes payable		95,740			166,108
Long-term debt and liabilities, gross		38,908,240			39,791,108
Less: Unamortized debt issuance costs		(443,797	)		(507,196	)
Long-term debt and liabilities, net of debt issuance costs		38,464,443			39,283,912
Less: Current portion of long-term debt		(2,626,990	)		(2,416,108	)
Long-term debt and liabilities, net	$	35,837,453		$	36,867,804

BMO Credit Agreement. On January 6, 2025, the Company entered into a credit agreement with BMO Bank N.A. ("BMO"), a national banking association (the "Credit Agreement"). The Credit Agreement provides for senior secured financing in the aggregate amount of up to $47,000,000, consisting of a $2,000,000 senior secured revolving credit facility and a $45,000,000 senior secured term loan.

The Credit Agreement replaced the senior secured term loan agreement with Fortress Credit Corp. ("Fortress Credit Agreement"), which included a term loan with a maturity date of November 13, 2026. On January 6, 2025, the Company 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. The Company recognized a loss on extinguishment of debt of $2,969,585 for the three months ended March 31, 2025 related to the refinancing of our debt from Fortress to BMO, primarily driven by the write-off of unamortized debt issuance costs.

Borrowings under the Credit Agreement bear interest at a rate equal to an applicable margin plus, at the Company’s option, either (1) at a floating rate equal to the base rate (the “Base Rate”) determined by reference to the greatest of: (a) the prime commercial rate

announced or otherwise established by BMO, (b) the federal funds rate plus one half of 1%, and (c) the one-month Term Secured Overnight Financing Rate ("SOFR") (as defined in the Credit Agreement) plus 1.00%; or (2) at a fixed rate based on Term SOFR with an interest period of one, three or six months (at the Company’s election). The applicable margin for borrowings is determined by reference to a pricing grid based on the Company’s then current Total Funded Debt to EBITDA Ratio (as defined in the Credit Agreement). The applicable margin for Base Rate loans ranges from 2.0% to 2.5% per annum. The applicable margin for SOFR loans ranges from 3.0% to 3.5% per annum. The Company pays interest on a monthly basis and has elected the one-month SOFR plus 1.00%. The Company will pay a commitment fee, payable quarterly in arrears, equal to the applicable margin on the average daily undrawn amount under the new revolving credit facility.

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 Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. The Credit Agreement includes financial covenants requiring the Company to maintain a maximum Total Funded Debt to EBITDA Ratio, a minimum Fixed Charge Coverage Ratio, minimum EBITDA, and maximum Capital Expenditures (each as defined in the Credit Agreement).

The Company’s obligations under the Credit Agreement are guaranteed by the Company’s domestic subsidiaries, and secured by a first-priority security interest in substantially all of the tangible and intangible personal property of the Company and each subsidiary.

In connection with entering into the Fortress Credit Agreement, the Company also issued warrants to purchase a total of up to 778,320 shares of the Company’s common stock to certain affiliates of Fortress at a price per share of $0.01 (the “Warrants”). The Warrants remain outstanding as of March 31, 2026 and are exercisable at any time, subject to certain restrictions. For purposes of calculating earnings (loss) per share, the Warrants are considered outstanding.

As of March 31, 2026, future maturities of our long-term obligations are as follows:


	Total
Years ended December 31,
2026		1,783,240
2027		3,375,000
2028		33,750,000
Long-term debt and liabilities, gross	$	38,908,240

NOTE 6. COMMITMENTS AND CONTINGENCIES

Concentration of risk. We are exposed to risks associated with customers who represent a significant portion of total revenues.

For the three months ended March 31, 2026 and 2025, respectively, we had the following client revenue concentrations:


	Location	Three Months Ended March 31, 2026 Revenue			Three Months Ended March 31, 2025 Revenue			Accounts Receivable March 31, 2026		Accounts Receivable December 31, 2025
Client A	Europe		18.8	%		20.1	%	$	1,161,357	$	1,210,444
Client B	Europe		13.1	%		7.9	%	$	803,505	$	994,641

Legal proceedings. In the ordinary course of conducting our business, we are, from time to time, involved in various legal proceedings, administrative proceedings, regulatory government investigations and other matters, including those in which we are a plaintiff or defendant, that are complex in nature and have outcomes that are difficult to predict.

An unexpected adverse judgment in any pending litigation could cause a material impact on our business operations, intellectual property, results of operations or financial position. Unless otherwise expressly stated, we believe costs associated with litigation will not have a material impact on our financial position or liquidity but may be material to the results of operations in any given period and, accordingly, no provision for loss has been reflected in the accompanying financial statements related to those matters.

Beginning on September 11, 2024, seven purported stockholders of Galaxy have sent demands to the Company and two of which included draft complaints. On October 18, 2024, two purported stockholders filed complaints, relating to the Merger Agreement disclosures, captioned Finger v. Galaxy Gaming, Inc., et al., Index No. 655536/2024 (N.Y. Sup. Ct.) and Coffman v. Galaxy Gaming, Inc., et al., Index No. 655530/2024 (N.Y. Sup. Ct.). The demand letters and complaints allege that the definitive proxy statement on

Schedule 14A filed by the Company on September 26, 2024 is materially incomplete and misleading because it omitted certain information related to the Merger (as defined herein), including but not limited to information about the Company’s financial projections and analyses performed by Galaxy’s financial advisor, Macquarie Capital (USA) Inc. While we believe that the disclosures set forth in the proxy statement comply fully with all applicable law and deny the allegations in the demand letters and the complaints, in order to moot plaintiffs’ disclosure claims, avoid nuisance and possible expense and business delays, and provide additional information to our stockholders, on November 1, 2024, we determined to voluntarily supplement certain disclosures in the proxy statement related to the purported stockholders’ claims.

Regulatory matters. The Company is conducting a self-initiated review of its historical sales and use tax compliance as part of its ongoing internal control and process improvement initiatives. In connection with this review, the Company identified a potential compliance gap related to the application of sales and use tax in certain jurisdictions for prior periods.

The Company has engaged third-party tax advisors to assist in evaluating the matter and has voluntarily requested a managed audit in a certain jurisdiction. The managed audit process is ongoing and involves the evaluation of nexus, exemption applicability, penalty treatment, and other relevant factors.

As of March 31, 2026, the Company is unable to reasonably estimate the amount of any potential liability, if any, associated with this matter, as the outcome remains dependent on determinations that have not yet been finalized through the audit process. Accordingly, no accrual has been recorded in the accompanying condensed consolidated financial statements.

The Company will continue to evaluate this matter as additional information becomes available and will record an accrual and/or provide additional disclosure in future periods if and when a liability becomes probable and reasonably estimable.

Intellectual property agreements. From time to time, the Company purchases or licenses intellectual property from third-parties and the Company, in turn, utilizes that intellectual property in certain games licensed to customers. In these purchase or license agreements, the Company may agree to pay the seller of the intellectual property a fee, if and when, the Company receives revenue from games containing the intellectual property.

NOTE 7. SEGMENT

We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision maker ("CODM"), CEO, Matthew Reback, to evaluate performance and make operating decisions. We currently have two revenue streams (land-based gaming and online gaming), which are aggregated into one reporting segment. The land-based revenue stream, which we refer to as core revenue, derives its revenues from casinos using our proprietary products to enhance their gaming operations. The online gaming ("iGaming") revenue stream, which we refer to as digital revenue, derives its revenues from the licensing and distribution of our content to iGaming operators. The Company has intra-entity sales between subsidiaries. The accounting policies of each revenue stream are the same as those described in the summary of significant accounting policies.

The CODM assesses performance of the revenue streams and allocates resources based on consolidated net income (loss), which is the primary performance metric. Net income (loss) is used to monitor budget versus actual results and assess the performance of the business. The measure of segment assets is reported on the Condensed Consolidated Balance Sheet as total assets, which are not allocated to individual revenue streams for performance evaluation by the CODM.

The Company determined the following significant expenses: cost of ancillary products and assembled components, selling, general and administrative, compensation and related expenses, research and development, depreciation and amortization, and stock-based compensation. The CODM reviews these significant expenses as provided in the monthly reporting package.

A summary of significant segment expense activity is as follows:


	For the Quarter Ended March 31,
	2026		2025
Revenue:
Total Core Revenue	$	4,777,581	$	5,016,233
Total Digital Revenue		2,884,980		2,768,700
Consolidated Revenue	$	7,662,561	$	7,784,933

Cost and expenses
Cost of ancillary products and assembled components	$	67,188	$	188,002
Selling, general and administrative		2,177,808		2,362,376
Compensation and related expenses		2,303,214		2,246,063
Research and development		17,888		67,118
Depreciation and amortization		869,951		779,817
Stock-based compensation		52,847		166,261
Total costs and expenses	$	5,488,896	$	5,809,637

Net income (loss)	$	1,367,556	$	(2,021,282	)

NOTE 8. INCOME TAXES

Our forecasted annual effective tax rate (“AETR”) at March 31, 2026 was 2.2%, as compared to 5.5% at March 31, 2025. This decrease was primarily driven by an increase in forecasted pre-tax book income offset by rate impacting components such as permanent items and changes in valuation allowance as compared to the prior-year period.

For the three months ended March 31, 2026 and 2025, our effective tax rate (“ETR”) was 2.2% and (1.8)%, respectively. The increase in the ETR for the three months ended March 31, 2026, as compared to the prior-year period, was mainly attributable to the pre-tax book income for the three months ended March 31, 2026 as compared to the pre-tax book loss for the three months ended March 31, 2025.

NOTE 9. SUBSEQUENT EVENTS

None

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

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 months ended March 31, 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.

SPECIAL NOTE REGARDING 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 satisfaction 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 the 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 that 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.

OVERVIEW

We develop, acquire, assemble and market technology and entertainment-based products and services for the gaming industry for placement on casino floors, 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, 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.

Agreement and Plan of Merger with Evolution

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 of the Merger Agreement 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. 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 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 by the Amended 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.

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

Our net revenue consists of the following components:


	Three Months Ended March 31,
	2026			2025			$ Change			% Change
Revenue:
Core Revenues:
Recurring License Revenue	$	5,424,810		$	5,253,261		$	171,549			3.3	%
Perpetual License Sales of Progressive Gaming Systems		96,367			505,120			(408,753	)		-80.9	%
Gross Revenue		5,521,177			5,758,381			(237,204	)		-4.1	%
Royalties Netted against Gross Revenue		(743,596	)		(742,148	)		(1,448	)		0.2	%
Total Core Revenue	$	4,777,581		$	5,016,233		$	(238,652	)		-4.8	%

Digital Revenues:
Recurring License Revenue		4,202,684		$	3,835,585		$	367,099			9.6	%
Gross Revenue		4,202,684			3,835,585			367,099			9.6	%
Royalties Netted against Gross Revenue		(1,317,704	)		(1,066,885	)		(250,819	)		23.5	%
Total Digital Revenue	$	2,884,980		$	2,768,700		$	116,280			4.2	%

Consolidated Revenues:
Recurring License Revenue	$	9,627,494		$	9,088,846		$	538,648			5.9	%
Perpetual License Sales of Progressive Gaming Systems		96,367			505,120			(408,753	)		-80.9	%
Gross Revenue		9,723,861			9,593,966			129,895			1.4	%
Royalties Netted against Gross Revenue		(2,061,300	)		(1,809,033	)		(252,267	)		13.9	%
Revenue	$	7,662,561		$	7,784,933		$	(122,372	)		-1.6	%

Costs and expenses
Cost of ancillary products and assembled components	$	67,188		$	188,002		$	(120,814	)		-64.3	%
Selling, general and administrative		4,346,852			4,312,781			34,071			0.8	%
Research and development		152,058			362,776			(210,718	)		-58.1	%
Depreciation and amortization		869,951			779,817			90,134			11.6	%
Stock-based compensation		52,847			166,261			(113,414	)		-68.2	%
Total costs and expenses		5,488,896			5,809,637			(320,741	)		-5.5	%
Income from operations		2,173,665			1,975,296			198,369			10.0	%
Other income (expense):
Interest income		379			22,878			(22,499	)		-98.3	%
Interest expense		(776,489	)		(1,003,350	)		226,861			-22.6	%
Foreign currency exchange gain (loss)		633			(10,100	)		10,733			-106.3	%
Loss on extinguishment of debt		-			(2,969,585	)		2,969,585			100	%
Total other expense, net		(775,477	)		(3,960,157	)		3,184,680			-80.4	%
Income (loss) before provision for income taxes	$	1,398,188		$	(1,984,861	)	$	3,383,049			-170.4	%
Provision for income taxes		(30,632	)		(36,421	)		5,789			-15.9	%
Net income (loss)	$	1,367,556		$	(2,021,282	)	$	3,388,838			-167.7	%

Revenue

Recurring core revenue increased $171,549, or 3.3% for the three months ended March 31, 2026, as compared to the same period in the prior year. The increase was primarily driven by higher licensing revenue across the United States, Europe, Middle East and Africa, partially driven by placements of our new GOS progressive gaming system. Royalties netted against gross core revenue were relatively flat, increasing $1,448, or 0.2% for the three months ended March 31, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $96,367, representing a 80.9% decrease for the three months ended March 31, 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, increased $367,099, or 9.6% for the three months ended March 31, 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, representing growth of 4.2% for the three months ended March 31, 2026, as compared to the same period in the prior year.

Costs and Expenses

Cost of ancillary products and assembled component expense decreased $120,814, or 64.3% for the three months ended March 31, 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.

Selling, general and administrative expenses increased $34,071, or 0.8% for the three months ended March 31, 2026, as compared to the same period in the prior year. This increase was primarily driven by a change in the form of board compensation, as our directors elected during the three months ended March 31, 2026 to receive cash compensation in lieu of restricted shares of our common stock, whereas in the prior-year period director compensation consisted both of cash and equity-based components. Included in the results are costs associated with special projects, most notably expenses incurred related to the acquisition by Evolution. Normalized for the impact of special projects and excluding the related fees of $119,383 and $208,273 for the three months ended March 31, 2026 and March 31, 2025, respectively, selling, general, and administrative expenses increased $122,961 for the three months ended March 31, 2026, as compared to the same period in the prior year. The increase was primarily driven by higher distributor costs associated with increased placements of land-based products in foreign jurisdictions, as well as higher royalty fees related to licensed content and the timing of audit fees.

Research and development expenses decreased $210,718, or 58.1% for the three months ended March 31, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount, as well as reduced outside services in the period.

Depreciation and amortization increased $90,134, or 11.6% for the three months ended March 31, 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, or 68.2% for the three months ended March 31, 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 first 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, or 22.6% for the three months ended March 31, 2026, as compared to the same period in the prior year. The decrease was primarily due to the reduced principal balance of outstanding debt and to a lesser extent a lower average interest rate, for the three months ended March 31, 2026, as compared to the same period in the prior year. Interest income decreased $22,499, or 98.3% 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.

The Company recognized a loss on extinguishment of debt of $2,969,585 for the three months ended March 31, 2025 related to the refinancing of our debt from Fortress to BMO, primarily driven by the write-off of unamortized debt issuance costs.

Income tax provision decreased to $30,632 for the three months ended March 31, 2026, compared to income tax provision of $36,421 for the comparable prior-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 for the three months ended March 31, 2026, as compared to a net loss of approximately $2,021,282 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 loss to exclude interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency exchange loss (gain), and severance and other expenses related to 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 loss to Adjusted EBITDA is as follows:


	Three Months Ended March 31,
Adjusted EBITDA Reconciliation:	2026			2025
Net income (loss)	$	1,367,556		$	(2,021,282	)
Interest expense		776,489			1,003,350
Interest income		(379	)		(22,878	)
Provision for income taxes		30,632			36,421
Depreciation and amortization		869,951			779,817
EBITDA		3,044,249			(224,572	)
Stock-based compensation (1)		52,847			166,261
Employee severance costs and other expenses (2)		36,000			10,491
Professional fees, acquisition costs and other (3)		119,383			208,273
Gain on disposal of assets (4)		—			(62	)
Foreign exchange loss (gain) (5)		(633	)		10,100
Loss on extinguishment of debt (6)		—			2,969,585
Adjusted EBITDA	$	3,251,846		$	3,140,076

(1) Represents the non-cash expense associated with the value of equity awards granted to employees, directors and consultants by the Company.

(2) Represents costs associated with the severance of employees.

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

(4) Represents gains and losses related to the write off of certain fixed assets.

(5) Represents foreign exchange losses and gains associated with the fluctuations of foreign currency rates.

(6) Represents the loss on the extinguishment of debt associated with the refinancing of our debt from Fortress to BMO.

Liquidity and capital resources. We have generally been able to fund our continuing operations, our investments, and the obligations under our existing borrowings through cash flow from operations. We may require additional capital to undertake acquisitions or to repay in full our indebtedness. Our ability to access capital for operations or for acquisitions will depend on conditions in the capital markets and investors’ perceptions of our business prospects and such conditions and perceptions may not always favor us.

As of March 31, 2026, we had total current assets of $10,949,227 and total assets of $27,042,819. 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 March 31, 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 March 31, 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 March 31, 2026 compared to December 31, 2025 decreased to $7,320,803 from $8,055,001. This 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 portion of long-term debt for upcoming payments to BMO.

Based on our current forecast of operations, we believe we will have sufficient liquidity to fund our operations and to meet the obligations under our financing arrangements as they come due over at least the next 12 months.

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 and research and development of our products. It is our intention to continue such initiatives and investments.

Our operating activities provided cash of $2,544,086 for the three months ended March 31, 2026, compared to $1,168,692 for the comparable prior year period. This change is mainly attributable to net income for the three months ended March 31, 2026, as compared to a net loss in the prior-year period, as well as a $1,002,419 variance in operating assets and liabilities. Additionally, the prior-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 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.

Investing activities used cash of $1,030,320 for the three months ended March 31, 2026, compared to cash used of $283,330 for the three months ended March 31, 2025. This increase in cash used was primarily due to higher expenditures for assemblies in process and increased investment in internally developed software.

Cash used in financing activities during the three months ended March 31, 2026, was $882,868. This compares to $13,849,213 cash used by financing activities for the three months ended March 31, 2025. The decrease in cash used was primarily due to the refinancing of our debt from Fortress to BMO in the prior-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.

As of March 31, 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.

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

Recently issued accounting pronouncements. We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’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 submitted under the Exchange Act is accumulated and communicated to management including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

No change in our internal control over financial reporting occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the effectiveness of control and procedures and internal controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives, and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

ITEM 5. OTHER INFORMATION

None

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We have been named in and have brought lawsuits in the normal course of business. For further information on legal proceedings, see Note 6 Commitments and Contingencies in the accompanying notes to the condensed consolidated financial statements.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risks and uncertainties set forth in our other filings with the SEC, including in our most recent Annual Report on Form 10-K.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) None

(b) None

(c) During the three months ended March 31, 2026, none of our directors or officers adopted or terminated a Rule 10b5-1 trading plan or arrangement or a non-Rule 10b5-1 trading plan or arrangement, as defined in Item 408(c) of Regulation S-K.

ITEM 6. EXHIBITS


Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith

2.1	Agreement and Plan of Merger dated as of July 18, 2024 by and among Galaxy Gaming, Inc., Evolution Malta Holding Limited, and Galaga Merger Sub, Inc.	8-K	000-30653	2.1	July 18, 2024

2.2	Amendment No. 1 to Agreement and Plan of Merger, dated as of November 24, 2025, by and among Galaxy Gaming, Inc., Evolution Malta Holding Limited, and Galaga Merger Sub, Inc.	8-K	000-30653	2.1	November 25, 2025

3.1	Amended and Restated Articles of Incorporation	8-K	000-30653	3.1	February 13, 2009

3.2	Amended and Restated Bylaws	8-K	000-30653	3.2	February 13, 2009

3.3	Second Amended and Restated Bylaws	8-K	000-30653	3.2	February 14, 2020

10.1	Board of Directors Service Agreement with Bryan W. Waters, Director	10-K	000-30653	10.11	March 31, 2015

10.2	Board of Directors Service Agreement with Cheryl Kondra, Director	8-K	000-30653	10.1	December 7, 2021

10.3	Form of Indemnification Agreement dated July 15, 2022, between the Company and Meredith Brill	8-K	000-30653	10.2	July 15, 2022

10.4	Board of Directors Service Agreement with Meredith Brill, Director	8-K	000-30653	10.1	July 15, 2022

10.5	First Amendment to Board of Directors Service Agreement with Meredith Brill, Director	8-K	000-30653	10.1	July 26, 2022

10.6	Changes to Board Compensation	8-K	000-30653	10.1	January 27, 2023

10.7	Amended and Restated Online Game License Agreement with Evolution Malta Limited	8-K	000-30653	10.1	May 16, 2023

10.8	Redacted License Agreement with the Talisman Group LLC	8-K	000-30653	10.1	June 20, 2023

10.9	Employment Agreement between the Company and Matt Reback effective November 13, 2023	8-K	000-30653	10.1	November 7, 2023

10.10	Employment Agreement Dated May 22, 2024, between the Company and Steven Kopjo.	8-K	000-30653	10.1	May 24, 2024

10.11	Galaxy Gaming, Inc 2014 Amended and Restated Equity Incentive Plan	8-K	000-30653	10.1	July 18, 2024

10.12	Form of Indemnification Agreement Dated July 31, 2024, between the Company and Matt Reback	8-K	000-30653	10.1	August 5, 2024

10.13	Form of Indemnification Agreement Dated July 31, 2024, between the Company and Steven Kopjo	8-K	000-30653	10.2	August 5, 2024

10.14	Amendment to Employment Agreement with Matt Reback dated December 27, 2024	8-K	000-30653	10.1	December 31, 2024

10.15	Credit Agreement dated as of January 6, 2025, by and between Galaxy Gaming, Inc. and BMO Bank N.A.	8-K	000-30653	10.1	January 8, 2025

10.16	Form of Indemnification Agreement between Company and Mark Lipparelli	10-K	000-30653	10.22	March 30, 2026

10.17	Form of Indemnification Agreement between Company and Bryan Waters	10-K	000-30653	10.23	March 30, 2026

     31.1

     Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     X

     31.2

     Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     X

     32.1

     Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     X

     101.INS

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Nevada		20-8143439
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

6480 Cameron Street Ste. 305 – Las Vegas, NV 89118
(Address of principal executive offices)

(702) 939-3254
(Issuer’s telephone number)


Title of each class	Trading symbol	Name of exchange on which registered
Common stock	GLXZ	OTCQB marketplace


	PART I
Item 1:	Financial Statements (unaudited)	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4:	Controls and Procedures	23
Item 5:	Other Information	23
	PART II
Item 1:	Legal Proceedings	24
Item 1A:	Risk Factors	24
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3:	Defaults Upon Senior Securities	24
Item 4:	Mine Safety Disclosures	24
Item 5:	Other Information	24
Item 6:	Exhibits	25


Condensed Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025	4
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2026 and 2025 (unaudited)	5
Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three months ended March 31, 2026 and 2025 (unaudited)	6
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited)	7
Notes to Condensed Consolidated Financial Statements (unaudited)	8


☒	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


	Galaxy Gaming, Inc.

Date:	May 8, 2026

	By:	/s/ MATTHEW REBACK
		Matthew Reback
		President and Chief Executive Officer (Principal Executive Officer)

	Galaxy Gaming, Inc.

Date:	May 8, 2026

	By:	/s/ STEVEN KOPJO
		Steven Kopjo
		Chief Financial Officer (Principal Accounting Officer)