UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

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

For the transition period from ________ to ________

Commission File No. 001-39274

GAN Limited

(Exact name of registrant as specified in its charter)

Bermuda

Not Applicable

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

400 Spectrum Center Drive, Suite 1900, Irvine, California		92618
(Address of principal executive offices)		(Zip Code)

(833) 565-0550

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, par value $0.01		GAN		The Nasdaq Stock Market LLC

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

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

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

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

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

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

At August 4, 2023, there were 44,683,215 ordinary shares outstanding.

GAN LIMITED

FORM 10-Q

INDEX

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2023 and 2022	5
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2023 and 2022	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	47
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 6.	Exhibits	50
	SIGNATURES	51

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GAN LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)

	June 30,			December 31,
	2023			2022
ASSETS
Current assets
Cash	$	43,387		$	45,920
Accounts receivable, net of allowance for doubtful accounts of $489 and $250 at June 30, 2023 and December 31, 2022, respectively		10,152			13,808
Prepaid expenses		3,933			4,861
Other current assets		3,454			3,041
Total current assets		60,926			67,630

Capitalized software development costs, net		7,908			6,749
Intangible assets, net		18,924			24,955
Operating lease right-of-use assets		2,103			234
Other assets		5,123			3,512
Total assets	$	94,984		$	103,080

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	4,815		$	6,437
Accrued compensation and benefits		11,087			8,750
Accrued content license fees		1,955			2,214
Liabilities to users		8,834			10,683
Current operating lease liabilities		409			195
Other current liabilities		5,173			4,253
Total current liabilities		32,273			32,532

Deferred income taxes		4,625			4,218
Long-term debt		39,769			28,157
Content licensing liabilities		3,400			15,280
Non-current operating lease liabilities		1,725			—
Other liabilities		3,253			2,125
Total liabilities		85,045			82,312
Commitments and contingencies (Note 16)		-			-
Shareholders’ equity
Ordinary shares, $0.01 par value, 100,000,000 shares authorized, 44,683,215 and 42,894,211 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		447			429
Additional paid-in capital		333,938			328,998
Accumulated deficit		(291,769	)		(274,861	)
Accumulated other comprehensive loss		(32,677	)		(33,798	)
Total shareholders’ equity		9,939			20,768
Total liabilities and shareholders’ equity	$	94,984		$	103,080

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

Table of Contents

GAN LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except share and per share amounts)

	2023			2022			2023			2022
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022

Revenue	$	33,758		$	34,967		$	68,887		$	72,461

Operating costs and expenses
Cost of revenue ⁽¹⁾		9,485			10,463			19,646			22,163
Sales and marketing		7,324			7,413			14,508			13,511
Product and technology		11,238			8,403			20,816			17,357
General and administrative ⁽¹⁾		10,029			10,327			20,035			19,719
Impairment		—			28,861			—			28,861
Restructuring		—			712			—			1,771
Depreciation and amortization		4,243			6,556			8,444			10,969
Total operating costs and expenses		42,319			72,735			83,449			114,351
Operating loss		(8,561	)		(37,768	)		(14,562	)		(41,890	)
Interest expense		905			1,080			2,621			1,071
Other loss (income), net		8,358			(270	)		(934	)		(270	)
Loss before income taxes		(17,824	)		(38,578	)		(16,249	)		(42,691	)
Income tax expense (benefit)		585			(229	)		659			157
Net loss	$	(18,409	)	$	(38,349	)	$	(16,908	)	$	(42,848	)

Loss per share, basic and diluted	$	(0.42	)	$	(0.91	)	$	(0.39	)	$	(1.01	)

Weighted average ordinary shares outstanding, basic and diluted		44,147,701			42,300,668			43,568,197			42,276,798

⁽¹⁾	Excludes depreciation and amortization expense.

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

Table of Contents

GAN LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(in thousands)

SEC Form 10-Q filed by GAN Limited