UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM CB
TENDER OFFER/RIGHTS OFFERING NOTIFICATION FORM

Please place an X in the box(es) to designate the appropriate rule provision(s) relied upon to file this Form:
 
Securities Act Rule 801 (Rights Offering)
Securities Act Rule 802 (Exchange Offer)
Exchange Act Rule 13e-4(h)(8) (Issuer Tender Offer)
Exchange Act Rule 14d-1(c) (Third Party Tender Offer)
Exchange Act Rule 14e-2(d) (Subject Company Response)
Filed or submitted in paper if permitted by Regulation S-T Rule 101(b)(8)

Aspire Global PLC
(Name of Subject Company)

N/A
(Translation of Subject Company’s Name into English (if applicable))

Malta
(Jurisdiction of Subject Company’s Incorporation or Organization)

NeoGames S.A
(Name of Person(s) Furnishing Form)

Ordinary shares
(Title of Class of Subject Securities)

N/A
(CUSIP Number of Class of Securities (if applicable))

Moti Malul
Chief Executive Officer
63-65, rue de Merl
L-2146 Luxembourg, Grand
Duchy of Luxembourg
Tel: +972-3-607-2571
(Name, Address (including zip code) and Telephone Number (including area code)
of Person(s) Authorized to Receive Notices and Communications on Behalf of Subject Company)

April 27, 2022
(Date Tender Offer/Rights Offering Commenced)
 


PART I – INFORMATION SENT TO SECURITY HOLDERS
 
Item 1. Home Jurisdiction Documents

(a) The following documents are attached as exhibits to this Form CB:

Exhibit
Number
 

(b) Not applicable.

Item 2. Informational Legends

A legend complying with Rule 802(b) under the U.S. Securities Act of 1933, as amended, is included in each of the documents referred to in Item 1.

PART II – INFORMATION NOT REQUIRED TO BE SENT TO SECURITY HOLDERS
 
Ehibit
Number
 
 
PART III – CONSENT TO SERVICE OF PROCESS
 
NeoGames S.A. submitted to the Securities and Exchange Commission a written irrevocable consent and power of attorney on Form F-X dated April 27, 2022.
 


SIGNATURES

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
 
   
NeoGames S.A
       
   
/s/ Moti Malul
   
Name:
Moti Malul
   
Title:
Chief Executive Officer
 
Date: April 27, 2022


 


Exhibit 99.1

 
 
Public offering of up to 7,604,886 new ordinary shares in NeoGames S.A represented by a corresponding number of Swedish Depositary Receipts
in the context of a public takeover offer in Sweden regarding all shares in Aspire Global Plc.
 
This prospectus (the “Prospectus”) has been prepared in connection with a public offering of SDRs (as defined below) in Sweden in the context of the public takeover offer in Sweden submitted by NeoGames S.A., a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its registered office at 63-65, rue de Merl, L - 2146 Luxembourg, Grand Duchy of Luxembourg, and registered with the Luxembourg Register of commerce and companies (“RCS”) under number B186309 (“NeoGames” or the “Company”), regarding all shares in Aspire Global Plc, a Maltese public limited company with Maltese registration number C 80711 (“Aspire”) which shares are admitted to trading on Nasdaq First North Premier Growth Market in Stockholm, and the issue of up to 7,604,886 new ordinary shares (the “Shares”) represented by a corresponding number of Swedish Depositary Receipts (“SDRs”) as share consideration in the offer, following the capital increase of the Company (the “Offer”).
 
The Offer, as well as any agreements entered into between the Company and the shareholders in Aspire for the purpose of the Offer, shall be governed and construed in accordance with substantive Swedish law. Any dispute regarding the Offer or such agreements, or which arises in connection therewith, shall be settled exclusively by Swedish courts, and the District Court of Stockholm (Sw. Stockholms tingsrätt) shall be the court of first instance. The Swedish Corporate Governance Board’s Takeover rules for certain trading platforms (the “Takeover Rules”) and the Swedish Securities Council’s (Sw. Aktiemarknadsnämnden) statements and rulings regarding interpretation and application of the Takeover Rules, including, where applicable, the Swedish Securities Council’s interpretation and application of the formerly applicable Rules on Public Offers for the Acquisition of Shares issued by the Swedish Industry and Commerce Stock Exchange Committee (Sw. Näringslivets Börskommitté), are applicable to the Offer. The SDRs are being offered, as specified in this Prospectus, subject to cancellation, suspension or modification of the Offer and subject to certain other conditions (see “Terms and Conditions of the Offer”).
 
Investing in the securities described in the Prospectus is connected with a high degree of risk inherent to investments in capital market equity instruments and risks connected with the Company’s operations and its business environment. Prospective investors should read the entire Prospectus and, in particular the discussion herein of certain risk factors that should be considered in connection with an investment in the SDRs, see “Risk Factors” in this Prospectus. The market price of the SDRs may decline and investors could lose all or part of their investment. An investment in the SDRs does not guarantee the achievement of the expected profitability level. An investment in the securities covered by this Prospectus is not covered by any invested capital protection schemes. An investment in the SDRs is compatible only with investors who do not need guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other advisor) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom.
 
The Offer is made for the securities of a non-U.S. company. The Offer is subject to disclosure requirements of a foreign country that are different from those of the United States. Financial statements included in the Prospectus, if any, may have been prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of U.S. companies. It may be difficult for U.S. investors to enforce their rights and any claim they may have arising under the federal securities laws, since the Issuer is located in a foreign country, and some or all of its officers and directors may be residents of a foreign country. U.S. investors may not be able to sue a foreign company or its officers or directors in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its affiliates to subject themselves to a U.S. court's judgment. U.S. investors should be aware that the Issuer may purchase securities otherwise than under the Company’s public offer to Aspire’s shareholders, such as in open market or privately negotiated purchases.
 
This Prospectus constitutes a prospectus in the form of a single document within the meaning of Article 6 of Regulation (EU) 2017/1129 of 14 June 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, as amended (the “Prospectus Regulation”) and has been prepared in accordance with the provisions of the Prospectus Regulation and the Swedish Act (2019:414) Supplementing the EU’s Prospectus Regulation (Sw. Lag (2019:414) med kompletterande bestämmelser till EU:s prospektförordning) (the “Swedish Prospectus Act”) and the rules promulgated thereunder. This Prospectus has been approved on 26 April 2022 by the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the “SFSA”) as a competent authority in accordance with the Prospectus Regulation. The SFSA only approves this Prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation; such approval should not be considered as an endorsement of the Company that is, or the quality of the securities that are, the subject of this Prospectus. Investors should make their own assessment as to the suitability of investing in the securities that are the subject of this Prospectus. The Prospectus shall be valid until 26 April 2023 being twelve months after its approval by the SFSA.
 
Based on Article 2(m) of the Prospectus Regulation, the Kingdom of Sweden (“Sweden”) is the home Member State of the Company and the SFSA is solely authorised to approve this Prospectus. This approval cannot be considered as a judgment by the SFSA on, or any comment by the SFSA on, the merits of the transaction, nor on the situation of the Company, and by approving this Prospectus the SFSA gives no undertaking as to the economic and financial soundness of the transaction and the quality or solvency of the Company.
 
The Company will be authorised to offer the SDRs as share consideration under the Offer in Sweden once the Prospectus has been approved by the SFSA and published on the Company’s website (https://ir.neogames.com/offer-page) and, additionally, for information purposes only, on the website of https://mangold.se/. In addition, in accordance with the requirements of the Prospectus Regulation, a copy of this Prospectus on a durable medium will be delivered to investors upon their request free of charge. Furthermore, a paper copy of this Prospectus will be delivered to the investors upon their request free of charge. However, pursuant to the Prospectus Regulation, such delivery will be limited to the jurisdiction in which the offer of the SDRs is made or where the admission to trading on a regulated market is taking place under the Prospectus Regulation.
 
The information contained herein is current as of the date of this Prospectus. Neither the delivery of this Prospectus, nor the offer, sale or delivery of the SDRs shall, under any circumstances, create any implication that no adverse changes have occurred nor events have happened, which may or could result in an adverse effect on the Company’s business, financial condition or results of operations and/or the market price of the Shares. Nothing contained in this Prospectus constitutes, or shall be relied upon as, a promise or representation by the Company or its advisors as to the future.
 
Prior to the Offer, the shares of the Company have been admitted to, and listed by the nominee Cede & Co on, the Nasdaq Global Market (ISIN LU2263803020). Application will be made to admit all the Shares to listing and trading on the Nasdaq Global Market. The Company expects that the date on which the trading in Shares on the Nasdaq Global Market will commence will be on or around 14 June 2022 (the “Listing Date”). The SDRs will not be subject to an application for the admission and introduction to trading on any trading venue. All the shares of the Company are ordinary registered shares. The ISIN of the Shares is LU2263803020. The SDRs represent ordinary shares in the Company. Each SDR corresponds to one share in the Company and the newly issued shares will be represented by SDRs. The ISIN of the SDRs is SE0017832504 as provided by Euroclear Sweden AB.
 
If the Offer is cancelled on the terms provided in this Prospectus, all shareholders in Aspire tendering in the Offer in exchange for share consideration, in part or in full, in the form of SDRs will be disregarded and any tendered Aspire shares will be returned without interest or other compensation. All dealings in the Shares prior to the Listing Date are at the sole risk of the parties concerned. Mangold Fondkommission AB (“Mangold”) or the Company do not accept any responsibility or liability with respect to any person as a result of a withdrawal/cancellation, modification or suspension of the Offer.
 
Except as indicated above, this Prospectus has not been registered, approved or submitted to any other regulatory body in any other jurisdiction and the SDRs have not been registered or approved, nor are they the subject of a notification submitted to any regulatory body in any jurisdiction. The date of this Prospectus is 26 April 2022.

1

 
 
TABLE OF CONTENTS
 
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42
43
44
45
47
48
49
50
55
68
80
88
94
95
100
101
105
119
123
130
131
132
136
137
139
140
141

2

 
SUMMARY

Section A - Introduction and warnings

Warnings

This summary should be read as an introduction to this prospectus (the “Prospectus”). Any decision to invest in the securities should be based on a consideration of the Prospectus as a whole by the investor. The investor may lose all or part of the invested capital. When a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor may, under the national law of the Member State, need to bear the costs of the Prospectus, or of translating the Prospectus, before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary, including any translation thereof, but only where the summary is misleading, inaccurate or inconsistent, when read together with the other parts of the Prospectus, or where it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.

The name and international securities identification number (ISIN) of the securities

Based on this Prospectus, the Company is offering up to 7,604,886 new ordinary shares (the “Shares”) in the Company represented by a corresponding number of Swedish Depositary Receipts (the “SDRs”) (the “Offer”). As at the date of this Prospectus, the share capital of the Company amounts to USD 45,263.77 represented by 25,565,095 shares of approximately USD 0,0017705 each, all fully subscribed and entirely paid up (the “Existing Shares”). The Existing Shares were issued and currently exist in registered form in accordance with the Articles of Association of the Company and the Luxembourg law of 10 August 1915 on commercial companies as amended (the “Luxembourg Company Law”). The ISIN code of the securities is LU2263803020.

The identity and contact details of the Company, including its legal entity identifier (LEI)

NeoGames S.A., a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its registered office at 63-65, rue de Merl, L - 2146 Luxembourg, Grand Duchy of Luxembourg, and registered with the Luxembourg Trade and Companies Register (Registre de commerce et des sociétés de Luxembourg) (“RCS”) under number B186309; LEI code No. 222100MZTIQEZS4XY614; telephone No.: +352-2040119020; website: https:// neogames.com.

The identity and contact details of the offeror, including its legal LEI entity identifier (LEI)

In the Offer, the SDRs are offered by the Company to shareholders in Aspire and issued by Mangold Fondkommission AB. The LEI code of Mangold Fondkomission AB is 549300GIWCYFWC3THC56.

The identity and contact details of the competent authority approving the Prospectus and the date of approval of the Prospecus

This Prospectus has been approved on 26 April 2022 by the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the “SFSA”), which is the competent authority under Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (the “Prospectus Regulation”) and the Swedish Act (2019:414) Supplementing the EU’s Prospectus Regulation (Sw. Lag (2019:414) med kompletterande bestämmelser till EU:s prospektförordning) (the “Swedish Prospectus Act”), with its registered office at Brunnsgatan 3, Stockholm, Sweden and telephone number: +46 8-408 980 00.

Section B - Key information on the issuer of the underlying shares

Who is the issuer of the underlying shares?

The issuer
 
NeoGames S.A., a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its registered office at 63-65, rue de Merl, L - 2146 Luxembourg, Grand Duchy of Luxembourg, and registered with the Luxembourg Register of commerce and companies under number B186309 and LEI code No. 222100MZTIQEZS4XY614 (“NeoGames” or the “Company”). The Company’s principal executive offices are located at 10 Habarzel Street, Tel Aviv, 6971014, Israel. The telephone number at this address is +972-73-372-3107.
 
The issuer’s principal activities
 
The Company is a technology-driven business that is an innovator in the lottery industry. As a global B2G and B2B technology and service provider to state lotteries and other lottery operators, the Company offers its customers a full-service solution that includes all of the elements required for the offering of lottery games, including Instants and DBGs (both as defined below), via personal computers, smartphones and handheld devices (“iLottery”). These elements include technology platforms, a range of value-added services and a game studio with a large portfolio of games. The value-added services that the Company offers facilitate various aspects of the iLottery offering including regulation and compliance, payment processing, risk management, player relationship management and player value optimization. The Company believes that it is the only full-service company exclusively focused on the iLottery industry.
 
NeoGames was established as an independent company in 2014, following a spin-off from Aspire Global Plc (formerly known as NeoPoint Technologies Limited) (“Aspire” and, together with its subsidiaries, the “Aspire Group”), a B2B service provider in the iGaming industry. Prior to the spin-off from Aspire, the Company’s management team was responsible for the iLottery business of Aspire, which derived the majority of its revenues from the sale of iLottery games to various lotteries in Europe. In 2014, the Company began to focus on the U.S. iLottery market, which opened in 2012 with the introduction of online lottery ticket sales in Illinois. In order to access this significant market opportunity, the Company partnered with Pollard, one of the leading vendors to the global lottery industry. In 2014, the Company entered into our first turnkey solution contract in the United States with the Michigan State Lottery (the “MSL”), as a sub-contractor to Pollard.
 
3

In July 2014 the Company formed NPI, a joint venture with Pollard, for the purpose of identifying, pursuing, winning and executing iLottery contracts in the North American lottery market. NPI combines the Company’s technology and iLottery business and operational experience with Pollard’s infrastructure, administrative capabilities and relationships with lotteries in North America. NPI is managed by an executive board of four members, consisting of two members appointed by the Company and two members appointed by Pollard. NPI has its own general manager and dedicated workforce and operates as a separate entity. However, it relies on the Company and Pollard for certain services, such as technology development, business operations and support services from the Company and corporate services, including legal, banking and certain human resources services, from Pollard.
 
All of the Company’s iLottery business in North America is conducted through NPI, except in Michigan, where the contract is between the MSL and Pollard and the Company supports the Michigan iLottery as a subcontractor of Pollard.
 
Lotteries are a crucial revenue source for the Company’s customers as they provide much-needed contributions to state budgets to fund public projects and initiatives. The iLottery industry, and the Company benefit from long-term, multi-year contracts with customers that generally start with an initial term of four to seven years with additional embedded extension option. Moreover, the Company’s software-as-a-service business model allows its platform to be highly scalable in a growing industry while benefitting from a visible revenue stream tied to the Company’s customers’ gaming revenues. There are also significant barriers to enter the iLottery industry due to complexities surrounding regulatory and government contracts and specialized technology requirements. Understanding these dynamics, the Company has developed a leading market position in the United States1.
 
The Company offers iLottery solutions through two distinct business lines — turnkey solutions and games. The turnkey solutions are tailored to each customer and can include a combination of any of the Company’s platforms, value-added services and game studio. The games offering is related to the Company’s game studio, but consists solely of offering the portfolio of iLottery games to lotteries.
 
The Company also provides certain software development services to the Aspire Group and NPI and sublicenses certain platforms to William Hill Organization Limited (“William Hill”).
 
The services are provided across four key areas: marketing operations, player operations, technology operations and business operations.
 
•     Marketing operations — the Company provides targeted marketing services and data analytics to its North American customers through the entire player life cycle, from digital acquisition and onboarding to game participation.
 
•      Player operations — leveraging years of experience managing players on behalf of its customers, the Company provides to its North American customers various services designed to offer the best possible experience to iLottery players.
 
•      Technology operations — these operations, which the Company provides to many of its customers, are meant to provide the full spectrum of monitoring and maintenance of the platforms that the Company deploys for its customers and protect the integrity of its back-end iLottery software.
 
•     Business operations — the Company facilitates payment processing services by third-party vendors and manage customer-facing personnel.
 
The issuer’s major shareholders
 
The following table sets forth the shareholders owning five percent or more of the shares in the Company, based on the information available to the Company as at 31 March 2022:
 
5% or Greater Shareholders
Number
Percent
Elyahu Azur
3,193,717
12.48
Pinhas Zahavi
3,193,717
12.48
Executive officers and directors
   
Oded Gottfried
330,478
1.29
Barak Matalon
5,109,948
19.97
Aharon Aran
1,277,486
4.99
All directors and executive officers as a group (3 persons)
6,717,912
26.25
Public investors
12,488,088
48.79
Total
25,593,434
100.00
 
To the extent known to the Company, the Company is not, directly or indirectly, owned or controlled by any one person. However, with respect to an appointment of board members, Barak Matalon, Aharon Aran, Elyahu Azur and Pinhas Zahavi have entered into a voting agreement.


1 According to Eilers & Krejcik Gaming's U.S. iLottery Tracker, NeoGames, through its NPI Joint Venture, has operated 67 percent of the market of U.S. iLottery gross wagers as of April 2021.

4

The identity of the issuer’s key managing directors and auditor

The following table presents the Company’s executive officers and directors as at the date of this Prospectus:

Executive Officers
 
Moti Malul
Chief Executive Officer, Co-Managing Director and Director
Raviv Adler
Chief Financial Officer
Oded Gottfried
Chief Technology Officer
Rinat Belfer
Chief Operations Officer
Non-Executive Directors
 
Barak Matalon
Non-Executive Director
Aharon Aran
Non-Executive Director
Laurent Teitgen(1)
Non-Executive Director
John E. Taylor, Jr.(1)
Non-Executive Director, Chairman
Lisbeth McNabb(1)
Non-Executive Director
 
(1)
Independent director in accordance with SEC regulations and Nasdaq rules requirements applicable to the Company.
 
The Company’s independent auditor is BDO Audit, with registered office at 1, rue Jean Piret, L-2350, Luxembourg, Grand Duchy of Luxembourg and registered with the RCS under number B 147570 (réviseur d’entreprises agréé) (BDO Audit).
 
The standalone financial statements of the Company as at and for the years ended 31 December 2020 and 31 December 2021 prepared in accordance with the Luxembourg act dated 19 December 2002 on the trade and companies register and on bookkeeping and annual accounts of companies (the 2002 Accounts Act) by applying IFRS as adopted by the EU have been audited by BDO Audit.
 
The standalone financial statements of the Company as at and for the years ended 31 December 2021 and 2019 prepared in accordance with the 2002 Accounts Act by applying IFRS as adopted by the EU have been audited by ATWELL, with registered office at 33, rue de Gasperich, L - 5826 Hesperange, Grand Duchy of Luxembourg and registered with the RCS under number B 169787 as independent auditor (cabinet de révision agréé) (ATWELL).
 
The consolidated financial statements of the Company as at and for the years ended 31 December 2021, 31 December 2020 and 31 December 2019 prepared in accordance with IFRS as issued by the International Accounting Standards Board have been audited by Ziv Haft, Certified Public Accountants, Isr., BDO Member Firm, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. The current address of Ziv Haft, Certified Public Accountants, Isr., BDO Member Firm is Amot Bituach House Bldg. B 48, Derech Menachem Begin Rd. Tel Aviv 6618001.

What is the key financial information regarding the Company?

Key Financial Information

The following tables set out a summary of selected consolidated financial information of the Company as at and for the years ended, respectively, 31 December 2021, 2020 and 2019, which were prepared in compliance with IFRS as issued by the International Accounting Standards Board.

Selected financial information from the consolidated statement of profit or loss for the periods indicated.

   
For the 12-month periods ended
31 December
   
Year-end report for 1 January –
31 December
 
   
audited
   
unaudited
 
   
2021
   
2020
   
2019
   
2021
   
2020
 
   
(USD’000)
 
Revenue          
   
50,463
     
49,202
     
33,062
     
50,463
     
49,202
 
Net and total comprehensive income (loss)
   
4,652
     
6,514
     
(3,978
)
   
4,652
     
6,514
 
Profit (loss) from operations          
   
(1,157
)
   
11,633
     
5,310
     
(1,157
)
   
11,633
 

Selected financial information from the consolidated statement of financial position at the dates indicated.

   
As at
31 December
   
As at 31 December
 
   
audited
   
unaudited
 
   
2021
   
2020
   
2019
   
2021
   
2020
 
   
(USD ’000)
 
Total assets
   
115,755
     
94,585
     
33,175
     
117,328
     
94,585
 
Total liabilities
   
55,961
     
43,764
     
38,783
     
57,534
     
43,764
 

5


Selected financial information from the consolidated statement of cash flows for the periods indicated.
 
   
For the 12-month periods ended
31 December
   
Year-end report for 1 January –
31 December
 
   
audited
   
unaudited
 
   
2021
   
2020
   
2019
   
2021
   
2020
 
   
(USD ’000)
 
Net cash generated from operating activities
   
14,911
     
24,518
     
15,040
     
-
     
-
 
Net cash used investing activities
   
(6,283
)
   
(12,696
)
   
(17,424
)
   
-
     
-
 
Net cash generated from (used in) financing activities
   
(2,313
)
   
41,929
     
5,166
     
-
     
-
 
Net change in cash and cash equivalents
   
6,315
     
53,751
     
2,782
     
-
     
-
 

Pro forma financial information

Selected items in the pro forma combined statement of income (loss) for the period 1 January – 31 December 2021
 
 
 
NeoGames SA as reported
   
Aspire PLC as reported
   
Aspire (As reported) converted to USD
   
ADJUSTMENT 1
   
ADJUSTMENT 2
   
Proforma combined results for the period ended Dec 31, 2021
 
 
USD'k
   
EUR'k
   
USD'k
   
USD'k
   
USD'k
   
USD'k
 
Revenue
   
50,463
     
157,449
     
186,264
     
2,715
     
-
     
239,442
 
Profit (loss) from operations
   
(1,157
)
   
21,640
     
25,600
     
(181
)
   
(35,864
)
   
(11,602
)
Net and total comprehensive income (loss)
   
4,652
     
18,257
     
21,598
     
(141
)
   
(48,994
)
   
(22,885
)

 Selected items in the pro forma combined statement of financial position as of 31 December 2021
 
 
 
NeoGames SA as reported
   
Aspire PLC as reported
   
Aspire (As reported) converted to USD
   
ADJUSTMENT 3
   
ADJUSTMENT 4
   
Proforma combined financial position as of Dec 31, 2021
 
   
USD'k
   
EUR'k
   
USD'k
   
USD'k
   
USD'k
   
USD'k
 
Total assets
   
117,328
     
213,880
     
242,068
     
(22,806
)
   
354,690
     
691,280
 
Total liabilities and equity
   
117,328
     
213,880
     
242,068
     
(22,806
)
   
354,690
     
691,280
 

Brief description of any qualifications in the audit report relating to the standalone financial statements

Not applicable. The audit report issued by BDO Audit in connection with its audit of the standalone financial statements of the Company as at and for the years ended 31 December 2021 and 31 December 2020 does not contain qualifications. The audit report issued by ATWELL in connection with its audit of the standalone financial statements of the Company as at and for the year ended 31 December 2019 does not contain qualifications.
 
What are the key risks that are specific to the issuer of the underlying shares?

Presented below is a selection of the key risks that are specific to the Company.

•     the Company has a concentrated customer base, and its failure to retain the existing contracts with its customers could have a significant adverse effect on the Company’s business;
•     the Company is dependent on Pollard with respect to the joint operation of the Michigan iLottery;
•     the Company’s lack of experience in completing acquisitions and/or inability to successfully complete and integrate future acquisitions could limit its future growth or otherwise be disruptive to its ongoing business;
•     the Company does not have a formal joint venture agreement or any other operating or shareholders’ agreement with Pollard with respect to NPI, through which the Company conducts a substantial amount of its business;
•     a reduction in discretionary consumer spending could have an adverse impact on the Company’s business;
•     the growth of the Company’s business largely depends on its continued ability to procure new contracts;
•     the Company incurs significant costs related to the procurement of new contracts, which the Company may be unable to recover in a timely manner, or at all;
•     the Company’s information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions; and
•     in addition to competition with other iLottery providers, the Company and its customers also compete with providers of other online offerings.

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Information about the issuer of the SDRs

The issuer of the SDRs is Mangold Fondkommission AB, a limited liability company (Sw. aktiebolag) incorporated on 14 February 2000 and existing under the laws of the Kingdom of Sweden, with its registered office at Engelbrektsplan 2, 114 34 Stockholm, Sweden, and registered with the Swedish Companies Registration Office (Sw. Bolagsverket) under number 556585-1267; LEI code No. 549300GIWCYFWC3THC56; telephone No.: +46 8 503 01 550; website: https://mangold.se; email: info@mangold.se.
 

Section C - Key information on the securities

What are the main features of the underlying shares

The Company is issuing up to 7,604,886 ordinary shares. The shares have no par value. The ISIN code of the shares is LU2263803020. The shares are issued under the Luxembourg law and they are denominated in euro.

Rights attached to securities
Each Share entitles the holder thereof to one (1) vote at the General Meeting, subject to the limitations imposed by law. All of the Shares carry full dividend rights. In the event of liquidation, dissolution or winding-up of the Company, the net assets remaining after the payment of all debts, charges and expenses shall be distributed to the shareholders of the Company in proportion to their respective shareholdings.

Relative seniority of the securities in the Issuer’s share capital in the event of insolvency
Not applicable. The Articles of Association of the Company do not include provisions on the seniority of the Shares in the event of the insolvency of the Company.

Restrictions on the free transferability of the securities
All of the Shares will be freely transferrable.

Dividend or payout policy
The Board of Directors currently intends to retain all of the available funds and any future earnings to fund the growth and development of the Company’s business, and currently does not intend to recommend paying dividends in the foreseeable future.

In the future, the Board of Directors may re-examine the dividend policy on an as-required basis, while decisions in that respect will be taken subject to various factors regarding the Company and the Group, including the prospects of future activities, future profits, the amount of the Company’s unconsolidated distributable reserves, demand for cash, financial condition, planned capital expenditures and development plans, as well as any legal requirements applicable to the payment of dividends by the Company, including in particular, the Company’s ability to pay dividends.

Information about the SDRs

NeoGames has commissioned Mangold to hold Shares in the Company in a custody account for the benefit of the depository receipt holders and to issue one SDR for each deposited Share in accordance with the terms and conditions of the SDRs. In aggregate up to a total of 7,604,886 new shares in NeoGames represented by corresponding number of SDRs will be issued as consideration in the Offer. The SDRs shall be registered in a Swedish CSD register maintained by Euroclear Sweden AB (the “VPC Register”) in accordance with the Swedish Central Securities Depositories and Financial Instruments Accounts Act (SFS 1998:1479). Thus, physical securities or other certificates representing the SDRs will not be issued. The SDRs will not be subject to an application for the admission and introduction to trading on any trading venue. The Shares are deposited for the benefit of an owner of SDRs or his/her nominee (the “Depository Receipt Holder”) in a custody account with a bank appointed by Mangold (the “Sub-Custodian”).

A Depository Receipt Holder will not have equivalent rights as shareholders of the Company in all respects. As the Sub-Custodian will be the shareholder of record for Shares represented by the SDRs, shareholder rights will rest with the Sub-Custodian. The Depository Receipt Holders’ rights will derive from the general terms and conditions of the SDRs and applicable rules and regulations. The Company shall establish arrangements such that Depository Receipt Holders shall have the opportunity to exercise certain rights with respect to the Company as would be exercisable by such holders if they had owned shares directly and not SDRs. Furthermore, Mangold shall ensure that notices to Depository Receipt Holders are provided to the Depository Receipt Holders and other rights holders who are registered in the VPC Register as entitled to receive notices in accordance with the Swedish Central Securities Depositories and Financial Instruments Accounts Act.

Shares withdrawn from the safe custody will be delivered to a custody account designated by the Depository Receipt Holder or as agreed between the Depository Receipt Holder and Mangold, provided that the corresponding SDRs have been surrendered to and cancelled by Mangold in the VPC Register. The SDR program is a temporary solution that is expected to be terminated 12 months after the issuance of SDRs. Upon termination, all holders of SDRs who have not yet converted their SDRs into ordinary Shares and been entered as a direct shareholder in the VPC Register (in own name or through a nominee), will automatically have their SDRs redeemed through Mangold, whereby the Shares that the SDRs represent will be sold in the market and the net average sales proceeds will then be paid pro rata to the previous holders of such SDRs.

The obligations of Mangold and the Company towards the Depository Receipt Holders in their entiry are set out in the General Terms and Conditions for Swedish Depository Receipts in NeoGames S.A., which will be made available on the Company’s website at ir.neogames.com/offer-page.


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What are the key risks that are specific to the SDRs?

SDR holders do not have the same rights as NeoGames shareholders;
There will be no trading in the SDRs;
Investors with a reference currency other than SEK will be subject to certain currency risks if they tender for SDRs in the Offer.

Where will the securities be traded?

All of the Shares will be subject to an application for the admission and introduction to trading on the Nasdaq Global Market. The SDRs will not be subject to an application for the admission and introduction to trading on any trading venue.

Section D - Key information on the offer of securities to the public

Under which conditions and timetable can I invest in this security?

General terms and conditions of the Offer
On 17 January 2022, NeoGames announced a recommended public offer to the shareholders of Aspire to tender all their shares in Aspire to NeoGames for a consideration consisting of a combination of cash and newly issued shares in the NeoGames in the form of SDRs (the “Offer”). Shareholders in Aspire may elect to tender in the Offer pursuant to either of two consideration alternatives, the Base Case Alternative and the Conditional Alternative.

The Base Case Alternative

Subject to the potential adjustment of each individual Aspire shareholder’s consideration due to elections made under the Mix & Match Facility described below, NeoGames is offering each shareholder in Aspire the following: (i) in respect of 50 percent of the number of shares in Aspire tendered by such shareholder: SEK 111.00 in cash per share in Aspire; and (ii) in respect of the remaining 50 percent of the number of shares in Aspire tendered by such shareholder: 0.320 shares in NeoGames per share in Aspire in the form of SDRs.

The Mix & Match Facility for Aspire’s shareholders

As part of the Base Case Alternative, NeoGames offers Aspire’s shareholders a Mix & Match Facility, through which each shareholder in Aspire is, subject to restrictions set out below, given the possibility, should the shareholder prefer a deviation from the Base Case Alternative, to elect either: (i) to receive as much consideration in cash as possible for tendered Aspire shares (in addition to the default cash entitlement of SEK 111.00 per Aspire share in respect of 50 percent of the number of Aspire shares tendered), and thus as little consideration in shares in the form of SDRs as possible; or (ii) to receive as much consideration in shares in the form of SDRs as possible for tendered Aspire shares (in addition to the default share entitlement of 0.320 shares in NeoGames in the form of SDRs per Aspire share in respect of 50 percent of the number of Aspire shares tendered), and thus as little in cash consideration as possible.

The Conditional Alternative

As an alternative to the Base Case Alternative, NeoGames is offering each shareholder in Aspire the following in respect of 100 percent of the number of Aspire shares tendered by such shareholder, and for each such Aspire share: (i) at settlement of the Offer: 0.320 shares in NeoGames or such lower prorated number of shares in NeoGames, in the form of SDRs, that may follow as a result of other shareholders’ elections under the Mix & Match Facility and the maximum number of shares in NeoGames that will be issued as consideration in the Offer, and (ii) provided that if less than 0.320 shares in NeoGames in the form of SDRs for each Aspire share has been received pursuant to clause (i) above and conditional upon the payment of future dividends from Aspire to NeoGames in a corresponding aggregate amount (net of any dividend tax) after Aspire has become a wholly owned subsidiary of NeoGames: an additional cash purchase price for each Aspire share amounting to the difference between the value of the share consideration delivered pursuant to clause (i) above (where 0.320 shares in NeoGames in the form of SDRs shall be deemed to have a value of SEK 111.00) and SEK 111.00, payable in cash in connection with such potential future dividends being paid.

The offered consideration models will be adjusted should Aspire or NeoGames distribute dividends or in any other way distribute or transfer value to their respective shareholders before settlement has taken place in relation to the Offer. The consideration will accordingly be reduced by a corresponding amount per share for each such dividend or value transfer distributed by Aspire, or increased by a corresponding amount per share for each such dividend or value transfer distributed by NeoGames. Furthermore, should the acceleration of all current outstanding incentive programs in Aspire, as well as any other warrants/options issued by Aspire, result in the creation of more than 828,094 new Aspire shares, the consideration in the Offer will be reduced such that the total consideration for all shares in Aspire in the Offer does not change, unless the Offer is instead withdrawn on the basis of the condition for completion number 3 below. No commission will be charged in respect of the settlement of the Aspire shares tendered to Neo-Games under the Offer.

Conditions for completion of the Offer

Completion of the Offer is conditional upon:

(1) the Offer being accepted to such extent that NeoGames becomes the owner of shares representing not less than 90 percent of the total number of outstanding shares in Aspire (on a non-diluted and on a fully diluted basis);

(2) Aspire’s articles of association, prior to the end of the acceptance period in the Offer, being amended as to allow for NeoGames, having become the owner of not less than 90 percent of the total number of outstanding shares in Aspire carrying voting rights (on both a non-diluted and on a fully diluted basis), to acquire the shares in Aspire that have not been tendered in the Offer, for a consideration no higher than and, at the sole discretion of NeoGames, in the same form as the consideration paid per Aspire share in the Offer or in a form having the corresponding value consisting of cash alone or a combination of cash and non-cash consideration;

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(3) that Aspire, prior to the end of the acceptance period in the Offer, resolves to accelerate the current incentive programs in Aspire and that all outstanding options thereunder, as well as any other warrants/options issued by Aspire, are converted into new Aspire shares resulting in the creation of not more than 828,094 new Aspire shares;

(4) with respect to the Offer and completion of the acquisition of Aspire and Aspire maintaining its current licenses and approvals, all necessary regulatory, governmental or similar clearances, approvals, decisions and other actions from authorities or similar, including from gaming and competition authorities, being obtained, in each case on terms which, in NeoGames’ opinion, are acceptable;

(5) neither the Offer nor the acquisition of Aspire being rendered or reasonably expected to be rendered wholly or partially impossible or significantly impeded as a result of legislation or other regulation, any decision of a court or public authority, or any similar circumstance;

(6) no circumstances having occurred which have a material adverse effect or can reasonably be expected to have a material adverse effect on Aspire’s financial position or operations, including Aspire’s licenses and permits, sales, results, liquidity, solidity, equity or assets;

(7) no information made public by Aspire, or otherwise made available to NeoGames or its advisors by Aspire, being inaccurate, incomplete or misleading, and Aspire having made public all information which should have been made public;

(8) Aspire’s business being carried out in the ordinary course and consistent with past practice;

(9) that the payment of the funds under the debt financing of the Offer is made in accordance with the agreement with Blackstone Alternative Credit Advisors LP and that currency hedging is provided in accordance with the currency hedging arrangement with Deutsche Bank AG; and

(10) Aspire not taking any action that is likely to impair the prerequisites for making or completing the Offer.

NeoGames reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions are not satisfied or cannot be satisfied. However, with regard to conditions 2–10 above, the Offer may only be withdrawn where the non-satisfaction of such condition is of material importance to NeoGames’ acquisition of Aspire or if otherwise approved by the Swedish Securities Council (Sw. Aktiemarknadsnämnden). NeoGames reserves the right to waive, in whole or in part, one, several or all of the conditions set out above, including, with respect to condition 1, to complete the Offer at a lower acceptance level.

Expected timetable of the Offer
The acceptance period for the Offer commences on 27 April 2022 and ends on 25 May 2022. Provided that the acceptance period ends on 25 May 2022, the expected settlement date is 14 June 2022. NeoGames has reserved the right to amend the acceptance period, as well as the settlement date.

Details of the admission to trading
The Company’s shares are admitted to trading on Nasdaq Global Market. The Shares will also be subject to an application for the admission and introduction to trading on the Nasdaq Global Market on or around 14 June 2022. The SDRs will not be subject to an application for the admission and introduction to trading on any trading venue.

Dilution effect
Based on full acceptance, the Offer entails a dilution effect of approximately 22.93 percent of the shares and votes in NeoGames.

Estimated total expenses
The estimated total expenses of the Offer amount to approximately $24 million.

Why is this prospectus being produced?

Reasons for the Offer
Having thoroughly researched and landscaped the global gaming market for a best-in-class iGaming provider, NeoGames has identified Aspire as an ideal combination that would allow NeoGames to pursue sports and gaming initiatives globally for lottery customers and permit entry into the adjacent TAMs of online sports betting and online gaming. NeoGames believes combining with Aspire and adding its proprietary technology, including a scalable PAM solution providing end-to-end solutions for a customer’s online business from regulation and compliance to payment processing, risk management, CRM, support and player value optimization combined with its games content and sports betting platform, provides strong strategic and operational rationale for a combination. Further, Aspire operates a pure B2B model, given its recent divestiture of its B2C operations. Aspire’s B2B operations, as reported by Aspire, have a history of revenue growth and operating profitability provides strong financial rationale for a combination. Neo-Games believes that the combination of award-winning products and service offerings across iLottery, online sports betting and iGaming, will uniquely position NeoGames, as a global multi-product leader, to further capitalize on industry growth, increase reve-nues from existing customers and offer a value proposition that would appeal to a wider array of customers globally.

Conflicts of interest
Barak Matalon and Aharon Aran are board members in both NeoGames and Aspire and own shares in NeoGames as well as Aspire. Oded Gottfried is Chief Technical Officer of NeoGames and owns shares in NeoGames as well as in Aspire. Barak Matalon, Aharon Aran and Oded Gottfried have irrevocably and unconditionally undertaken towards NeoGames to accept the Offer. Considering the aforementioned relationships and contractual arrangements, and in accordance with the Swedish Corporate Governance Board’s Takeover rules for certain trading platforms, Barak Matalon and Aharon Aran have not participated, and will not participate, in NeoGames’ nor Aspire’s handling and evaluation of the Offer. Correspondingly, NeoGames’ board of directors has established an independent director committee to handle and evaluate the Offer without the involvement of Barak Matalon and Aharon Aran.


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RISK FACTORS
 
Before tendering for SDRs in the Offer, prospective tenderers should carefully consider the risks and uncertainties described below, together with the other information contained in this Prospectus. The occurrence of any of the events or circumstances described in these risk factors, individually or together with other circumstances, may have a significant negative impact on the Company’s business, financial condition, results of operations and prospects. The price of the SDRs could decline, and an investor might lose part or all of its investment upon the occurrence of any such event.
 
All of these risk factors are contingencies that may or may not occur. The Company may face a number of these risks described below simultaneously and some risks described below may be interdependent where indicated with a cross-reference. Although the most material risk factors have been presented first within each category, the order in which the remaining risks are presented is not necessarily an indication of the likelihood of the risks actually materialising, of the potential significance of the risks or of the scope of any potential negative impact to the Group’s business, financial condition, results of operations and prospects. While the risk factors below have been divided into categories, some risk factors could belong in more than one category and prospective investors should carefully consider all of the risk factors set out in this section.
 
Although the Company believes that the risks and uncertainties described below are the material risks and uncertainties concerning the Company’s business and industry and the SDRs, they are not the only risks and uncertainties relating to the Company and the SDRs. Other risks, events, facts or circumstances not presently known to the Company, or that the Company currently deems to be immaterial could, individually or cumulatively, prove to be important and may have a significant negative impact on the Company’s business, financial condition, results of operations and prospects.
 
Prospective investors should carefully read and review the entire Prospectus and should form their own views before making an investment decision with respect to the SDRs. Furthermore, before making a decision to tender in the Offer in exchange for a share consideration in the form of SDRs, prospective investors should consult their own professional adviser and carefully review the risks associated with an investment in the SDRs and consider such an investment decision in light of their personal circumstances.
 
Risks relating to the Company’s business, operations and the industry in which it operates
 
We have a concentrated customer base, and our failure to retain our existing contracts with our customers could have a significant adverse effect on our business.
 
Our financial condition is heavily dependent on our ability to maintain our existing turnkey contracts and our large games contracts. We cannot guarantee that our existing contracts will be renewed or that we will be able to win a procurement process for a new contract. Even if we are successful in renewing agreements with customers, there is no assurance that such renewals will be on the same terms, and it is possible that renewals of existing agreements will be on less preferable terms. This has occurred in the past when certain customers required certain concessions upon the renewal of existing agreements. As is typical with many government contracts, most of our customers can terminate our contracts for convenience. Loss of any of our customer contracts would result in a substantial decline in our revenues, which also could hinder our ability to pursue growth initiatives, both in the form of new or enhanced products and services and in expansion into new markets. The loss of any of our customers could damage our reputation, which could materially damage our financial condition.
 
We are dependent on Pollard with respect to our joint operation of the Michigan iLottery for the Michigan State Lottery.
 
We act as a subcontractor to Pollard with respect to its agreement (the “MSL Agreement”) to provide development, implementation, operational support and maintenance (including technology platforms, games and added value services) to the Michigan State Lottery (the “MSL”). The Michigan iLottery accounted for 45.3% of our revenues in the year ended 31 December 2021 and 54.5% of our revenues in the year ended 31 December 2020.
 
If Pollard breaches or does not perform its obligations under the MSL Agreement to the satisfaction of the MSL or if there is otherwise a dispute between Pollard and the MSL, the MSL could seek to terminate the MSL Agreement prior to its expiration or seek to amend the terms of the MSL Agreement in a manner that would negatively impact the financial and other benefits we derive indirectly from the MSL Agreement. In addition, such an amendment to the MSL Agreement could cause Pollard to seek to amend the terms of our agreement with Pollard with respect to the MSL (the “Michigan JV Agreement”) in a way that is less favorable to us. If the MSL terminates the MSL Agreement or if any disputes arise between Pollard and the MSL, our business, financial conditions and results of operations could be adversely affected as a result of our association with Pollard and the MSL.
 
Our inability to successfully complete and integrate pending or future acquisitions could limit our future growth or otherwise be disruptive to our ongoing business.
 
Since our inception, we have not consummated any acquisitions in support of our strategic goals, and we therefore have no experience in integration of new acquisitions. From time to time, we pursue acquisitions in support of our strategic goals. Our tender offer to acquire Aspire is an example for such strategic acquisition. There can be no assurance that acquisition opportunities will be available on acceptable terms or at all or that we will be able to obtain necessary financing or regulatory approvals to complete potential acquisitions. Our ability to succeed in implementing our strategy will depend to some degree upon the ability of our management to identify, complete and successfully integrate commercially viable acquisitions. Acquisition transactions may disrupt our ongoing business and distract management from other responsibilities. In connection with any such acquisitions, we could face significant challenges in managing and integrating our expanded or combined operations, including acquired assets, operations, and personnel. For example, the integration of Aspire, if completed, could prove to be complicated and time consuming for our management. We may not be able to successfully integrate Aspire and may not be able to realize and benefit from any future synergies, which could adversely affect our business and financial condition. For information regarding the public tender offer to Aspire shareholders, see “Terms and conditions of the Offer”.
 
We do not have a formal joint venture agreement or any other operating or shareholders’ agreement with Pollard with respect to NPI, through which we conduct a substantial amount of our business.
 
In 2014, following the procurement process for the predecessor to the MSL Agreement, we and Pollard established NPI to pursue other iLottery opportunities in the North American market. While the current MSL Agreement remains between Pollard and the MSL, NPI has since been awarded iLottery contracts with the Virginia Lottery (the “VAL”) in August 2015, the New Hampshire Lottery Commission (the “NHL”) in September 2018 (as a subcontractor to Intralot, Inc. (“Intralot”)), the North Carolina Education Lottery (the “NCEL”) in October 2019 and the Alberta Gaming, Liquor and Cannabis Commission (the “AGLC”) in March 2020.

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Although we and Pollard have certain rights and obligations prescribed by law as equity holders of NPI, there is no joint venture agreement, shareholders’ agreement or any other type of operating agreement between us and Pollard with respect to NPI, and we and Pollard operate NPI based on a term sheet that was executed in 2014 and expired in 2015. While to date the parties have been successfully operating NPI on the basis of non-contractual understandings, the absence of a written agreement with clearly defined rights, roles and responsibilities of each party may increase the likelihood of disputes between us and Pollard and could make the outcome of any potential dispute more uncertain. Furthermore, conducting a business through a jointly-owned entity such as NPI entails risks that are commonly associated with joint ventures, including the failure to maintain a good working relationship, differing economic and business interests and goals, and liability or reputational harm resulting from each other’s actions. Differences in views between us and Pollard, or a change in the ownership of Pollard, may also result in delayed decision-making or disputes at the shareholder and board level that could negatively impact the operations of NPI and its relationship with customers.
 
Upon the termination of the Michigan JV Agreement, neither we nor Pollard will be obligated to cooperate with each other in pursuing iLottery opportunities in North America, and both we and Pollard may choose to pursue future iLottery opportunities without each other. The termination of our business relationship with Pollard would pose several potential risks for us. In the event that our relationship with Pollard is terminated, there can be no assurance that any of NPI’s employees will remain with NPI. In addition, Pollard manages the procurement process, and our ability to pursue new contracts in North America may be hindered as a result of a need to build certain legal, administrative and customer relations capabilities and functions in our North American operations, which Pollard currently contributes to NPI and which we do not currently offer in North America. As such, if we pursue future opportunities alone, we cannot assure you that we will be able to secure additional contracts in North America. Further, if we decide to collaborate with new partners with whom we have no prior relationship or track record of successful cooperation, we may fail to achieve the same degree of success that we have achieved with Pollard. We may also be delayed in pursuing future opportunities if we are required to negotiate new agreements and business arrangements with these new partners, and the terms we negotiate with these new partners may be less favorable than those we currently have with Pollard.
 
A reduction in discretionary consumer spending could have an adverse impact on our business.
 
Lottery and gaming represent discretionary expenditures, which are subject to volatility during times of economic, social and political change. Changes in discretionary spending or player preferences are driven by changes outside of our control, such as, but not limited to, the following economic or socio-political factors:
 
•          recessions or other economic slowdowns;
 
•          perceptions by potential players of weak or weakening economic conditions;
 
•          tax increases, including on lottery winnings;
 
•          significant declines in stock markets;
 
•          decreased liquidity in certain financial markets;
 
•          general tightening of credit;
 
•          civil unrest, terrorist activities or other forms of socio-political turbulence; and
 
•          pandemics, epidemics and the spread of contagious diseases.
 
We generate the majority of our revenues from customer contracts based on a revenue sharing model, with our portion calculated as a percentage of GGR or NGR. Widespread reductions in disposable income could lead to a reduction in the number of lottery players and the amounts such players are willing and able to wager. Given the nature of our revenue sharing arrangements, fewer players and lower spending per player could have a significant adverse effect on our business.
 
Because our customers’ offerings are typically available only to players within their geographic borders, our revenue is highly concentrated in a limited number of locations. A significant portion of our revenue is generated from the Michigan iLottery, and any adverse impact resulting from any of the foregoing economic factors would be magnified to the extent that it disproportionately impacts players in Michigan or other jurisdictions from which we derive revenues.
 
As our revenue sharing arrangements result in an intertwined relationship between our and our customers’ financial condition, we also face significant risks during times of uncertain and unfavorable economic and socio-political conditions affecting our customers. Unfavorable economic and socio-political factors and conditions could result in budgetary and liquidity concerns for our customers, which may reduce the likelihood that we will be able to renew our existing contracts on substantially similar commercial terms or win new contracts with terms as favorable to us as the terms of our existing contracts.
 
The growth of our business largely depends on our continued ability to procure new contracts.
 
While much of our revenue growth over the past few years has come from increasing NGR generated by the Michigan iLottery, and we expect the Michigan iLottery to continue to account for a large portion of our revenues, the addition of new iLottery contracts has begun to contribute substantially to the growth of our business. In particular, NPI began recognizing revenues from new turnkey contracts supporting the VAL in 2015 and, later, NHL and the NCEL in 2018 and 2019, respectively, and the latter two contracts accounted collectively for 40.3% of the Company’s share in NPI’s revenues for the year ended 31 December 2021 and 16.1% of the Company’s share in NPI’s revenues for the year ended 31 December 2020.
 
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We may not continue to procure new customer contracts at the same rate as in the past, or at all. There can be no assurance that additional U.S. states will seek to implement iLottery offerings or that U.S. states seeking to implement iLottery offerings will do so through a process in which NPI can compete to be the turnkey solution provider. In particular, certain of our competitors currently serve as central lottery system providers for certain U.S. states, and if these states decide to implement iLottery offerings, they may choose to do so by expanding their existing relationships with our competitors without launching a public procurement process or by including iLottery in a broader lottery system procurement process in which we may not be able to successfully compete.
 
Even if additional U.S. states seek to implement iLottery offerings through a public procurement process, there can be no assurance that NPI will procure any new contracts. Our failure to win new contracts could materially limit the growth of our business.
 
We incur significant costs related to the procurement of new contracts, which we may be unable to recover in a timely manner, or at all.
 
The tender process to obtain a new contract is highly competitive and typically requires a significant upfront capital investment. The efforts and resources required to participate and win a request for proposal, commence operations of an iLottery program and procure revenues from that program are relatively long and may take several months or years to complete. This investment, which includes our management’s time, may never be recovered in the event that we fail in our bid. A typical request for proposals or a tender requires us to spend substantial time and effort assisting potential customers in evaluating our products and services, including providing demonstrations and benchmarking against other available offerings by our competitors. This process can be costly and time consuming, and we often do not know if any given sales efforts will be successful until the later stages of those efforts. After being awarded a contract, it can take years to set up the iLottery system and for the contract to become profitable. The long procurement cycle creates a significant time gap between the time we participate in a tender and dedicate the necessary resources, and the time we can recognize revenue or income from that program, if at all. This time gap creates pressure on our cash flow, as it requires significant funding up front, and in the interim period, and may not result in any income, or result in income that will only be achieved quarters after the resources have been dedicated. If we are unable to forecast market demand and conditions, we may not be able to expand our sales efforts at appropriate times and our revenues and related results of operations could be materially adversely affected.
 
Intense competition exists in the iLottery industry, and we expect competition to continue to intensify.
 
We face significant competition in the evolving iLottery industry. We compete in the iLottery market with respect to our offering of technology solutions, games and related operational services on the basis of the content, features, quality, functionality, accuracy, reliability, innovation and price of such offerings. If we do not consistently deliver innovative, high-quality and reliable products and services, our ability to remain viable within the iLottery industry may suffer, especially as the level of competition increases.
 
Some of our competitors and potential competitors have substantially greater financial and other resources (including human resources) or experience than we do. Some of our competitors also have existing relationships and insight as the legacy retail lottery provider of certain U.S. states and may realize synergies that we cannot. Competitors may devote more resources towards developing and testing products and services, undertake more extensive marketing campaigns, offer more favorable pricing terms, pursue aggressive growth initiatives or otherwise develop more commercially successful products or services. In addition, certain of our competitors may enter into contracts with less favorable terms to prevent us from procuring new contracts or renewing our existing contracts. Such potential competitive disadvantages may make it difficult for us to retain existing contracts or secure new contracts without being willing to accept less favorable terms.
 
In addition to risks directly tied to our relative lack of resources, experience and longevity, we face risks that:
 
we may fail to anticipate and adapt to changes in customer expectations at the same rate as our competitors;
 
customers who currently utilize platforms offered by our competitors may be satisfied with such solutions or may determine that it is too costly and/or time consuming to adopt our platform and solutions. Lotteries may face significant switching costs if their platforms have been integrated with those of a competitor, potentially reducing the likelihood of us being the successful tenderer;
 
lotteies that we currently view as potential customers may decide to develop internally products and services which compete with our products and services; and
 
new competitors, including large global corporations or large software vendors operating in adjacent industries, may enter our market.
 
Moreover, current and future competitors may establish cooperative relationships among themselves or with others, including our current or future strategic partners. By doing so, these competitors may increase their ability to meet the needs of our existing and prospective customers and their players. These developments could make it more difficult for us to renew our existing contracts or win new contracts. If we are unable to compete effectively, successfully and at reasonable cost against our existing and future competitors, our results of operations, cash flows and financial condition could be adversely impacted.
 
Our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.
 
The secure maintenance and transmission of player information is a critical element of our operations. Our information technology and other systems that maintain and transmit player information, or those of service providers, business partners or employee information may be compromised by a malicious third-party penetration of our network security, or that of a third-party service provider or business partner, or impacted by intentional or unintentional actions or inactions by our employees, or those of a third-party service provider or business partner. As a result, our players’ information may be lost, disclosed, accessed or taken without their consent. We have experienced in the past, and expect to continue to experience in the future, attempts to breach our systems and other similar incidents. To date these attempts have not had a material impact on our operations or financial results, but we cannot provide assurance that they will not have a material impact in the future.
 
We rely on encryption and authentication technology licensed from third parties in an effort to securely transmit confidential and sensitive information, including credit card numbers. Advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of this technology to protect transaction data or other confidential and sensitive information from being breached or compromised. In addition, websites are often attacked through compromised credentials, including those obtained through phishing and credential stuffing. Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to breach our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our websites, networks and systems or that we or such third parties otherwise maintain, including payment card systems, which may subject us to fines or higher transaction fees or limit or terminate our access to certain payment methods. Threats to information security are constantly evolving, including in diversity and sophistication. We and such third parties may not anticipate or prevent all types of attacks until after they have already been launched. Further, techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers.

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In addition, security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by third parties. These risks may increase over time as the number of our employees and the complexity and number of technical systems and applications we use also increase. Breaches of our security measures or those of our third- party service providers or cybersecurity incidents could result in unauthorized access to our sites, networks and systems; unauthorized access to and misappropriation of player information, including players’ personally identifiable information, or other confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our sites, networks or systems; deletion or modification of content or the display of unauthorized content on our sites; interruption, disruption or malfunction of operations; costs relating to breach remediation, deployment of additional personnel and protection technologies, response to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; litigation, regulatory action and other potential liabilities. In the past, we have experienced social engineering, phishing, malware and similar attacks and threats of denial-of-service attacks, none of which to date has been material to our business; however, such attacks could in the future have a material adverse effect on our operations. Pursuant to a software license agreement with Pollard in respect of the offering to the MSL (the “Pollard Software License Agreement”), our iLottery software is installed on Pollard’s servers, through which it is made available to the MSL. Pollard is responsible for the security measures on its servers, and the Pollard Software License Agreement contains no representations or undertakings with regard to such security measures. A breach of Pollard’s server security could expose our software to the risks noted above. Moreover, our iLottery software is made available by NPI to the VAL, the NHL, the NCEL and the AGLC . If any of these breaches of security should occur, our reputation and brand could be damaged, customers may terminate their contracts with us, our business may suffer, we could be required to expend significant capital and other resources to alleviate problems caused by such breaches, and we could be exposed to a risk of loss, litigation or regulatory action and possible liability. We cannot guarantee that recovery protocols and backup systems will be sufficient to prevent data loss. Actual or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.
 
In addition, any party who is able to illicitly obtain a player’s password may be able access such player’s transaction data or personal data (including payment information), resulting in the perception that our systems are insecure. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data protection, data security, network and information systems security and other laws, potentially trigger private rights of action under certain laws and cause significant legal and financial exposure, negative publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, reputation, financial condition, results of operations and prospects. We continue to devote significant resources to protect against security breaches and we may in the future need to address problems caused by breaches, including notifying affected players and responding to any resulting litigation, which in turn, would divert resources from the growth and expansion of our business.
 
We maintain liability insurance policies covering certain security and privacy damages. However, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.
 
In addition to competition with other iLottery providers, we and our customers also compete with providers of other online offerings.
 
In addition to competition from iLottery providers, we also face competition from providers of other online offerings, including iGaming, sports betting, mobile games and eSports. While we believe that our customers’ iLottery offerings target different players and provide a differentiated experience than these other online offerings, the introduction of such offerings may allow new competitors to establish a foothold in regions where we currently provide the iLottery offering. For example, on 22 January 2021, iGaming and online sports betting was launched in Michigan. The Michigan iLottery accounted for approximately 45.3% of our revenues in the year ended 31 December 2021 and 54.5% of our revenues in the year ended 31 December 2020, and the introduction of other online gaming offerings, which is typically accompanied by significant marketing efforts to attract players, has adversely affected the revenues generated by the Michigan iLottery program.
 
We operate in an industry that is affected by technological improvements and evolving player preferences.
 
The iLottery industry continues to experience rapid development of technological advances and player preferences. In some instances, advancements in technology trigger a change in player preferences. For example, as digital graphics improve, players may demand games with higher definition and a superior user interface. Our success depends on our ability to accurately anticipate and quickly respond to evolving industry standards and player preferences. We cannot assure you that we will be able to respond to such changes with innovative, high-quality, reliable and popular products and services or make the required adjustments to our existing products and services on a timely basis. In addition, the introduction of new products or updated versions of existing products has inherent risks, including, but not limited to:
 
the timing with which we may realize the benefits of the commonly-required significant, upfront capital investments;
 
the accuracy of our estimates of player preferences, and the fit of the new products and features to such preferences;
 
the ability to adequately maintain our main technology systems, such as the NeoDraw platform;
 
the quality of our products and services, including the possibility of software defects, which could result in claims against us or the inability to sell our products and services;
 
the need to educate our sales, marketing and services personnel to work with the enhanced or new products and features, which may strain our resources and lengthen sales cycles;
 
market acceptance of new product releases; and
 
competitor product introductions or regulatory changes that render our products obsolete.
 
In light of the costs required to create and introduce new or enhanced products and services, if our new or enhanced products fail to achieve commercial success, we will struggle to remain commercially viable, especially in the face of heightened competition.
 
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We have incurred operating losses in the past, may incur operating losses in the future and may not be able to maintain sustainable profit margins.
 
We generated a net profit of $6.5 million in the year ended December 31, 2020, which was the first reporting period in which we generated a net profit since incorporation. We continued to generate net profit, and in the year ended December 31, 2021 we generated a net profit of $4.7 million. We expect to continue the development and expansion of our business, and we anticipate additional costs in connection with legal, accounting and other administrative expenses related to operating as a public company. While our revenue has grown in recent years, if our revenue declines or fails to grow at a rate sufficient to offset increases in our operating expenses, we may generate losses. We cannot ensure that we will sustain profitability in the future.
 
Certain of our directors and shareholders may experience a conflict of interest between their duties to us and to Aspire.
 
We were established as an independent company in 2014, following a spin-off from Aspire Global Plc (formerly known as NeoPoint Technologies Limited) (“Aspire” and, together with its subsidiaries, the “Aspire Group”). Prior to our spin-off from Aspire, our management team was responsible for the iLottery business of Aspire. Barak Matalon and Aharon Aran, members of our board of directors, are also members of Aspire’s board of directors. Further, Barak Matalon, Elyahu Azur, Pinhas Zahavi and Aharon Aran (collectively, the “Founding Shareholders”), who collectively own a majority of the shares of Aspire, may have substantial influence over the outcome of matters submitted to our shareholders for approval. Such directors and shareholders could experience a conflict of interest between their duties to us and Aspire, which may have an adverse effect on our business and prospects.
 
For example, the Aspire Software License Agreement (as defined below in “Related Party Transactions - Relationship with Aspire - Aspire Software License Agreement”) does not prevent NeoGames from using the Mixed-Use Software (as defined below in “Related Party Transactions - Relationship with Aspire - Aspire Software License Agreement”) to design, develop and implement games content, so long as it is not sold through certain platform providers or white label companies which are competitors of Aspire, and provided that we do not design, develop and implement casino and slot content to games aggregators. See “Related Party Transactions - Relationship with Aspire - Aspire Software License Agreement.” Accordingly, both we and Aspire could compete in future engagements for provision of games content or for a contract with a white label provider. Furthermore, the Aspire Software License Agreement does not prevent either NeoGames or Aspire from using the Mixed-Use Software for (i) B2B customers in the iGaming and sports betting business in the United States, (ii) B2G customers in the iLottery business anywhere outside the United States, and (iii) offering games content to customers worldwide except for B2G customers in the United States and for customers who are providers of iLottery content which are NeoGames competitors. Accordingly, both we and Aspire could compete for the same B2B iGaming and sports betting customers in the United States or B2G iLottery customers outside the United States. In the event that such circumstances arise, the shared directors or shareholders may decide to prevent NeoGames from pursuing such opportunities in favor of Aspire.
 
Additionally, on 17 January 2022 we announced the Aspire Tender Offer (as defined below). The Aspire Tender Offer is an ongoing process as of the date hereof. While both we and Aspire have established special independent committees to evaluate and approve the Aspire Tender Offer, the Aspire Tender Offer, if completed, will constitute a transaction between related parties. For more information, see “Related Party Transactions - Relationship with Aspire.”
 
Our Founding Shareholders have significant influence over the nominations and elections of members of our board of directors and other matters submitted for shareholder approval.
 
Our Founding Shareholders have the exclusive right under our amended and restated articles of association (“articles of association”) to nominate up to 50% of our directors so long as they own in the aggregate at least 40.0% of our issued and outstanding share capital. As of March 31, 2022, the Founding Shareholders held approximately 49.9% of our issued and outstanding share capital. As a result, the Founding Shareholders have significant influence also over the outcomes of other matters submitted to shareholders for approval. The Founding Shareholders are entitled to vote their shares according to their own interests, and such interests may be different than the interests of our other shareholders and may delay, deter or prevent a change in control or other business combination that might otherwise be beneficial to our shareholders.
 
We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations.
 
We provide a sub-license to the NeoSphere platform to William Hill, which at the time was one of our largest shareholders. In April 2021, William Hill was acquired by, and became a subsidiary of Caesars Entertainment, Inc. (“Caesars”). On 18 March 2022, Caesars reported the consummation of a block sale, in which it divested its holdings in the Company. We also provide certain software services to Aspire. The revenues received from William Hill and Aspire amounted to approximately 19% of our revenues in the year 31 December 2021 and 18.6% of our revenues in the year ended 31 December 2020. We may have achieved more favorable terms if such transactions had not been entered into with related parties.
 
We have also entered into certain intellectual property licenses and cost-sharing arrangements with Aspire. Transactions with our significant shareholders or entities in which our significant shareholders hold ownership interests present potential for conflicts of interest, as the interests of these parties and their stockholders may not align with the interests of our shareholders.
 
Our existing and future contractual arrangements could restrict our ability to compete effectively, which may affect our ability to grow our business and enter into new markets.
 
From time to time, we enter into contractual agreements that contain restrictive covenants (such as non-compete, exclusivity and license agreements) that restrict us from entering into new markets to which we may desire to expand our businesses. Our contractual arrangements with Pollard, Aspire and William Hill contain certain provisions that may restrict our ability to grow our business, enter into new markets and compete effectively.

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Pursuant to the Michigan JV Agreement, until its expiration, we are restricted from exploring any opportunities for further marketing, distribution and exploitation of our internet lottery, scratch cards, instant win games and slots and other online games to other national and state lotteries in the United States and Canada without Pollard. Both the Company and Pollard have the exclusive and pre-emptive right to exploit any and all such additional opportunities that may be conceived, and the participation of NPI in any such additional opportunity is subject to mutual approval of the Company and Pollard. Accordingly, as long as the Michigan JV Agreement remains in effect, the Company is unable to independently pursue any such opportunities, enter into agreements with additional lotteries in the United States and Canada or enter into new partnerships in the United States and Canada. This may negatively impact the future growth of our business or cause our business, financial conditions and results of operations to be harmed.
 
Additionally, pursuant to the Aspire Software License Agreement, Aspire granted NeoGames a license to use Mixed-Use Software for certain purposes. However, the Aspire Software License Agreement restricts NeoGames from using the Mixed-Use Software to (i) design, develop or implement casino and slot games for games aggregators and (ii) design, develop and implement games content for customers who are platform providers or white-label companies which are competitors of Aspire. See “Related Party Transactions - Relationship with Aspire - Aspire Software License Agreement.” While we have only focused on the iLottery business to date, these restrictions may limit our ability to enter into the market of casino, slot games and sports betting in the future and may affect our ability to expand our customer base.
 
Further, pursuant to a binding term sheet entered into in 2018 (the “WH Term Sheet”) with WHG (International) Ltd. (“WHG”), an affiliate of William Hill, we are prohibited from using the NeoSphere platform to compete with WHG in the B2C sports betting industry in the United States. While this has not impeded our ability to grow our business to date, it may limit our ability to expand into the B2C sports betting market in the future.
 
To the extent that such restrictive contractual provisions prevent us from taking advantage of business opportunities, our business, financial position and cash flows may be adversely affected.
 
While we have not experienced a material impact to date, the ongoing COVID-19 and similar health epidemics and contagious disease outbreaks could significantly disrupt our operations and adversely affect our business, results of operations, cash flows or financial condition.
 
In December 2019, a novel strain of coronavirus (“COVID-19”) was identified, and on 11 March 2020, the World Health Organization declared COVID-19 as a global pandemic. Numerous state and local jurisdictions have imposed, and others in the future may impose, “shelter-in-place” orders, quarantines, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19. In particular, the governments in jurisdictions where our employees are located have imposed limitations on gatherings, social distancing measures and restrictions on movement, only allowing essential businesses to remain open. Such restrictions have resulted in temporary store closures, work stoppages, slowdowns and delays, travel restrictions and cancellation of events, among other restrictions, any of which may negatively impact workforces, customers, consumer sentiment and economies in many markets and, along with decreased consumer spending, have led to an economic downturn throughout much of the world.
 
Our business is largely tied to the disposable income of lottery players. While we have not experienced a material impact to date, the global economic and financial uncertainty may result in significant declines to the number of players using our customers’ offerings and the amount of money that players are able and willing to wager. See “– A reduction in discretionary consumer spending could have an adverse impact on our business.
 
In response to the COVID-19 pandemic, we transitioned many of our employees to remote working arrangements and temporarily closed our offices in Israel, Ukraine and Michigan. More recently, we have gradually permitted employees to return to our offices in Israel, Kyiv and Michigan in phases while maintaining hybrid office and remote workplace arrangements. While we have not experienced a material impact to date, it is possible that this could have a negative impact on the execution of our business plans and operations. If a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. The increase in remote working may also result in player privacy, IT security and fraud concerns as well as increase our exposure to potential wage and hour issues.
 
Given the continued spread of COVID-19, including the emergence of COVID-19 variants, such as the recent Delta and Omicron variants, and the resultant personal, economic and governmental reactions, we may have to take additional actions in the future that could adversely affect our business, financial condition, and results of operations. In addition, our management team has spent, and will likely continue to spend, significant time, attention, and resources monitoring the COVID-19 pandemic and associated global economic uncertainty and seeking to manage its effects on our business and workforce.
 
The extent to which the COVID-19 pandemic affects our financial results and operations will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, vaccine and booster rollout, severity and transmission rates of the virus and its current and future variants, the duration and spread of the outbreak, the governmental actions and regulations imposed to contain the virus or treat its impact, how quickly and to what extent pre-pandemic economic and operating conditions can resume and overall changes in players’ behavior.
 
Our limited operating history makes it difficult to evaluate our current business and future prospects.
 
The market for our offerings is relatively new and evolving, and we have a limited operating history under the majority of our customer agreements. As a result, our business and future prospects are difficult to evaluate and our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties.
 
We entered into our first customer agreement in 2014, and a majority of our customer agreements are in their initial terms. In 2018 and 2019, we began providing turnkey solutions to the NHL and NCEL, respectively. Furthermore, during 2020 we transitioned the VAL solution into a full iLottery program and launched a new turnkey solution with the province of Alberta in Canada. In 2021, we launched Instant games with the Austrian Lotteries (Österreichische Lotterien) as well as Lottomatica in Italy and Sisal Sans in Turkey. Our limited operating history in certain markets makes it difficult to accurately assess our future prospects and increase the risk associated with your investment. Any future changes to our revenue model could materially and adversely affect our business.
 
Our historical revenue growth should not be considered indicative of our future performance. In future periods, our revenue growth could slow and our revenues could decline for a number of reasons, including declining player demand, increasing competition, decreasing growth of the iLottery market or our failure to continue entering into new arrangements. We will continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If our assumptions regarding these risks, uncertainties or future revenue growth are incorrect, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

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We are subject to substantial penalties for failure to perform.
 
Our lottery contracts in the United States and in other jurisdictions and other service contracts often require performance bonds or letters of credit to secure our performance under such contracts and require us to pay substantial monetary liquidated damages in the event of non-performance by us.
 
As of 31 December 2021, we had outstanding performance bonds and letters of credit in an aggregate amount of approximately $3.8 million. These instruments present a potential expense for us and divert financial resources from other uses. Claims on performance bonds, drawings on letters of credit, and payment of liquidated damages could individually or in the aggregate have a material adverse effect on our results of operations, business, financial condition or prospects.
 
We rely on information technology and other systems and platforms, and any failures, errors, defects or disruptions in our systems or platforms could diminish our brand and reputation, subject us to liability, disrupt our business, affect our ability to scale our technical infrastructure and adversely affect our business.
 
Our technology infrastructure is critical to the performance of our platform and offerings and to customer and player satisfaction. We devote significant resources to network and data security to protect our systems and data. However, our systems and the systems of any third-party service providers on which we rely may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could be harmful to our business. We cannot assure you that the measures we take to prevent or hinder cyber-attacks and protect our systems, data and player information and to prevent outages, data or information loss, fraud and to prevent or detect security breaches, including a disaster recovery strategy for server and equipment failure and back-office systems and the use of third parties for certain cybersecurity services, will provide absolute security. We have experienced, and we may in the future experience, website disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints. Such disruptions have not had a material impact on us; however, future disruptions from unauthorized access to, fraudulent manipulation of, or tampering with our computer systems and technological infrastructure, or those of third parties, could result in a wide range of negative outcomes, each of which could materially adversely affect our business, financial condition, results of operations and prospects.
 
Additionally, our software may contain errors, bugs, flaws or corrupted data. If a particular product offering is unavailable when players attempt to access it or navigation through our platforms is slower than they expect, players may be less likely to return to our customers’ platforms as often, if at all. Furthermore, programming errors, defects and data corruption could disrupt our operations, adversely affect the experience of players, harm our reputation and cause players to stop utilizing our customers’ offerings.
 
Our current systems may be unable to support a significant increase in online traffic or increased player numbers, especially during peak times or events (such as for significant jackpot runs). If there is a system disruption, customers may be able to make a contractual claim for damages against us.
 
We may at any time be required to expend significant capital or other resources, including staff and management time, to reduce the risk of network or IT failure or disruption, including replacing or upgrading existing business continuity systems, procedures and security measures. If such protective measures are implemented unsuccessfully or inefficiently, the quality of our products and services may be materially and adversely affected.
 
We rely on third-party service providers for key functions in our operations.
 
We rely upon various third-party service providers to maintain continuous operation of our platform, servers, hosting services, payment processing and various other key functions of our business. Know-your-customer and geolocation programs and technologies supplied by third parties are an important aspect of certain of our products and services. These services are costly and their failure or inadequacy could materially affect our operations.
 
Additionally, we rely on third-party service providers for payment processing services, including the processing of credit and debit cards. Our business could be materially disrupted if these third-party service providers become unwilling or unable to provide these services to us.
 
Certain of these services discussed above are only provided by a limited number of third-party providers and in the event that any of these providers cease to provide us with their services (due to the termination of their agreement, a dispute between us and any such providers or for any other reason), we may struggle to locate a suitable replacement on commercially reasonable terms, if at all, which could lead to harmful disruptions to our operations.
 
If we fail to protect or enforce our intellectual property rights, our business could be materially affected.
 
We rely on a combination of trademark, copyright, trade secret, and domain-name-protection laws as well as contractual restrictions to protect our technology and intellectual property rights. While it is our policy to protect and defend our rights to our intellectual property, we cannot predict whether steps taken by us to protect our intellectual property will be adequate to prevent infringement, misappropriation, dilution or other violation of our intellectual property rights. Effective intellectual property protection may not be available in every country in which we operate or intend to operate our business. Third parties may infringe our proprietary rights (knowingly or unknowingly) and challenge proprietary rights held by us, and any potential future trademark and patent applications may not be approved. We have been required and in the future may be required to expend significant time and expense to prevent infringement or to enforce our rights. We also cannot guarantee that others will not independently develop technology with the same or similar functions to any proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. Unauthorized parties may also attempt to copy or obtain and use our technology to develop offerings with the same functionality as our solutions, and policing unauthorized use of our technology and intellectual property rights is difficult and may not be effective. Any unauthorized use of our brand, technology or intellectual property could result in revenue loss as well as have an adverse impact on our reputation. We may be required to incur significant expenses in registering, monitoring and protecting our intellectual property rights. Any litigation could result in significant expense to us, including the diversion of management time and may not ultimately be resolved in our favor. Changes in the law or adverse court rulings may also negatively affect our ability to prevent others from using our technology.

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We attempt to protect our intellectual property, technology and confidential information by requiring certain of our employees and consultants to enter into confidentiality and assignment of inventions agreements and certain third parties to enter into nondisclosure agreements. These agreements may not effectively grant all necessary rights to any inventions or works that may have been developed or created by the employees or consultants party thereto. In addition, these agreements may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, intellectual property, or technology.
 
We currently hold rights to the neogames.com internet domain name and various other related domain names. The regulation of domain names is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars, or modify the requirements for holding domain names. In addition, third parties may already have registered, or may register in the future, domain names similar or identical to our registered and unregistered trademarks. As a result, we may not be able to acquire or maintain all domain names that use the name neogames or are otherwise important for our business.
 
We also have certain registered and unregistered trademarks that are important to our business, such as the NEOGAMES trademark. If we fail to adequately protect or enforce our rights under this trademark, we may lose the ability to use this trademark or to prevent others from using it, which could adversely harm our reputation, business, results of operations and financial condition.
 
Our software, games and marketing materials are protected in these works with copyright law, and some also benefit from trade secret protection. We have chosen not to register any copyrights under the Library of Congress. In order to bring a copyright infringement lawsuit in the United States, the copyright must be registered. Accordingly, the remedies and damages available to us for unauthorized use of our software, games and materials may be limited.
 
We rely on third-party intellectual property. We cannot guarantee that such intellectual property will continue to be available.
 
We rely on third-party technologies, trademarks and other intellectual property. There can be no assurance that these licenses, or support for such licensed products and technology, will continue to be available to us on commercially reasonable terms, if at all. In addition, the future success of our business may depend, in part, on our ability to obtain or expand licenses for lottery or gaming technologies we do not currently possess. In the event that we cannot retain, renew or expand existing licenses, we may be required to modify, limit or discontinue certain of our products or services, which could materially affect our business, financial condition and results of operations. In addition, the regulatory review process and licensing requirements of our government customers may preclude us from using technologies owned or developed by third parties if those parties are unwilling to subject themselves to regulatory review or do not meet regulatory requirements.
 
While we own most of the software in our platform, we license certain core legacy software from Aspire, as further described in “Related Party Transactions.” The Aspire Software License Agreement does not prohibit Aspire from depositing the source code of the software licensed to us with an escrow agent. While Aspire has not yet done this, if Aspire were to do so and a release event were to occur, Aspire’s third-party designees would gain rights and access to source code that is material to our business which could materially and adversely affect our business, prospects, financial condition and results of operations. The Aspire Software License Agreement also allows both Aspire and the Company to develop modifications to the Mixed-Use Software, and any modifications developed by the Company or Aspire are owned by the developing party and licensed to the other party for certain purposes. This results in a risk to the confidentiality and exclusivity of any modifications and improvements we may create to such software.
 
As part of our effort to migrate off of using any Mixed-Use Software in our product and service offerings, we are currently adopting a “microservice” approach pursuant to which we have different software modules for each product and service. We may encounter technological challenges that render such transition impossible, or may determine that such transition is too costly or time intensive to complete. The result might be that we need to continue to rely on the Mixed-Use Software. Although our license from Aspire for the Mixed-Use Software is exclusive, perpetual and irrevocable, Aspire could argue that certain uses we are making of the Mixed-Use Software are outside of the scope of the license. In addition, if our license from Aspire were found to be invalid or not perpetual for any reason, this could materially and adversely affect our business, prospects, financial condition and results of operations.
 
The gaming industry is historically litigious with respect to intellectual property and there can be no assurance that our platforms will not infringe on the rights of others.
 
There is a risk that our operations, platforms and services may infringe, or be alleged to infringe, the intellectual property rights of third parties. We have incurred and in the future may incur substantial time and expense in defending against third-party infringement claims, regardless of their merit. Additionally, due to diversion of management time, expenses required to defend against any claim and the potential liability associated with any lawsuit, any litigation could significantly harm our business, financial condition and results of operations. If we were found to have infringed the intellectual property rights of a third party, we could be liable for license fees, royalty payments, lost profits or other damages, and may be subject to injunctive relief to prevent us from using such intellectual property rights in the future. Such liability (if significant) or injunctive relief could materially and adversely affect our business, prospects, financial condition and results of operations.
 
We are exposed to costs associated with changes in levies and taxes.
 
We must comply with tax laws in the jurisdictions in which we operate. Tax rules or their interpretation may change in the markets in which we operate and in any markets we may enter in the future. Any changes to the corporate tax rate application in different jurisdictions, withholding taxes, transfer pricing rules, levels of value added tax, industry specific taxes and other levies, royalties and imposts could materially and adversely affect our financial position, performance and prospects. For example, there is a risk that we will not be able to pass on to our customers any additional gaming levies or taxes that apply to us. In addition, certain of our positions regarding the taxes that apply to us in the different jurisdictions in which we operate may not be accepted by the tax authorities in such jurisdictions, which could adversely affect our financial condition. On May 18, 2021, we obtained a pre-ruling from the Israeli Tax Authority regarding the transfer of certain intellectual property rights relating to the online lottery business of NeoGames S.A. to NGS. We cannot guarantee that the ruling will be acceptable with the Luxembourg tax authorities.
 
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We are subject to taxation in multiple jurisdictions, which is complex and often requires making subjective determinations subject to scrutiny by, and disagreements with, tax regulators.
 
We are subject to different forms of taxation in each of the countries and regions we or our subsidiaries are formed and/or conduct our business, including, but not limited to, income tax, withholding tax, gaming taxes, property tax, VAT, social security and other payroll-related taxes. Tax law and administration is complex, subject to change and varying interpretations and often requires us to make subjective determinations. In addition, we take positions in the course of our business with respect to various tax matters, including in connection with our operations. Tax authorities worldwide are increasingly rigorous in their scrutiny of corporate tax structures and may not agree with the determinations that are made, or the positions taken, by us with respect to the application of tax law. Such disagreements could result in lengthy legal disputes, an increased overall tax rate applicable to us and, ultimately, in the payment of substantial amounts of tax, interest and penalties, which could have a material adverse effect on our business, results of operations and financial condition.
 
For example, in August 2021 we received a request from the Israeli Tax Authority to provide certain information and documents related to our Israeli subsidiary Neogames Systems Ltd. with respect to the years 2016–2019. We have not received additional requests or other notifications from the Israeli Tax Authority, pertaining to this matter, with any findings or that would clarify the reasons for such audit. Such audit and similar proceedings may result in assessments, fines, settlements, or increased overall tax rates. While we believe we comply with applicable tax laws, and given the absence of further communications from the Israeli Tax Authority as aforementioned, we cannot anticipate the results of such audit or other similar proceedings, and we have not set aside any reserves to provide for any outcomes related to the tax audits. The ultimate outcome of the Israeli tax audit, and any other audits that may commence by any other tax authority, and of any related litigation or other proceedings, could have a material adverse effect on our consolidated financial statements.
 
Another example is the pre-ruling issued on 18 May2021 by the Israeli Tax Authority regarding the transfer of certain intellectual property rights relating to the online lottery business of NeoGames S.A. to NGS. We cannot guarantee that the ruling will be acceptable to the Luxembourg tax authorities, or that the Israeli Tax Authority will not commence audit of other periods. Furthermore, the pre-ruling sets forth certain terms regarding the Company’s day to day practices. Failure by the Company to adhere to such terms may result in the loss of the beneficial tax rates set forth by the pre-ruling. See Item 10.E. “Taxation – Tax Ruling of the Israeli Tax Authority.”
 
Our operations in Kyiv, Ukraine may be materially impacted as a result of Russia’s invasion of Ukraine and our business, financial condition and results of operations may be materially adversely affected by any negative economic impact resulting from the conflict in Ukraine.
 
We operate a development hub in Kyiv, Ukraine. As of 31 December 2021, we had approximately 211 employees and 1% in assets in Ukraine. We do not have revenue generating activities in Ukraine. We have also invested significant resources in Ukraine over the last several years. As a result, warfare, political turmoil or terrorist attacks in this region could negatively affect our Ukrainian operations and our business. On 24 February 2022, Russian military forces invaded Ukraine. Prior to Russia’s invasion, 60 of our staff in Ukraine left the country to neighbouring countries with our assistance, and 70 left to western areas of the country. We have transitioned to Israel the responsibilities for the release of new features, and the monitoring of stability and health of production environment. However, the ultimate extent, length and impact of the ongoing military conflict are highly unpredictable, and it could disrupt our Ukrainian operations, increase our costs and may disrupt future planned development of capabilities in Ukraine and the surrounding region, and adversely impact our ability to meet our long term development delivery commitments. It is unclear what impact the hostilities in Ukraine will have on our assets.
 
We have developed and, in some cases, implemented additional contingency plans to relocate work and/or personnel to other geographies and add new locations, as appropriate. Our business continuity plans are designed to address known contingency scenarios to ensure that we have adequate processes and practices in place to protect the safety of our people and to handle potential impacts to our operations. Our crisis management procedures, business continuity plans, and disaster recovery capabilities may not be effective at preventing or mitigating the effects of prolonged or multiple crises, such as civil unrest, military conflict and a pandemic in a concentrated geographic area. The current events in the regions where we operate and where we derive a significant amount of our business may pose security risks to our people, our facilities, our operations, and infrastructure, such as utilities and network services, and the disruption of any or all of them could materially adversely affect our business, financial conditions and results of operations, and cause volatility in the price of our shares. We are continuing to monitor the situation in Ukraine and assess options in relation to our ongoing operations and our ability to continue to do business in the region.
 
Furthermore, due to the political uncertainty involving Russia and Ukraine, there is also an increased likelihood that the tensions could result in cyber-attacks or cybersecurity incidents that could either directly or indirectly impact our operations. Any attempts by cyber attackers to disrupt our services or systems, if successful, could harm our business, result in the misappropriation of funds, be expensive to remedy and damage our reputation or brand. Insurance may not be sufficient to cover significant expenses and losses related to such cyber-attacks and cybersecurity incidents.
 
Our platform contains third-party open source software components, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could negatively affect our business.
 
Our platform contains software modules licensed to us by third-party authors under “open source” licenses and we expect to use open source software in the future. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. To the extent that our platform depends upon the successful operation of open source software, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platform, delay new introduction of new solutions, result in a failure of our platform and injure our reputation. For example, undetected errors or defects in open source software could render it vulnerable to breaches or security attacks, and, subsequently, make our systems more vulnerable to data breaches. In addition, the public availability of such software may make it easier for others to compromise our platform.
 
Some open source licenses require that source code for modifications or derivative works we created based on such open source software be made publicly available as open source software. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with less investment of development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software.

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Although we monitor our use of open source software to avoid subjecting our platform to conditions we do not intend, the terms of many open source licenses have not been interpreted by United States or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our platform will be effective. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability, or be required to seek costly licenses from third parties, to continue providing our offerings on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition and results of operations.
 
We are highly dependent on our key personnel. If we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
 
We rely on the expertise, industry experience, customer relationships and leadership of our senior management, and the departure, death or disability of any one of our executive officers or other extended or permanent loss of any of their services, or any negative market or industry perception with respect to any of them or their loss, could have a material adverse effect on our business.
 
We depend on our technical and operational employees for the design and development of our innovative products and services. The competition for these types of personnel is intense and we compete with other potential employers, including certain of our strategic partners, for the services of our employees. As a result, we may not succeed in retaining the key employees that we need in order to maintain and grow our business.
 
If we do not succeed in attracting, hiring, and integrating qualified personnel, or retaining and motivating existing personnel, we may be unable to grow effectively and our business could be adversely affected. We deploy our employees to certain of our customers’ worksites to assist in the development of their IT systems and platforms. The loss of employees who have been involved in the development of intellectual property and know-how and the development and maintenance of key strategic relationships with customers may result in the subsequent loss of key customers. If key employees were to leave, we may be unable to deliver our existing services or develop new products until such employees have been replaced. As our employees have very specific skillsets and are highly qualified, we may face difficulties in replacing them with new employees, and even if we succeed in recruiting new employees, we may incur substantial costs in the recruiting, training and integration of such new employees. See “ – Our operations in Kyiv, Ukraine may be materially impacted as a result of Russia’s invasion of Ukraine and our business, financial condition and results of operations may be materially adversely affected by any negative economic impact resulting from the conflict in Ukraine” regarding the situation in Ukraine.
 
Competition for skilled technical and other personnel in Israel is intense, and as a result we may fail to attract, recruit, retain and develop qualified employees, which could materially and adversely impact our business, financial condition and results of operations.
 
We compete in a market marked by rapidly changing technologies and an evolving competitive landscape. In order for us to successfully compete and grow, we must attract, recruit, retain and develop personnel with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital and business needs.
 
Our principal research and development as well as significant elements of our general and administrative activities are conducted at our headquarters in Israel, and we face significant competition for suitably skilled employees in Israel. While there has been intense competition for qualified human resources in the Israeli high-tech industry historically, the industry experienced record growth and activity in 2021, both at the earlier stages of venture capital and growth equity financings, and at the exit stage of initial public offerings and mergers and acquisitions. This flurry of growth and activity has caused a sharp increase in job openings in both Israeli high-tech companies and Israeli research and development centers of foreign companies, and intensification of competition between these employers to attract qualified employees in Israel. As a result, the high-tech industry in Israel has experienced significant levels of employee attrition and is currently facing a severe shortage of skilled human capital, including engineering, research and development, sales and customer support personnel. Many of the companies with which we compete for qualified personnel have greater resources than we do, and we may not succeed in recruiting additional experienced or professional personnel, retaining personnel or effectively replacing current personnel who may depart with qualified or effective successors. Failure to retain or attract qualified personnel could have a material adverse effect on our business, financial condition and results of operations.
 
We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business.
 
Our business generally requires significant upfront capital expenditures for software customization and implementation and systems and equipment installation and configuration. In connection with a renewal of or bid for a lottery or gaming contract, a customer may seek to impose new service requirements, which may require additional capital expenditures in order to retain or win the contract, as applicable.
 
To the extent that we do not have sufficient liquidity levels to fund such capital expenditures, our ability to procure new contracts and renew existing contracts would depend on, among other things, our ability to obtain additional financing on commercially reasonable terms. Our ability to obtain additional capital, if and when required, will depend on, among other factors, our business plans, investor demand and the capital markets.
 
We have historically funded our operations with, among other things, borrowings under the WH Credit Facility. On October 20, 2020, we entered into a loan agreement with William Hill Finance Limited, an affiliate of William Hill, which sets out amended terms and an amended repayment schedule with respect to our outstanding loans under the WH Credit Facility and prohibits us from making any additional draws under the WH Credit Facility. See “Related Party Transactions – Relationship with William Hill – WH Credit Facility.
 
We completed our public listing on November 23, 2020 raising a total net amount of $43 million and our total cash balance as of 31 December 2021 was approximately $66.1 million.
 
Any financing through the sale of equity securities may dilute the value of our outstanding Ordinary Shares. Any debt financing may require us to comply with various financial covenants and may restrict our activities. We also can provide no assurance that the funds we raise will be sufficient to finance any future capital requirements. If we are unable to obtain additional capital when required on satisfactory terms, our ability to continue to grow our business could be adversely affected.

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Our management team has limited experience managing a public company.
 
Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies listed in the United States. Our management team may not successfully or efficiently manage the Company, which is subject to significant regulatory oversight and reporting obligations under the U.S. federal securities laws and the continuous scrutiny of securities analysts and investors. These obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, prospects, financial condition and results of operations.
 
We may become subject to litigation, from which we could incur significant monetary and reputational harm, irrespective of the merit of such claim or outcome of such litigation.
 
There is a risk that we may become subject to litigation and other claims and disputes in the ordinary course of business, including contractual disputes and indemnity claims, misleading and deceptive conduct claims, employment-related claims, and intellectual property disputes and claims, including those based on allegations of infringement, misappropriations or other violations of intellectual property rights. We may incur significant expense defending or settling such litigation.
 
Any litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or in payments of substantial monetary damages or fines, the posting of bonds requiring significant collateral, letters of credit or similar instruments, or we may decide to settle lawsuits on similarly unfavorable terms. These proceedings could also result in reputational harm, criminal sanctions, consent decrees or orders preventing us from offering certain products or requiring a change in our business practices in costly ways or requiring development of non-infringing or otherwise altered products or technologies. Litigation and other claims and regulatory proceedings against us could result in unexpected disciplinary actions, expenses and liabilities, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
 
Our results of operations may be adversely affected by fluctuations in currency values.
 
The Company’s consolidated financial results are affected by foreign currency exchange rate fluctuations. Foreign currency exchange rate exposures arise from current transactions and anticipated transactions denominated in currencies other than U.S. dollars and from the translation of foreign currency denominated balance sheet accounts into U.S. dollar-denominated balance sheet accounts. The Company is exposed to currency exchange rate fluctuations because portions of its expenses are denominated in currencies other than the U.S. dollar.
 
Approximately 82% of the Company’s revenues in the year ended 31 December 2021 were denominated in U.S. dollars, 4% in euros and 14% in other currencies. However, 26% of the Company’s liabilities were denominated in New Israeli Shekels. For example, almost all of the Company’s current employees are domiciled in Israel and paid in New Israeli Shekels. In 2021, the U.S. dollar / New Israeli Shekel exchange rate decreased from NIS 3.215 per $1 on 31 December 2020, to NIS 3.110 per $1 on 31 December 2021. The decrease from year end 2020 to year end 2021 adversely affected our costs and liabilities that are denominated in Shekels compared to our dollar-denominated income. Any further devaluation of the U.S. dollar compared to the New Israeli Shekel may result in further increases in employee liabilities and other expenses, which may adversely affect the Company’s profit and financial performance. Exchange rate fluctuations have in the past adversely affected the Company’s operating results and cash flows and may adversely affect the Company’s results of operations and cash flows and the value of its assets outside the United States in the future. A devaluation of local currency in a jurisdiction in which the Company is paid in such currency may require the Company’s customers located in such jurisdiction to adjust the amounts paid in local currency for the Company’s products and services, which they may be unable or unwilling to make. Other than the FX hedging transaction entered into in connection with the proposed acquisition of Aspire, NeoGames Systems Ltd. entered into certain forward contracts to hedge its NIS exposure associated with expenses nominated in NIS during 2022. For additional information regarding the FX Hedging Transaction. As of the date hereof, the Company has incurred costs in an amount of approximately $1.6 million in connection with the financing agreements with Blackstone. The Company has not incurred costs in connection with the FX Hedging Transaction. The costs of the FX Hedging Transaction will be incurred only upon completion of the Aspire Tender Offer.
 
Expansion into new markets may be important to the growth of our business in the future, and if we do not manage the business and economic risks of this expansion effectively, it could materially and adversely affect our business and results of operations.
 
We expect to continue to expand our operations to additional U.S. states and to expand our international operations. Any new markets or countries which we attempt to access may not be receptive. For example, we may not be able to expand further in some markets if we are not able to satisfy certain government requirements. In addition, our operations in new jurisdictions subject us to risks customarily associated with such operations, including the complexity of local laws, regulations and markets, the uncertainty of enforcement of remedies in foreign jurisdictions, the impact of local labor laws and disputes, the economic, tax and regulatory policies of local governments and the ability to attract and retain key personnel in new jurisdictions. Foreign jurisdictions could impose tariffs, quotas, trade barriers, and other similar restrictions on our international sales. In addition, our ability to expand successfully involves other risks, including difficulties in integrating operations, risks associated with entering jurisdictions in which we may have little experience and the day-to-day management of a growing and increasingly geographically diverse company.
 
Our investments in new jurisdictions often entail entering into joint ventures or other business relationships with locally-based entities, especially in jurisdictions in which governments prefer or are required to use locally-based entities. Our reliance on partnerships with locally-based entities can involve additional risks arising from our lack of sole decision-making authority, our reliance on a partner’s financial condition, inconsistency between our business interests or goals and those of our partners and disputes between us and our partners.
 
We may not realize the operating efficiencies, competitive advantages or financial results that we anticipate from our investments in new jurisdictions and our failure to effectively manage the risks associated with our operations in new jurisdictions could have a material adverse effect on our financial position, performance and prospects.

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As a significant amount of our net profits and cash flows are generated outside Luxembourg, the repatriation of funds currently held in foreign jurisdictions may result in higher effective tax rates for us. In addition, heightened attention has been given at national and supranational levels, including through the G20 / OECD Base Erosion and Profit Shifting project (“BEPS”), as well as in other public forums and the media, with regard to matters of cross-border taxation, and in particular, to taxation of the digital economy. In December 2021, the OECD published the Pillar Two model rules for domestic implementation of 15% global minimum tax, and the EU followed suit shortly thereafter. It is expected that the OECD will release the commentary relating to the model rules in 2022 and address co-existence with the US Global Intangible Low-Taxed Income (GILTI) rules. This will be followed by the development of an implementation framework focused on administrative, compliance and co-ordination issues relating to Pillar Two. It is expected that the global minimum tax will be implemented at national level by 2023. The Pillar Two rules, once implemented, are expected to apply to us, along with detailed transfer pricing reporting and exchange of tax information rules known as “Country by Country Reporting”, insofar as our annual revenues exceed EUR 750 million.
 
Malta transposed the EU Anti-Tax Avoidance Directive into domestic law, including changes with respect to exit tax, General Anti-Abuse Rules and Controlled Foreign Corporation rules. Due to pressure from the European Union, many offshore jurisdictions have introduced “substance” requirements including with regard to intangible property companies. The likelihood of scrutiny of tax practices by tax authorities in relevant jurisdictions and the aggressiveness of tax authorities remains high.
 
In this context, we expect to be subject to increased reporting requirements regarding our international tax structure.
 
Any changes in the rules regarding cross-border taxation or the revised interpretation of existing tax rules could increase our tax liability and have a material adverse effect on our business, results of operations, financial condition and prospects.
 
For example, our pending acquisition of Aspire, which is material for us, may not have the expected results, and may fail to yield the expected results or benefits due to the challenges described above.
 
Our insurance may not provide adequate levels of coverage against claims.
 
We maintain insurance that we believe is customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis. Such losses could adversely affect our business prospects, results of operations, cash flows and financial condition.
 
If we fail to detect fraud or theft, including by our employees and our customers and their players, our reputation may suffer which could harm our brand and negatively impact our business, financial condition and results of operations and subject us to investigations and litigation.
 
We may incur losses, whether directly or indirectly through our revenue share with our customers, from various types of financial fraud, including use of stolen or fraudulent credit card data, claims of unauthorized payments by our customers’ players and attempted payments by such players with insufficient funds. Bad actors use increasingly sophisticated methods to engage in illegal activities involving personal data, such as unauthorized use of another person’s identity, account information or payment information and unauthorized acquisition or use of credit or debit card details, bank account information and mobile phone numbers and accounts.
 
Acts of fraud may involve various tactics, including collusion. Successful exploitation of our systems could have negative effects on our product offerings, services and player experience and could harm our reputation. Failure to discover such acts or schemes in a timely manner could result in harm to our operations.
 
In addition, negative publicity related to such schemes could have an adverse effect on our reputation, potentially causing a material adverse effect on our business, financial condition, results of operations and prospects. In the event of the occurrence of any such issues with our existing platform or product offerings, substantial engineering and marketing resources and management attention, may be diverted from other projects to correct these issues, which may delay other projects and the achievement of our strategic objectives.
 
In addition, any misappropriation of, or access to, players’ personal data or other proprietary information or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, including for failure to protect personal data or for misusing personal data, which could disrupt our operations, force us to modify our business practices, damage our reputation and expose us to claims from our customers, their players, regulators, employees and other persons, any of which could have an adverse effect on our business, financial condition, results of operations and prospects.
 
We cannot guarantee that any measures we have taken or may take in the future to detect and reduce the occurrence of fraudulent or other malicious activity on our platform will be effective or will scale efficiently with our business. Our failure to adequately detect or prevent fraudulent transactions could harm our reputation or brand, result in litigation or regulatory action and lead to expenses that could adversely affect our business, financial condition and results of operations.
 
We are subject to risks related to corporate social responsibility, responsible lottery and gaming, reputation and ethical conduct.
 
Many factors affect our reputation and the value of our brand, including the perception held by our customers, business partners, investors, other key stakeholders and the communities in which we operate, such as our social responsibility, corporate governance and responsible lottery practices. We have faced, and will likely continue to face, increased scrutiny related to social, governance and responsible lottery and gaming activities, and our reputation and the value of our brands can be materially adversely harmed if we fail to act responsibly in a number of areas, such as diversity and inclusion, workplace conduct, responsible gaming, human rights, philanthropy and support for local communities. Any harm to our reputation could impact employee engagement and retention and the willingness of customers and partners to do business with us, which could have a materially adverse effect on our business, results of operations and cash flows. We believe that our reputation is critical to our role as a leader in the iLottery and gaming industries and as a publicly traded company. Our management is heavily focused on the integrity of our directors, officers, senior management, employees, other personnel and third-party suppliers and partners. Illegal, unethical or fraudulent activities perpetrated by any of such individuals, suppliers or partners for personal gain could expose us to potential reputational damage and financial loss.

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The illegal gaming market could negatively affect our business.
 
A significant threat to the lottery and gaming industry arises from illegal activities. Such illegal activities may draw significant betting volumes away from the regulated industry. In particular, illegal gaming could take away a portion of the present players that are the focus of our business. The loss of such players could have a material adverse effect on our results of operations, business, financial condition or prospects. Further, public trust is critical to the long-term success of regulated gaming, including lottery. Illegal gaming activities could impact the reputation of our customers, which would have an adverse impact on their revenues and our revenues.
 
Termination of our relationship with William Hill or failure to realize the anticipated benefits of such relationship could have an adverse effect on our business, prospects, financial condition and results of operations.
 
Pursuant to the WH Term Sheet, we granted WHG a sub-license to our NeoSphere platform to operate its U.S. iGaming business. In addition, we customize the NeoSphere platform to assist William Hill in meeting the regulatory requirements of the states in which it operates our systems.
 
Upon a change of control of the Company, William Hill will have the right to purchase a perpetual sub-license to the NeoSphere platform and any software updates and development that we provided to WHG (the “IP Option”) for a price of £15 million. We have also agreed to provide WHG with the IP Option following the completion of a four year period from the date of the WH Term Sheet. For additional information on our relationship with William Hill, see “Related Party Transactions – Relationship with William Hill.” Revenues received from William Hill in exchange for the sub-license to use the NeoSphere platform and the related services accounted for 16% of the Company’s revenues in the year ended 31 December 2021, 13.6% of the Company’s revenues in the year ended 31 December 2020 and 17.0% of the Company’s revenues in the year ended 31 December 2019. In the event that WHG terminates the WH Term Sheet, we will cease to generate revenues from William Hill. Additionally, the termination of our strategic relationship with William Hill could be negatively perceived by the market and could harm our brand and reputation.
 
Risks relating to legal, tax and regulatory matters
 
The gaming and lottery industries are heavily regulated, and changes to the regulatory framework in the jurisdictions in which we operate could harm our existing operations.
 
We and our customers are subject to extensive laws and regulations, which vary across the jurisdictions in which we and they operate. The regulatory environment, including lottery and gaming laws, in any particular jurisdiction may change in the future, which may limit some or all of our or our customers’ existing operations in such jurisdiction. There can be no assurance that our and our customers’ existing operations, or the iLottery industry as a whole, in such jurisdictions will continue to be permitted. Further, even if we are still permitted to operate in a given jurisdiction, regulations may be imposed that make continued operations cost-prohibitive.
 
We may become subject to additional regulations in any new jurisdiction in which we decide to operate in the future. The complexity of the regulatory environment may create challenges for us with respect to our ability to comply with applicable regulations, renew contracts, pursue tender offers and otherwise develop our business.
 
We may not be able to capitalize on the expansion of internet use and other changes in the lottery industry as a consequence of lack of legislative approvals, changes in regulations or regulatory uncertainty. We aim to take advantage of the liberalization of internet and mobile gaming, both within the United States and internationally. These industries involve significant risks and uncertainty, including legal, business and financial risks. This dynamic environment can make it difficult to plan strategically and can provide opportunities for competitors to grow revenues at our expense. Our ability to successfully pursue interactive lottery and gaming strategies depends on the regulation of gambling through online channels. Regulations and laws relating to internet gaming are evolving and we cannot predict the timing, scope or terms of any such state, federal or foreign regulations, or the extent to which any such regulations will facilitate or hinder our interactive strategies. Any such changes to regulations or laws could have a material adverse effect on our business, results of operations, financial condition and prospects.
 
Failure to comply with regulations may result in the revocation or suspension of our or certain of our customers’ respective licenses to operate.
 
Our and our customers’ respective licenses to operate are subject to suspension or revocation by applicable regulatory authorities as a result of noncompliance with applicable regulatory requirements. In the event of our noncompliance, such authorities may pursue enforcement proceedings against us or certain of our customers. We can provide no assurance as to whether such proceedings would be likely to result in a favorable outcome. Further, such proceedings, irrespective of their outcome, may cause us or our customers to incur substantial costs, require operational changes and result in reputational damage, among other negative impacts, which could have a material adverse effect on our business, results of operations, financial condition and prospects. Finally, regulatory and gaming authorities may suspend, revoke, or condition our existing licenses and permits, or refuse, delay or condition the grant of future licenses and permits, if our principal shareholders are subject to investigations or regulatory proceedings. In two cases, a State gaming board or other regulatory authority granted us a temporary permit, subject to our obligation to provide updates and notify the board regarding proceedings involving one of our Founding Shareholders.
 
We may incur substantial costs in order to meet the varied and complex regulatory requirements to which we are subject in the different jurisdictions in which we operate.
 
The form and scope of regulatory requirements within the iLottery, iGaming and online sports betting industries vary by jurisdiction. This lack of uniformity can increase the costs and burden of compliance, as well as increase the difficulty associated with expansion into new jurisdictions.
 
Regulatory frameworks associated with the iLottery, iGaming and online sports betting industries exist across a wide spectrum, including within particular countries. We currently operate in 20 jurisdictions, including several U.S. states where we hold supplier licenses as part of the WHG License (as defined below), and plan to expand our operations into new jurisdictions. Expansion into new jurisdictions will subject us to a wider range of different, and potentially conflicting, regulatory requirements, which may cause it to incur increased costs and expend a greater degree of time in ensuring compliance. Our business and operations may be adversely affected by inaccurate predictions of the financial cost and administrative burden of compliance in connection with expansion into new jurisdictions. Further, the likelihood of noncompliance may be heightened in the event of expansion, which could result in payment of liquidated damages or termination of contracts in the event of material noncompliance.

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Negative publicity concerning the gambling industry could result in increased regulations and reputational harm.
 
The industries in which we operate are at times subject to negative publicity with regard to harmful gambling behavior, such as addiction, gambling by minors, risks related to digital gambling and alleged association with money laundering. Publicity regarding problem gambling and other concerns with the lottery and other gambling industries, even if not directly connected to us, could adversely impact our business, results of operations, and financial condition. For example, if the perception develops that the gaming industry is failing to address such concerns adequately, the resulting political pressure may result in the industry becoming subject to increased regulation and restrictions on operations. Such an increase in regulation could adversely impact our results of operations, business, financial condition or prospects.
 
We are subject to laws and regulations related to data privacy, data protection and information security and consumer protection across different markets where we conduct our business, including in the United States and the European Union (“EU”), and we are also required to comply with certain industry standards including the Payment Card Industry Data Security Standard. Our actual or perceived failure to comply with such obligations could harm our business.
 
In the United States and other jurisdictions in which we operate, we are subject to various consumer protection laws and related regulations. If we are found to have breached any consumer protection laws or regulations in any such jurisdiction, we may be subject to enforcement actions that require us to change our business practices in a manner which may negatively impact our revenues, as well as expose us to litigation, fines, civil and/or criminal penalties and adverse publicity that could cause our customers to lose trust in us, negatively impacting our reputation and business in a manner that harms our financial position.
 
As part of our business and on behalf of our customers, we collect information about individuals, also referred to as personal data, and other potentially sensitive and/or regulated data. Laws and regulations in the United States and around the world restrict how personal data is collected, processed, stored, used and disclosed, as well as set standards for its security, implement notice requirements regarding privacy practices, and provide individuals with certain rights regarding the use, disclosure and sale of their protected personal data.
 
In the United States, both the federal and various state governments have adopted or are considering, laws, guidelines or rules for the collection, distribution, use and storage of information collected from or about consumers or their devices. For example, in the United States, there are a number of federal laws that impose limits on or requirements regarding the collection, distribution, use, security and storage of personal data of individuals. The Federal Trade Commission (FTC) Act grants the FTC authority to enforce against unfair or deceptive practices, which the FTC has interpreted to require companies’ practices with respect to personal data comply with the commitments posted in their privacy policies. The U.S. Federal Trade Commission and numerous state attorneys general also are applying federal and state consumer protection laws to impose standards on the online collection, use and dissemination of personal data, and to the security measures applied to such data. With respect to the use of personal data for direct marketing purposes, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act, establishes specific requirements for commercial email messages and specifies penalties for the transmission of commercial email messages that are intended to deceive the recipient as to source or content, and obligates, among other things, the sender of commercial emails to provide recipients with the ability to opt out of receiving future commercial emails from the sender.
 
In addition, in the United States at the state level, for example, California enacted the California Consumer Privacy Act (the “CCPA”), which came into force in 2020. The CCPA creates individual privacy rights for California residents and increases the privacy and security obligations of businesses handling personal data. The CCPA is enforceable by the California Attorney General and there is also a private right of action relating to certain data security incidents.
 
Additionally, the California Privacy Rights Act (the “CPRA”) which was approved on November 3, 2020 imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. Further, on March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act (the “CDPA”), a comprehensive privacy statute that shares similarities with the CCPA, CPRA and legislation proposed in other states. In addition, on July 7, 2021, Colorado enacted the Colorado Privacy Act (“COCPA”), becoming the third comprehensive consumer privacy law to be passed in the United States (after the CCPA and CDPA). Similar laws have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. If we become subject to laws, guidelines or rules such as the CCPA, CRPA CDPA, or COCPA, we may be required to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
 
Several foreign jurisdictions, including the EU and the European Economic Area (“EEA”), have laws and regulations which are more restrictive in certain respects than those in the United States. For example, in the EU we are subject to the General Data Protection Regulation 2016/679 (the “GDPR”) in relation to our collection, control, processing, sharing, disclosure and other use of data relating to an identifiable living individual (personal data). The GDPR, and national implementing legislation in EEA Member States, impose a strict data protection compliance regime including: providing detailed disclosures about how personal data is collected and processed (in a concise, intelligible and easily accessible form); demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities; granting rights for data subjects in regard to their personal data (including data access rights, the right to be “forgotten” and the right to data portability); requirements to take appropriate technical and organizational security measures; requirements to have data processing agreements in place to govern the processing of personal data on behalf of other organizations; introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; maintaining a record of data processing; and complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.

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We are also subject to EU rules with respect to cross-border transfers of personal data out of the EEA. Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States. Most recently, on July 16, 2020, the Court of Justice of the EU (the “CJEU”) invalidated the EU-US Privacy Shield Framework (the “Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme. While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on standard contractual clauses alone may not necessarily be sufficient in all circumstances. Use of the standard contractual clauses must now be assessed on a case-by-case basis, taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be put in place, however, the nature of these additional measures is currently uncertain. The CJEU went on to state that if a competent supervisory authority believes that the standard contractual clauses cannot be complied with in the destination country and the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer. The European Commission has published revised standard contractual clauses for data transfers from the EEA: the revised clauses must be used for relevant new data transfers from September 27, 2021; existing standard contractual clauses arrangements must be migrated to the revised clauses by December 27, 2022. We will be required to implement the revised standard contractual clauses, in relation to relevant existing contracts and certain additional contracts and customer arrangements, within the relevant time frames. There is some uncertainty around whether the revised clauses can be used for all types of data transfers, particularly whether they can be relied on for data transfers to non-EEA entities subject to the GDPR.
 
We have relied and currently rely on standard contractual clauses to transfer personal data outside the EU, including to the U.S. among other data transfer mechanisms pursuant to the GDPR, such as transfer to jurisdictions recognized by the European Commission as providing sufficient safeguards for the processing of personal data (adequacy decision).
 
We have previously relied on our relevant providers’ Privacy Shield certification for the purposes of transferring personal data from the EU to the U.S. in compliance with the GDPR’s data export conditions.
 
These recent developments may require us to review and amend the legal mechanisms by which we make and/or receive personal data transfers to/in the U.S. The developments also create uncertainty and increase the risk around our international operations. European court and regulatory decisions subsequent to the CJEU decision of 16 July 2020 have taken a restrictive approach to international data transfers. For example, the Austrian and the French data protection supervisory authorities, as well as the European Data Protection Supervisor, have recently ruled that use of Google Analytics by European website operators involves the unlawful transfer of personal data to the United States; a number of other EU supervisory authorities are expected to take a similar approach which may impact other business tools that we use. As the enforcement supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
 
We depend on a number of third parties in relation to the operation of our business, a number of which process personal data on our behalf. With each such provider we attempt to mitigate the associated risks of using third parties by performing security assessments and detailed due diligence, entering into contractual arrangements to ensure that providers only process personal data according to our instructions, and that they have sufficient technical and organizational security measures in place. Where we transfer personal data outside the EU or the United Kingdom to such third parties, we do so in compliance with the relevant data export requirements, as described above. There is no assurance that these contractual measures and our own privacy and security-related safeguards will protect us from the risks associated with the third-party processing, storage and transmission of such information. Any violation of data or security laws by our third-party processors could have a material adverse effect on our business and result in the fines and penalties outlined below.
 
We also act as a data processor on behalf of our customers and have data protection obligations to our customers, including in relation to notifying customers if we suffer a personal data breach, assisting customers with data subject rights requests in relation to the personal data we process, requirements for the use of sub-processors and restrictions on transferring personal data outside of the EU.
 
We are subject to the supervision of local data protection authorities in those EU jurisdictions where we are established or otherwise subject to the GDPR. Fines for certain breaches of the GDPR are significant, such as an amount equal to the greater of €20 million or 4% of total global annual turnover. In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease/ change our processing of our data, enforcement notices, and/or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.
 
We are also subject to evolving EU privacy laws on cookies, tracking technologies and e-marketing. In the EU, informed consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing. The GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology. The current national laws that implement the ePrivacy Directive are highly likely to be replaced across the EU by an EU regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance. While the text of the ePrivacy Regulation is still under development, a recent European court decision, regulators’ recent guidance and recent campaigns by a not-for-profit organization are driving increased attention to cookies and tracking technologies. If regulators start to enforce the strict approach in recent guidance, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users, may lead to broader restrictions and impairments on our marketing and personalization activities and may negatively impact our efforts to understand users.
 
Restrictions on the collection, use, sharing or disclosure of personal data or additional requirements and liability for security and data integrity could require us to modify our solutions and features, possibly in a material manner, could limit our ability to develop new products and features and could subject us to increased compliance obligations and regulatory scrutiny.

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These laws and regulations constantly evolve and remain subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain. New privacy laws add additional complexity, requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, and could impact trading strategies and availability of previously useful data. Such new laws may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, and could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
 
We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, including the Payment Card Industry Data Security Standard (the “PCI DSS”), a security standard applicable to companies that collect, store or transmit certain data regarding credit and debit cards, holders and transactions. Any failure to comply with the PCI DSS may violate payment card association operating rules, federal and state laws and regulations, and the terms of our contracts with payment processors and merchant banks. Such failure to comply may result in the loss of our ability to accept credit and debit card payments, subject us to fines, penalties and damages. In addition, there is no guarantee that PCI DSS compliance will prevent illegal or improper use of our payment systems or the theft, loss or misuse of data pertaining to credit and debit cards, credit and debit card holders, and credit and debit card transactions.
 
We are subject to anti-money laundering laws and regulations in the United States and other jurisdictions in which we operate.
 
We are subject to reporting, recordkeeping and anti-money laundering provisions in the United States, and are subject to similar requirements in other jurisdictions in which we operate. Recently, there has been increased regulatory scrutiny by the United States and other regulators and law enforcement agencies on companies in the gaming industry and compliance with anti-money laundering laws and regulations. Anti-money laundering laws and regulations are evolving quickly and could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Any determination that we have violated such laws or regulations, or any accusations of money laundering or regulatory investigations into possible money laundering activities, could have an adverse effect on our business, financial condition and results of operations and cash flows, and changes in these laws or regulations could result in increased operating costs.
 
We are subject to economic and trade sanctions laws and regulations.
 
We are subject to economic and trade sanctions laws and regulations in the various jurisdictions in which we operate, including those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. Our global operations expose us to the risk of violating, or being accused of violating, economic and trade sanctions laws and regulations. Our failure to comply with these laws and regulations may expose us to reputational harm as well as significant penalties, including criminal fines, imprisonment, civil fines, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can also be disruptive and cause us to incur significant legal and investigatory fees. Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.
 
We are subject to global anti-corruption laws, including the U.S. Foreign Corrupt Practices Act.
 
We are subject to anti-corruption, anti-bribery and similar laws and regulations in the various jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (the “FCPA”). The FCPA prohibits us and our officers, directors, employees, agents and business partners acting on our behalf, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or otherwise securing an improper advantage to obtain or retain business. The FCPA further requires companies listed on U.S. stock exchanges to make and keep books and records that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. We conduct business directly and indirectly (through third-party vendors) with U.S. and non-U.S. governments. We are also subject to governmental oversight around the world, which may bring our officers, directors, employees and business partners acting on our behalf, including agents, into contact with government officials, all of which creates compliance risks.
 
We will implement and maintain policies and procedures designed to comply with applicable anti-corruption laws and regulations. However, we cannot provide assurance that our internal controls and compliance systems will always protect us from liability for acts committed by employees, agents or business partners of ours that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks and other related laws. Any such improper actions or allegations of such acts could subject us to civil or criminal fines and penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as related stockholder lawsuits and other remedial measures, all of which could adversely affect our reputation, business, financial condition and results of operations. Investigations of alleged violations can also be disruptive and cause us to incur significant legal and investigatory fees.
 
Our revenue may be impacted, to a significant extent, by macroeconomic conditions.
 
Our business is sensitive to macroeconomic conditions. Economic factors, such as interest rates, heightened inflationary pressures, rising interest rates in key markets in which we operate, currency exchange rates, changes in monetary and related policies, market volatility, consumer confidence, supply chain issues and unemployment rates, are among the most significant factors that impact consumer spending behavior. Weak economic conditions or a significant deterioration in either global or certain regional economic conditions, including those resulting from health epidemics, such as the ongoing COVID-19 pandemic, or man-made events, such as the rapidly-escalating conflict in Ukraine, may limit supply chains or increase their cost, reduce the amount of disposable income consumers have, which, in turn, reduces consumer spending, and would have an adverse effect on our business, financial condition, and results of operations.

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Conditions in the jurisdictions where we operate could materially and adversely affect our business , including, for example, in connection with the ongoing war in Ukraine.
 
Our offices are located in Tel Aviv, Israel, and a number of our officers and directors are living in Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business and operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries. Any hostilities involving Israel could adversely affect our operations and results of operations.
 
In addition, one of our offices is located in Kyiv, Ukraine, where a large part of our development team is located. Russia’s invasion of Ukraine and the related measures taken by the U.S., EU, UK and other jurisdictions, and NATO, including economic sanctions and export controls imposed as a result thereof, have created global security concerns and could have an impact on regional and global economies.
 
We cannot predict the impact of Russian activities in Ukraine and any heightened military conflict or geopolitical instability that may follow, including additional sanctions or counter-sanctions. While we continue to monitor the situation in Ukraine closely, any prolonged or expanded unrest, military activities, or sanctions, could have a material adverse effect on our operations.
 
Risks related to the Shares
 
The trading price of our Shares is likely to be volatile, and you may lose all or part of your investment.
 
The following factors, in addition to other risks described in this prospectus, may have a significant effect on the market price of our Shares:
 
•          variations in our operating results;
 
•          actual or anticipated changes in the estimates of our operating results;
 
•          changes in stock market analyst recommendations regarding our Shares, other comparable companies or our industry generally;
 
•          macro-economic conditions in the countries in which we do business;
 
•          currency exchange fluctuations and the denominations in which we conduct business and hold our cash reserves;
 
•          market conditions in our industry;
 
•          actual or expected changes in our growth rates or our competitors’ growth rates;
 
•          changes in regulation applicable to our industry;
 
•          changes in the market valuation of similar companies;
 
•          the trading volume of our shares on Nasdaq;
 
•          sales of our Shares by us or our shareholders, including the Founding Shareholders; and
 
•          the adoption or modification of regulations, policies, procedures or programs applicable to our business.
 
In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the trading price of our Shares could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our Shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of your investment in our Shares. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially adversely affect our business, operating results and financial condition.
 
If a U.S. person is treated as owning at least 10% of our Ordinary Shares, such holder may be subject to adverse United States federal income tax consequences.
 
If a U.S. person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our Ordinary Shares, such person may be treated as a “U.S. shareholder” with respect to each “controlled foreign corporation” in our group (if any). Because our group includes a U.S. subsidiary, certain of our non-U.S. subsidiaries will be treated as controlled foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation). A U.S. shareholder of a controlled foreign corporation may be required to report annually and include in its United States taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that is a U.S. shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a U.S. shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a U.S. shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s United States federal income tax return for the year for which reporting was due from starting. We cannot provide any assurance that we will assist investors in determining whether we are or any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a U.S. shareholder with respect to any such controlled foreign corporation or furnish to any U.S. shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A U.S. investor should consult its advisers regarding the potential application of these rules to an investment in our Ordinary Shares.
 
Ownership in our Shares is restricted by gambling laws, and persons found “unsuitable” by a competent authority may be required to dispose of their shares.
 
Gambling authorities or lottery authorities, as applicable, have the right to investigate any individual or entity having a relationship to, or involvement with, us or any of our subsidiaries or joint ventures, to determine whether such individual or entity is suitable as a business associate of ours. Many jurisdictions also require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gambling company to report the acquisition to the local regulatory authorities, and those authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for “institutional investors” that hold a company’s voting securities for investment purposes only.

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Gambling and/or lottery authorities have very broad discretion in determining whether an applicant should be deemed suitable. Subject to certain administrative proceeding requirements, these regulators have the authority to deny any application or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable by those authorities.
 
Any person found unsuitable by a competent authority may be precluded from holding direct, indirect, beneficial or record ownership of any voting security, nonvoting security or debt security of any public corporation which is registered with the relevant gambling or lottery authority beyond the time prescribed by such authority.
 
Our failure, or the failure of any of our major shareholders, directors, officers, key employees, products or technology, to obtain or retain a required license or approval in one jurisdiction could negatively impact our ability (or the ability of any of our major shareholders, directors, officers, key employees, products or technology) to obtain or retain required licenses and approvals in other jurisdictions.
 
In light of these regulations and the potential impact on our business, our articles of association allow for the restriction of stock ownership by persons or entities who fail to comply with informational or other regulatory requirements under applicable gambling laws, who are found unsuitable to hold our shares by competent authorities, whose stock ownership adversely affects our ability to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gambling or lottery authority or a purported transferee of a stockholder who acquires shares made invalid pursuant to our articles of association. The licensing procedures and background investigations of the authorities that regulate our businesses and the restriction in our articles of association may inhibit potential investors from becoming significant stockholders or inhibit existing stockholders from retaining or increasing their ownership.
 
We do not anticipate paying dividends in the foreseeable future.
 
We do not anticipate paying any cash dividends on our Shares in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination to pay dividends will be made at the discretion of our board of directors, subject to compliance with applicable laws and covenants under any future credit facility, which may restrict or limit our ability to pay dividends. The amount of any future dividend payments we may make will depend on, among other factors, our strategy, future earnings, financial condition, cash flow, working capital requirements, capital expenditures and applicable provisions of our articles of association. Unless and until we declare and pay dividends, any return on your investment will only occur if the value of our Shares appreciates.
 
Additionally, under Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. The allocation to the legal reserve becomes compulsory again when the legal reserve no longer represents 10% of our issued share capital. Our legal reserve is not available for distribution.
 
Future sales or the perception of future sales of our Ordinary Shares could adversely affect the price of our Ordinary Shares.
 
Subject to compliance with the Securities Act or exceptions therefrom, we, all of our directors and executive officers, and certain of our shareholders including the Founding Shareholders, may make Ordinary Shares available for sale into the public markets, which could cause the market price of our Ordinary Shares to decline and impair our ability to raise capital. Sales of a substantial number of shares or the perception that such sales may occur may also cause the market price of our Ordinary Shares to fall or make it more difficult for you to sell your Ordinary Shares at a time and price that you deem appropriate.
 
The coverage of our business or our Shares by securities or industry analysts or the absence thereof could adversely affect the trading price and trading volume of our Shares.
 
Our Shares are listed on Nasdaq. However, we cannot assure you that an active trading market for our Shares will be sustained. The trading market for our securities is influenced in part by the research and other reports that industry or securities analysts publish about us or our business or industry from time to time. We do not control these analysts or the content and opinions included in their reports. We may be slow to attract equity research coverage, and the analysts who publish information about our securities will have had relatively little experience with our company, which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates. If no or few analysts commence equity research coverage of us, the trading price and volume of our securities would likely be negatively impacted. If analysts do cover us and one or more of them downgrade our securities, or if they issue other unfavorable commentary about us or our industry or inaccurate research, our stock price would likely decline. Furthermore, if one or more of these analysts cease coverage or fail to regularly publish reports on us, we could lose visibility in the financial markets. Any of the foregoing would likely cause our stock price and trading volume to decline. Accordingly, we cannot assure you of the likelihood that an active trading market will be sustained, the liquidity of any trading market, your ability to sell your Shares when desired or the price that you may be able to obtain in any such sale.
 
We are an emerging growth company, as defined in the Securities Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Ordinary Shares less attractive to investors because we may rely on these reduced disclosure requirements.
 
We are an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we could continue to be an emerging growth company for up to five years following the completion of our initial public offering.
 
For as long as we continue to be an emerging growth company, we may also take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including presenting only limited selected financial data and not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. As a result, our shareholders may not have access to certain information that they may deem important. We cannot predict if investors will find our Ordinary Shares less attractive because we may rely on these exemptions. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile.

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We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
 
We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information. In addition, foreign private issuers are not required to file their annual report on Form 20-F as promptly as U.S. domestic issuers. In addition, we are permitted to disclose limited compensation information for our executive officers on an individual basis. Further, we are not required to comply with Regulation FD, which restricts the selective disclosure of material nonpublic information to, among others, broker-dealers and holders of a company’s securities under circumstances in which it is reasonably foreseeable that the holder will trade in the company’s securities on the basis of the information. These exemptions and leniencies reduce the frequency and scope of information and protections afforded to shareholders of a company that is not a foreign private issuer.
 
Additionally, as a foreign private issuer whose shares are listed on Nasdaq, we have the option to follow certain home country corporate governance practices rather than those of Nasdaq, including with respect to Nasdaq’s rule with respect to a majority independent board.
 
At this time, we do not follow any Luxembourg rules instead of Nasdaq corporate governance rules, except with respect to Nasdaq Marketplace Rule 5635 which sets forth the circumstances under which shareholder approval is required prior to an issuance of securities in connection with: (i) the acquisition of the stock or assets of another company; (ii) equity-based compensation of officers, directors, employees or consultants; (iii) a change of control; and (iv) transactions other than public offerings. With respect to the circumstances described in Nasdaq Marketplace Rule 5635, we follow Luxembourg law which does not require approval of our shareholders with respect to the issuance of new shares within the limit and subject to the terms of the delegation granted to the board of directors in the form (and within the limits and conditions) of the authorized capital of the Company.
 
Subject to following home country rules with respect to the circumstances described in Nasdaq Marketplace Rule 5635, we intend to substantially comply with the rules applicable to U.S. companies listed on Nasdaq. We may in the future elect to follow additional home country practices with regard to various corporate governance requirements for which exemptions are available to foreign private issuers, including certain requirements prescribed by Nasdaq with regard to, among other things, the composition of our board of directors and shareholder approval procedures for certain dilutive events and for the adoption of, and material changes to, equity incentive plans. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on Nasdaq, may provide less protection than is accorded to investors under Nasdaq rules applicable to domestic issuers. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.
 
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
 
As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2022. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq rules. As a U.S.-listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.
 
We were, until recently, a “controlled company” under Nasdaq rules, and were able to rely on exemptions from certain corporate governance requirements that provide protection to shareholders of companies that are not controlled companies.
 
Our Founding Shareholders held until recently more than 50% of our issued Ordinary Shares, which entitled us to rely on certain exemptions as a “controlled company” under Nasdaq rules. To date, the Founding Shareholders hold approximately 49.9% of our issued Ordinary Shares, and we are no longer a “controlled company”. However, in the event that the Founding Shareholders increase their holdings to more than 50% of our Ordinary Shares, we will be a “controlled company” under Nasdaq rules, again. As a controlled company, we would be exempt from Nasdaq rules with respect to certain corporate governance requirements, such as the requirement that we have a majority of independent directors, which we utilized when we were a “controlled company”. If we regain the status of a “controlled company” and elect to take advantage of any exemptions in the future, our shareholders will not have the same protections afforded to shareholders of companies that are subject to all Nasdaq rules.
 
Our articles of association designate the federal district courts of the United States as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders.
 
Our articles of association provide that, unless we consent in writing to the selection of an alternative forum, the U.S. federal district courts shall be the sole and exclusive forum for any claim asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may increase the costs associated with such lawsuits, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our articles of association inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. Any person or entity purchasing or otherwise acquiring any interest in our share capital shall be deemed to have notice of and to have consented to the choice of forum provisions of our articles of association described above. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.

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We may be classified as a passive foreign investment company, which could result in adverse United States federal income tax consequences to United States Holders (as defined below) of our Ordinary Shares.
 
We would be classified as a passive foreign investment company (“PFIC”) for any taxable year if, after the application of certain look-through rules, either: (i) 75% or more of our gross income for such year is “passive income” (as defined in the relevant provisions of the Internal Revenue Code (as defined below)), or (ii) 50% or more of the value of our gross assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For these purposes, cash and other assets readily convertible into cash or that do or could generate passive income are categorized as passive assets, and the value of goodwill and other unbooked intangible assets is generally taken into account. Passive income generally includes, among other things, rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities and securities transactions. For purposes of this test, we will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock.
 
Based on our market capitalization and the composition of our income, assets and operations, we believe we were not a PFIC for the year ending December 31, 2021 and do not expect to be a PFIC for United States federal income tax purposes for the current taxable year or in the foreseeable future. However, this is a factual determination that must be made annually after the close of each taxable year. Moreover, the aggregate value of our assets for purposes of the PFIC determination may be determined by reference to the trading value of our Ordinary Shares, which could fluctuate significantly. In addition, it is possible that the Internal Revenue Service may take a contrary position with respect to our determination in any particular year, and, therefore, there can be no assurance that we were not a PFIC for the year ending December 31, 2021 or will not be classified as a PFIC for the current taxable year or in the future. United States Holders should consult their tax advisers regarding the application of these rules. Certain adverse United States federal income tax consequences could apply to a United States Holder if we are treated as a PFIC for any taxable year during which such United States Holder holds our Ordinary Shares. See Item 10.E. “Taxation - Material United States Federal Income Tax Considerations for United States Holders - Passive Foreign Investment Company.”
 
We continue to incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives and corporate governance practices.
 
As a public company, and particularly after we are no longer an emerging growth company, we will continue to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Nasdaq rules and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations continue to increase our legal and financial compliance costs and continue to make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and could also make it more difficult for us to attract and retain qualified members of our board of directors.
 
We continue to evaluate these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
 
We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our annual reports and provide an annual management report on the effectiveness of control over financial reporting. We are required to disclose material changes in internal control over financial reporting on an annual basis and are required to make annual assessment of our internal control over financial reporting pursuant to Section 404(a). While we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm pursuant to Section 404(b). To maintain compliance with Section 404, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude that our internal control over financial reporting is effective as required by Section 404. If we identify one or more significant deficiencies, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. As a result, the market price of our Shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
 
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
 
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act.
 
Notwithstanding Sections 3(a)(1)(A) and (C) of the 1940 Act, we are a research and development company and comply with the safe harbor requirements of Rule 3a-8 of the 1940 Act. We intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

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Risks relating to our incorporation in Luxembourg
 
The rights of our shareholders may differ from the rights they would have as shareholders of a United States corporation, which could adversely impact trading in our Ordinary Shares and our ability to conduct equity financings.
 
The Company’s corporate affairs are governed by the Company’s articles of association and the laws of Luxembourg, including the Luxembourg Company Law, as amended from time to time (loi du 10 août 1915 concernant les sociétés commerciales, telle qu’elle a été modifiée). The rights of our shareholders and the responsibilities of our directors and officers under Luxembourg law are different from those applicable to a corporation incorporated in the United States. For example, under Delaware law, the board of directors of a Delaware corporation bears the ultimate responsibility for managing the business and affairs of a corporation. In discharging this function, directors of a Delaware corporation owe fiduciary duties of care and loyalty to the corporation and its shareholders. Luxembourg law imposes a duty on directors of a Luxembourg company to: (i) act in good faith with a view to the best interests of a company; and (ii) exercise the care, diligence, and skill that a reasonably prudent person would exercise in a similar position and under comparable circumstances. Additionally, under Delaware law, a shareholder may bring a derivative action on behalf of a company to enforce a company’s rights. Under Luxembourg law, the board of directors has sole authority to decide whether to initiate legal action to enforce a company’s rights (other than, in certain circumstances, an action against members of our board of directors, which may be initiated by the general meeting of the shareholders, or, subject to certain conditions, by minority shareholders holding together at least 10% of the voting rights in the company). Further, under Luxembourg law, there may be less publicly available information about us than is regularly published by or about U.S. issuers. In addition, Luxembourg laws governing the securities of Luxembourg companies may not be as extensive as those in effect in the United States, and Luxembourg laws and regulations in respect of corporate governance matters might not be as protective of minority shareholders as are state corporation laws in the United States. Therefore, our shareholders may have more difficulty in protecting their interests in connection with actions taken by our directors, officers or principal shareholders than they would as shareholders of a corporation incorporated in the United States. As a result of these differences, our shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S. issuer.
 
The Company is organized under the laws of Luxembourg and a substantial amount of its assets are not located in the United States. It may be difficult for you to obtain or enforce judgments or bring original actions against us or the members of our board of directors in the United States.
 
The Company is organized under the laws of the Grand Duchy of Luxembourg. Most of the members of our board of directors, our senior management and the experts named in this Prospectus reside outside the United States and a substantial portion of their assets are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon these individuals or upon us or to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. securities laws against us in the United States. Awards of punitive damages in actions brought in the United States or elsewhere are generally not enforceable in Luxembourg and penalty clauses and similar clauses on damages or liquidated damages are allowed to the extent that they provide for a reasonable level of damages and the courts of Luxembourg have the right to reduce or increase the amount thereof if it is unreasonably high or low.
 
As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the United States and the Grand Duchy of Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S. court. A valid judgment obtained from a court of competent jurisdiction in the United States may be entered and enforced through a court of competent jurisdiction in Luxembourg, subject to compliance with the enforcement procedures (exequatur). The enforceability in Luxembourg courts of judgments rendered by U.S. courts will be subject, prior to any enforcement in Luxembourg, to the procedure and the conditions set forth in the Luxembourg procedural code, which conditions may include that:
 

the judgment of the U.S. court is final and enforceable (exécutoire) in the United States;

the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules);

the U.S. court has applied to the dispute the substantive law that would have been applied by Luxembourg courts. Based on recent case law and legal doctrine, it is not certain that this condition would still be required for an exequatur to be granted by a Luxembourg court;

the judgment was granted following proceedings where the counterparty had the opportunity to appear and, if it appeared, to present a defense, and the decision of the foreign court must not have been obtained by fraud, but in compliance with the rights of the defendant;

the U.S. court has acted in accordance with its own procedural laws; and

the decisions and the considerations of the U.S. court must not be contrary to Luxembourg international public policy rules, must not have been given in proceedings of a tax or criminal nature and must not have been rendered subsequent to an evasion of Luxembourg law (fraude à la loi).

In addition, actions brought in a Luxembourg court against us, the members of our board of directors, our officers or the experts named herein to enforce liabilities based on U.S. federal securities laws may be subject to certain restrictions. In particular, Luxembourg courts do generally not award punitive damages. It is possible that awards of damages made under civil liabilities provisions of the U.S. federal securities laws or other laws (for example, fines or punitive damages) would be classified by Luxembourg courts as being of a penal or punitive nature and would not be recognized by Luxembourg courts. Ordinarily an award of monetary damages would not be considered as a penalty, but if the monetary damages include punitive damages, such punitive damages may be considered as a penalty.

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Derivative actions are generally not available to shareholders under Luxembourg law. However, minority shareholders holding securities entitled to 10% of the voting rights at the general meeting that resolved on the granting of discharge to the directors may bring an action against the directors on behalf of the company. Minority shareholders holding at least 10% of the voting rights of a company may also ask the directors questions in writing concerning acts of management of the company or one of its subsidiaries, and if the company fails to answer these questions within one month, these shareholders may apply to the Luxembourg courts to appoint one or more experts instructed to submit a report on these acts of management. This provision of Luxembourg law does not apply to claims under the U.S. federal securities laws. Furthermore, consideration would be given by a Luxembourg court in summary proceedings to acts that are alleged to constitute an abuse of majority rights against the minority shareholders.
 
Litigation in Luxembourg also is subject to rules of procedure that differ from the U.S. rules, including with respect to the taking and admissibility of evidence, the conduct of the proceedings and the allocation of costs. Proceedings in Luxembourg would have to be conducted in the French or German language, and all documents submitted to the court would, in principle, have to be translated into French or German.
 
There exists no published case law in Luxembourg in relation to the recognition of limited recourse provisions by which a party agrees to limit its recourse against the other party to the assets available at any given point in time with such other party and there exists no published case law in Luxembourg in relation to the recognition of foreign law governed subordination provisions whereby a party agrees to subordinate its claims of another party. If a Luxembourg court had to analyze the enforceability of such provisions, it is likely that such a court would consider the position taken by Belgian and Luxembourg legal scholars according to which limited recourse provisions are enforceable against the parties thereto but not against third parties.
 
A contractual provision allowing the service of process against a party to a service agent could be overridden by Luxembourg statutory provisions allowing the valid serving of process against a party subject to and in accordance with the laws of the country where such party is domiciled.
 
For these reasons, it may be difficult for a U.S. investor to bring an original action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against us, the members of our board of directors, our executive officers and the experts named in this Prospectus. In addition, even if a judgment against us, the non-U.S. members of our board of directors, senior management or the experts named in this Prospectus based on the civil liability provisions of the U.S. federal securities laws is obtained, a U.S. investor may not be able to enforce it in U.S. or Luxembourg courts.
 
Luxembourg and European insolvency and bankruptcy laws are substantially different than U.S. insolvency laws and may offer our shareholders less protection than they would have under U.S. insolvency and bankruptcy laws.
 
As a company organized under the laws of Luxembourg and with its registered office in Luxembourg, the Company is subject to Luxembourg insolvency and bankruptcy laws in the event any insolvency proceedings are initiated against us including, among other things, Council and European Parliament Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (recast). Should courts in another European country determine that the insolvency and bankruptcy laws of that country apply to us in accordance with and subject to such EU regulations, the courts in that country could have jurisdiction over the insolvency proceedings initiated against us. Insolvency and bankruptcy laws in Luxembourg or the relevant other European country, if any, may offer our shareholders less protection than they would have under U.S. insolvency and bankruptcy laws and make it more difficult for them to recover the amount they could expect to recover in a liquidation under U.S. insolvency and bankruptcy laws.
 
Risks relating to the SDRs
 
SDR holders do not have the same rights as NeoGames shareholders.
 
SDR holders will not have rights equivalent to those of NeoGames shareholders, whose rights are governed by Luxembourg law. Although the terms and conditions of the SDRs generally will allow SDR holders to vote in general meetings of shareholders or be entitled to dividends as if they held NeoGames shares directly, the rights of SDR holders differ in some instances from the rights of NeoGames shareholders, as further set out in the section “Terms and conditions of the SDRs” below. Additionally, SDR holders may not be able to enforce their rights under the terms and conditions of the SDRs in relation to their SDRs in the same manner as shareholders could with respect to the Shares under Luxembourg law.
 
There will be no trading in the SDRs.
 
The Company’s shares are admitted to trading on Nasdaq Global Market. The Shares will also be subject to an application for the admission and introduction to trading on the Nasdaq Global Market. However, the Shares will be held by Mangold until they are transferred to the shareholders in Aspire accepting the Offer through the conversion of the SDRs in accordance with the section “Deposit and withdrawal of Shares” under “Terms and conditions of the SDRs” below. Consequently, the shareholders in Aspire accepting the Offer will not be able to divest the Shares represented by the SDRs received by them before the conversion is carried out. Furthermore, the SDRs will not be subject to an application for the admission and introduction to trading on any trading venue. Since there will not be an active trading market for the SDRs it may be difficult for the shareholders accepting the Offer to divest the SDRs.
 
Investors with a reference currency other than SEK will be subject to certain currency risks if they tender for SDRs in the Offer.
 
The SDRs are, and any potential dividend to be paid in respect of the SDRs will be, denominated in SEK. Tendering in the Offer for SDRs by an investor whose principal currency is not SEK may expose the investor to currency exchange risks that may impact the value of the SDRs for such holder and any dividends, as any depreciation of SEK in relation to such foreign currency may reduce the value of the SDRs and any future dividends paid.
 
Risks relating to the Offer
 
The conditions for completion of the Offer may not be fulfilled within an acceptable timeframe or on terms acceptable to the Company.
 
The Company has set a number of conditions for the completion of the Offer, including that the Company becomes the owner of not less than 90 percent of the shares in Aspire and that Aspire Global’s articles of association are amended (see “Terms and Conditions of the Offer”). These terms are partly beyond the control of the Company. In the event that one or more conditions are not fulfilled or cannot be fulfilled, the Company has, under certain conditions, the right to withdraw the Offer. Since the Offer was announced on 17 January 2022, the market price of Aspire’s shares has increased. Should uncertainty arise regarding the completion of the Offer, or if the Company should withdraw the Offer, it may have a negative effect on the share price of Aspire or the Company’s shares or cause the volatility to increase. Furthermore, a portion of the costs associated with the Offer must be paid regardless of whether the Offer is completed, which could harm NeoGames’ business, financial condition and result of operations.

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Risks related to clauses in the Company’s and Aspire’s agreements regarding change of control.
 
Completion of the Offer may trigger change of control clauses in agreements that will be or have already been entered into by the Company or Aspire. If the Company fails to obtain third party consents, when necessary, it may have an adverse effect on the Company’s and/or the Combined Company’s (as defined below) business, operations, financial position, results of operations and prospects.
 
The coordination of the companies’ businesses may take longer than anticipated.
 
The establishment and the continued operations of the Combined Company (as defined below), and the realisation of the anticipated benefits of the combination and coordination of the businesses of NeoGames and Aspire (as described in the section "Reasons for the offer"), will be demanding and time consuming for the companies and may not yield the results anticipated by the companies’ management teams. It is important that the combination process is carried out without material disturbances in the businesses of the companies, and without material losses of key and other employees. There is a risk that the coordination of the businesses within the Combined Company takes longer than anticipated, which could affect the results of the Combined Company negatively. Furthermore, some or all of the anticipated positive effects of the combination may not be achieved.
 
In connection with completion of the Offer, goodwill and other intangible assets will be recognized that may result in accounting impairment losses.
 
Goodwill and other intangible assets will be recognized upon completion of the Offer. This goodwill and other intangible assets will be stated in its entirety in the balance sheet of the group in which the Company, after the completion of the acquisition of Aspire, is the parent company (the “Combined Company”). Any impairment losses related to the consideration paid by the Company to acquire Aspire Global, may entail a reduction of Combined Company’s equity and thereby solvency.
 
The Company does not and will not control Aspire until after completion of the Offer.
 
The Company will not have control of any entity of the Aspire group before completion of the Offer. The Company cannot assure investors that the Aspire group, up until completion of the Offer, will be operated in the same way as it would be under the Company’s control. Should any entity of the Aspire group alter its operations in a way that affects its business strategy or financial position, this could make the completion of the Offer less commercially beneficial for the Company than anticipated.
 
In the event that NeoGames obtains not less than 90 percent, but less than 100 percent, of the outstanding Aspire shares, NeoGames intends to commence a compulsory acquisition proceeding in accordance with Aspire’s amended articles of association in order to acquire all remaining Aspire shares. Full integration of NeoGames’ business with Aspire’s business may not be achieved until this compulsory acquisition proceeding is completed. Furthermore, full integration may not be achieved at all if NeoGames elects to waive the condition for completion of the Offer requiring that the Offer is accepted to such extent that NeoGames becomes the owner of shares representing not less than 90 percent of the total number of outstanding shares in Aspire Global (on both a non-diluted and on a fully diluted basis), as a compulsory acquisition proceeding can in such case not be initiated in accordance with Aspire’s amended articles of association. This could prevent or delay NeoGames from realizing some or all of the anticipated strategic benefits of its acquisition of Aspire since the shareholder minority protection rules would in that case limit NeoGames’ freedom to manage Aspire.
 
The Company’s access to information regarding Aspire has been limited, and the Company may not be adequately protected against possible known or unknown deficiencies and liabilities.
 
The Company’s access to information regarding Aspire in connection with the Offer has been limited to confirmatory diligence review. Such limited due diligence review entails a risk that potential liabilities and deficiencies in the target company have not been identified and discovered, including specific contract terms in material agreements or threatened liabilities for breaches of contract in business-critical relationships, legal proceedings, employer and pension obligations, non-compliance with applicable laws or standards, environmental remedies, taxes, or other liabilities. As the Company and Aspire commence their operations as a combined company, the Combined Company’s management may learn of additional liabilities which, individually or in aggregate, could result in significant additional costs and liabilities that are not described in this Prospectus, or affect the feasibility of achieving expected synergies. Any of the above factors could have a material adverse effect on the business, financial position, results of operations, future prospects or the share price of the Company and, consequently, the value of the SDRs offered as share consideration in the Offer.
 
NeoGames’ and Aspire Global’s exchange rates are fixed and will not be adjusted for fluctuations in the market price of NeoGames’ shares or foreign exchange rates.
 
Under the Base Case Alternative in the Offer (see “Terms and Conditions of the Offer”), NeoGames is offering each shareholder in Aspire, in respect of 50 percent of the number of Aspire shares tendered by such shareholder, SEK 111.00 in cash per Aspire share, and, in respect of the remaining 50 percent of the number of Aspire shares tendered by such shareholder, 0.320 shares in NeoGames per Aspire share, in the form of SDRs. Due to the volatility in the market price of NeoGames’ shares, Aspire shareholders cannot be sure of the total value, at the time of settlement of the Offer, of the NeoGames shares in the form of SDRs that are issued as consideration in the Offer, which may decrease. Accordingly, the value of the NeoGames share (which is denominated in USD) that Aspire shareholders will receive upon settlement of the Offer will depend on the market value of the NeoGames share at the time of settlement of the Offer, which may be lower or higher than SEK 71.05, being NeoGames’ closing price on 14 January 2022 (i.e., the last day of trading prior to the announcement of the Offer) based on a SEK to USD foreign exchange rate of 0.111. Fluctuations in the exchange rate between USD and SEK may further affect the value in SEK of NeoGames’ shares in the form of SDRs, which are issued as consideration in the Offer, at the time of settlement of the Offer as compared to the value in SEK of the NeoGames share on the last trading day prior to the announcement of the Offer. There will be no adjustment to the Offer consideration based on fluctuations in the market price of NeoGames’ shares or foreign exchange rates.

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The uncertainties associated with NeoGames’ combination with Aspire may cause key employees to leave Aspire or NeoGames.
 
While NeoGames does not intend to make any material changes to either NeoGames’ or Aspire’s employee base, terms of employment or locations in the near-term, NeoGames’ and Aspire’s employees may perceive uncertainty about their future role with the Combined Company until strategies with regard to the combined businesses are announced or executed. Employee retention may be particularly challenging as NeoGames’ and Aspire’s employees may experience frustrations during the integration process and uncertainty about their future roles with NeoGames following the completion of the Offer. For the combination to be successful, NeoGames and Aspire must continue to retain and motivate key employees during the period before the Offer is completed. Furthermore, after the Offer is completed, NeoGames must be successful at retaining and motivating key employees in order for the benefits of the combination to be fully realized. If key employees depart, for example, because of the uncertainty and difficulty of integration and/or a desire not to become employees of NeoGames after the Offer is completed, NeoGames may incur significant costs in identifying, hiring, and retaining replacements for departing employees, or customer relationships may suffer, which could substantially reduce or delay NeoGames’ ability to realize the anticipated benefits of the combination and could have a material adverse effect on NeoGames’ and Aspire’s businesses, financial condition and results of operations.
 
Holders of Aspire shares that do not accept the Offer and whose Aspire shares are acquired in the compulsory acquisition proceeding may not receive consideration for their Aspire shares for a significant period of time after completion of the Offer.
 
In the event that NeoGames obtains not less than 90 percent, but less than 100 percent, of the outstanding Aspire shares, and provided that Aspire Global’s articles of association are amended in accordance with the conditions for the completion of the Offer, NeoGames intends to commence a compulsory acquisition proceeding in accordance with Aspire’s amended articles of association in order to acquire all remaining Aspire shares. It may take several months from initiation of the compulsory acquisition proceeding until the proceeding has been fully completed. Consequently, holders of Aspire shares that do not accept the Offer and whose Aspire shares are subsequently acquired in the compulsory acquisition proceeding may not receive consideration for their Aspire shares for a significant period of time after completion of the Offer.
 
The payment of the full cash component of the Offer consideration under the Conditional Alternative may be uncertain.
 
The Offer consideration for the shares in Aspire may take the form of either of the two consideration alternatives, the Base Case Alternative and the Conditional Alternative. The cash component of the consideration payable under the Conditional Alternative is dependent on the distribution of dividends by Aspire. In order for final dividends to be paid to the shareholders of Aspire, there must be profits available for distribution in accordance with the provisions of the Companies Act (Chapter 386 of the laws of Malta), and the board of directors of Aspire must propose, by board resolution, the declaration and distribution of a dividend, after which the general meeting of shareholders of Aspire must resolve to adopt the board of directors’ proposal. In order for interim dividends to be paid to shareholders of Aspire (that is, dividends which are not final dividends), there must be profits available for distribution in accordance with the provisions of the Companies Act (Chapter 386 of the laws of Malta), and the board of directors of Aspire must approve, by board resolution, the declaration and distribution of a dividend. Thus, there can be no assurances as to the timing of the payment of the full cash component under the Conditional Alternative or whether it will be paid at all. It should be noted that this does not apply to the payment of cash consideration under the Base Case Alternative.
 
We may not be able to service our debt under our financing agreements in connection with the Offer, or we may otherwise be in breach of those arrangements.
 
In order to finance, among other things, part of the aggregate consideration payable by the Company pursuant to the Offer, the Company, NeoGames Connect S.à r.l. and NeoGames Connect Limited have entered into the Interim Facilities Agreement with the Interim Lenders (each as defined below). Notwithstanding the entry into the Interim Facilities Agreement, the Company will seek to negotiate and execute a long-form financing agreement prior to the closing date of the Offer to replace the Interim Facilities (each as defined below). In relation to this, the Company and NeoGames Connect S.à r.l. also entered into the Commitment Letter (as defined below). Pursuant to the terms of the Commitment Letter, BXC (as defined below) has committed to make available, in connection with the Offer, the Senior Facilities (as defined below) which shall be documented pursuant to the Senior Facilities Agreement (as defined below). If no Interim Facility has been funded prior to such time, the Interim Facility Agreement shall automatically terminate on the date on which the Senior Facilities Agreement is signed and each initial condition precedent thereunder is irrevocably satisfied or waived as evidenced by delivery of a duly signed and unqualified conditions precedent letter thereunder.
 
Upon consummation of the Offer, we will have outstanding indebtedness with debt service requirements. Our ability to meet our debt service obligations will depend on our future operating and financial performance, which in turn depends on our ability to successfully implement our business strategy as well as general economic, financial, competitive, regulatory and other factors. If we do not generate sufficient cash to service our debt under the Interim Facilities Agreement (or, to the extent entered into, the Senior Facilities Agreement) or if we fail to meet other obligations under the Interim Facilities Agreement (or, to the extent entered into, the Senior Facilities Agreement), we may be in default, which may entitle the Interim Lenders (or, in the case of the Senior Facilities, the Lenders (as defined below)), as applicable, to certain rights and remedies against us, and such rights and remedies may have a material adverse effect on our business and financial results. In addition, the final maturity date of the Interim Facilities is 90 days after the date on which the first drawdown of Interim Facility 1 (as defined below) occurs (by which date, the Interim Facilities would need to be replaced and refinanced).
 
If the closing date in the Offer has not occurred on or before the date falling eight months after (and excluding) 17 January 2022 and the Interim Lenders (or, in the case of the Senior Facilities, the Lenders) do not agree to extend such period, the Interim Facilities (or, as the case may be, the Senior Facilities) will no longer be available to be drawn.
 
The Interim Facilities Agreement contains (and the Senior Facilities Agreement is expected to contain) customary affirmative and negative covenants which may restrict our ability to operate our business (including, in the case of the Senior Facilities Agreement, a financial maintenance covenant). Our failure to comply with these covenants could result in an event of default that could materially and adversely affect our financial condition and results of operations.
 
In the event of a default under the Interim Facilities Agreement (or, to the extent entered into, the Senior Facilities Agreement), that is not cured or waived, the Interim Lenders (or, in the case of the Senior Facilities, the Lenders) could take certain actions, including terminating their commitments, declaring all amounts that we have borrowed under the Interim Facilities Agreement (or, to the extent entered into, the Senior Facilities Agreement), to be due and payable, together with accrued and unpaid interest (and other fees) and/or enforce the Interim Security (as defined below) (or, in the case of the Senior Facilities, security in favor of the Lenders under the Senior Facilities Agreement). If the debt under the Interim Facilities Agreement, the Senior Facilities Agreement or any other material financing arrangement that we have entered into or will subsequently enter into were to be accelerated, our assets may be insufficient to repay the indebtedness in full. Any such actions could force us into bankruptcy or liquidation, and we might not be able to repay our obligations in such an event.
 
As of the date hereof, the Company has incurred costs in an amount of approximately $1.6 million in connection with the financing agreements with Blackstone. The Company has not incurred costs in connection with the FX Hedging Transaction. The costs of the FX Hedging Transaction will be incurred only upon completion of the Offer.
 
33


IMPORTANT INFORMATION
 
Capitalised terms used in this Prospectus and not otherwise defined in this Prospectus have the meanings ascribed to such terms in the “Abbreviations and Definitions” section. Moreover, certain industry terms and other terms used in this Prospectus are explained in the “Abbreviations and Definitions”, “Glossary of Industry Terms”, and “Important InformationPresentation of Financial and Other Information—Market, economic and industry data” sections below.
 
Unless implied otherwise in this Prospectus, the term the “Management” refers to the Board of Directors and the management board of the Company. Except where the context otherwise requires or otherwise indicated, the terms “NeoGames” and the “Company” refer to NeoGames S.A. together with its consolidated subsidiaries, as a group, and the terms “we,” “us” and “our” refer to the Company, together with NeoPollard Interactive LLC (“NPI”), as a group.
 
The validity of this Prospectus will expire on 26 April 2023, being twelve months after the date of its approval. The information contained in this Prospectus speaks only as at the date hereof and any obligation to supplement this Prospectus in the event of significant new factors, material mistakes or material inaccuracies (insofar as required under the Prospectus Regulation) will not apply after the closing of the offer period for the SDRs.
 
Unless indicated otherwise, references to statements as to beliefs, expectations, estimates and opinions of the Company or its management refer to the beliefs, expectations, estimates and opinions of the Management.
 
Neither the Company, nor the Management or any of their respective representatives give any assurance or make any representation to any investor as to the legality of an investment in the SDRs by an investor under the laws applicable to such investor. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of tendering in the Offer in exchange for SDRs.
 
This Prospectus is intended to provide information to prospective investors in the context and for the sole purpose of evaluating to tender in the Offer in exchange for the SDRs offered as share consideration in the Offer. It has been prepared in accordance with the provisions of the Prospectus Regulation and the Swedish Prospectus Act, and does not express any commitment or acknowledgement or waiver, and does not create any express or implied right towards anyone other than a prospective investor in the context of the Offer. It cannot be used except in connection with the Offer.
 
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RESPONSIBILITY STATEMENT
 
The Company accepts responsibility for the completeness and accuracy of the information contained in this Prospectus. To the best of the Company’s knowledge, the information contained in this Prospectus is in accordance with the facts and makes no omission likely to affect its import. The opinions, assumptions, intentions, projections and forecasts expressed in this Prospectus with regard to the Company are honestly held by the Company, have been reached after considering all the relevant circumstances and are based on reasonable assumptions.
 
No representation or warranty, express or implied, is made by the Management as to the accuracy, completeness or verification of the information set forth in this Prospectus or any other information provided by the Company in connection with the SDRs or their distribution, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation in this respect, whether made in the past or the future. The Management assumes no responsibility for its accuracy, completeness or verification and accordingly disclaim, to the fullest extent permitted by applicable law, any and all liability, whether arising in tort, contract or otherwise, which they might otherwise be found to have in respect of this document or any such statement.

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NOTICE TO PROSPECTIVE TENDERERS
 
This Prospectus is intended to provide information to prospective investors in the context and for the sole purpose of evaluating to tender in the Offer in exchange for the SDRs offered as share consideration in the Offer. It contains selected and summary information, does not express any commitment or acknowledgement or waiver and does not create any express or implied right towards anyone other than a prospective investor in the context of the Offer. It cannot be used except in connection with the Offer. The contents of this Prospectus are not to be construed as an interpretation of the Company’s obligations, of market practice or of contracts entered into by the Company.
 
Prospective investors are expressly advised that an investment in the SDRs entails financial risk and that they should therefore read this Prospectus in its entirety, in particular the “Risk Factors” section hereof, when considering an investment in the SDRs. In deciding to tender in the Offer, prospective investors must rely on their own examination, analysis and enquiry of the Company, the SDRs and the Offer and the information contained in this Prospectus, including the merits and risks involved in an investment in the SDRs.
 
Any decision to invest in the SDRs offered as share consideration in the Offer should be based solely on this Prospectus (and any supplement hereto), taking into account that any summary or description, set forth in this Prospectus, of legal provisions, accounting principles or a comparison of such principles, corporate structuring or contractual relationships is for information purposes only and should not be construed as legal, accounting or tax advice as to the interpretation or enforceability of such provisions, information or relationships.
 
Except as provided for under mandatory provisions of law, no person is authorised to give any information or to make any representation in connection with the Offer other than as contained in this Prospectus, (and any supplement hereto), and, if given or made, such information or representation must not be relied upon as having been authorised by the Company.
 
This Prospectus does not constitute an offer to sell or a solicitation by or on behalf of the Company to any person to purchase any of the SDRs offered in the Offer in any jurisdiction where it is unlawful for such person to make such an offer or solicitation. The distribution of this Prospectus and the offer of the SDRs in certain jurisdictions are restricted by law. Persons into whose possession this Prospectus may come are required by the Company to inform themselves about and to observe such restrictions. Other than with respect to the Offer in Sweden, no action has been taken by the Company that would permit an offer of the SDRs, or the possession or distribution of this Prospectus or any other offering material or application form relating to the SDRs, in any jurisdiction where action for that purpose is required. This Prospectus may not be used for, or in connection with, any offer to, or solicitation by, anyone in any jurisdiction or under any circumstances in which such offer or solicitation is not authorised or is unlawful. The Company does not accept any responsibility for any violation by any person, whether or not such person is a prospective investor in the SDRs, of any of these restrictions. See “Selling Restrictions” and “Transfer Restrictions” elsewhere in this Prospectus.
 
This Prospectus has been prepared in accordance with the Prospectus Regulation and the Swedish Prospectus Act. This Prospectus has been prepared for the purpose of the public offering of SDRs in Sweden as share consideration under the Offer. This Prospectus was approved by the SFSA and published on the SFSA’s website (www.fi.se), and once its approval has been notified by the SFSA to the FI, it (together with its summary translated into Swedish) will be published on the Company’s website (https://ir.neogames.com/offer-page) and, additionally, for information purposes only, on the website of https://mangold.se/
 
None of the Company or any of its respective representatives is making any representation to any offeree or purchaser of the SDRs regarding the legality of an investment in the SDRs by such offeree or purchaser under the laws applicable to such offeree or purchaser. The contents of this Prospectus should not be construed as legal, financial or tax advice. The investors are advised to consult their own legal advisor, independent financial advisor or tax advisor for legal, financial or tax advice.
 
Neither the delivery of this Prospectus nor any sale made hereunder at any time after the date hereof shall, under any circumstances, create any implication that there has been no change in the Company’s affairs since the date hereof or that the entirety of the information set forth in this Prospectus is correct as at any time subsequent to its date.
 
The SDRs are subject to a public offering within the territory of Sweden on the basis of the Prospectus approved by the SFSA. In certain countries, applicable legislation may limit the distribution of the Prospectus or any advertising or promotion of the Offer. The Prospectus may not be used for the purpose of or in connection with, and does not constitute, any offer to sell, or any solicitation or invitation to purchase, subscribe for, or any advertising or promotion of the Offer with respect to the SDRs in any jurisdiction in which such offer or solicitation or invitation or advertising or promotion would be unlawful. The SDRs are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. Persons in possession of the Prospectus should inform themselves about and observe and comply with any restrictions in such respect, including the restrictions regarding the possibility to acquire or subscribe for the SDRs (see “Selling Restrictions” and “Transfer Restrictions”). Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions.
 
For the purpose of acquiring or subscribing for the SDRs, each investor will be required to make certain representations and warranties and to take certain actions as described in “Terms and conditions of the Offer”. The Company reserves the right to refuse, at its own discretion, to allot any SDRs if in the opinion of the Company or any representative thereof such allotment could constitute a breach or result in a breach of any law or regulation (see “Selling Restrictions” and “Transfer Restrictions”).
 
Prospective investors also acknowledge that: (i) they have relied only on the information contained in this Prospectus; and (ii) that no person has been authorised to give any information or to make any representation concerning the Company or its subsidiary or the SDRs (other than as contained in this Prospectus) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Company.

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NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES
 
The Offer described in this Prospectus is made for the issued and outstanding shares of Aspire, a company incorporated under Maltese law, and is subject to Maltese and Swedish disclosure and procedural requirements, which are different from those of the United States. Shareholders in the United States are advised that the shares of Aspire are not listed on a U.S. securities exchange and that Aspire is not subject to the periodic reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), and is not required to, and does not, file any reports with the U.S. Securities and Exchange Commission (the “SEC”) thereunder.
 
The Offer is made in the United States pursuant to Section 14(e) and Regulation 14E of the U.S. Exchange Act, subject to exemptions provided by Rule 14d – 1(c) under the U.S. Exchange Act for a Tier I tender offer (the “Tier I Exemption”) and Rule 802 under the U.S. Securities Act of 1933 (the “802 Exemption”), and otherwise in accordance with the disclosure and procedural requirements of Swedish law, including with respect to withdrawal rights, the Offer timetable, settlement procedures, waiver of conditions and timing of payments, which are different from those applicable under U.S. domestic tender offer procedures and law. Holders of the shares of Aspire domiciled in the United States (the “U.S. Holders”) are encouraged to consult with their own advisors regarding the Offer.
 
Aspire’s financial statements and all financial information included herein, or any other documents relating to the Offer, have been or will be prepared in accordance with IFRS and may not be comparable to the financial statements or financial information of companies in the United States or other companies whose financial statements are prepared in accordance with U.S. generally accepted accounting principles. The Offer is made to the U.S. Holders on the same terms and conditions as those made to all other shareholders of Aspire to whom an offer is made. Any information documents, including the offer document, are being disseminated to U.S. Holders on a basis comparable to the method pursuant to which such documents are provided to Aspire’s other shareholders.
 
As permitted under the Tier I Exemption, the settlement of the Offer is based on the applicable Swedish law provisions, which differ from the settlement procedures customary in the United States, particularly as regards to the time when payment of the consideration is rendered. The Offer, which is subject to Swedish law, is being made to the U.S. Holders in accordance with the applicable U.S. securities laws, and applicable exemptions thereunder, in particular the Tier I Exemption and the 802 Exemption. To the extent the Offer is subject to U.S. securities laws, those laws only apply to U.S. Holders and thus will not give rise to claims on the part of any other person. The U.S. Holders should consider that the price for the Offer is being paid in SEK and that no adjustment will be made based on any changes in the exchange rate.
 
It may be difficult for Aspire’s shareholders to enforce their rights and any claims they may have arising under the U.S. federal or state securities laws in connection with the Offer, since Aspire and NeoGames are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. Aspire’s shareholders may not be able to sue Aspire or NeoGames or their respective officers or directors in a non-U.S. court for violations of U.S. securities laws. Further, it may be difficult to compel Aspire or NeoGames and/or their respective affiliates to subject themselves to the jurisdiction or judgment of a U.S. court.
 
To the extent permissible under applicable law or regulations, NeoGames and its affiliates or its brokers and its brokers’ affiliates (acting as agents for NeoGames or its affiliates, as applicable) may from time to time and during the pendency of the Offer, and other than pursuant to the Offer, directly or indirectly purchase or arrange to purchase shares of Aspire outside the United States, or any securities that are convertible into, exchangeable for or exercisable for such shares. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices, and information about such purchases will be disclosed by means of a press release or other means reasonably calculated to inform U.S. Holders of such information. In addition, to the extent permissible under applicable law or regulation, the financial advisors to NeoGames may also engage in ordinary course trading activities in securities of Aspire Global, which may include purchases or arrangements to purchase such securities as long as such purchases or arrangements are in compliance with the applicable law. Any information about such purchases will be announced in Swedish and in a non-binding English translation available to the U.S. Holders through relevant electronic media if, and to the extent, such announcement is required under applicable Swedish or U.S. law, rules or regulations.
 
The receipt of cash pursuant to the Offer by a U.S. Holder may be a taxable transaction for U.S. federal income tax purposes and under applicable U.S. state and local, as well as foreign and other, tax laws. Each shareholder is urged to consult an independent professional adviser regarding the tax consequences of accepting the Offer. Neither NeoGames nor any of its affiliates and their respective directors, officers, employees or agents or any other person acting on their behalf in connection with the Offer shall be responsible for any tax effects or liabilities resulting from acceptance of this Offer.
 
Certain other information applicable to U.S. investor may not be included in this Prospectus. U.S. investors should therefore read our annual report on Form 20-F, filed with the Securities and Exchange Commission on 14 April 2022 before making any decision with respect to our securities.
 
Neither the U.S. Securities and Exchange Commission nor any securities regulatory authority of any state or other jurisdiction of the United States has approved or disapproved of the SDRs offered as share consideration in the Offer or determined that this Prospectus is accurate or complete. Any representation to the contrary is a criminal offence in the United States.

37

 
NOTICE TO EEA INVESTORS
 
The Prospectus has been approved by the SFSA, the financial sector supervisory authority in the Kingdom of Sweden, for the purpose of the public offering of the SDRs in Sweden under the Offer. No offer of the SDRs to the public is being made in any Member State of the European Economic Area (other than Sweden) (each, a “Relevant State”) that would require the publication of the prospectus or any other offering document in such other Relevant State. However, the Company may decide to advertise the Offer in another Relevant State under certain exemptions from the obligation to publish a prospectus under the Prospectus Regulation, provided that any such offering of the SDRs to the public will not result in a requirement to publish the Prospectus or any other offering document by the Company under Article 3 of the Prospectus Regulation.
 
In relation to each Relevant State, no SDRs have been offered or will be offered pursuant to the Offer to the public in that Relevant Member State prior to the publication of a prospectus in relation to the SDRs which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, as applicable, except that the SDRs may be offered to the public in that Relevant State at any time:
 
to any legal entity which is a qualified investor as defined under Article 2 of the Prospectus Regulation;
 
to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the Prospectus Regulation); or
 
in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
 
provided that no such offer of the SDRs shall require the Company to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation within the territory of the Relevant State and each person who initially acquires SDRs or to whom any offer is made will be deemed to have represented, warranted and agreed to and with the Company that it is a “qualified investor” within the meaning of the Prospectus Regulation.
 
For the purposes of this Prospectus, the expression an “offer to the public” or “offer of the SDRs to the public” in relation to any SDRs in any Relevant State means a communication to persons in any form and by any means, presenting sufficient information on the terms of the Offer and the SDRs to be offered as share consideration, so as to enable an investor to decide to tender in the Offer in exchange, in part or in full, for the SDRs offered as share consideration (including the placement of the SDRs through financial intermediaries).
 
The Company and its respective affiliates and others will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement. Notwithstanding the above, a person who is not a qualified investor and who has notified the Company of such fact in writing may be permitted to tender for SDRs in the Offer.

38

MIFID II PRODUCT GOVERNANCE REQUIREMENTS
 
Although the Company is not subject to EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”), the SDRs that are the subject of the Offering have been subject to a product approval process to determine the target market of the SDRs (the “Target Market Assessment”). The Target Market Assessment has determined that the SDRs are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II.
 
Notwithstanding the Target Market Assessment, distributors should note that: the price of the SDRs may decline and investors could lose all or part of their investment; the SDRs offer no guaranteed income and no capital protection; and an investment in the SDRs is compatible only with investors who do not need guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other advisor) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offer.
 
It must be noted that the Company is not a “manufacturer” subject to the provsions of MiFID II, and each distributor is responsible for undertaking its own target market assessment in respect of the SDRs and determining the appropriate distribution channels.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
 
Financial Statements and other data in the Prospectus
 
Financial information
 
This Prospectus includes standalone financial statements of the Company which have been prepared for the years ended 31 December 2021, 31 December 2020 and 31 December 2019 in accordance with the Luxembourg act dated 19 December 2002 on the trade and companies register and on bookkeeping and annual accounts of companies (as amended) (the 2002 Accounts Act) by applying the International Financial Reporting Standards (the “IFRS”) as adopted by the European Union. BDO Audit has audited the standalone financial statements of the Company for the financial year ended 31 December 2020. ATWELL has audited the standalone financial statements of the Company for the years ended 31 December 2019 and 31 December 2021.
 
This Prospectus includes consolidated financial information of the Company and its subsidiaries as of and for the years ended 31 December 2021, 31 December 2020 and 31 December 2019, prepared in accordance with the IFRS as issued by the International Accounting Standards Board (an accounting standard equivalent to IFRS as adopted by the EU pursuant to Commission Decision 2008/961/EC) (the “Consolidated Financial Statements”) as additional information. Ziv Haft, Certified Public Accountants, Isr., BDO Member Firm has audited the Consolidated Financial Statements included herein.
 
Unless otherwise stated, the financial information in this Prospectus has been prepared in accordance with the IFRS as issued by the International Accounting Standards Board.
 
The financial information presented in this Prospectus was not prepared in accordance with US Generally Accepted Accounting Principles (“U.S. GAAP”) or audited in accordance with US Generally Accepted Auditing Standards (“U.S. GAAS”). No opinion or any other assurance with regard to any financial information was expressed under US GAAP or US GAAS, and the financial information is not intended to comply with the SEC reporting requirements. Compliance with such requirements would require modification, reformulation or exclusion of certain financial measures. In addition, changes would be required in the presentation of certain other information. In particular, no reconciliation to US GAAP is provided.
 
Throughout this prospectus, we provide a number of key performance indicators used by our management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Performance Indicators.”
 
Rounding
 
Certain numerical figures set out in this Prospectus, including financial data presented in millions and certain operating data, have been subject to rounding adjustments. As a result, the totals of the data in this Prospectus may vary slightly from the actual arithmetic totals of such information. Percentages and amounts reflecting changes over time periods relating to financial data are calculated using the numerical data in the Consolidated Financial Statements or the tabular presentation of financial data (subject to rounding) contained in this Prospectus, as applicable, and do not use the numerical data in the narrative description thereof.
 
Currency Presentation
 
Unless otherwise indicated, all references in the Prospectus to “euro” or “EUR” are to the common currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty establishing the European Community, while references to “USD”, “U.S. Dollar” or “$” are to the lawful currency of the United States of America, and references to “SEK” are to the lawful currency of Sweden.
 
Market, economic and industry data
 
Unless the source is otherwise stated, the market, economic and industry data in this Prospectus constitute the Company’s estimates, using underlying data from independent third parties. The Company obtained market data and certain industry forecasts used in this Prospectus from internal surveys, reports and studies, where appropriate, as well as market research, publicly available information and industry publications.
 
Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. The Company believes that these industry publications, surveys and forecasts are reliable, but the Company has not independently verified them, or made any representation or warranty as to or their accuracy or completeness. To the extent these industry publications, surveys and forecasts are accurate and complete, the Company confirms it has correctly extracted and accurately reproduced the information from such sources. As far as the Company is aware and able to ascertain from information published by such sources, no facts have been omitted that would render the reproduced information inaccurate or misleading. Additionally, industry publications and such reports generally state that the information contained therein has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed and in some instances state that they do not assume liability for such information. The Company cannot therefore assure you of the accuracy and completeness of such information and the Company has not independently verified such information.
 
However, the forward-looking estimates and forecasts reproduced in this Prospectus from third-party sources could prove to be inaccurate. The market studies are often based on information or assumptions that may not be accurate or appropriate, and their methodology is inherently predictive and speculative. The fact that information from the aforementioned third-party studies has been included in this Prospectus should not be considered as a recommendation by the relevant third parties to invest in, purchase, or take any other action whatsoever with respect to shares in the Company.
 
Where third-party information has been used in this Prospectus, the source of such information has been identified. In addition, in many cases, statements in this Prospectus regarding the Company’s industry and its position in the industry are based on the Company’s experience and its own investigation of its industry and the review of information made publicly available by competitors. Comparisons between the Group’s reported financial or operational information and that of competitors using this information may not fully reflect their actual positions on the market, as such information may not be defined consistently or reported for companies that operate in the same industry as the Company defines or reports such information in this Prospectus.

40

 
While the Company is not aware of any misstatements regarding the industry data presented herein, the Company’s estimates involve certain assumptions, risks and uncertainties and are subject to change based on various factors, including those discussed in the “Risk Factors” section. The Company cannot assure the investors that any of these statements are accurate or correctly reflect the Company’s position in the industry, and none of its internal surveys or information have been verified by any independent sources, and the Company cannot guarantee their accuracy.
 
Documents incorporated in the Prospectus by reference
 
The Prospectus does not contain any information incorporated therein by reference to information contained in other publicly available documents or sources, regardless of the form in which they have been made available or recorded.
 
No Incorporation of Website Information
 
The contents of the Company’s websites and all other websites mentioned in this Prospectus do not form part of this Prospectus. The information on such websites has not been scrutinised or approved by the SFSA.
 
The information on the website of the Company or the information contained on the websites to which the website of the Company is linked do not constitute a part of the Prospectus.

41

 
MARKET AND INDUSTRY DATA
 
Unless otherwise indicated, information in this prospectus concerning our industry, our markets and our competitive position is based on information from our own internal estimates and research as well as from publicly available information, industry and general publications and research, surveys and studies conducted by third parties such as the American Gaming Association, Eilers & Krejcik Gaming, GamblingCompliance, H2 Gambling Capital (“H2GC”) and La Fleur’s TLF Publications, in addition to reports from state lottery commissions.
 
Industry publications and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus. See “Cautionary Statement Regarding Forward-Looking Statements.

42

 
TRADEMARKS, SERVICE MARKS AND TRADE NAMES
 
We have proprietary rights to trademarks used in this prospectus which are important to our business, many of which are registered under applicable intellectual property laws.
 
Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

43

 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This prospectus contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements are contained principally in the sections titled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements, including, without limitation, the potential opportunities and benefits of a combination of NeoGames and Aspire relate to events that involve known and unknown risks, uncertainties and other factors, including those listed in “Risk Factors,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
 
The Company has not published and does not intend to publish any profit estimates within the meaning of Regulation 2019/980, and no such profit estimate is provided in this Prospectus.
 
In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions.
 
These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our ability to control or predict. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors.
 
Many important factors, in addition to the factors described in the risk factor section of this Prospectus, could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
 
The forward-looking statements made in this Prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this Prospectus and the documents that we reference in this Prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results or performance may be materially different from what we expect.

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REASONS FOR THE OFFER
 
Having thoroughly researched and landscaped the global gaming market for a best-in-class iGaming provider, NeoGames has identified Aspire as an ideal combination that would allow NeoGames to pursue sports and gaming initiatives globally for lottery customers and permit entry into the adjacent TAMs of online sports betting and online gaming. NeoGames believes combining with Aspire and adding its proprietary technology, including a scalable PAM solution providing end-to-end solutions for a customer’s online business from regulation and compliance to payment processing, risk management, CRM, support and player value optimization combined with its games content and sports betting platform, provides strong strategic and operational rationale for a combination. Further, Aspire operates a pure B2B model, given its recent divestiture of its B2C operations. Aspire’s B2B operations, as reported by Aspire, have a history of revenue growth and operating profitability provides strong financial rationale for a combination. NeoGames believes that the combination of award-winning products and service offerings across iLottery, online sports betting and iGaming, will uniquely position NeoGames, as a global multi-product leader, to further capitalize on industry growth, increase revenues from existing customers and offer a value proposition that would appeal to a wider array of customers globally.
 
The fact that both companies share a common origin and a common technology foundation will, we believe, allow us to benefit from revenue synergies efficiently. These shared roots also mean that both companies share important cultural and management values which again will smooth the transitional period.
 
NeoGames believes the proposed combination of NeoGames and Aspire could result in the following benefits to the combined business:
 
Technology and Product Offering Enhancements Elevating the Go-To-Market Strategy
 
As lotteries around the world are seeking comprehensive turn-key solutions that include iLottery, online sports betting and iGaming products and services, it is NeoGames’ belief that the ability to provide a complete end-to-end solution is becoming an increasingly important consideration for lotteries around the world when selecting platform and content providers. The combination of iLottery, online sports betting and iGaming would create a comprehensive product offering that would enable NeoGames to compete and win contracts in markets where lotteries operate sports betting and iGaming, providing additional revenue opportunities. Furthermore, the combination would enhance NeoGames’ ability to address all aspects of its customers’ needs in-house, reducing the need for third party solutions.
 
Provides Strategic Opportunities to Accelerate and Diversify Growth
 
NeoGames’ positioning in the U.S. as a leading iLottery platform provider2, with technology platforms that are deployed and operational in over a dozen U.S. states across lotteries and gaming, could further facilitate and accelerate Aspire’s entry into the growing U.S. market. Further, Aspire’s online sports betting and iGaming operating capabilities with experience operating outside of the U.S. could assist NeoGames to establish a presence in the sports betting and iGaming verticals in emerging high growth regions, such as Latin America and Africa.
 
Diversified Revenue Streams and Improved Growth Profile
 
Aspire’s complementary online sports betting and iGaming offering diversifies NeoGames’ revenue streams, both geographically and by product. NeoGames would be able to pursue sports and gaming initiatives globally for lottery customers and enter into the adjacent TAMs of online sports betting and online gaming. Together, NeoGames and Aspire operate across three continents globally. Combing the power of the global reach with a comprehensive product offering, which brings efficient product development and faster new market launches, NeoGames believes meaningful revenue synergies could be realized over the long term. NeoGames believes that the combined product offering will better position the combined company to win contracts in markets that were previously inaccessible or require a highly competitive position.
 
Additionally, reducing third party costs and fees, eliminating duplicative public company costs, and aligning of research and development activities and general and administrative costs could potentially create cost synergies.
 
Committed to Continued Profitable Growth
 
Both NeoGames and Aspire have operated separately as high growth and highly profitable entities for many years. The combination of the companies, and resulting reduced reliance on third party vendors improving margins, as well as increased TAM and growth profile, are expected to lead to additional opportunities to accelerate growth and to further expand already strong margins.
 
Enhanced Management Expertise
 
The combined company will be led and supported by the market-leading capabilities of an experienced, joint management team. Having worked together successfully in the past, NeoGames’ and Aspire’s management teams represent a strong cultural fit as each focus on innovation and a customer-centric approach to their respective markets and products.
 
NeoGames looks forward to working with Aspire’s highly experienced team. The quality of the team throughout the organization was one of the drivers for the Offer and as such NeoGames sees them as key to the future success of the combined company and intends to invest in their continued growth. The organizational structure of Aspire has provided a robust platform for growth, therefore NeoGames intends to create a new iGaming division that will encompass the entire existing operations of Aspire to support and push for the continued growth of the iGaming and sports betting verticals, while benefiting from overarching synergies.



2 According to Eilers & Krejcik Gaming's U.S. iLottery Tracker, NeoGames, through its NPI Joint Venture, has operated 67 percent of the market of U.S. iLottery gross wagers as of April 2021.
 
45

 
The combined company is expected to be led by Moti Malul, who will continue as CEO, and Raviv Adler as CFO of NeoGames. Tsachi Maimon, the CEO of Aspire, is expected join NeoGames as President and lead the newly formed online gaming division. The current board of directors of NeoGames will remain in place and be responsible for governance of the combined entity.
 
NeoGames is expecting it will experience employee growth over time and is not anticipating significant redundancies in personnel. NeoGames plans to maintain separate business lines across products much as it is currently organized.
 
As set out above, NeoGames’ intention is to realize integration benefits of the combination. The integration of Aspire and NeoGames will therefore likely entail some changes to the organization, operation and employees of the combined group. The specific initiatives to be implemented will be determined following completion of the Offer pursuant to a detailed review of the combined businesses. Before completion of such review, it is too early to say which specific initiatives will be taken and the impact that these would have. Except for what is stated above, there are currently no decisions on any changes to NeoGames’ or Aspire’s employees, management or existing organization and operations of Aspire, including terms of employment and location of business.
 

46

 

DIVIDEND AND DIVIDEND POLICY
 
We do not anticipate paying any cash dividends on our Shares in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business.
 
There are no legislative or other legal provisions currently in force in Luxembourg or arising under our articles of association that restrict the payment of dividends or distributions to holders of our Shares not residing in Luxembourg, except for withholding tax requirements and regulations restricting the remittance of dividends, distributions and other payments in compliance with United Nations and EU sanctions. Under Luxembourg law the amount and payment of dividends or other distributions is determined by a simple majority vote at a general meeting of shareholders based on the recommendation of our board of directors, except in certain limited circumstances. Pursuant to our articles of association, our board of directors has the power to pay interim dividends or make other distributions in accordance with applicable Luxembourg law.
 
Distributions (in the form of either dividends, share premium or capital surplus reimbursements) may be lawfully declared and paid if our net profits and/or distributable reserves are sufficient under Luxembourg law.
 
Under Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. The allocation to the legal reserve becomes compulsory again when the legal reserve no longer represents 10% of our issued share capital. As of 31 December 2021 we had a legal reserve in the amount of $230 thousand.
 
Under Luxembourg law, the amount of distributions paid to shareholders (including in the form of dividends, share premium reimbursements or capital surplus reimbursements) may not exceed the amount of profits at the end of the last financial year plus any profits carried forward and any amounts drawn from reserves that are available for that purpose, less any losses carried forward and sums to be placed in reserve in accordance with Luxembourg law or our articles of association. Furthermore, no distributions (including in the form of dividends, share premium reimbursements or capital surplus reimbursements) may be made if net assets were, at the end of the last financial year (or would become, following such a distribution), less than the amount of the subscribed share capital plus the non-distributable reserves. Distributions in the form of dividends may only be made out of net profits and profits carried forward, whereas distributions in the form of share premium reimbursements may only be made out of available share premium and distributions in the form of capital surplus reimbursements may only be made out of available capital surplus.
 
The amount of any future dividend payments we may make will depend on, among other factors, our strategy, future earnings, financial condition, cash flow, working capital requirements, capital expenditures and applicable provisions of our articles of association. Any profits we declare as dividends and any share premium or capital surplus we distribute will not be available to be reinvested in our operations.
 
We have not declared nor paid dividends in any of the years ended 31 December 2019, 2020 and 2021.

47

 
CAPITALISATION AND INDEBTEDNESS
 
The data presented in this section should be analysed in conjunction with the information provided in “Operating and Financial Review” and the historical financial statements and the notes thereto, as well as the financial data presented in the other sections of the Prospectus.
 
Working capital statement
 
The Company is of the opinion that the Company has sufficient working capital for its present requirements that is for at least the next twelve months commencing as at the date of this Prospectus.
 
The tables below set forth our cash and cash equivalents and capitalization as of 31 March 2022 and is based on unaudited financial information as of the aforementioned date.
 
Investors should read this table in conjunction with our audited financial statements included in this Prospectus as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no significant adjustments to our capitalization since 31 March 2022.
 
Total current debt (including current portion of non-current debt)
   
-
 
Guaranteed
   
-
 
Secured
   
-
 
Unguaranteed / unsecured
   
-
 
Total non-current debt (excluding current portion of non-current debt)..
   
13,287
 
- Guaranteed
   
-
 
- Secured
   
13,287
 
- Unguaranteed / unsecured
   
-
 
Shareholder equity
   
60,887
 
- Share capital
   
45
 
- Legal reserve(s)
   
60,842
 
- Other reserves
   
-
 
Total          
   
74,174
 

A Cash
   
40,768
 
B Cash equivalents
   
-
 
C Other current financial assets
   
-
 
D Liquidity (A + B + C)
   
40,768
 
E Current financial debt (including debt instruments, but excluding current
portion of non-current financial debt)
   
-
 
F Current portion of non-current financial debt
   
-
 
G Current financial indebtedness (E + F)
   
-
 
H Net current financial indebtedness (G - D)
   
(40,768
)
I Non-current financial debt (excluding current portion and debt instruments).
   
13,287
 
J Debt instruments
   
-
 
K Non-current trade and other payables
   
1,158
 
L Non-current financial indebtedness (I + J + K)
   
14,445
 
M Total financial indebtedness (H + L)
   
(26,323
)

48

 
INVESTMENTS
 
Development expenses for the year ended December 31, 2021 were $9.4 million. The development expenses are primarily comprised of costs of our research and development personnel, contractor services in Ukraine and other development-related expenses. Research and development costs are expensed when incurred, except to the extent that such costs qualify for capitalization. The increase of $1.9 million compared with the year ended December 31, 2020 was primarily driven by an increase in the number of employees in our Ukraine research and development centers.
 
Development expenses for the year ended December 31, 2020 were $7.5 million increasing from $6.9 million in the year ended December 31, 2019. The increase is attributed to increase in the number of employees both in Israel and Ukrtaine development centers.
 
There are no material investments of the Company that are in progress or for which firm commitments have been made between the period 31 December 2021 and the date of this Prospectus. However, the Company intends to complete the acquisition of Aspire Global in accordance with what is stated in this Prospectus. In particular, see section “Reasons for the Offer
 
On July 31, 2014, Pollard and NeoGames US jointly established an equal ownership share, NeoPollard Interactive LLC (“NPI” or the “Joint Venture”) designated to participate in iLottery tenders in the North American market. NPI has operated the Virginia State Lottery online e-Subscription program, since 2015 through October 2026, the iLottery platform on behalf of New Hampshire Lottery since September 2018 with an initial term of seven years, the North Carolina Education Lottery iLottery program since October 2019 (initial terms of five years with an option to extend for additional five years) and the Alberta Gaming, Liquor and Cannabis Commission ("AGLC') iLottery platform since September 2020 (initial term of seven years, with an option to extend for five years).

49

 
SELECTED HISTORICAL FINANCIAL INFORMATION
 
The following tables set out selected consolidated historical financial information of the Company as at and for the years ended 31 December 2021, 31 December 2020 and 31 December 2019.
 
These consilodeated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. Profit or loss accounts are presented and analyzed by their nature rather than their function within the entity as such method provides reliable and more relevant information on the Company's operations.
 
Statements of profit or loss
 
Selected financial information from the consolidated statement of profit or loss for the periods indicated.
 

   
For the 12-month periods ended
31-Dec
 
   
2021
   
2020
   
2019
 
   
($ ‘000) / (audited)
 
Revenue
   
50,463
     
49,202
     
33,062
 
Distribution expenses
   
9,889
     
6,685
     
4,252
 
Development expenses
   
9,428
     
7,452
     
6,877
 
Selling and marketing expenses
   
1,549
     
1,483
     
1,981
 
General and administrative expenses
   
12,300
     
7,496
     
4,957
 
Initial public offering expenses
   
-
     
2,796
     
-
 
Prospective acquisition related expenses
   
3,841
     
-
     
-
 
Total operating expenses excluding depreciation and amortization
   
37,007
     
25,912
     
18,067
 
                         
EBITDA
   
25,902
     
24,683
     
11,071
 
                         
Depreciation and amortization
   
14,613
     
11,657
     
9,685
 
Interest expenses with respect to funding from related parties
   
4,811
     
4,343
     
3,792
 
Finance income
   
-
     
(21
)
   
(53
)
Finance expenses
   
1,501
     
747
     
382
 
The company’s share in profits (losses) of Joint Venture
   
12,446
     
1,393
     
(3,924
)
Profit (loss) before income taxes expenses
   
4,977
     
7,957
     
(2,735
)
Income taxes expenses
   
(325
)
   
(1,443
)
   
(1,243
)
Net and total comprehensive income (loss)
   
4,652
     
6,514
     
(3,978
)

50


Statement of financial position
 
Selected financial information from the consolidated statement of financial position at the dates indicated.

   
As at 31 December
 
   
2021
   
2020
   
2019
 
   
($’000) / (audited)
 
ASSETS
                 
NON-CURRENT ASSETS
             
Restricted deposit
   
154
     
164
     
150
 
Restricted deposits – Joint Venture
   
3,848
     
3,773
     
2,000
 
Property and equipment
   
2,159
     
1,301
     
849
 
Intangible assets
   
22,354
     
17,835
     
14,413
 
Right-of-use assets
   
7,882
     
3,127
     
4,688
 
Deferred taxes
   
1,839
     
211
     
130
 
CURRENT ASSETS
                 
Cash and cash equivalents
   
66,082
     
59,767
     
6,016
 
Designated cash
   
167
     
-
     
-
 
Restricted deposit
   
9
     
12
     
138
 
Prepaid expenses and other receivables
   
2,494
     
1,446
     
905
 
Due from Aspire Group
   
1,483
     
56
     
296
 
Due from the Michigan Joint Operation and NPI
   
3,560
     
3,192
     
250
 
Trade receivables
   
3,724
     
3,701
     
2,737
 
TOTAL ASSETS
   
115,755
     
94,585
     
33,175
 
                         
LIABILITIES AND EQUITY
         
                         
EQUITY
                       
Share capital
   
45
     
44
     
21
 
Reserve with respect to transaction under common control
   
(8,467
)
   
(8,467
)
   
(8,467
)
Reserve with respect to funding transactions with related parties
   
20,072
     
20,072
     
16,940
 
Share premium
   
70,812
     
68,608
     
22,788
 
Share based payments reserve
   
6,023
     
3,907
     
2,967
 
Accumulated losses
   
(28,691
)
   
(33,343
)
   
(39,857
)
                         
NON-CURRENT LIABILITIES
         
Capital notes, loans and accrued interest due to Aspire Group
   
-
     
17,739
     
14,987
 
Loans and other due to Caesars, net
   
12,899
     
10,666
     
-
 
Company share of Joint Venture net liabilities
   
830
     
1,025
     
-
 
Lease liabilities
   
7,820
     
1,855
     
3,382
 
Accrued severance pay, net
   
286
     
384
     
276
 
                         
CURRENT LIABILITIES
                 
Trade and other payables
   
7,902
     
4,910
     
1,855
 
Lease liabilities
   
769
     
1,651
     
1,455
 
Capital notes, loans and accrued interest due to Aspire Group
   
21,086
     
-
     
-
 
Loans and other due to Caesars, net
   
-
     
1,972
     
14,245
 
Employees withholding payable
   
167
     
-
     
-
 
Employees’ related payables and accruals
   
4,202
     
3,562
     
2,583
 
                         
TOTAL LIABILITIES AND EQUITY
   
115,755
     
94,585
     
33,175
 

51

Statement of cash flows
 
Selected financial information from the consolidated statement of cash flows for the periods indicated.

   
For the 12-month periods ended 31 December
 
   
2021
   
2020
   
2019
 
   
($‘000)/(audited)
 
Net cash generated from operating activities
   
14,911
     
24,518
     
15,040
 
Net cash used in investing activities          
   
(6,283
)
   
(12,696
)
   
(17,424
)
Net cash generated from financing activities
   
(2,313
)
   
41,929
     
5,166
 
Net change in cash and cash equivalents
   
6,315
     
53,751
     
2,782
 
 
Significant accounting policies

The significant accounting policies followed in the preparation of the financial statements, on a consistent basis, are:
 
Comparative information
 
Comparative figures stated in the statements of comprehensive loss have been reclassified to conform to the current year's presentation format for the purpose of adequate much more and relevant presentation.
 
Foreign currency
 
The financial statements of the Company are prepared in US dollar (the functional currency), which is the currency that best reflects the economic substance of the underlying events and circumstances relevant to the Company's transactions. Balances in foreign currencies are converted into US dollar in accordance with the principles set forth by International Accounting standard (IAS) 21 ("The Effects of Changes in Foreign Exchange Rates"). Accordingly, transactions and balances have been converted as follows:
 
Monetary assets and liabilities - at the rate of exchange applicable at the end of the reporting year; Income and expense items - at exchange rates applicable as of the date of recognition of those items. Non-monetary items - at the rate of exchange used to convert the related items within the Statement of Financial Position i.e. at the time of the transaction.
 
Transaction under common control
 
Acquisition of intangible assets under common control is accounted for based on their book value as was accounted for by the seller. The difference between the fair value of the consideration and the book value of the intangible assets was recorded as a capital reserve with respect to transaction under common control in the statement of changes in deficit.
 
Cash equivalents
 
Cash and cash equivalents comprise cash balances and time deposits with a term of three months or less from the date of the actual deposit.
 
Trade receivables
 
Trade receivables are initially recognized at fair value and subsequently measured at amortized cost and principally comprise amounts due from related parties and ilottery companies. The Company has applied the standard' simplified approach and has calculated the ECLs based on lifetime of expected credit losses, with de-minlmis results. Bad debts (if any) are written off when there is objective evidence that the full amount may not be collected.
 

52

 
Provisions
 
Provisions, which are liabilities of uncertain timing or amount, are recognized when the Company has a legal or constructive obligation as a result of past events, if it is probable that an outflow of funds will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.
 
Property and equipment
 
Property and equipment comprise of data center (servers), computers, leasehold improvements, office furniture and equipment and are stated at cost less accumulated depreciation. Carrying amounts are reviewed at the end of each reporting year. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
 
Depreciation is calculated to write off the cost of fixed assets on a straight line basis over the expected useful lives of the assets concerned. The principal annual rates used for this purpose, are
 
 
%
Computers and computers equipment
25-33
Office furniture and equipment
7
Leasehold improvements
Over the shorter of the term of the lease or useful lives

Subsequent expenditures are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss during the financial period in which they are incurred.
 
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognized in profit and loss.
 
The residual value, the depreciation method and the useful life of an asset are reviewed at least each year- end and the changes are accounted for as a change in accounting estimate on a prospective basis.
 
Impairment of non-financial assets
 
The Company evaluates the need to record an impairment of the carrying amount of fixed assets and intangible assets whenever events or changes in the circumstances indicate that the carrying amount is not recoverable. If the carrying amount of the above assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of the net sale price and value in use. In measuring value in use, the expected cash flows are discounted using a pre-tax discount rate that reflects the specific risks of the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in the statement of comprehensive loss.
 
Revenue recognition

Revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring services to a customer.
 
The Company generates its revenues through three streams:
 
Royalties from licensed technological platfmm and the provision of proprietary games content Royalty revenues are recognized in the accounting periods in which the gaming transactions occur.
 
Fees from use of intellectual property rights ("IP rights") - revenues are recognized over the usage periods.
 
Development services - revenues are recognized in the accounting periods in which services provided.

53

 
Reserve with respect to funding transactions with a Related Group
 
Transactions with related parties are accounted for based on fair value. Any difference between the nominated value and the fair value arise in transactions with related parties are recorded directly into equity to a "Reserve with respect to funding transactions with a Related Group".
 
Share-based payment

Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.
 
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period,
 
Finance income and expenses

Finance income comprises of net currencies exchange rates differences, while finance expenses comprise of interest on related paities funding, net currencies exchange rates differences, interest on leases liabilities and banks charges.
 
Fair value measurement hierarchy

The Company measures certain financial instruments, including derivatives and option scheme expense, at fair value at the end of each repmting period. Fair value is the price that would be received or paid in an orderly transaction between market participants at a particular date, either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for that asset or liability accessible to the Group.
 
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use ofrelevant observable inputs and minimizing the use of unobservable inputs.
 
New standards, interpretations and amendments adopted by the Company

IFRIC 23, Uncertainty over Income Tax Treatments
 
IFRIC 23, Uncertainty over fncome Tax Treatments clarifies how to apply the recognition and measurement requirements in IAS 12 Income Taxes when there is unce1tainty over income tax treatments.
 
IFRIC 23, requires entities to calculate the current tax liability in their financial statements as if the tax authorities were going to perform a tax audit, and the tax authorities knew all the facts and circumstances about the entity's tax position.
 
IFRlC 23 addresses the following issues:
 

Whether an entity should consider uncertain tax treatments separately;

The assumptions an entity should make about the examination of tax treatments by taxation authorities;

How an entity determines taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates; and

How an entity considers changes in facts and circumstances.

The standard was adopted on January l, 2019 with no impact on the consolidated financial statements.
 
The preparation of financial statements under IFRS requires the Company to make estimates and judgments that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
 
Included in this note are accounting policies and/or estimates which cover areas that the Directors and Management consider require judgments and/or assumptions which have a significant risk of causing a material adjustment to the canying amount of assets and liabilities in the future. These policies together with references to the related notes to the financial statements, which include further commentary on the nature of the estimates and judgments made, can be found below:
 
Funding transactions with a Related Group:
 
The fair values of the funding transactions with related parties, the reserve relating to the funding transactions with a Related Group and the relating interest expenses recorded based on discounted cash flow of the anticipating repayments by an annual market interest rate valued by a reputable appraiser.
 
Share based payments/compensation:
 
The compensation expenses of stock options are vested over service periods, but exercisable only upon consummation of certain events as provided in the letter of grants. Stock based compensation expenses were recorded based on the fair values of the options, using the Black-Scholes model assumptions as well as the likelihood of the fulfillment of such events at the respective grant dates.

54

 
COMBINED COMPANY AND PRO FORMA FINANCIAL INFORMATION
 
This section includes forward-looking statements that reflect the current views and opinions of the Company and, due to their nature, involve certain risks and uncertainties. The actual events and outcome of the combination of the companies may differ significantly from the information presented in the forward-looking statements.
 
Introduction
 
The completion of the Offer and the subsequent compulsory acquisition proceeding (as described in the section Terms and conditions of the Offer above) will result in a new group in which NeoGames will be the parent company and Aspire Global, directly or indirectly, will be a wholly owned subsidiary of NeoGames (the “Combined Company”).
 
The combination of NeoGames and Aspire Global will result in a well-diversified iLottery, digital sports betting and casino B2B leader in the global gaming marketplace and will provide customers full turnkey technology solutions with respect to their iLottery, digital sports betting and casino offerings. The Combined Company will have a true global presence, servicing customers in more than a dozen U.S. states, over ten countries throughout Europe, as well as operations throughout high growth regions such as Latin America and Africa.
 
Product offering
 
Having thoroughly researched and landscaped the global gaming market for a best-in-class iGaming provider, NeoGames has identified Aspire Global as an ideal combination that would allow NeoGames to pursue sports and gaming initiatives globally for lottery customers and permit entry into the adjacent Total Addressable Markets (TAMs) of online sports betting and online gaming. NeoGames believes combining with Aspire Global and adding its proprietary technology, including a scalable Player Account Management (PAM) solution providing end-to-end solutions for a customer’s online business from regulation and compliance to payment processing, risk management, CRM, support and player value optimization combined with its games content and sports betting platform, provides strong strategic and operational rationale for a combination. Further, Aspire Global operates a pure B2B model, given its recent divestiture of its B2C operations. Aspire Global’s B2B operations, as reported by Aspire Global, have a history of revenue growth and operating profitability provides strong financial rationale for a combination. NeoGames believes that the combination of award-winning products and service offerings across iLottery, online sports betting and iGaming, will uniquely position NeoGames, as a global multi-product leader, to further capitalize on industry growth, increase revenues from existing customers and offer a value proposition that would appeal to a wider array of customers globally.
 
As lotteries around the world are seeking comprehensive turn-key solutions that include iLottery, online sports betting and iGaming products and services, it is NeoGames’ belief that the ability to provide a complete end-to-end solution is becoming an increasingly important consideration for lotteries around the world when selecting platform and content providers. The combination of iLottery, online sports betting and iGaming would create a comprehensive product offering that would enable NeoGames to compete and win contracts in markets where lotteries operate sports betting and iGaming, providing additional revenue opportunities. Furthermore, the combination would enhance NeoGames’ ability to address all aspects of its customers’ needs in-house, reducing the need for third party solutions.
 
Organization
 
The Combined Company will be led and supported by the market-leading capabilities of an experienced, joint management team. Having worked together successfully in the past, NeoGames’ and Aspire Global’s management teams represent a strong cultural fit as each focus on innovation and a customer-centric approach to their respective markets and products.
 
NeoGames looks forward to working with Aspire Global’s highly experienced team. The quality of the team throughout the organization was one of the drivers for the Offer and as such NeoGames sees them as key to the future success of the Combined Company and intends to invest in their continued growth. The organizational structure of Aspire Global has provided a robust platform for growth, therefore NeoGames intends to create a new iGaming division that will encompass the entire existing operations of Aspire Global to support and push for the continued growth of the iGaming and sports betting verticals, while benefiting from overarching synergies.
 
The Combined Company is expected to be led by Moti Malul, who will continue as CEO, and Raviv Adler as CFO of NeoGames. Tsachi Maimon, the CEO of Aspire Global, is expected join NeoGames as President and lead the newly formed online gaming division. The current board of directors and auditor of NeoGames will remain in place and be responsible for governance of the combined entity.
 
NeoGames is expecting it will experience employee growth over time and is not anticipating significant redundancies in personnel. NeoGames plans to maintain separate business lines across products much as it is currently organized.
 
As set out above, NeoGames’ intention is to realize integration benefits of the combination. The integration of Aspire Global and NeoGames will therefore likely entail some changes to the organization, operation and employees of the combined group. The specific initiatives to be implemented will be determined following completion of the Offer pursuant to a detailed review of the combined businesses. Before completion of such review, it is too early to say which specific initiatives will be taken and the impact that these would have. Except for what is stated above, there are currently no decisions on any changes to NeoGames’ or Aspire Global’s employees, management or existing organization and operations of Aspire Global, including terms of employment and location of business.

55

 
Planned changes in operations
 
At the time of this Prospectus, there are no material planned changes in operations of NeoGames or Aspire following the completion of the Offer.
 
In the long term, NeoGames will in collaboration with Aspire identify and assess further benefits of the Combined Company. This will be a continuous project which will likely lead to changes in the business and operations of the Combined Company in order to, inter alia, improve the quality of delivered services, streamline administration and service production, create increased opportunities to develop the services of the Combined Company, and find new paths in the ever-changing environment in which the Combined Company will operate. Before these further assessments have been carried out, it is not possible to further specify the benefits and costs of the combination and coordination of the two companies’ businesses. Furthermore, at the time of this offer document, it is not possible to quantify these benefits/synergies and costs, or to specify when they are expected to arise.
 
Market position
 
NeoGames’ positioning in the U.S. as a leading iLottery platform provider3, with technology platforms that are deployed and operational in over a dozen U.S. states across lotteries and gaming, could further facilitate and accelerate Aspire Global’s entry into the growing U.S. market. Further, Aspire Global’s online sports betting and iGaming operating capabilities with experience operating outside of the U.S. could assist NeoGames to establish a presence in the sports betting and iGaming verticals in emerging high growth regions, such as Latin America and Africa.
 
Aspire Global’s complementary online sports betting and iGaming offering diversifies NeoGames’ revenue streams, both geographically and by product. NeoGames would be able to pursue sports and gaming initiatives globally for lottery customers and enter into the adjacent total addressable markets (TAMs) of online sports betting and online gaming. Together, NeoGames and Aspire Global operate across three continents globally. Combining the power of global reach with a comprehensive product offering, which brings efficient product development and faster new market launches, NeoGames believes meaningful revenue synergies could be realized over the long term. NeoGames believes that the combined product offering will better position the Combined Company to win contracts in markets that were previously inaccessible or require a highly competitive position.
 
Planned coordination measures and their financial impact
 
The fact that both companies share a common origin and a common technology foundation will, we believe, allow us to benefit from revenue synergies efficiently. These shared roots also mean that both companies share important cultural and management values which again will smoothen the transitional period.
 
Ownership and share capital structure
 
After the completion of the Offer, Aspire will be, directly or indirectly, a wholly owned subsidiary of NeoGames. With regard to the ownership structure of NeoGames after the completion of the Offer, it is expected, as far as the Company is aware, that the persons presented in the below table, directly or indirectly, will be the five largest shareholders in NeoGames, based on full acceptance in the Offer, and based on that all shareholders in Aspire, except for those who have irrevocably undertaken to accept the Offer, elect to receive 100 percent cash consideration. The presentation is based on NeoGames’ ownership structure available to NeoGames as at 31 December 2021 and changes thereafter that NeoGames is aware of, and Aspire’s ownership structure as at 31 March 2022.
 
Owner
 
Number of shares
   
% of the share capital
   
% of the votes
 
Barak Matalon
   
8,042,765
     
24.23
     
24.23
 
Pinhas Zahavi
   
5,031,596
     
15.16
     
15.16
 
Elyahu Azur
   
5,019,425
     
15.12
     
15.12
 
Aharon Aran
   
2,007,769
     
6.05
     
6.05
 
Oded Gottfried
   
608,677
     
1.83
     
1.83
 
Others
   
12,488,088
     
37.62
     
37.62
 
TOTAL
   
33,198,320
     
100.00
     
100.00
 

As part of the consideration in the Offer, NeoGames will issue up to a total of 7,604,886 new shares in NeoGames to the shareholders of Aspire Global as payment of the share consideration in the Offer, which would entail that Aspire Global’s shareholders will have an ownership interest of approximately 22.08 percent of the outstanding capital and votes in NeoGames, and correspondingly existing shareholders of NeoGames a remaining ownership interest of 77.924 percent of the outstanding capital and votes in NeoGames, assuming full acceptance of the Offer.


3 According to Eilers & Krejcik Gaming's U.S. iLottery Tracker, NeoGames, through its NPI Joint Venture, has operated 67 percent of the market of U.S. iLottery gross wagers as of April 2021.
4 Based on 7,604,886 NeoGames shares issued to Aspire shareholders and 26,833,042 NeoGames shares (based on the fully diluted number of NeoGames ordinary shares outstanding as of the quarter ended March 31, 2022).
56

 
After the completion of the Offer, the total amount of shares, votes and share capital in NeoGames, i.e., the parent company of the Combined Company, is expected to amount to the following, based on full acceptance in the Offer:
 
   
Before the Offer
   
After the Offer
   
Dilution
 
Number of outstanding shares and votes in NeoGames
   
25,593,434
     
33,198,320
     
22.91
%
Registered share capital in NeoGames
   
45,263.77
     
58,713.54
     
22.91
%

Pro forma financial statements
 
Introduction
 
On January 17, 2022, NeoGames announced that it has commenced a public offer to the shareholders of Aspire Global, to acquire 100% of the outstanding shares of Aspire. NeoGames’ offer is for a total purchase price of approximately $480 million (equivalent to SEK 4.3 billion representing SEK 91.03 per share.) NeoGames is offering to acquire all the outstanding shares of Aspire through a combination of cash for 50% of Aspire shares at a price of SEK 111 per share, and equity consideration for the remaining 50% of Aspire’s shares consisting of 7.6 million newly issued shares in NeoGames (equal to an exchange ratio of 0.32 shares in NeoGames per one share in Aspire). The exchange ratio was determined based on a $38.01 per share price for NeoGames and a SEK 111.00 per share price for Aspire.  Newly issued NeoGames shares will be delivered in the form of Swedish depository receipts (the “Offer”).
 
On 30 November 2021, Aspire Global completed the transaction to divest its B2C segment to the US-based Group Esports echnologies, Inc. (Nasdaq: EBET or the “Acquirer”) for a consideration of €65 million of which €50 million in cash, €10 million in promissory notes and €5 million nominated in common stock of the Acquirer. After the completion of the transaction, the B2C brands will become platform partners to Aspire Global and the deal with Esports Technologies includes a four-year platform and managed services agreement. The divestment saw Aspire becoming a pure B2B company.
 
The acquisition of Aspire Global and divestment of the B2C segment is assessed to have a material impact on NeoGames’ future results and financial position and consequently the following unaudited pro forma financial information gives effect to the acquisition by NeoGames of all outstanding shares of Aspire Global plc (Nasdaq First North Premier Growth Market: ASPIRE), the divestment of Aspire’s B2C business and additional adjustments as described below.
 
The unaudited pro forma financial information has been prepared in accordance with Annex 20 to Commission Delegated Regulation (EU) 2021/528 and have been compiled in a manner consistent with the accounting principles of NeoGames with respect to its financial position, performance and non IFRS measures, which are described in its Annual Report for 2021. The unaudited pro forma financial information has not been compiled in accordance with and shall not be regarded as being compiled in accordance with Regulation S-X in the U.S. Securities Act.
 
For the purposes of preparing the unaudited pro forma combined statement of financial position as of December 31, 2021, the following financial information was used:
 

The audited NeoGames consolidated statement of financial position as of December 31, 2021;
 

The unaudited Aspire consolidated statement of financial position as of December 31, 2021, published by Aspire on February 17, 2022, converted from EURO into USD using a EURO to USD conversion rate as further set out in item 2 below and conformed with NeoGames’ financial presentation;
 

Pro forma adjustments to reflect the proposed acquisition of Aspire as if such acquisition had been completed on December 31, 2021; and
 

Pro forma adjustments to reflect the debt financing undertaken by NeoGames for the purpose of financing the proposed acquisition of Aspire as if such debt financing had been undertaken effective as of December 31, 2021.
 
For purposes of preparing the unaudited pro forma combined statement of income (loss) from continuing operations and reconciliation statement for non IFRS measures (EBIT, EBITDA and Adjusted EBITDA) for the year ended December 31, 2021 the following financial information has been used:
 

The audited NeoGames consolidated statement of comprehensive income (loss) for the year ended December 31, 2021;
 

The unaudited NeoGames reconciliation statement for non-IFRS measures (EBIT, EBITDA and Adjusted EBITDA) for the year ended December 31, 2021;
 

The unaudited Aspire consolidated statement of comprehensive income (loss) for the year ended December 31, 2021, published by Aspire on February 17, 2022, converted from EURO into USD using a EURO to USD conversion rate as further set out in item 2 below and conformed to NeoGames’ financial presentation;
 

Pro forma adjustments to reflect the proposed acquisition of Aspire as if such acquisition had been completed on December 31, 2021;
 

Pro forma adjustments to reflect the debt financing undertaken by NeoGames for the purpose of financing the proposed acquisition of Aspire as if such debt financing had been undertaken effective as of December 31, 2021; and
 

Pro forma adjustments to reflect the divestment of Aspire’s B2C Business as if it had occurred on January 1, 2021.


57




Aspire's financial statements were prepared in accordance with International Financial Reporting Standards including, International Accounting Standards and interpretations (collectively “IFRS”) issued by the International Accounting Standards Board ("IASB") as adopted by the European Union (“IFRS EU”), and NeoGames' financial statements were prepared in accordance with IFRS as issued by the IASB.
 
If NeoGames would have prepared its financial statements in accordance with IFRS EU, no adjustments would have been required to its statement of financial position as of December 31, 2021, and/or to its statement of comprehensive income for the year then ended and therefore the unaudited pro forma financial information has been prepared based on IFRS EU.
 
The historical consolidated financial information has been adjusted to give effect to pro forma events that are directly attributable to the aforementioned transactions, factually supportable and, with respect to the unaudited pro forma combined statement of income (loss) from continuing operations and non IFRS measures, expected to have a continuing impact on the results of the combined company. The unaudited pro forma financial information should be read in conjunction with the accompanying adjustments and notes to the unaudited pro forma financial information. In addition, the unaudited pro forma financial information was based on and should be read in conjunction with the consolidated financial statements of NeoGames for the year ended December 31, 2021 and the related notes thereto incorporated by reference to this Prospectus and the consolidated financial statements of Aspire for the year ended December 31, 2021 and the related notes thereto.
 
The acquisition method of accounting, including purchase price adjustments will depend on certain valuations and other studies that can only be prepared following the closing of the transaction, at which time NeoGames will have full access to all of Aspire’s financial information. Therefore, all information related to the acquisition method of accounting, including purchase price adjustments should be regarded as preliminary information. Differences between such preliminary information and the final acquisition accounting may occur and could have a material impact on the unaudited pro forma financial information.
 
The unaudited pro forma financial information is for illustrative purposes only.
 
It does not intend to indicate the results that would have actually been attained had the proposed acquisition of Aspire had been completed on the assumed dates or for the periods presented, or which may be realized in the future. To produce the unaudited pro forma financial information, NeoGames allocated the estimated purchase price for Aspire using its best estimates of fair value. To the extent there are significant changes to the scope and nature of the business of Aspire, the assumptions and estimates herein could change significantly. The allocation of the purchase price is dependent upon certain valuation and other studies which are expected only upon settlement of the acquired shares and closing of the transaction. Accordingly, the pro forma purchase price adjustments are preliminary and subject to further adjustments as additional information becomes available, and as additional analysis is performed. There can be no assurances that the final valuation will not result in material changes to the purchase price allocation. Furthermore, NeoGames could have reorganization and restructuring expenses as well as potential operating synergies as a result of the proposed combining of NeoGames and Aspire. The unaudited pro forma financial information does not reflect these potential expenses and synergies.
 
The unaudited pro forma financial information has been prepared assuming that 100% of the outstanding Aspire shares will be tendered into the Offer.
 
58

Unaudited pro forma combined statement of financial position as of December 31, 2021

Proforma statement of financial position
 
Statement of Financial position
             
 
 
As of Dec 31, 2021
   
As of Dec 31, 2021
     
 
 
NeoGames SA as reported
   
Aspire PLC as reported
   
Aspire (As reported) converted to USD
   
ADJUSMENT 3
   
ADJUSMENT 4
   
Proforma combined financial position as of Dec 31, 2021
 
ASSETS
 
USD'k
   
EUR'k
   
USD'k
   
USD'k
   
USD'k
   
USD'k
 
CURRENT ASSETS
                                   
Cash and cash equivalents
   
66,082
     
63,651
     
72,039
           
(97,493
)
   
40,628
 
Designated cash
   
167
     
-
     
-
                   
167
 
Restricted cash
   
9
     
108
     
122
                   
131
 
Restricted deposit
   
-
     
-
     
-
                   
-
 
Prepaid expenses and other receivables
   
2,494
     
7,452
     
8,434
                   
10,928
 
Income tax receivables
   
-
     
9,518
     
10,772
                   
10,772
 
Investment in EBET
   
-
     
3,841
     
4,347
                   
4,347
 
Capital notes and accrued interests due from a related group
   
-
     
18,669
     
21,130
     
(21,130
)
           
-
 
Due from Aspire Group
   
1,483
     
-
     
-
     
(1,483
)
           
-
 
Due from the Michigan Joint Operation and NPI
   
3,560
     
-
     
-
                     
3,560
 
Common stock
   
-
     
-
     
-
                     
-
 
Trade receivables
   
3,724
     
18,048
     
20,427
                     
24,151
 
TOTAL CURRENT ASSETS
   
77,519
     
121,287
     
137,271
     
(22,613
)
   
(97,493
)
   
94,684
 
 
                                               
NON-CURRENT ASSETS
                                               
Restricted deposit
   
154
                                     
154
 
Restricted deposits - Joint Venture
   
3,848
     
-
     
-
                     
3,848
 
Investment and loans - associated companies
   
-
     
3,002
     
3,398
                     
3,398
 
Property and equipment
   
2,159
     
1,508
     
1,707
                     
3,866
 
Goodwill
   
-
     
34,475
     
39,019
             
245,439
     
284,458
 
Intangible assets
   
22,354
     
42,215
     
47,779
             
201,626
     
271,759
 
Right-of-use assets
   
7,882
     
1,269
     
1,436
     
(193
)
           
9,125
 
Capital note and accrued interest
   
-
     
10,083
     
11,412
                     
11,412
 
Deferred financing costs
   
-
     
-
     
-
             
5,118
     
5,118
 
Deferred taxes
   
1,839
     
41
     
46
                     
1,885
 
TOTAL NON-CURRENT ASSETS
   
38,236
     
92,593
     
104,797
     
(193
)
   
452,183
     
595,023
 
TOTAL ASSETS
   
115,755
     
213,880
     
242,068
     
(22,806
)
   
354,690
     
689,707
 
 
                                               
LIABILITIES AND EQUITY
                                               
CURRENT LIABILITIES
                                               
Trade and other payables
   
7,902
     
25,005
     
28,301
                     
36,203
 
Current liabilities
   
-
     
5,024
     
5,686
                     
5,686
 
Lease liabilities
   
769
     
914
     
1,034
     
(245
)
           
1,558
 
Contingent liabilities
   
-
     
-
     
-
                     
-
 
Deferred payment on business combination
   
-
     
-
     
-
                     
-
 
Related group payables
   
-
     
1,303
     
1,475
     
(1,475
)
           
-
 
Shareholder's loans
   
-
     
11,276
     
12,762
                     
12,762
 
Income taxes payables
   
-