Document:

Exhibit 4.12

 

FORM 51-102F3

 

MATERIAL CHANGE REPORT

 

		Item 1.	Name and Address of Company

 

Bragg Gaming Group Inc. (the “Corporation”)

100 King Street West, Suite 3400

Toronto, Ontario

M5X 1A4

 

		Item 2.	Date of Material Change

 

June 2, 2021

 

		Item 3.	News Release

 

A news release with respect to the material
change referred to in this report was issued by the Corporation on June 2, 2021 through Globe Newswire and filed on the system for electronic
document analysis and retrieval (SEDAR) at www.sedar.com under the Corporation’s profile.

 

		Item 4.	Summary of Material Change

 

The Corporation, through its wholly-owned
Delaware subsidiary, acquired Wild Streak LLC (“Wild Streak”), a Nevada-based content creation studio, pursuant to
a membership interest purchase agreement dated June 2, 2021 (“MIPA”). Pursuant to the MIPA, the Corporation purchased
100% of the membership interests of Wild Streak (the "Transaction") for an aggregate purchase price of US$30 million
(the “Purchase Price”), consisting of: (i) US$10 million in cash; and (ii) US$20 million in common shares in the capital
of the Corporation (“Common Shares”), payable on each of the next three anniversaries of the closing date of the transaction
(collectively, the “Closing Date”). The Purchase Price is subject to post-closing adjustments.

 

		Item 5.	Full Description of Material Change

 

		Item 5.1	Full Description of Material Change

 

On June 2, 2021, the Corporation announced
that it had entered into the MIPA, pursuant to which it acquired 100% of the membership interests of Wild Streak.

 

The Purchase Price of US$30 million consists
of:

 

		(a)	US$10 million in cash paid at the Closing Date; and

 

		(b)	US$20 million in Common Shares, payable on each of the next three anniversaries of the Closing Date as
follows:

 

     

     

    

 

		(i)	on the first anniversary of the Closing Date: A number of Common Shares determined by dividing
US$10,000,000 by the price of the Common Shares based on the 10-day weighted trading price of the Common Shares over the 10 trading days
immediately preceding the Closing Date, being US$13.66 per Common Share (the “Stock Price”);

 

		(ii)	on each of the second and third anniversaries of the Closing Date: A number of Common Shares determined
by dividing US$5,000,000 by the Stock Price,

 

(collectively, the “Deferred
Consideration”).

 

However, in the event of a change of control
of the Corporation prior to the third anniversary of the Closing Date, all Deferred Consideration payable on or after the date of such
change of control shall vest immediately and become payable to the Seller and Keith Rucker prior to such change of control event.

 

The Transaction closed in escrow on June
2, 2021, and the escrow condtions have been satisfied.

 

Based in Las Vegas, Nevada, Wild Streak
is a content creation studio with a portfolio of casino slot titles supported across online and land-based applications currently servicing
the US market. Wild Streak will provide the Corporation with a library of 39 casino content titles, including several land-based titles,
and intellectual property and know-how, including game designs, mathematic works, advanced game mechanics and features that are specifically
tailored for US markets.

 

Effective as of the Closing Date, Doug
Fallon, joined the Corporation as Managing Director of Group Content and will play a key role in leading the Corporation through its US
content creation strategy.

 

As a result of the Transaction, and upon
the completion of the Corporation's previously announced acquisition of Spin Games LLC, the Corporation’s operations will include
a turnkey iGaming, content delivery, and player engagement platform, and in-house content development with localized market expertise.
Localized market expertise will allow the Corporation to expand its proprietary content offering and better integrate into the tier one
operating segment across the US and European markets.

 

Forward-Looking Statements

 

Certain information contained in
this material change report may be forward-looking statements or “forward-looking information” within the meaning of
applicable securities laws (“forward looking-statements”). Forward-looking statements are often, but not always,
identified by the use of words such as “target”, “expect”, “anticipate”, “believe”,
 “foresee”, “could”, “would”, “estimate”, “goal”, “outlook”,
 “intend”, “plan”, “seek”, “will”, “may”, “tracking”,
 “pacing” and “should” and similar expressions or words suggesting future outcomes. This material change
report includes forward-looking statements pertaining to, among other things, the Corporation’s future growth plans. Numerous
risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions
expressed or implied in the forward-looking statements, including, but not limited to, the following risks and uncertainties:
anticipated strategic, operational and competitive benefits may not be realized; events or series of events, including in connection
with COVID-19, may cause business interruptions; and the Corporation may not be able to raise additional capital. Among other
things, the Corporation has assumed that its businesses will operate as anticipated. The forward-looking statements contained in
this material change report are made as of the date hereof and the Corporation has no obligation to publicly update such
forward-looking statements to reflect new information, subsequent or otherwise, unless required by applicable securities laws. The
reader is warned against placing undue reliance on these forward-looking statements.

 

     

     

    

 

		Item 5.2	Disclosure for Restructuring Transactions

 

N/A

 

		Item 6.	Reliance on Subsection 7.1(2) of National Instrument 51-102

 

N/A

 

		Item 7.	Omitted Information

 

N/A

 

		Item 8.	Executive Officer

 

For further information, please contact
Yaniv Spielberg, CSO, Bragg Gaming Group Inc., Phone: 1-647-800-2282, Email: info@bragg.games.

 

		Item 9.	Date of Report

 

June 10, 2021Exhibit 4.13

 

	BRAGG GAMING GROUP INC.	 

 

 

 

BRAGG GAMING GROUP
INC.

 

INTERIM UNAUDITED
CONDENSED

CONSOLIDATED FINANCIAL
STATEMENTS

 

Three- and six-month
periods ended June 30, 2021

and June 30, 2020

 

Presented in Euros
(Thousands)

 

     

     

    

 

	BRAGG GAMING GROUP INC.	 

 

TABLE OF CONTENTS

 

	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS	1

 

	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION	2

 

	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	3

 

	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	4

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

	1	BASIS OF PRESENTATION AND GOING CONCERN	5

		 	 

	2	SIGNIFICANT ACCOUNTING POLICIES	8
	 	 	 
	3	LOSS BEFORE INCOME TAXES CLASSIFIED BY NATURE	19
	 	 	 
	4	ACQUISITION OF WILD STREAK LLC	20
	 	 	 
	5	DISCONTINUED OPERATIONS	21
	 	 	 
	6	SHARE CAPITAL	22
	 	 	 
	7	PUBLIC OFFERING COMPLETED NOVEMBER 18, 2020	23
	 	 	 
	8	WARRANTS	24
	 	 	 
	9	SHARE BASED COMPENSATION	27
	 	 	 
	10	DEFERRED AND CONTINGENT CONSIDERATION	30
	 	 	 
	11	INTANGIBLE ASSETS	31
	 	 	 
	12	CASH AND CASH EQUIVALENTS	31
	 	 	 
	13	TRADE AND OTHER RECEIVABLES	32
	 	 	 
	14	PREPAID EXPENSES AND OTHER ASSETS	33
	 	 	 
	15	TRADE PAYABLES AND OTHER LIABILITIES	33
	 	 	 
	16	RELATED PARTY TRANSACTIONS	34
	 	 	 
	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT	36
	 	 	 
	18	SUPPLEMENTARY CASHFLOW INFORMATION	40
	 	 	 
	19	SEGMENT INFORMATION	41
	 	 	 
	20	INCOME TAXES	42
	 	 	 
	21	CONTINGENT LIABILITIES	44

 

     

     

    

 

	 	1

 

	BRAGG GAMING GROUP INC.	 	 	 	 	 	 
	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 	 	 
	 	 	 	 	 	 	 

 

	 	 	 	 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 
	 	 	Note	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	Revenue	 	 	3	 	 	 	15,491	 	 	 	12,145	 	 	 	29,687	 	 	 	20,929	 
	Cost of revenue	 	 	 	 	 	 	(8,466	)	 	 	(7,035	)	 	 	(16,013	)	 	 	(11,852	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Profit	 	 	 	 	 	 	7,025	 	 	 	5,110	 	 	 	13,674	 	 	 	9,077	 
	Selling, general and administrative expenses	 	 	3	 	 	 	(8,856	)	 	 	(4,129	)	 	 	(16,010	)	 	 	(8,208	)
	Gain on remeasurement of consideration receivable	 	 	 	 	 	 	6	 	 	 	-	 	 	 	12	 	 	 	-	 
	Loss on remeasurement of deferred and contingent consideration	 	 	3, 10	 	 	 	-	 	 	 	(219	)	 	 	-	 	 	 	(5,187	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating (Loss) Income	 	 	 	 	 	 	(1,825	)	 	 	762	 	 	 	(2,324	)	 	 	(4,318	)
	Net interest expense and other financing charges	 	 	3	 	 	 	(24	)	 	 	(884	)	 	 	(92	)	 	 	(945	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss Before Income Taxes	 	 	3	 	 	 	(1,849	)	 	 	(122	)	 	 	(2,416	)	 	 	(5,263	)
	Income taxes	 	 	20	 	 	 	(482	)	 	 	(498	)	 	 	(989	)	 	 	(741	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Loss from Continuing Operations	 	 	 	 	 	 	(2,331	)	 	 	(620	)	 	 	(3,405	)	 	 	(6,004	)
	Net gain (loss) from discontinued operations after tax	 	 	5	 	 	 	-	 	 	 	228	 	 	 	-	 	 	 	(88	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Loss	 	 	 	 	 	 	(2,331	)	 	 	(392	)	 	 	(3,405	)	 	 	(6,092	)
	Items to be reclassified to net loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	    Cumulative translation adjustment -
    continuing operations	 	 	 	 	 	 	424	 	 	 	123	 	 	 	1,549	 	 	 	161	 
	    Cumulative
    translation adjustment - discontinued operations	 	 	 	 	 	 	-	 	 	 	(4	)	 	 	-	 	 	 	(15	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Comprehensive Loss	 	 	 	 	 	 	(1,907	)	 	 	(273	)	 	 	(1,856	)	 	 	(5,946	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic and Diluted (Loss) Gain Per Share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Continuing operations	 	 	 	 	 	 	(0.12	)	 	 	(0.08	)	 	 	(0.18	)	 	 	(0.75	)
	Discontinued operations	 	 	 	 	 	 	0.00	 	 	 	0.03	 	 	 	0.00	 	 	 	(0.01	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	(0.12	)	 	 	(0.05	)	 	 	(0.18	)	 	 	(0.76	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Millions	 	 	 	Millions	 	 	 	Millions	 	 	 	Millions	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Weighted average number of shares - basic and diluted	 	 	 	 	 	 	19.9	 	 	 	8.0	 	 	 	19.0	 	 	 	8.0	 

 

See accompanying notes to the interim unaudited condensed consolidated financial statements.

 

     

     

    

 

	BRAGG GAMING GROUP INC.

INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	2

 

	 	 	 	 	 	As at	 	 	As at	 
	 	 	 	 	 	June 30,	 	 	December 31,	 
	 	 	Note	 	 	2021	 	 	2020	 
	Cash and cash equivalents	 	 	12	 	 	 	20,966	 	 	 	26,102	 
	Trade and other receivables	 	 	13	 	 	 	8,409	 	 	 	10,297	 
	Prepaid expenses and other assets	 	 	14	 	 	 	2,101	 	 	 	263	 
	Consideration receivable	 	 	5	 	 	 	128	 	 	 	148	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Current Assets	 	 	 	 	 	 	31,604	 	 	 	36,810	 
	Property and equipment	 	 	 	 	 	 	251	 	 	 	272	 
	Right-of-use assets	 	 	 	 	 	 	658	 	 	 	708	 
	Consideration receivable	 	 	5	 	 	 	-	 	 	 	44	 
	Intangible assets	 	 	11	 	 	 	31,391	 	 	 	14,279	 
	Goodwill	 	 	4	 	 	 	26,189	 	 	 	19,938	 
	Other assets	 	 	 	 	 	 	43	 	 	 	43	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Assets	 	 	 	 	 	 	90,136	 	 	 	72,094	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Trade payables and other liabilities	 	 	15	 	 	 	17,279	 	 	 	16,968	 
	Deferred revenue	 	 	 	 	 	 	605	 	 	 	102	 
	Income taxes payable	 	 	20	 	 	 	1,762	 	 	 	1,318	 
	Lease obligations on right of use assets - current	 	 	 	 	 	 	162	 	 	 	133	 
	Deferred and contingent consideration	 	 	10	 	 	 	63	 	 	 	11,521	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Current Liabilities	 	 	 	 	 	 	19,871	 	 	 	30,042	 
	Deferred income tax liability	 	 	20	 	 	 	1,261	 	 	 	1,415	 
	Non-current lease obligations on right of use assets	 	 	 	 	 	 	529	 	 	 	593	 
	Other non-current liabilities	 	 	 	 	 	 	172	 	 	 	147	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Liabilities	 	 	 	 	 	 	21,833	 	 	 	32,197	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Share capital	 	 	6	 	 	 	100,268	 	 	 	62,304	 
	Warrants	 	 	8	 	 	 	-	 	 	 	1,642	 
	Broker warrants	 	 	8	 	 	 	38	 	 	 	399	 
	Shares to be issued	 	 	6, 12	 	 	 	15,310	 	 	 	22,608	 
	Contributed surplus	 	 	 	 	 	 	15,924	 	 	 	14,325	 
	Deficit	 	 	 	 	 	 	(64,636	)	 	 	(61,231	)
	Accumulated other comprehensive income (loss)	 	 	 	 	 	 	1,399	 	 	 	(150	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Equity	 	 	 	 	 	 	68,303	 	 	 	39,897	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Liabilities and Equity	 	 	 	 	 	 	90,136	 	 	 	72,094	 

 

	Going Concern	 	 	1	 	 	 	 	 	 	 	 	 

 

See accompanying notes to the interim unaudited condensed consolidated financial statements.

 

	Approved on behalf of the Board	 	 	 
	 	 	 	 
	Richard Carter	Lara Falzon
	Chief Executive Officer	Non Executive Director

 

     

     

    

 

	BRAGG
    GAMING GROUP INC.	3
	INTERIM
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
	PRESENTED
    IN EUROS (THOUSANDS, EXCEPT SHARE AMOUNTS)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	Special	 	 	 	 	 	 	 	Accumulated	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	warrants
    -	 	 	 	 	 	 	 	other	 	 	 
	 	 	 	 	Share	 	Shares
    to	 	 	 	 	compensation	 	Broker	 	Contributed	 	 	 	comprehensive	 	Total	 
	 	 	Note	 	capital	 	be
    issued	 	 	Warrants	 	options	 	warrants	 	surplus	 	Deficit	 	income
    (loss)	 	Equity	 
	Balance
    as at January 1, 2020	 	 	 	 	 	40,204	 	 	-	 	 	 	1,565	 	 	660	 	 	-	 	 	11,064	 	 	(46,665	)	 	(212	)	 	6,616	 
	Exercise
    of DSUs	 	 	6,
                                            9	 	 	219	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	(219	)	 	-	 	 	-	 	 	-	 
	Share-based
    compensation	 	 	9	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	(94	)	 	-	 	 	-	 	 	(94	)
	Net
    loss for the period	 	 	 	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(6,092	)	 	-	 	 	(6,092	)
	Other
    comprehensive income	 	 	 	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	146	 	 	146	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance
    as at June 30, 2020	 	 	 	 	 	40,423	 	 	-	 	 	 	1,565	 	 	660	 	 	-	 	 	10,751	 	 	(52,757	)	 	(66	)	 	576	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance
    as at January 1, 2021	 	 	 	 	 	62,304	 	 	22,608	 	 	 	1,642	 	 	-	 	 	399	 	 	14,325	 	 	(61,231	)	 	(150	)	 	39,897	 
	Shares
    issued upon completion of Oryx earn-out	 	 	6	 	 	22,000	 	 	(22,000	)	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 
	Shares
    issued upon completion of private placement, net of issuance costs	 	 	6	 	 	1,918	 	 	(608	)	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	1,310	 
	Shares
    to be issued as deferred consideration	 	 	4	 	 	-	 	 	15,310	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	15,310	 
	Exercise
    of RSUs	 	 	6,
                                            9	 	 	267	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	(267	)	 	-	 	 	-	 	 	-	 
	Exercise
    of options	 	 	6,
                                            9	 	 	966	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	(341	)	 	-	 	 	-	 	 	625	 
	Exercise
    of warrants	 	 	8	 	 	11,916	 	 	-	 	 	 	(1,831	)	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	10,085	 
	Expiry
    of warrants	 	 	8	 	 	-	 	 	-	 	 	 	(7	)	 	-	 	 	-	 	 	7	 	 	-	 	 	-	 	 	-	 
	Exercise
    of  broker warrants	 	 	8	 	 	897	 	 	-	 	 	 	196	 	 	-	 	 	(361	)	 	-	 	 	-	 	 	-	 	 	732	 
	Share-based
    compensation	 	 	9	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	2,200	 	 	-	 	 	-	 	 	2,200	 
	Net
    loss for the period	 	 	 	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(3,405	)	 	-	 	 	(3,405	)
	Other
    comprehensive income	 	 	 	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	1,549	 	 	1,549	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance
    as at June 30, 2021	 	 	 	 	 	100,268	 	 	15,310	 	 	 	-	 	 	-	 	 	38	 	 	15,924	 	 	(64,636	)	 	1,399	 	 	68,303	 

 

See accompanying notes to the interim unaudited condensed consolidated financial statements.

 

     

     

    

   

	BRAGG GAMING GROUP INC.	4
	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)
	 	 	 	 	 	 	 	 
	 	 	 	 	Six Months Ended June 30,	 
	 	 	Note	 	2021	 	2020	 
	Operating Activities	 	 	 	 	 	 	 	 	 	 
	Net loss from continuing operations	 	 	 	 	 	(3,405	)	 	(6,004	)
	Add:	 	 	 	 	 	 	 	 	 	 
	Net interest expense and other financing charges	 	 	 	 	 	92	 	 	945	 
	Depreciation and amortization	 	 	3	 	 	1,887	 	 	1,451	 
	Share based compensation	 	 	3, 9	 	 	2,200	 	 	(94	)
	Gain on remeasurement of consideration receivable	 	 	 	 	 	(12	)	 	-	 
	Loss on remeasurement of deferred and contingent consideration	 	 	10	 	 	-	 	 	5,187	 
	Deferred income tax recovery	 	 	20	 	 	(154	)	 	(56	)
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	608	 	 	1,429	 
	Change in non-cash working capital	 	 	18	 	 	1,097	 	 	1,218	 
	Change in income taxes payable	 	 	 	 	 	444	 	 	488	 
	 	 	 	 	 	 	 	 	 	 	 
	Cash Flows From Operating Activities	 	 	 	 	 	2,149	 	 	3,135	 
	 	 	 	 	 	 	 	 	 	 	 
	Investing Activities	 	 	 	 	 	 	 	 	 	 
	Purchases of property and equipment	 	 	 	 	 	(51	)	 	(61	)
	Additions of intangible assets	 	 	11	 	 	(1,426	)	 	(801	)
	Proceeds from sale of discontinued operations	 	 	5	 	 	76	 	 	-	 
	Consideration paid upon business combination	 	 	4	 	 	(8,206	)	 	-	 
	Cash acquired from business combination	 	 	4	 	 	124	 	 	-	 
	Deferred and contingent consideration payments	 	 	10	 	 	(11,521	)	 	-	 
	 	 	 	 	 	 	 	 	 	 	 
	Cash Flows Used In Investing Activities	 	 	 	 	 	(21,004	)	 	(862	)
	 	 	 	 	 	 	 	 	 	 	 
	Financing Activities	 	 	 	 	 	 	 	 	 	 
	Proceeds from exercise of warrants and broker warrants	 	 	8	 	 	10,817	 	 	-	 
	Proceeds from exercise of stock options	 	 	9	 	 	625	 	 	-	 
	Proceeds from shares issued upon private placement, net of issuance costs	 	 	6	 	 	1,310	 	 	-	 
	Repayment of lease liability	 	 	 	 	 	(70	)	 	(113	)
	Interest income	 	 	 	 	 	38	 	 	8	 
	Interest and financing fees	 	 	 	 	 	(130	)	 	(36	)
	 	 	 	 	 	 	 	 	 	 	 
	Cash Flows From (Used In) Financing Activities	 	 	 	 	 	12,590	 	 	(141	)
	 	 	 	 	 	 	 	 	 	 	 
	Effect of foreign currency exchange rate changes on cash and cash equivalents	 	 	 	 	 	1,129	 	 	(73	)
	Net cash flow used in discontinued operations	 	 	5	 	 	-	 	 	(254	)
	 	 	 	 	 	 	 	 	 	 	 
	Change in Cash and Cash Equivalents	 	 	 	 	 	(5,136	)	 	1,805	 
	Cash and cash equivalents at beginning of period	 	 	 	 	 	26,102	 	 	682	 
	 	 	 	 	 	 	 	 	 	 	 
	Cash and Cash Equivalents at end of period	 	 	 	 	 	20,966	 	 	2,487	 

 

	See accompanying notes to the interim unaudited condensed consolidated financial statements.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	5

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		1	BASIS OF PRESENTATION AND GOING CONCERN

 

Nature of operations

 

Bragg Gaming Group Inc. and its subsidiaries ("Bragg",
 "BGG", the "Company" or the "Group") is primarily a B2B online gaming technology platform and casino content
aggregator through its acquisition of Oryx Gaming International LLC ("Oryx" or "Oryx Gaming") in 2018.

 

The registered and head office of the Company
is located at 130 King Street West, Suite 1955, Toronto, Ontario, Canada M5X 1E3.

 

Oryx Gaming

 

Oryx Gaming is a B2B gaming solution provider.
Oryx offers a turnkey solution, including an omni-channel retail, online and mobile iGaming platform, as well as an advanced content aggregator,
sportsbook, lottery, marketing, and operational services. Oryx is incorporated in the State of Delaware and headquartered in Las Vegas.
Its primary operations are provided through its wholly owned subsidiaries in Malta, Cyprus, and Slovenia.

 

Classification of online media business unit
as held for sale and discontinued operations

 

During the year ended December 31, 2019, the Company
decided to discontinue its online media business unit. The associated assets and liabilities within the disposal group are presented as
held for sale and the net loss attributable as discontinued operations in the interim unaudited condensed consolidated financial statements
("interim financial statements"). The Company completed the sale of the majority of its online media business unit on May 7,
2020 (Note 5).

 

Statement of compliance and basis of presentation

 

The accompanying interim financial statements
have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting. The
interim financial statements do not include all of the information required for annual consolidated financial statements and should be
read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020.

 

The financial statements are prepared on a historical
cost basis except for financial instruments classified at fair value through profit or loss (“FVTPL”) which are measured at
fair value. The significant accounting policies set out below have been applied consistently in the preparation of the interim financial
statements for all periods presented.

 

These
interim financial statements were, at the recommendation of the audit committee, approved and authorized for issuance by the Company’s
Board of Directors on August 11, 2021.

 

Going concern

 

The interim financial statements have been prepared
on the going concern basis, which assumes that the Company will be able to continue as a going concern and realize its assets and discharge
its liabilities in the normal course of business, and do not give effect to any adjustments which would be necessary should the Company
be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the
normal course of business and at amounts different from those reflected in the interim financial statements. If the going concern assumption
is not appropriate, material adjustments to the interim financial statements could be required.

 

As at June 30, 2021, the Company had current assets
of EUR 31,604 (December 31, 2020: EUR 36,810) and current liabilities of EUR 19,871 (December 31, 2020: EUR 30,042). As of June 30,
2021, the Company has a cumulative deficit of EUR 64,636 (December 31, 2020: EUR 61,231). These conditions, along with the continued
generation of positive cash flows from operations indicates that the Company will be able to continue on a going concern basis.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	6

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	1	BASIS OF PRESENTATION AND GOING CONCERN (CONTINUED)

 

COVID-19

 

In December 2019, there was a global outbreak
of COVID-19 (coronavirus), which continued to have a significant impact on businesses through the restrictions put in place by the national,
provincial and municipal governments around the world regarding travel, business operations and isolation and quarantine orders.

 

At this time, it is unknown the extent of the
impact the COVID-19 outbreak may have on the Company in the long term as this will depend on future developments that are highly uncertain
and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate duration of the outbreak,
including the duration of travel restrictions, business closures or disruptions, quarantine and isolation measures that are currently,
or may be put, in place by Canada and other countries to fight the virus.

 

However, the Company derives the majority of its
revenue from online casino gaming. This sector has largely benefited from the various international “lock downs”, requiring
people to stay at home. As a result, such forms of entertainment have prevailed in a similar fashion to the various streaming businesses
such as Netflix. Furthermore, the Company has limited exposure to sports betting revenues that have been impacted by the lack of professional
sports.

 

As at the time of release of these interim financial
statements, the Company’s financial performance, financial position and cash flow had not been adversely impacted by COVID-19 and
the Company has determined no impairment of its goodwill is required.

 

Graduation to the Toronto Stock Exchange (“TSX”)

 

On January 27, 2021, , the Company began trading
on TSX under the symbol “BRAG”. Concurrent with the TSX listing, the Company’s Common Shares were delisted from the
TSX Venture Exchange.

 

Reverse Stock Split

 

On April 30, 2021, the Company announced a one-for-ten
share consolidation (the “reverse stock split”). At the annual and special meeting of the Company’s shareholders held
on April 28, 2021, the Company’s shareholders granted the Company’s Board of Directors discretionary authority to implement
a consolidation of the issued and outstanding Common Shares of the Company on the basis of a consolidation ratio of up to 15 pre-consolidation
Common Shares for one post-consolidation Common Share. The Board of Directors selected a share consolidation ratio of ten pre-consolidation
Common Shares for one post-consolidation Common Share. The Company’s Common Shares began trading on TSX on a post-consolidation
basis under the Company’s existing trade symbol "BRAG" on May 5, 2021. In accordance with International Financial Reporting
Standards (“IFRS”), the change has been applied retroactively.

 

Base Shelf Prospectus

 

In order to support future growth initiatives,
on May 4, 2021, the Company filed a short form base shelf prospectus (the "Base Shelf Prospectus"), with securities regulators
in each of the provinces and territories of Canada. The Base Shelf Prospectus permits the Company to offer and sell Common Shares, unsecured
debt securities, subscription receipts, warrants, other securities convertible or exchange for Common Shares or other securities of the
Company or any combination thereof in various offerings having an aggregate value of up to CAD 500 million during the 25-month period
that the Base Shelf Prospectus remains effective.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	7

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	1	BASIS OF PRESENTATION AND GOING CONCERN (CONTINUED)

 

Acquisition of Spin Games LLC

 

On May 12, 2021, the Company announced it had
entered into an agreement to acquire Spin Games LLC (“Spin”) in a cash and stock transaction for a purchase price of approximately
USD 30 million. Under the deal the sellers of Spin will receive USD 10 million in cash and USD 20 million in Common Shares of the Company
of which USD 5 million in Common Shares will be issued on closing and the balance over the next three years. The transaction is expected
to close following final approval from state gaming regulators and satisfaction of other customary closing conditions.

 

Acquisition of Wild Streak LLC

 

On June 2, 2021, the Company announced that it
had acquired Wild Streak LLC doing business as Wild Streak Gaming ("Wild Streak"), a Las Vegas, Nevada based content creation
studio with a portfolio of 39 premium casino slot titles supported across online and land-based applications.

 

The Company signed a purchase agreement to acquire
all of the outstanding membership interests of Wild Streak in a cash and stock transaction for a purchase price of USD 30,000. Pursuant
to the transaction, which closed simultaneously with the signing of the purchase agreement, the sellers of Wild Streak received USD 10,000
in cash at closing and will receive USD 20,000 worth of common shares of the Company over the next three years, subject to acceleration
in the event of a change of control.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	8

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	2	SIGNIFICANT ACCOUNTING POLICIES

 

The interim unaudited condensed consolidated financial
statements were prepared using the same basis of presentation, accounting policies and methods of computation as those of the audited
consolidated financial statements for the year ended December 31, 2020, which are available at www.sedar.com. They were prepared using
the same critical estimates and judgments in applying the accounting policies as those of the audited consolidated financial statements
for the year ended December 31, 2020.

  

Basis of consolidation

 

The interim unaudited condensed consolidated financial
statements include the accounts of the Company and its wholly owned subsidiaries when the Company controls them. Control exists when the
Company is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary. The Company assesses control on an ongoing basis. The Company’s interest in the voting share
capital of all its subsidiaries is 100%.

 

Transactions and balances between the Company
and its consolidated entities have been eliminated on consolidation.

 

The table below summarizes the Company’s
operating subsidiaries and the functional currency for each operating subsidiary:

  

	 	 	Place of 

incorporation	 	 	 	 	Functional	 
	 	 	/ operation	 	Principal activity	 	 	currency	 
	Bragg Gaming Group - Group Services Ltd.	 	United Kingdom	 	Corporate activities	 	 	GBP	 
	Bragg Gaming Group - Parent Services Ltd.	 	United Kingdom	 	Corporate activities	 	 	GBP	 
	Bragg Oryx Holdings Inc.	 	Canada	 	Intermediate holding company	 	 	CAD	 
	Bragg USA, Inc.	 	United States	 	Intermediate holding company	 	 	USD	 
	Oryx Sales Distribution Ltd.	 	Cyprus	 	Distribution	 	 	EUR	 
	Oryx Gaming International LLC	 	United States	 	Gaming solution provider	 	 	EUR	 
	Oryx Gaming Ltd.	 	Malta	 	Gaming solution provider	 	 	EUR	 
	Oryx Marketing Poslovne Storitve D.o.o.	 	Slovenia	 	Marketing	 	 	EUR	 
	Oryx Podpora D.o.o.	 	Slovenia	 	B2B support services	 	 	EUR	 
	Oryx Razyojne-Storitve D.o.o.	 	Slovenia	 	Gaming solution developer	 	 	EUR	 
	Poynt Inc.	 	Canada	 	Distribution	 	 	CAD	 
	Wild Streak LLC	 	United States	 	Content creation studio	 	 	USD	 
	Win Gaming Ltd.	 	Malta	 	Gaming licence holder	 	 	EUR 	 

 

     

     

    

  

	BRAGG
  GAMING GROUP INC.	9

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Presentation currency

 

The presentation currency of the Company is the
Euro, whilst the functional currencies of its subsidiaries are Euro, Canadian dollar, United States dollar, and British pound sterling
due to primary location of individual entities within the Group. The presentation currency of the Euro has been selected as it best represents
the majority of the Company’s economic inflows, outflows as well as its assets and liabilities.

 

The assets and liabilities of operations that
have a functional currency different from that of the Company’s reporting currency are translated into Euros at the foreign currency
exchange rate in effect at the reporting date. The resulting foreign currency exchange gains or losses are recognized in the foreign currency
translation adjustment as part of other comprehensive income (loss). When such foreign operations are disposed of, the related foreign
currency translation reserve is recognized in net earnings as part of the gain or loss on disposal.

 

Revenues and expenses of foreign operations are
translated into Euros at the foreign currency exchange rates that approximate the rates in effect at the dates when such items are transacted.

 

Business combinations

 

Business combinations are accounted for using
the acquisition method as of the date when control is transferred to the Company. The Company measures goodwill as the excess of the sum
of the fair value of the consideration transferred over the net identifiable assets acquired and liabilities assumed, all measured as
at the acquisition date. Transaction costs that the Company incurs in connection with a business combination, other than those associated
with the issuance of debt or equity securities, are expensed as incurred.

 

Net earnings (loss) per share (“EPS”)

 

Basic EPS is calculated by dividing the net earnings
(loss) available to shareholders by the weighted average number of shares outstanding during the period. Diluted EPS is calculated by
adjusting the net earnings available to shareholders and the weighted average number of shares outstanding for the effects of all potential
dilutive instruments.

 

Diluted loss per share is equal to basic loss
per share when the effect of dilutive securities is anti-dilutive.

 

Cash and cash equivalents

 

Cash equivalents consist of highly liquid
marketable investments with an original maturity date of 90 days or less from the date of acquisition and prepaid credit cards. Cash
and cash equivalents also include any cash held in trust as proceeds from future private placement.

 

Trade and other receivables

 

Trade and other receivables consist primarily
of trade receivables from customers for which Oryx Gaming provides services during the period and accrued income in relation to receivables
from customers that have yet to be invoiced, for services provided during the three and six months ended June 30, 2021, and 2020. Upon
invoicing, amounts are transferred from accrued income to trade receivables and any differences between the accrued and invoiced values
are recognized in the interim unaudited condensed consolidated statements of loss and comprehensive loss.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	10

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Revenue recognition

 

The Company recognizes revenue when control of
the goods or services has been transferred. Revenue is measured at the amount of consideration to which the Company expects to be entitled
to, including variable consideration to the extent that it is highly probable that a significant reversal will not occur. Revenue from
continuing operations is derived from software platform licensing, maintenance of source code, bespoke development, management service
fees, marketing fees, content and hosting fees. Revenue is recognized when the service provided to the customer is complete. Specifically:

 

- Games and content: revenues from content
and platform licensing are linked to revenues a customer earns from utilizing the Company’s software platform and aggregated content
in that period. The Company’s revenue is therefore linked to the revenue of the underlying customer, i.e., the subsequent sale.
The Company recognizes revenue once the customer has earned the revenue from the subsequent sale/services as this is the point where the
performance obligation is satisfied.

 

- iGaming and turnkey projects: the
Company charges a fixed monthly management and marketing fee for its services in the month in which the services are provided, and performance
obligations are met. Charges for development projects are charged on a time and materials basis upon delivery at agreed milestones. Revenue
is recognized as it is billed unless services and performance obligations are provided in a future period. If services and performance
obligations are not provided in the reporting period, then revenue is not recognized.

 

Revenue from discontinued operations is derived
from programmatic advertising, branded content and social media management, sales of software maintenance agreements, software customization
services, technical support services and consulting services. Revenue from discontinued operations is recognized on a monthly basis as
it is billed.

 

Consideration receivable

 

Consideration receivable consists of cash receivables
due as a result of the sale of discontinued operations. The fair value of the consideration receivable is determined by calculating the
present value of expected future cashflows relating to the consideration receivable, applying the Company’s discount rate.

 

Income taxes

 

Current and deferred taxes are recognized in the
interim unaudited condensed consolidated statements of loss and comprehensive loss, except for current and deferred taxes related to a
business combination, or amounts charged directly to equity or other comprehensive loss, which are recognized in the interim unaudited
condensed consolidated statements of financial position.

 

Current tax is the expected tax payable or receivable
on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment
to tax payable in respect of previous periods.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	11

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Income taxes (continued)

 

Deferred tax is recognized using the asset
and liability method of accounting on temporary differences arising between the financial statement carrying values of
existing assets and liabilities and their respective income tax bases. Deferred tax is measured using enacted or substantively
enacted income tax rates expected to apply in the periods in which those temporary differences are expected to be recovered or
settled. A deferred tax asset is recognized for temporary differences as well as unused tax losses and credits to the extent that it
is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realized.

 

Deferred tax assets and liabilities are
offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied
by the same taxation authority on the same taxable entity, or on different taxable entities where the Company intends to settle
its current tax assets and liabilities on a net basis.

 

Deferred tax is recorded on temporary
differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is
controlled by the Company, and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Property and equipment

 

Property and equipment are recognized and
subsequently measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditures
that are directly attributable to the acquisition of the asset,including costs incurred to prepare the asset for its intended use
and capitalized borrowing costs. The commencement date for capitalization of costs occurs when the Company first incurs
expenditures for the qualifying assets and undertakes the required activities to prepare the assets for their intended use.

 

Borrowing costs directly attributable to the
acquisition, construction or production of property and equipment, that necessarily take a substantial period of time to prepare for
their intended use and a proportionate share of general borrowings, are capitalized to the cost of those assets, based on a
quarterly weighted average cost of borrowing. All other borrowing costs are expensed as incurred and recognized in net interest
expense and other financing charges.

 

The cost of replacing a component of
property and equipment is recognized in the carrying amount if it is probable that the future economic benefits embodied within the
component will flow to the Company and the cost can be measured reliably. The carrying amount of the replaced component is
derecognized. The cost of repairs and maintenance of property and equipment is expensed as incurred and recognized in the
interim unaudited condensed consolidated statements of loss and comprehensive loss.

 

Gains and losses on disposal of property and
equipment are determined by comparing the fair value of proceeds from disposal with the net book value of the assets and are
recognized on a net basis in the interim unaudited condensed consolidated statements of loss and comprehensive loss.

 

Property and equipment are depreciated on a
straight-line basis over their estimated useful lives of three years to their estimated residual value when the assets are available
for use. When significant parts of a property and equipment have different useful lives, they are accounted for as separate
components and depreciated separately. Depreciation methods, useful lives and residual values are reviewed annually and are
adjusted for prospectively, if appropriate.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	12

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Leases

 

The Company assesses whether a contract is, or
contains, a lease. If a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration,
then the contract may contain a lease. The Company assesses whether a contract conveys the right to control the use of an asset by performing
the following tests:

 

		-	assess whether the contract involves the use of an identified asset and may be specified explicitly or
implicitly. It should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier
has a significant right to substitution, then the asset is not identified;
		-	assess whether the Company has the right to obtain substantially all of the economic benefits arising
from the use of the asset throughout the period of use; and
		-	assess that the Company has the right to direct enjoyment of the asset. This right is identified when
the Company has the decision-making rights in how and for what purpose the asset is used. In cases where the decision on how and for what
purpose to use the asset has been predetermined, the Company has the right to direct the use of the asset if either it has the right to
operate the asset, or the Company has designed the asset in a manner that predetermines how and for what purpose the asset will be used.

 

The Company recognizes a right-of-use
asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated
using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the
end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment.
In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the
lease liability.

 

The lease liability is initially measured at the
present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental
borrowing rate as the discount rate.

 

Lease payments included in the measurement of
the lease liability comprise the following:

 

		-	fixed payments, including in-substance fixed payments;

		-	variable lease payments that depend on an index or a rate, initially measured using the index or rate
as at the commencement date;

		-	amounts expected to be payable under a residual value guarantee; and

		-	the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments
in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination
of a lease unless the Company is reasonably certain not to terminate early.

 

The lease liability is measured at amortized cost
using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index
or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or
if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	13

NOTES
TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED
IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Leases (continued)

 

When the lease liability is remeasured in this
way, a corresponding adjustment is made to the carrying amount of the right of-use asset or is recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero.

 

The Company has elected not to recognize right-of-use
assets and lease liabilities for short-term leases of equipment that have a lease term of twelve months or less and leases of low-value
assets, including IT equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight-line
basis over the lease term.

 

Intangible assets

 

Intangible assets are measured at cost less any
amortization and accumulated impairment losses. These intangible assets are tested for impairment on an annual basis or more frequently
if there are indicators that intangible assets may be impaired as described in the Impairment of non-financial assets policy.

 

Intangible assets are amortized on a straight-line
basis over their estimated useful lives as follows:

 

	Intellectual property identified upon business
combination	8 years / 10 years
	Intellectual property acquired from third-parties	3
years
	Customer relationships	10 years
	Brands	10 years
	Deferred development costs	3 years
	Trademarks	3 years
	Gaming licences	over the term of the licence

  

Trademarks and gaming licences are classified
under “Other” in the intangible assets disclosure note (Note 11).

 

The Company capitalizes the costs of intangible
assets if and only if:

 

		-	it is probable that the expected future economic benefits attributable to the asset will flow to the entity;
and
		-	the cost of the asset can be measured reliably.

 

Certain costs incurred in connection with the
development of intellectual property relating to proprietary technology are capitalized to intangible assets as development costs. Intangible
assets are recorded at cost, which consists of directly attributable costs necessary to create such intangible assets, less accumulated
amortization and accumulated impairment losses, if any. The costs mainly include the salaries paid to the software developers and consulting
fees.

  

These costs are recognized as development costs
assets when the following criteria are met:

 

		-	it is technically feasible to complete the software product so that it will be available for use;
		-	management intends to complete the software product;
		-	it can be demonstrated how the software product will generate future economic benefits;
		-	adequate technical, financial, and other resources to complete the development and to use or sell the
products are available; and
		-	the expenditure attributable to the software product during its development can be reliably measured.

 

     

     

    

 

	BRAGG
  GAMING GROUP INC.	14

NOTES TO THE INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Goodwill

 

Goodwill arising in a business combination is
recognized as an asset at the date that control is acquired. Goodwill is subsequently measured at cost less accumulated impairment losses.
Goodwill is not amortized but is tested for impairment on an annual basis or more frequently if there are indicators that goodwill may
be impaired as described in the Impairment of non-financial assets policy.

 

Impairment of non-financial assets

 

At each statement of financial position date,
the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any
such indication exists, the asset is then tested for impairment by comparing its recoverable amount to its carrying value. Goodwill is
tested for impairment at least annually.

 

For the purpose of impairment testing, assets,
including right-of-use assets, are grouped together into the smallest group of assets that generate cash inflows from continuing use that
are largely independent of cash inflows of other assets or groups of assets. This grouping is referred to as a cash generating unit ("CGU").

 

Corporate assets, which include head office facilities
and distribution centres, do not generate separate cash inflows. Corporate assets are tested for impairment at the minimum grouping of
CGUs to which the corporate assets can be reasonably and consistently allocated. Goodwill arising from a business combination is tested
for impairment at the minimum grouping of CGUs that are expected to benefit from the synergies of the combination.

 

The recoverable amount of a CGU or CGU grouping
is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows from
the CGU or CGU grouping, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the CGU or CGU grouping. If the CGU or CGU grouping includes right-of-use assets in its
carrying amount, the pre-tax discount rate reflects the risks associated with the exclusion of lease payments from the estimated future
cash flows. The fair value less costs to sell is based on the best information available to reflect the amount that could be obtained
from the disposal of the CGU or CGU grouping in an arm’s length transaction between knowledgeable and willing parties, net of estimates
of the costs of disposal.

 

An impairment loss is recognized if the carrying
amount of a CGU or CGU grouping exceeds its recoverable amount. For asset impairments other than goodwill, the impairment loss reduces
the carrying amounts of the non-financial assets in the CGU on a pro-rata basis, up to an asset’s individual recoverable amount.
Any loss identified from goodwill impairment testing is first applied to reduce the carrying amount of goodwill allocated to the CGU grouping,
and then to reduce the carrying amounts of the other non-financial assets in the CGU or CGU grouping on a pro-rata basis.

 

For assets other than goodwill, an impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortization, if no impairment loss had been recognized. An impairment loss in respect of goodwill is not reversed.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	15

 NOTES TO THE INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Financial instruments

 

Financial assets and liabilities are recognized
when the Company becomes party to the contractual provisions of the financial instrument. Upon initial recognition, financial instruments
are measured at fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of financial instruments
that are not classified as fair value through profit or loss.

 

Financial instruments – classification
and measurement

 

The classification and measurement approach for
financial assets reflect the business model in which assets are managed and their cash flow characteristics. Financial assets are classified
and measured based on these categories: amortized cost, fair value through other comprehensive income ("FVOCI"), or fair value
through profit and loss ("FVTPL"). A financial asset is measured at amortized cost if it meets both of the following conditions
and is not designated as FVTPL:

 

		-	the financial asset is held within a business model whose objective is to hold assets in order to collect
contractual cash flows; and

		-	the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

 

A financial asset is measured at FVOCI if it meets
both of the following conditions and is not designated as at FVTPL:

 

		-	the financial asset is held within a business model in which assets are managed to achieve a particular
objective by both collecting contractual cash flows and selling financial assets; and

		-	the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of

principal and interest on the principal amount outstanding.

 

A financial asset shall be measured at FVTPL unless
it is measured at amortized cost or at FVOCI.

 

Financial assets are not reclassified subsequent
to their initial recognition unless the Company identifies changes in its business model in managing financial assets.

 

Financial liabilities are classified and measured
based on two categories: amortized cost or FVTPL.

 

Fair values are based on quoted market
prices where available from active markets, otherwise fair values are estimated using valuation methodologies, primarily discounted
cash flows taking into account external market inputs where possible.

 

The amortized cost of a financial asset or
liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal payments, plus
or minus the cumulative amortization using the effective interest method of any difference between the initial amount recognized
and the maturity amount, minus any reduction for impairment.

 

The following table summarizes the classification
and measurement of the Company’s financial assets and liabilities:

 

	Asset / Liability	 	Classification / Measurement
	Cash and cash equivalents	 	FVTPL
	Trade and other receivables	 	Amortized cost
	Consideration receivable	 	FVTPL
	Other assets	 	Amortized cost
	Trade payables and other liabilities	 	Amortized cost
	Deferred and contingent consideration	 	FVTPL
	Lease obligations on right of use assets	 	Amortized cost

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	16

 NOTES TO THE INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Financial instruments – valuation

 

The determination of the fair value of financial
instruments is performed by the Company’s treasury and financial reporting departments on a quarterly basis. There was no change
in the valuation techniques applied to financial instruments during the current period.

 

The carrying amounts reported for cash and cash
equivalents, trade and other receivables, consideration receivable, trade payables and other liabilities, and deferred and contingent
consideration approximate fair value because of the immediate short-term maturity of these financial instruments. The carrying value of
lease obligations on right of use assets approximates the fair value based on rates currently available from financial institutions and
various lenders.

 

Gains and losses on FVTPL financial assets and
financial liabilities are recognized in net earnings in the period in which they are incurred. Settlement date accounting is used to account
for the purchase and sale of financial assets. Gains or losses between the trade date and settlement date on FVTPL financial assets are
recorded in the interim unaudited condensed consolidated statements of loss and comprehensive loss.

 

Financial instruments – derecognition

 

Financial assets are derecognized when the contractual
rights to receive cash flows and benefits from the financial asset expire, or if the Company transfers the control or substantially all
the risks and rewards of ownership of the financial asset to another party. The difference between the carrying amount of the financial
asset and the sum of the consideration received and receivable is recognized in earnings before income taxes.

 

Financial liabilities are derecognized when obligations
under the contract expire, are discharged, or cancelled. The difference between the carrying amount of the financial liability derecognized
and the consideration paid and payable is recognized in earnings before income taxes.

 

Financial instruments – impairment

 

The Company applies a forward-looking expected
credit loss ("ECL") model at each reporting date to financial assets measured at amortized cost or those measured at FVOCI,
except for investments in equity instruments. The ECL model outlines a three-stage approach to reflect the increase in credit risks of
a financial instrument:

 

		-	Stage 1 is comprised of all financial instruments that have not had a significant increase in credit risks
since initial recognition or that have low credit risk at the reporting date. The Company is required to recognize impairment for Stage
1 financial instruments based on the expected losses over the expected life of the instrument arising from loss events that could occur
during the 12 months following the reporting date.

		-	Stage 2 is comprised of all financial instruments that have had a significant increase in credit risks
since initial recognition but that do not have objective evidence of a credit loss event. For Stage 2 financial instruments the impairment
is recognized based on the expected losses over the expected life of the instrument arising from loss events that could occur over the
expected life. The Company is required to recognize a lifetime ECL for Stage 2 financial instruments.

		-	Stage 3 is comprised of all financial instruments that have objective evidence of impairment at the reporting
date. The Company is required to recognize impairment based on a lifetime ECL for Stage 3 financial instruments. The ECL model applied
to financial assets require judgment, assumptions, and estimations on changes in credit risks, forecasts of future economic conditions
and historical information on the credit quality of the financial asset. Consideration of how changes in economic factors affect ECLs
are determined on a probability-weighted basis.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	17

 NOTES TO THE INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Financial instruments – impairment (continued)

 

The carrying amount of the financial asset or
group of financial assets are reduced through the use of impairment allowance accounts. In periods subsequent to the impairment where
the impairment loss has decreased, and such decrease can be related objectively to conditions and changes in factors occurring after the
impairment was initially recognized, the previously recognized impairment loss is reversed. The impairment reversal is limited to the
lesser of the decrease in impairment or the extent that the carrying amount of the financial asset at the date the impairment is reversed
does not exceed what the amortized cost would have been had the impairment not been recognized.

 

Deferred and contingent consideration

 

Prior to January 18, 2021, the Company had deferred
and contingent consideration payable to the vendor of Oryx Gaming. Between December 20, 2018 and November 13, 2020 earnout payments were
agreed based upon a multiple of EBITDA in financial years ended December 31, 2019 and December 31, 2020 with a minimum amount payable
in each twelve-month period. In each reporting period the present value of the deferred and contingent consideration payable was measured
by discounting achieved and forecasted EBITDA by applying the Company’s weighted average cost of capital. A Black-Scholes calculation
was then applied to account for probability of payout and to determine present value of payout after counter-party risk.

 

Prior to the next remeasurement period an accretion
expense was recorded in the interim unaudited condensed consolidated statements of loss and comprehensive loss as the discount was unwound
towards the reporting date. Upon remeasurement, any gain or loss on remeasurement was also recorded in the interim unaudited condensed
consolidated statements of loss and comprehensive loss.

 

On November 13, 2020, the Company entered into
an amending agreement with the vendor of Oryx Gaming whereby the second payment of deferred and contingent consideration was agreed at
a fixed cash value and, following shareholder agreement on November 27, 2020, could be settled in fixed amount of Common Shares. As the
payment can only be settled by way of Common Shares, there is no obligation of the Company to deliver cash or cash equivalents, and the
underlying fair value of the liability and number of Common Shares is fixed, the payment qualifies as an equity instrument and was recorded
as shares to be issued in the interim unaudited condensed consolidated statements of changes in equity. On January 18, 2021, the agreed
fixed number of Common Shares was issued from treasury to the vendor and the balance recorded in shares to be issued was transferred to
the share capital account.

 

Short term employee benefits

 

Short term employee benefits include wages, salaries,
compensated absences, and bonuses. Short term employee benefit

obligations are measured on an undiscounted basis
and are recognized in operating income as the related service is provided or capitalized if the service rendered is in connection with
the creation of an intangible asset. A liability is recognized for the amount expected to be paid under short term cash bonus plans if
the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and
the obligation can be

estimated reliably.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	18

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Share based payments

 

The Company has stock option plans for directors,
officers, employees, and consultants. Each tranche of an award is considered a separate award with its own vesting period and grant date
fair value. The fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model. In addition,
the Company also has deferred share unit (“DSU”), restricted share unit (“RSU”) and performance share unit (“PSU”)
plans for directors, officers, employees, and consultants. The fair value of each unit is measured as the share price on date of grant
with nil exercise price.

 

Compensation expense is recognized over each tranche’s
vesting period, based on the number of awards expected to vest, with the offset credited to contributed surplus. The number of awards
expected to vest is reviewed quarterly, with any impact being recognized immediately. When options are exercised, the amount received
is credited to share capital and the fair value attributed to these options is transferred from contributed surplus to share capital.
In the case of DSUs, RSUs or PSUs, only the fair value attributed to these options is transferred from contributed surplus to share capital.

 

Equity

 

Shares are classified as equity. Incremental costs
directly attributable to the issuance of shares are recognized as a deduction from equity. Contributed surplus includes amounts in connection
with conversion options embedded in compound financial instruments, share based payments and the value of expired options and warrants.
Deficit includes all current and prior period income and losses.

 

Warrants

 

The Company accounts for warrants using the Black-Scholes
option pricing model at the date of issuance. If and when warrants ultimately expire, the applicable amounts are transferred to contributed
surplus.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	19

 NOTES TO THE INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

 

		3	LOSS BEFORE INCOME TAXES CLASSIFIED BY NATURE

 

The loss before income taxes is classified as follows:

 

	 	 	 	 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 
	 	 	Note	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	Revenue	 	 	 	 	 	 	15,491	 	 	 	12,145	 	 	 	29,687	 	 	 	20,929	 
	Third-party content	 	 	 	 	 	 	(8,466	)	 	 	(7,035	)	 	 	(16,013	)	 	 	(11,852	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Profit	 	 	 	 	 	 	7,025	 	 	 	5,110	 	 	 	13,674	 	 	 	9,077	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Salaries and subcontractors	 	 	 	 	 	 	(3,651	)	 	 	(2,049	)	 	 	(6,287	)	 	 	(4,165	)
	Share based payments	 	 	9	 	 	 	(891	)	 	 	145	 	 	 	(2,200	)	 	 	94	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total employee costs	 	 	 	 	 	 	(4,542	)	 	 	(1,904	)	 	 	(8,487	)	 	 	(4,071	)
	Depreciation and amortization	 	 	 	 	 	 	(1,051	)	 	 	(667	)	 	 	(1,887	)	 	 	(1,451	)
	IT and hosting	 	 	 	 	 	 	(386	)	 	 	(351	)	 	 	(773	)	 	 	(671	)
	Professional fees	 	 	 	 	 	 	(1,090	)	 	 	(272	)	 	 	(1,585	)	 	 	(514	)
	Corporate costs	 	 	 	 	 	 	(525	)	 	 	(110	)	 	 	(710	)	 	 	(181	)
	Sales and marketing	 	 	 	 	 	 	(155	)	 	 	(16	)	 	 	(218	)	 	 	(108	)
	Bad debt expense	 	 	13	 	 	 	(78	)	 	 	(364	)	 	 	(320	)	 	 	(453	)
	Travel and entertainment	 	 	 	 	 	 	(28	)	 	 	(13	)	 	 	(28	)	 	 	(121	)
	Transaction and acquisition costs	 	 	 	 	 	 	(573	)	 	 	(307	)	 	 	(1,136	)	 	 	(344	)
	Other operational costs	 	 	 	 	 	 	(428	)	 	 	(125	)	 	 	(866	)	 	 	(294	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Selling, General and Administrative Expenses	 	 	 	 	 	 	(8,856	)	 	 	(4,129	)	 	 	(16,010	)	 	 	(8,208	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gain on remeasurement of consideration receivable	 	 	5	 	 	 	6	 	 	 	-	 	 	 	12	 	 	 	-	 
	Loss on remeasurement of deferred and contingent consideration	 	 	10	 	 	 	-	 	 	 	(219	)	 	 	-	 	 	 	(5,187	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating (Loss) Income	 	 	 	 	 	 	(1,825	)	 	 	762	 	 	 	(2,324	)	 	 	(4,318	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Interest income	 	 	 	 	 	 	23	 	 	 	-	 	 	 	38	 	 	 	8	 
	Accretion on liabilities	 	 	10	 	 	 	-	 	 	 	(864	)	 	 	-	 	 	 	(917	)
	Interest and financing fees	 	 	 	 	 	 	(47	)	 	 	(20	)	 	 	(130	)	 	 	(36	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Interest Expense and Other Financing Charges	 	 	 	 	 	 	(24	)	 	 	(884	)	 	 	(92	)	 	 	(945	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss Before Income Taxes	 	 	 	 	 	 	(1,849	)	 	 	(122	)	 	 	(2,416	)	 	 	(5,263	)

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	20

 NOTES TO THE INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

 

	4	ACQUISITION OF WILD STREAK LLC

 

On June 2, 2021, the Company announced that it
had acquired Wild Streak LLC ("Wild Streak").

 

The Company signed a purchase agreement to acquire
all of the outstanding membership interests of Wild Streak in a cash and stock transaction for a purchase price of EUR 24,618 (USD 30,000).
Pursuant to the transaction, the sellers of Wild Streak received EUR 8,206 (USD 10,000) in cash at closing and will receive EUR 16,412
(USD 20,000) worth of common shares of the Company over the next three years, subject to acceleration in the event of a change of control.

 

The fair value allocations which follow are based
on preliminary purchase price allocations conducted by management. As the acquisition is within the measurement period under IFRS 3, it
continues to be refined. The Company is gathering information to finalize the fair value of intangible assets and goodwill acquired.

 

	Purchase price:	 	 	 
	Cash	 	 	8,206	 
	Shares to be issued	 	 	15,310	 
	Deferred consideration	 	 	62	 
	Total purchase price	 	 	23,578	 
	 	 	 	 	 
	Fair value of assets acquired, and liabilities assumed:	 	 	 	 
	Cash and cash equivalents	 	 	124	 
	Accounts receivable	 	 	295	 
	Trade payables and other liabilities	 	 	(87	)
	Net assets acquired and liabilities assumed	 	 	332	 
	 	 	 	 	 
	Fair value of intangible assets	 	 	 	 
	Brands	 	 	314	 
	Customer relationships	 	 	11,006	 
	Intellectual property	 	 	5,660	 
	Other	 	 	15	 
	Fair value of goodwill	 	 	6,251	 

 

Pro-forma revenues and net profit (loss) for
the period

 

On a pro-forma basis Wild Streak generated revenue
of EUR 844 and EUR 1,262 for the three and six months ended June 30, 2021, respectively. This would have resulted in consolidated revenues
of EUR 16,082 and EUR 30,696 for three and six months ended June 30, 2021, respectively.

 

On a pro-forma basis Wild Streak generated net profit of EUR 412 and
EUR 660 for the three and six months ended June 30, 2021, respectively. This would have resulted in consolidated net loss of EUR 2,051
and EUR 2,876 for the three and six months ended June 30, 2021, respectively.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	21

NOTES TO THE INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

 

		5	DISCONTINUED OPERATIONS

 

During the year ended December 31, 2019, the Company
decided to discontinue its online media business unit.

 

On April 30, 2020, the Company discontinued its
GIVEMEBET operation and as of June 30, 2021, this subsidiary is considered dormant with no remaining assets and liabilities. Any associated
net loss for this subsidiary continues to be presented as discontinued operations in the interim unaudited condensed consolidated financial
statements.

 

On May 7, 2020, the Company completed the sale
of its GIVEMESPORT operation for cash consideration of GBP 50 (EUR 56) plus additional consideration equivalent to the net current assets
disposed plus consideration receivable of 10% of GIVEMESPORT aggregate revenues for a period of twenty-one months from date of completion.
As of June 30, 2021, consideration receivable has been recognized at a present value of EUR 128 of which EUR 128 is due within twelve
months of the reporting date. Consideration is settled in cash at three-month intervals from the date of sale. As of June 30, 2021, and
December 31, 2020, the Company has not identified any assets or liabilities as held for sale.

 

Consolidated statements of cash flows

 

	 	 	Six Months Ended June 30,	 
	 	 	2021	 	 	2020	 
	Net cash used in operating activities	 	 	-	 	 	 	(169	)
	Net cash used in investing activities	 	 	-	 	 	 	(19	)
	Net cash used in financing activities	 	 	-	 	 	 	(66	)
	Net cash flows for the period	 	 	-	 	 	 	(254	)

 

Consolidated statements of income (loss) and comprehensive income
(loss)

 

	 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 
	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	Revenue	 	 	-	 	 	 	81	 	 	 	-	 	 	 	559	 
	Cost of revenue	 	 	-	 	 	 	36	 	 	 	-	 	 	 	(120	)
	Gross Profit	 	 	-	 	 	 	117	 	 	 	-	 	 	 	439	 
	Selling, general and administrative expenses	 	 	-	 	 	 	(16	)	 	 	-	 	 	 	(622	)
	Operating Income (Loss)	 	 	-	 	 	 	101	 	 	 	-	 	 	 	(183	)
	Net interest expense and other financing charges	 	 	-	 	 	 	(9	)	 	 	-	 	 	 	(41	)
	Gain on disposal of discontinued operations	 	 	-	 	 	 	136	 	 	 	-	 	 	 	136	 
	Income (Loss) Before Income Taxes	 	 	-	 	 	 	228	 	 	 	-	 	 	 	(88	)
	Income taxes	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Net Income (Loss)	 	 	-	 	 	 	228	 	 	 	-	 	 	 	(88	)
	Cumulative translation adjustment	 	 	-	 	 	 	(4	)	 	 	-	 	 	 	(15	)
	Net Comprehensive Income (Loss)	 	 	-	 	 	 	224	 	 	 	-	 	 	 	(103	)

 

    	 		

     

    

 

 

	BRAGG GAMING GROUP INC.	22
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 	 

 

	5	DISCONTINUED	OPERATIONS (CONTINUED)

 

In the three and six months ended June 30, 2021,
remeasurement of the present value of the consideration receivable resulted in a gain on remeasurement of consideration receivable of
EUR 6 and EUR 12, respectively (three and six months ended June 30, 2020: EUR nil).

 

	6	SHARE CAPITAL

 

Authorized - Unlimited Common Shares, fully paid

 

The following is a continuity of the Company’s share capital:

 

	 	 	 	 	Note	 	 	Number	 	 	Value	 
	January 1, 2020	 	Balance	 	 	 	 	 	 	7,986,385	 	 	 	40,204	 
	June 2, 2020	 	Issuance of share capital upon exercise of DSUs	 	 	9	 	 	 	50,000	 	 	 	219	 
	June 30, 2020	 	Balance	 	 	 	 	 	 	8,036,385	 	 	 	40,423	 
	January 1, 2021	 	Balance	 	 	 	 	 	 	13,111,248	 	 	 	62,304	 
	January 11, 2021, to

 February 22, 2021	 	Exercise of warrants	 	 	8	 	 	 	1,554,082	 	 	 	11,916	 
	January 21, 2021, to

 February 18, 2021	 	Exercise of broker warrants	 	 	8	 	 	 	160,548	 	 	 	897	 
	January 13, 2021	 	Shares issued on completion of private placement	 	 	 	 	 	 	247,934	 	 	 	1,918	 
	January 18, 2021	 	Shares issued upon completion of Oryx earn-out	 	 	 	 	 	 	4,700,000	 	 	 	22,000	 
	March 12, 2021, to 

March 17, 2021	 	Issuance of share capital upon exercise of RSUs	 	 	9	 	 	 	50,000	 	 	 	267	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	June 9, 2021, to

 June 17, 2021	 	Issuance of share capital upon exercise of stock options	 	 	9	 	 	 	125,000	 	 	 	966	 
	 	 	Rounding of fractional shares after consolidation	 	 	 	 	 	 	2	 	 	 	-	 
	June 30, 2021	 	Balance	 	 	 	 	 	 	19,948,814	 	 	 	100,268	 

 

The Company’s Common Shares have no par value. 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	23
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 

 

	6	SHARE	CAPITAL (CONTINUED)

 

Effective as of April 30, 2021, the Company underwent
a reverse stock split on the basis of one post-consolidation Common Share for every ten pre-consolidation Common Shares (1-for-10). The
share capital has been reported on a post-consolidation basis (Note 1).

 

Private placement

 

On January 13, 2021, the Company completed a non-brokered
private placement offering comprised of 247,934 Common Shares at a price of CAD 12.10 per share for aggregate gross proceeds of EUR 1,937.
This offering was exclusively taken up by Company employees and Board members and is subject to a hold period expiring May 14, 2021. No
commission or finder's fee was paid in connection with the offering.

 

As at June 30, 2021, EUR nil (December 31, 2020:
EUR 608) was held in trust on behalf of the Company for subscription receipts related to the private placement offering. This amount was
recorded in cash and cash equivalents.

 

Completion of Oryx earn-out

 

On January 18, 2021, the Company satisfied its
earn-out obligations to K.A.V.O. Holdings Limited via a combination of cash and Common Shares of the Company. A total of 4,700,000 Common
Shares of the Company were issued to the vendor with a recorded fair-value of EUR 22,000. The Common Shares are subject to a hold period
expiring May 19, 2021.

 

In connection with this transaction Matevž
Mazij became a “control person” of the Company, in accordance with section 1(1) of the Ontario Securities Act, with a total
shareholding through K.A.V.O. Holdings Limited of 4,900,000 Common Shares representing over 27% of the outstanding Common Shares of the
Company as of the settlement date.

 

	7	PUBLIC OFFERING COMPLETED NOVEMBER 18, 2020

 

On October 26, 2020, the Company announced that
it had entered into an agreement with a syndicate of underwriters pursuant to which the underwriters agreed to purchase 1,786,000 units
(the "Units") from the treasury of the Company, at a price of CAD 7.00 per Unit and offer them to the public by way of short
form prospectus for total gross proceeds of approximately CAD 12,500 (the "Offering"). On October 27, 2020, the Company agreed
to increase the size of the Offering whereby the Underwriters agreed to purchase 2,571,500 Units for aggregate gross proceeds of CAD 18,001.

 

The Company granted the underwriters an option
(the "Over-Allotment Option") to purchase up to an additional 15% of the Units of the Offering on the same terms exercisable
at any time up to 30 days following the closing of the Offering. The underwriters exercised the Over-Allotment Option in full and, together
with the base offering, purchased 2,957,225 Units in total for aggregate gross proceeds of EUR 13,343 (CAD 20,701). Issuance costs directly
associated with raise of funds amounted to EUR 1,216 (CAD 1,887) resulting in cash proceeds, net of issuance costs, of EUR 12,127 (CAD
18,814). Closing of the Offering occurred on November 18, 2020, with net proceeds to be used for growth initiatives, working capital and
general corporate purposes.

 

Each Unit consists of one Common Share and one
half of one warrant (each whole warrant, a "Public Offering Warrant") of the Company. Each Public Offering Warrant entitled
the holder thereof to purchase one Common Share at a price equal to CAD 10.00 for a period of 36 months following the closing of the Offering
(Note 8).

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	24
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 

 

	7	PUBLIC	OFFERING COMPLETED NOVEMBER 18, 2020 (CONTINUED)

 

The Public Offering Warrants included an acceleration
provision, exercisable at the Company's option, if the Company's daily volume weighted average share price is greater than CAD 15.00 for
at least ten consecutive trading days. On January 21, 2021, the Company announced that it elected to exercise its right under the terms
of the warrant indenture to accelerate the expiry date of the warrants. Accordingly, the Company gave notice to all registered warrant
holders that the expiry date for the Warrants was accelerated to February 22, 2021. As of June 30, 2021, all such warrants have been exercised
or have expired.

 

In addition to the Units, the Company granted
177,434 broker warrants (“Broker Warrants”), each convertible to one Common Share and half of one Public Offering Warrant
at a price equal to CAD 7.00 (Note 8).

 

	8	WARRANTS

 

The following are continuities of the Company’s warrants:

 

	 	 	 	 	 	 	 	 	 	 	 	Special	 	 	 	 
	 	 	 	 	 	 	 	 	Warrants	 	 	warrants -	 	 	 	 
	 	 	 	 	 	 	 	 	issued upon	 	 	compensation	 	 	Broker	 
	Number of Warrants	 	 	 	 	Warrants	 	 	Public Offering	 	 	options	 	 	warrants	 
	January 1, 2020 and

June 30, 2020	 	Balance	 	 	 	2,705,880	 	 	 	-	 	 	 	160,178	 	 	 	-	 
	January 1, 2021	 	Balance	 	 	 	-	 	 	 	1,478,512	 	 	 	-	 	 	 	177,434	 
	January 11, 2021 to

February 22, 2021	 	Exercise of warrants	 	 	 	-	 	 	 	(1,554,082	)	 	 	-	 	 	 	-	 
	January 21, 2021 to

February 18, 2021	 	Exercise of broker warrants	 	 	 	-	 	 	 	80,274	 	 	 	-	 	 	 	(160,548	)
	February 22, 2021	 	Expiry of warrants	 	 	 	-	 	 	 	(4,704	)	 	 	-	 	 	 	-	 
	June 30, 2021	 	Balance	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	16,886	 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	25
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 

 

	8	WARRANTS	(CONTINUED)

 

Each unit consists of the following characteristics:

 

	 	 	 	 	 	 	 	 	Special	 	 	 	 
	 	 	Warrants	 	 	Warrants	 	 	warrants -	 	 	 	 
	 	 	issued	 	 	issued upon	 	 	compensation	 	 	Broker	 
	 	 	March 14, 2019	 	 	Public Offering	 	 	options	 	 	warrants	 
	Number of shares	 	 	1	 	 	 	1	 	 	 	1	 	 	 	1	 
	Number of Warrants	 	 	-	 	 	 	-	 	 	 	1	 	 	 	0.5	 
	Exercise price of unit (CAD)	 	 	7.60	 	 	 	10.00	 	 	 	5.10	 	 	 	7.00	 

 

Warrants issued upon completion of Public Offering

 

Upon completion of the Public Offering on November
18, 2020 (Note 7) 1,478,612 Public Offering Warrants were issued resulting in an increase in the fair value of Public Offering Warrants
of EUR 1,887, before issuance costs. The assumptions used to measure the fair value of the Public Offering Warrants under the Black-Scholes
valuation model were as follows:

 

	Expected dividend yield (%)	 	 	0.0	 
	Expected share price volatility (%)	 	 	103.5	 
	Risk-free interest rate (%)	 	 	0.11	 
	Expected life of warrants (years)	 	 	1.0	 
	Underlying share price (CAD)	 	 	8.00	 

 

The Public Offering Warrants were issued with
an exercise price of CAD 10.00 and were convertible to one Common Share per Public Offering Warrant initially expiring November 18, 2023.
The Public Offering Warrant indenture included an acceleration provision, exercisable at the Company's option, if the Company's daily
volume weighted average Common Share price is greater than CAD 15.00 for at least ten consecutive trading days. The Company had the option
to accelerate the exercise period of the Public Offering Warrants to a period ending at least 30 days from the date notice of such acceleration
is provided to the holders of the Public Offering Warrants. On January 21, 2021, the Company announced that it elected to exercise its
right under the terms of a warrant indenture to accelerate the expiry date of the warrants. Accordingly, the Company gave notice to all
registered warrant holders that the expiry date for the Warrants was accelerated to February 22, 2021.

 

Between January 1, 2021, and February 22, 2021,
1,554,082 Public Offering Warrants were exercised resulting in issuance of 1,554,082 shares and cash receipt of EUR 10,085. An increase
in share capital of EUR 11,916 and decrease in fair value of warrants of EUR 1,831 was recognized in the interim unaudited condensed consolidated
statements of changes in equity. On February 22, 2021, 4,704 Public Offering Warrants expired resulting in a decrease in fair value of
warrants and corresponding increase in contributed surplus of EUR 7.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	26
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 

 

	8	WARRANTS	(CONTINUED)

 

Broker Warrants issued upon completion of Public
Offering

 

Upon completion of the Public Offering on November
18, 2020 (Note 7), 177,434 broker warrants (“Broker Warrants”) were issued resulting in an increase in the fair value of warrants
of EUR 399, a decrease in share capital of EUR 331 and decrease in fair value of warrants of EUR 68. The Broker Warrants were issued with
an exercise price of CAD 7.00 and are convertible to one Common Share plus one-half of a Public Offering Warrant per Broker Warrant expiring
November 18, 2023. The assumptions used to measure the fair value of the Broker Warrants under the Black-Scholes valuation model were
as follows:

 

	Expected dividend yield (%)	 	 	0.0	 
	Expected share price volatility (%)	 	 	103.5	 
	Risk-free interest rate (%)	 	 	0.11	 
	Expected life of warrants (years)	 	 	1.0	 
	Underlying share price (CAD)	 	 	8.00	 

 

The underlying Public Offering Warrants were subject to the same acceleration
provision and notice of acceleration that was given on January 21, 2021. Between January 21, 2021 and February 18, 2021, 160,548 Broker
Warrants were exercised for 160,548 Common Shares and 80,274 Public Offering Warrants resulting in an increase in share capital of EUR
897, an increase in fair value of warrants of EUR 196 and decrease in fair value of Broker Warrants of EUR 361. Broker Warrants may still
be exercised for Common Shares until date of expiry.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	27
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 

 

	9	SHARE BASED COMPENSATION

 

The Company maintains an Omnibus Incentive Equity
Plan ("OEIP") for certain employees and consultants. The plan was approved at an annual and special meeting of shareholders
on November 27, 2020. At the annual and special meeting of shareholders of the Company held on April 28, 2021, the shareholders approved
the increase in the number of Common Shares available for issuance as awards under the plan from 3,180,000 to 3,965,000.

 

The following is a continuity of the Company’s equity incentive
plans:

 

	 	 	DSU	 	 	RSU	 	 	FSO	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Weighted	 
	 	 	 	Outstanding	 	 	 	Outstanding	 	 	 	Outstanding	 	 	 	Average	 
	 	 	 	DSU Units	 	 	 	RSU Units	 	 	 	FSO Options	 	 	 	Exercise	 
	 	 	 	(Number of	 	 	 	(Number of	 	 	 	(Number	 	 	 	Price / Share	 
	 	 	 	of shares)	 	 	 	of shares)	 	 	 	of shares)	 	 	 	CAD	 
	As at January 1, 2020	 	 	408,000	 	 	 	-	 	 	 	745,576	 	 	 	6.02	 
	Granted	 	 	-	 	 	 	-	 	 	 	70,000	 	 	 	3.00	 
	Exercised	 	 	(50,000	)	 	 	-	 	 	 	-	 	 	 	-	 
	Expired	 	 	-	 	 	 	-	 	 	 	(750	)	 	 	44.86	 
	Forfeited / Cancelled	 	 	-	 	 	 	-	 	 	 	(97,679	)	 	 	11.24	 
	As at June 30, 2020	 	 	358,000	 	 	 	-	 	 	 	717,147	 	 	 	4.97	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at January 1, 2021	 	 	120,000	 	 	 	210,000	 	 	 	1,228,410	 	 	 	6.37	 
	Granted	 	 	133,800	 	 	 	75,000	 	 	 	5,000	 	 	 	12.10	 
	Exercised	 	 	-	 	 	 	(50,000	)	 	 	(125,000	)	 	 	7.36	 
	Forfeited / Cancelled	 	 	-	 	 	 	-	 	 	 	(3,139	)	 	 	2.30	 
	As at June 30, 2021	 	 	253,800	 	 	 	235,000	 	 	 	1,105,271	 	 	 	6.30	 

 

The following table summarizes information about the outstanding share
options as at June 30, 2021:

 

	 	 	Outstanding	 	 	Exercisable	 
	 	 	 	 	 	 	 	Weighted	 	 	 	Weighted	 	 	 	 	 	 	 	Weighted	 
	 	 	 	 	 	 	 	Average	 	 	 	Average	 	 	 	 	 	 	 	Average	 
	 	 	 	Options	 	 	 	Remaining	 	 	 	Exercise	 	 	 	Options	 	 	 	Exercise	 
		 	 	(Number	 	 	 	Contractual	 	 	 	Price / Share	 	 	 	(Number	 	 	 	Price / Share	 
	Range of exercise prices (CAD)	 	 	of shares)	 	 	 	Life (Years)	 	 	 	CAD	 	 	 	of shares)	 	 	 	CAD	 
	2.30 - 5.00	 	 	265,861	 	 	 	3	 	 	 	2.99	 	 	 	173,528	 	 	 	3.17	 
	5.01 - 5.60	 	 	200,000	 	 	 	3	 	 	 	5.60	 	 	 	170,834	 	 	 	5.60	 
	5.61 - 7.80	 	 	632,858	 	 	 	4	 	 	 	7.80	 	 	 	632,858	 	 	 	7.80	 
	7.81 - 33.30	 	 	6,552	 	 	 	5	 	 	 	17.12	 	 	 	2,386	 	 	 	25.89	 
	 	 	 	1,105,271	 	 	 	4	 	 	 	6.30	 	 	 	979,606	 	 	 	6.64	 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	28
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 

 

	9	SHARE	BASED COMPENSATION (CONTINUED)

 

The following table summarizes information about
the outstanding share options as at June 30, 2020:

 

	 	 	Outstanding	 	 	Exercisable	 
	 	 	 	 	 	Weighted	 	 	Weighted	 	 	 	 	 	Weighted	 
	 	 	 	 	 	Average	 	 	Average	 	 	 	 	 	Average	 
	 	 	Options	 	 	Remaining	 	 	Exercise	 	 	Options	 	 	Exercise	 
		 	(Number	 	 	Contractual	 	 	Price / Share	 	 	(Number	 	 	Price / Share	 
	Range of exercise prices (CAD)	 	of shares)	 	 	Life (Years)	 	 	CAD	 	 	of shares)	 	 	CAD	 
	2.30 - 5.00	 	 	361,845	 	 	 	4	 	 	 	2.91	 	 	 	136,161	 	 	 	3.57	 
	5.01 - 5.60	 	 	325,000	 	 	 	4	 	 	 	5.60	 	 	 	155,833	 	 	 	5.60	 
	5.61 - 33.30	 	 	30,302	 	 	 	3	 	 	 	22.85	 	 	 	30,302	 	 	 	22.85	 
	 	 	 	717,147	 	 	 	4	 	 	 	4.97	 	 	 	322,296	 	 	 	6.36	 

 

During the three and six months ended June 30,
2021, a share based payment charge of EUR 44 and EUR 84, respectively has been recognized in the interim unaudited condensed consolidated
statements of loss and comprehensive loss (three months and six months ended June 30, 2020: negative EUR 145 and negative EUR 94, respectively)
in relation to the fixed stock options.

 

During the six months ended June 30, 2021, the
Company granted 5,000 share options (six months ended June 30, 2020: 70,000 share options) with a weighted average exercise price of CAD
12.10 per share (six months ended June 30, 2020: CAD 3.00) and a fair value of EUR 32 (six months ended June 30, 2020: EUR 75).

 

During the three and six months ended June 30,
2021, 125,000 Common Shares were issued upon exercise of 125,000 fixed stock options (three and six months ended June 30, 2021: nil).
Upon exercise of fixed stock options, EUR 341 was transferred from contributed surplus to share capital in the interim unaudited condensed
consolidated statement of changes in equity.

 

Deferred Share Units

 

Exercises of grants may only be settled in shares,
and only when the employee or consultant has left the Company. Under the plan, the Company may grant options of its shares at nil cost
that vest immediately.

 

During the three and six months ended June 30,
2021, nil and 133,800 DSUs, respectively (three and six months ended June 30, 2020: nil DSUs), were granted with a fair value of CAD 21.80
per unit (three and six months ended June 30, 2020: nil) determined as the share price on the date of grant.

 

During the three and six months ended June 30,
2021, a share based payment charge of EUR 413 and EUR 1,274, respectively, has been recognized in the interim unaudited condensed consolidated
statements of loss and comprehensive loss (three and six months ended June 30, 2020: EUR nil) in relation to the deferred share units.

 

During the three and six months ended June 30, 2020, 50,000 Common
Shares were issued upon exercise of 50,000 DSUs. Upon exercise of DSUs, EUR 219 was transferred from contributed surplus to share capital
in the interim unaudited condensed consolidated statement of changes in equity.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	29
	NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	 
	FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020	 
	PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)	 

 

		9	SHARE BASED COMPENSATION (CONTINUED)

 

Restricted Share Units

 

During the three and six months ended June 30,
2021, nil and 75,000 RSUs, respectively (three and six months ended June 30, 2020: nil), were granted with a fair value of CAD 21.80 per
unit (three and six months ended June 30, 2020: nil) determined as the share price on the date of grant.

 

During the three and six months ended June 30,
2021, a share based payment charge of EUR 434 and EUR 842, respectively, has been recognized in the interim unaudited condensed consolidated
statements of loss and comprehensive loss (three and six months ended June 30, 2020: EUR nil) in relation to the RSUs.

 

During the six months ended June 30, 2021, 50,000
Common Shares were issued upon exercise of 50,000 RSUs (three months ended June 30, 2021: nil). Upon exercise of RSUs, EUR 267 was transferred
from contributed surplus to share capital in the interim unaudited condensed consolidated statement of changes in equity.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	30

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		10	DEFERRED AND CONTINGENT CONSIDERATION

 

The Company completed the acquisition of Oryx
Gaming International LLC together with its subsidiaries on December 20, 2018. The vendor is now part of the Company’s key management,
though was not at the time of the acquisition. Deferred and contingent consideration on December 31, 2020, related to two earnout payments
due, comprised of both cash and shares to be issued.

 

The Company completed the acquisition of Wild
Streak LLC effective on June 2, 2021. The Company agreed a cash payment of USD 75 (EUR 63) to the vendor in relation to working capital
provided prior to completion to be settled on or about the sixtieth day following closing of the transaction.

 

The following is a continuity of the Company’s deferred and contingent
consideration:

 

	As at January 1, 2020	 	 	23,732	 
	Cash paid on settlement of deferred and contingent consideration	 	 	(527	)
	Accretion expense	 	 	1,037	 
	Shares to be issued	 	 	(22,000	)
	Loss on remeasurement of deferred and contingent consideration	 	 	9,276	 
	Effect of movements in exchange rates	 	 	3	 
	 	 	 	 	 
	As at December 31, 2020	 	 	11,521	 
	 	 	 	 	 
	Cash paid on settlement of deferred and contingent consideration	 	 	(11,521	)
	Deferred consideration payable upon business combination (Note 4)	 	 	63	 
	 	 	 	 	 
	As at June 30, 2021	 	 	63	 

 

In the three- and six-month period ended June
30, 2021, EUR nil (three- and six-month period ended June 30, 2020: EUR 219 and EUR 5,187, respectively) of loss on remeasurement of deferred
and contingent consideration and EUR nil (three- and six-month period ended June 30, 2020: EUR 863 and EUR 917, respectively) of accretion
expense was recognized in the interim unaudited condensed consolidated statements of loss and comprehensive loss.

 

Deferred and contingent consideration is disclosed
in the interim unaudited condensed consolidated statement of financial position as follows:

 

	 	 	As at	 	 	As at	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Deferred and Contingent Consideration	 	 	63	 	 	 	11,521	 

 

All contingent liabilities in relation to the acquisition of Oryx were
settled in full to the Oryx vendor on January 18, 2021 following shareholder approval on November 27, 2020. On January 18, 2021, the Company
satisfied its earn-out obligations to K.A.V.O. Holdings Limited via a combination of cash and Common Shares (Note 6) of the Company. Cash
paid totalled EUR 11,598, of which EUR 11,521 fully settled deferred and contingent consideration payable, EUR 52 settled interest payable
and EUR 25 settled legal fees.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	31

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		11	INTANGIBLE ASSETS

 

	 	 	 	 	 	Deferred	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Intellectual	 	 	Development	 	 	Customer	 	 	 	 	 	 	 	 	 	 
	 	 	Property	 	 	Costs	 	 	Relationships	 	 	Brands	 	 	Other	 	 	Total	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at December 31, 2019	 	 	8,801	 	 	 	1,222	 	 	 	4,903	 	 	 	1,357	 	 	 	128	 	 	 	16,411	 
	Additions	 	 	165	 	 	 	2,075	 	 	 	-	 	 	 	-	 	 	 	46	 	 	 	2,286	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at December 31, 2020	 	 	8,966	 	 	 	3,297	 	 	 	4,903	 	 	 	1,357	 	 	 	174	 	 	 	18,697	 
	Additions	 	 	77	 	 	 	1,349	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,426	 
	Acquired through business combination (Note 4)	 	 	5,660	 	 	 	-	 	 	 	11,006	 	 	 	314	 	 	 	19	 	 	 	16,999	 
	Effect of movement in exchange rates	 	 	145	 	 	 	-	 	 	 	279	 	 	 	9	 	 	 	(1	)	 	 	432	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at June 30, 2021	 	 	14,848	 	 	 	4,646	 	 	 	16,188	 	 	 	1,680	 	 	 	192	 	 	 	37,554	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accumulated Amortization	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at December 31, 2019	 	 	1,119	 	 	 	76	 	 	 	504	 	 	 	140	 	 	 	11	 	 	 	1,850	 
	Amortization	 	 	1,169	 	 	 	754	 	 	 	490	 	 	 	136	 	 	 	19	 	 	 	2,568	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at December 31, 2020	 	 	2,288	 	 	 	830	 	 	 	994	 	 	 	276	 	 	 	30	 	 	 	4,418	 
	Amortization	 	 	654	 	 	 	662	 	 	 	339	 	 	 	70	 	 	 	16	 	 	 	1,741	 
	Acquired through business combination (Note 4)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	4	 	 	 	4	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at June 30, 2021	 	 	2,942	 	 	 	1,492	 	 	 	1,333	 	 	 	346	 	 	 	50	 	 	 	6,163	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Carrying Amount	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at December 31, 2020	 	 	6,678	 	 	 	2,467	 	 	 	3,909	 	 	 	1,081	 	 	 	144	 	 	 	14,279	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at June 30, 2021	 	 	11,906	 	 	 	3,154	 	 	 	14,855	 	 	 	1,334	 	 	 	142	 	 	 	31,391	 

 

In the three- and six-month periods ended June
30, 2021, amortization expense of EUR 979 and EUR 1,741, respectively, was recognized within selling, general and administrative expenses
(three- and six-month periods ended June 30, 2020: EUR 588 and EUR 1,296, respectively).

 

		12	CASH AND CASH EQUIVALENTS

 

As at June 30, 2021 and December 31, 2020, cash
and cash equivalents consisted of cash held in banks, marketable investments with an original maturity date of 90 days or less from the
date of acquisition, and prepaid credit cards.

 

As at June 30, 2021, EUR nil (December 31, 2020: EUR 608) was held
in trust on behalf of the Company for subscription receipts related to a non-brokered private placement offering that completed on January
13, 2021 (Note 6). This amount was recorded in cash and cash equivalents.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	32

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		13	TRADE AND OTHER RECEIVABLES

 

The following is an aging of the Company’s trade and other receivables:

 

	 	 	As at	 	 	As at	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Less than one month	 	 	8,290	 	 	 	9,563	 
	Between two and three months	 	 	606	 	 	 	1,193	 
	Greater than three months	 	 	1,645	 	 	 	1,296	 
	 	 	 	 	 	 	 	 	 
	 	 	 	10,541	 	 	 	12,052	 
	Provision for expected credit losses	 	 	(2,132	)	 	 	(1,755	)
	 	 	 	 	 	 	 	 	 
	Trade and Other Receivables	 	 	8,409	 	 	 	10,297	 

 

The balance of accrued income is included in receivables
aged less than one month as this balance will be converted to accounts receivable upon issuance of sales invoices.

 

The following is a continuity of the Company’s
provision for expected credit losses related to trade and other receivables:

 

	As at December 31, 2019	 	 	941	 
	Bad debt written-off	 	 	(419	)
	Net additional provision for doubtful debts	 	 	1,076	 
	Provision for late interest receivable	 	 	157	 
	 	 	 	 	 
	As at December 31, 2020	 	 	1,755	 
	Net additional provision for doubtful debts	 	 	320	 
	Provision for late interest receivable	 	 	57	 
	 	 	 	 	 
	As at June 30, 2021	 	 	2,132	 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	33

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		14	PREPAID EXPENSES AND OTHER ASSETS

 

Prepaid expenses and other assets comprises:

 

	 	 	As at	 	 	As at	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Prepayments	 	 	1,873	 	 	 	249	 
	Deposits	 	 	71	 	 	 	-	 
	Other assets	 	 	157	 	 	 	14	 
	 	 	 	 	 	 	 	 	 
	Prepaid Expenses and Other Assets	 	 	2,101	 	 	 	263	 

 

		15	TRADE PAYABLES AND OTHER LIABILITIES

 

Trade payables and other liabilities comprises:

 

	 	 	As at	 	 	As at	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Trade payables	 	 	3,848	 	 	 	6,406	 
	Accrued liabilities	 	 	11,825	 	 	 	6,099	 
	Sales tax payable	 	 	1,555	 	 	 	4,356	 
	Other payables	 	 	51	 	 	 	107	 
	 	 	 	 	 	 	 	 	 
	Trade Payables and Other Liabilities	 	 	17,279	 	 	 	16,968	 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	34

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		16	RELATED PARTY TRANSACTIONS

 

The Company’s policy is to conduct all transactions
and settle all balances with related parties on market terms and conditions for those in the normal course of business. Transactions between
the Company and its consolidated entities have been eliminated on consolidation and are not disclosed in this note.

 

Key Management Personnel

 

The Company’s key management personnel are
comprised of members of the Board and the executive team which consists of the Chief Executive Officer (“CEO”), Chief Financial
Officer (“CFO”), Chief Strategy Officer (“CSO”) and Chief Technology Officer (“CTO”). Three key management
employees are also shareholders in the Company. Transactions and balances between the Company and its key management personnel are as
follows:

 

Interim Unaudited Condensed Consolidated Statements
of Loss and Comprehensive Loss

 

		·	Revenues for the three and six months ended June 30, 2021, to a shareholder of the Company totalled EUR
28 and EUR 49 (three and six months ended June 30, 2020: EUR 5 and EUR 10), respectively.

		·	Total compensation for salaries, director fees, share-based payments, and short-term employee benefits
of key management personnel of the Company for the three and six months ended June 30, 2021, totalled EUR 2,645 and EUR 4,344 (three and
six months ended June 30, 2020: EUR 536 and EUR 974), respectively.

		·	Total compensation for salaries and short-term employee benefits of vendors of the sale of Wild Streak
and subsequently employees of the Company for the three and six months ended June 30, 2021, totalled EUR 37 (three and six months ended
June 30, 2020: EUR nil).

		·	Loss on remeasurement of deferred and contingent consideration payable to the former Managing Director
of Oryx for the three and six months ended June 30, 2021, was nil (three and six months ended June 30, 2020: EUR 219 and EUR 5,187, respectively).
While the key management employee is no longer Managing Director of Oryx, they remain a director of the Company.

		·	Interest expense on deferred and contingent consideration payable to the former Managing Director of Oryx
for the three and six months ended June 30, 2021, totalled EUR nil and EUR 52 (three and six months ended June 30, 2020: EUR nil).

		·	During the three and six months ended June 30, 2021, legal fees of EUR nil and EUR 25 payable to the former
Managing Director of Oryx in relation to the Oryx earn-out was recognized in the interim unaudited condensed consolidated statements of
loss and comprehensive loss (three and six months ended June 30, 2020: EUR nil).

		·	During the three and six months ended June 30, 2021, professional fees of EUR 64 and EUR 85, respectively
payable to a related business of a non-executive director of the Company was recognized in the interim unaudited condensed consolidated
statements of loss and comprehensive loss (three and six months ended June 30, 2020: EUR nil).

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	35

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		16	RELATED PARTY TRANSACTIONS (CONTINUED)

 

Interim Unaudited Condensed Consolidated Statements
of Financial Position

 

		·	As at June 30, 2021, EUR 8 of trade and other receivables was receivable from the former Managing Director
of Oryx and other shareholders (December 31, 2020: EUR 4).

		·	As at June 30, 2021, EUR 14 of prepaid expenses and other assets was receivable from a related business
of a non-executive director of the Company (December 31, 2020: EUR nil).

		·	As at June 30, 2021, EUR 208 of trade payables and other liabilities was due to the Company’s key
management personnel (December 31, 2020: EUR 166).

		·	As at June 30, 2021, EUR 26 of trade payables and other liabilities was due to the vendors of the sale
of Wild Streak and subsequently employees of the Company (December 31, 2020: EUR nil).

		·	As at June 30, 2021, EUR nil of deferred and contingent consideration (Note 10) was payable to the former
Managing Director of Oryx (December 31, 2020: EUR 11,521).

		·	As at June 30, 2021, EUR 63 of deferred and contingent consideration (Note 10) was payable to the vendors
of the sale Wild Streak and subsequently employees of the Company (December 31, 2020: EUR nil).

 

Interim Unaudited Condensed Consolidated Statements
of Changes in Equity

 

		·	During the three and six months ended June 30, 2021, EUR nil and 22,000, respectively of share capital
(three and six months ended June 30, 2020: EUR nil) was issued to the former Managing Director of Oryx upon completion of the earn-out
(Note 10). A corresponding decrease in shares to be issued was recognized in the interim unaudited condensed consolidated statements of
changes in equity.

		·	During the three and six months ended June 30, 2021, EUR 15,310 of shares to be issued (three and six
months ended June 30, 2020: EUR nil) to the vendors for the sale of Wild Streak (Note 4) and subsequently employees of the Company was
recognized in the interim unaudited condensed consolidated statements of changes in equity.

		·	During the three and six months ended June 30, 2021, EUR nil and EUR 1,918, respectively of additional
share capital was recognized in the interim unaudited condensed consolidated statements of changes in equity in relation to the private
placement by key management personnel of the Company (Note 6) (three and six months ended June 30, 2020: EUR nil).

		·	During the three and six months ended June 30, 2021, EUR 143 and EUR 410 additional share capital, respectively,
was recognized in the interim unaudited condensed consolidated statements of changes in equity for exercise of DSUs, RSUs and FSOs by
key management personnel of the Company (Note 9) (three and six months ended June 30, 2020: EUR 219).

 

Interim Unaudited Condensed Consolidated Statements
of Cash Flows

 

		·	During the three and six months ended June 30, 2021, a total of EUR nil and EUR 11,521, respectively in
payments were made to the former Managing Director of Oryx for deferred consideration (three months and six months ended June 30, 2020:
EUR nil).

		·	During the three and six months ended June 30, 2021, a total of EUR nil and 140, respectively in payments
were made to the former Managing Director of Oryx for interest on deferred and contingent consideration payable (three and six months
ended June 30, 2020: EUR nil).

		·	During the three and six months ended June 30, 2021, a total of EUR 8,206 in cash consideration payments
were made to the vendors of the sale of Wild Streak (three months and six months ended June 30, 2020: EUR nil).

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	36

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

 

The financial instruments measured at amortized cost are summarised
below:

 

Financial Assets

 

	 	 	Financial assets as subsequently	 
	 	 	measured at amortized cost	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Trade and other receivables	 	 	8,409	 	 	 	10,297	 

 

Financial Liabilities

 

	 	 	Financial liabilities as subsequently	 
	 	 	measured at amortized cost	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Trade payables	 	 	3,848	 	 	 	6,406	 
	Accrued liabilities	 	 	11,825	 	 	 	6,099	 
	Other liabilities	 	 	51	 	 	 	107	 
	Lease obligations on right of use assets	 	 	691	 	 	 	726	 
	 	 	 	16,415	 	 	 	13,338	 

 

The carrying values of the financial instruments approximate their fair values.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	37

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

 

Fair Value Hierarchy

 

The following table presents the fair values and fair value hierarchy
of the Company’s financial instruments.

 

	 	 	June 30, 2021	 	 	December 31, 2020	 
	 	 	Level 1	 	 	Level 3	 	 	Total	 	 	Level 1	 	 	Level 3	 	 	Total	 
	Financial assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fair value through profit and loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents	 	 	20,966	 	 	 	-	 	 	 	20,966	 	 	 	26,102	 	 	 	-	 	 	 	26,102	 
	Consideration receivable	 	 	-	 	 	 	128	 	 	 	128	 	 	 	-	 	 	 	192	 	 	 	192	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fair value through profit and loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred and contingent consideration	 	 	63	 	 	 	-	 	 	 	63	 	 	 	11,521	 	 	 	-	 	 	 	11,521	 

 

There were no transfers between the levels of the fair value hierarchy
during the periods.

 

During the three and six months ended June 30, 2021, a loss of EUR
nil (three and six months ended June 30, 2020: EUR 219 and EUR 5,187, respectively), was recognized in the interim unaudited condensed
consolidated statements of loss and comprehensive loss as loss on remeasurement of deferred and contingent consideration (Note 10) for
financial instruments designated as FVTPL.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	38

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

 

As a result of holding and issuing financial instruments,
the Company is exposed to certain risks. The following is a description of those risks and how the exposures are managed.

 

Liquidity risk

 

Liquidity risk is the risk that the Company is
unable to generate or obtain sufficient cash and cash equivalents in a cost-effective manner to fund its obligations as they come due.
The Company will experience liquidity risks if it fails to maintain appropriate levels of cash and cash equivalents, is unable to access
sources of funding or fails to appropriately diversify sources of funding. If any of these events were to occur, they could adversely
affect the financial performance of the Company.

 

The Company has a planning and budgeting process
in place by which it anticipates and determines the funds required to support its normal operating requirements. The Company coordinates
this planning and budgeting process with its financing activities through its capital management process. The Company holds sufficient
cash and cash equivalents and working capital, maintained through stringent cash flow management, to ensure sufficient liquidity is maintained.
The Company is not subject to any externally imposed capital requirements.

 

The following are the undiscounted contractual
maturities of significant financial liabilities and the total contractual obligations of the Company as at June 30, 2021:

 

	 	 	2021	 	 	2022	 	 	2023	 	 	2024	 	 	Thereafter	 	 	Total	 
	Trade payables and other liabilities	 	 	17,279	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	17,279	 
	Lease obligations on right of use assets	 	 	88	 	 	 	172	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	731	 
	Deferred and contingent consideration	 	 	63	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	63	 
	 	 	 	17,430	 	 	 	172	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	18,073	 

 

Foreign currency exchange risk

 

The Company’s financial statements are presented
in EUR, however a portion of the Company’s net assets and operations are denominated in other currencies, particularly the Canadian
dollar. Such net assets are translated into EUR at the foreign currency exchange rate in effect at the reporting date, and operations
at the foreign currency exchange rates that approximate the rates in effect at the dates when such items are recognized. As a result,
the Company is exposed to foreign currency translation gains and losses, which are recorded in accumulated other comprehensive loss.

 

The Company is also exposed to risk on transaction
in currencies other than its functional currency resulting in realized and unrealized foreign currency gains and loss which are recorded
in other operational costs. The Company estimates that an appreciation of the EUR of 10% relative to other currencies would result in
a decrease of EUR 835 in earnings before income taxes while a depreciating EUR will have the opposite impact.

 

The Company has no derivative instruments in
the form of futures contracts and forward contracts to manage its current and anticipated exposure to fluctuations in EUR exchange rates.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	39

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

 

Credit risk

 

The Company is exposed to credit risk resulting
from the possibility that counterparties could default on their financial obligations to the Company including cash and cash equivalents,
other assets and accounts receivable. Failure to manage credit risk could adversely affect the financial performance of the Company.

 

The risk related to cash and cash equivalents
is reduced by policies and guidelines that require that the Company enters into transactions only with counterparties or issuers that
have a minimum long term “BBB” credit rating from a recognized credit rating agency. The Company mitigates the risk of credit
loss relating to accounts receivable by evaluating the creditworthiness of new customers and establishes a provision for expected credit
losses. The Company applies the simplified approach to provide for expected credit losses as prescribed by IFRS 9, Financial Instruments,
which permits the use of the lifetime expected loss provision for all accounts receivable. The expected credit loss provision is based
on the Company’s historical collections and loss experience and incorporates forward-looking factors, where appropriate.

 

The provision matrix below shows the expected credit loss rate for
each aging category of accounts receivable as at June 30, 2021:

 

	 	 	 	 	 	Aging (months)	 	 	 	 
	 	 	Note	 	 	<1	 	 	1 - 3	 	 	>3	 	 	Total	 
	Gross accounts receivable	 	 	13	 	 	 	8,290	 	 	 	606	 	 	 	1,645	 	 	 	10,541	 
	Expected loss rate	 	 	 	 	 	 	4.60	%	 	 	30.53	%	 	 	95.20	%	 	 	20.23	%
	Expected Loss Provision	 	 	13	 	 	 	381	 	 	 	185	 	 	 	1,566	 	 	 	2,132	 

 

The provision matrix below shows the expected credit loss rate for
each aging category of accounts receivable as at December 31, 2020:

 

	 	 	 	 	 	Aging (months)	 	 	 	 
	 	 	Note	 	 	<1	 	 	1 - 3	 	 	>3	 	 	Total	 
	Gross accounts receivable	 	 	13	 	 	 	9,563	 	 	 	1,193	 	 	 	1,296	 	 	 	12,052	 
	Expected loss rate	 	 	 	 	 	 	4.51	%	 	 	14.84	%	 	 	88.50	%	 	 	14.56	%
	Expected Loss Provision	 	 	13	 	 	 	431	 	 	 	177	 	 	 	1,147	 	 	 	1,755	 

 

Gross accounts receivable includes the balance
of accrued income within the aging category of less than one month.

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	40

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

 

Concentration risk

 

For the three months ended June 30, 2021, one
customer (three months ended June 30, 2020: one customer) contributed more than 10% each to the Company’s revenues. Aggregate revenues
from this customer totalled EUR 2,714 (three months ended June 30, 2020: EUR 1,712).

 

For the six months ended June 30, 2021, one customer
(six months ended June 30, 2020: one customer) contributed more than 10% each to the Company’s revenues. Aggregate revenues from
this customer totalled EUR 5,467 (six months ended June 30, 2020: EUR 2,816).

 

As at June 30, 2021, one customer (December 31,
2020: one customer) constituted more than 10% each to the Company’s accounts receivable. The balance owed by this customer totalled
EUR 974 (December 31, 2020: EUR 1,247). The Company continues to expand its customer base to reduce the concentration risk.

 

	18	SUPPLEMENTARY CASHFLOW INFORMATION

 

Cash flows arising from changes in non-cash working capital are summarized
below:

 

	 	 	Six Months Ended June 30,	 
	Cash flows arising from movement in:	 	2021	 	 	2020	 
	Trade and other receivables	 	 	2,183	 	 	 	(2,642	)
	Prepaid expenses and other assets	 	 	(1,838	)	 	 	(135	)
	Deferred revenue	 	 	503	 	 	 	-	 
	Trade payables and other liabilities	 	 	224	 	 	 	3,995	 
	Other liabilities - non-current	 	 	25	 	 	 	-	 
	 	 	 	 	 	 	 	 	 
	Changes in Non-Cash Working Capital	 	 	1,097	 	 	 	1,218	 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	41

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		19	SEGMENT INFORMATION

 

Operating

 

The Company has one reportable operating segment
in its continuing operations, B2B Online Gaming.

 

The accounting policies of the reportable operating
segments are the same as those described in the Company’s summary of significant accounting policies (Note 2). The Company measures
each reportable operating segment’s performance based on adjusted EBITDA. No reportable operating segment is reliant on any single
external customer.

 

Intersegment charges have been eliminated on consolidation.

 

Geography – Revenue

 

Revenue for continuing operations was generated from the following
jurisdictions:

 

	 	 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 
	 	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	Malta	 	 	 	9,386	 	 	 	8,492	 	 	 	18,861	 	 	 	14,428	 
	Curaçao	 	 	 	3,761	 	 	 	2,488	 	 	 	6,534	 	 	 	4,230	 
	Croatia	 	 	 	713	 	 	 	363	 	 	 	1,138	 	 	 	649	 
	Germany	 	 	 	404	 	 	 	84	 	 	 	830	 	 	 	129	 
	Romania	 	 	 	425	 	 	 	50	 	 	 	744	 	 	 	200	 
	Serbia	 	 	 	243	 	 	 	126	 	 	 	442	 	 	 	254	 
	Other	 	 	 	559	 	 	 	542	 	 	 	1,138	 	 	 	1,039	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue	 	 	 	15,491	 	 	 	12,145	 	 	 	29,687	 	 	 	20,929	 

 

This segmentation is not correlated to the geographical
location of the Company’s worldwide end-user base.

 

Geography – Non-Current Assets

 

Non-current assets are held in the following jurisdictions:

 

	 	 	As at	 	 	As at	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	United States	 	 	57,041	 	 	 	34,104	 
	Other	 	 	1,491	 	 	 	1,180	 
	 	 	 	 	 	 	 	 	 
	Non-Current Assets	 	 	58,532	 	 	 	35,284	 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	42

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		20	INCOME TAXES

 

The components of income taxes recognized in the interim unaudited
condensed consolidated statements of financial position are as follows:

 

	 	 	As at	 	 	As at	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Income taxes payable	 	 	1,762	 	 	 	1,318	 
	Deferred income tax liabilities	 	 	1,261	 	 	 	1,415	 

 

The components of income taxes recognized in the interim unaudited
condensed consolidated statements of loss and comprehensive loss are as follows:

 

	 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 
	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	Current period	 	 	452	 	 	 	526	 	 	 	1,143	 	 	 	797	 
	Adjustment in respect of prior periods	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Income Taxes	 	 	452	 	 	 	526	 	 	 	1,143	 	 	 	797	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred income tax expense (recovery)	 	 	30	 	 	 	(28	)	 	 	(154	)	 	 	(56	)
	Deferred Income Tax Expense (Recovery)	 	 	30	 	 	 	(28	)	 	 	(154	)	 	 	(56	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income Taxes	 	 	482	 	 	 	498	 	 	 	989	 	 	 	741	 

 

There is no income tax expense recognized in other comprehensive income
(loss).

 

	 	 	As at	 	 	As at	 
	 	 	June 30,	 	 	December 31,	 
	 	 	2021	 	 	2020	 
	Intangible assets	 	 	1,261	 	 	 	1,415	 
	Other	 	 	-	 	 	 	-	 
	 	 	 	 	 	 	 	 	 
	Deferred tax liability	 	 	1,261	 	 	 	1,415	 

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	43

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		20	INCOME TAXES (CONTINUED)

 

The effective income tax rates in the interim
unaudited condensed consolidated statements of loss and comprehensive loss were reported at rates different than the combined Canadian
federal and provincial statutory income tax rates for the following reasons:

 

	 	 	Six Months Ended June 30,	 
	 	 	2021	 	 	2020	 
	 	 	%	 	 	%	 
	Canadian statutory tax rate	 	 	26.5	 	 	 	26.5	 
	Effect of tax rate in foreign jurisdictions	 	 	7.4	 	 	 	2.6	 
	Impact of foreign currency translation	 	 	-	 	 	 	 	 
	Non-deductible and non-taxable items	 	 	(30.2	)	 	 	(12.4	)
	Remeasurement of contingent and deferred consideration	 	 	-	 	 	 	(14.2	)
	Accretion expense of contingent consideration	 	 	-	 	 	 	(4.5	)
	Change in tax benefits not recognized	 	 	(8.6	)	 	 	(7.2	)
	Adjustments in respect of prior periods	 	 	-	 	 	 	(2.5	)
	Other	 	 	(36.1	)	 	 	(2.4	)
	Effective Income Tax Rate Applicable to Loss Before Income Taxes	 	 	(41.0	)	 	 	(14.1	)

 

Deferred income tax liabilities recognized in
the interim unaudited condensed consolidated statements of financial position were attributable solely to acquired intangible assets (Note
11).

 

    	 		

     

    

 

	BRAGG GAMING GROUP INC.	44

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021, AND JUNE 30, 2020

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		20	INCOME TAXES (CONTINUED)

 

The portion of the income tax losses related to
Canada which have a limited carry-forward period expire in the years 2026 to 2041 as follows:

 

	2026	 	 	 	97	 
	2027	 	 	 	182	 
	2028	 	 	 	170	 
	2029	 	 	 	87	 
	2030	 	 	 	60	 
	2031	 	 	 	60	 
	2032	 	 	 	101	 
	2033	 	 	 	68	 
	2034	 	 	 	126	 
	2035	 	 	 	126	 
	2036	 	 	 	134	 
	2037	 	 	 	279	 
	2038	 	 	 	1,897	 
	2039	 	 	 	2,001	 
	2040	 	 	 	3,100	 
	2041	 	 	 	3,164	 
	 	 	 	 	11,652	 

 

The United Kingdom losses are carried forward
indefinitely unless subject to certain restrictions and are now classified in the current year as discontinued operations as unrecognized
deferred income tax assets. The deductible temporary differences do not expire under current income tax legislation. Deferred income tax
assets were not recognized in respect of these items because it is not probable that future taxable income will be available to the Company
to utilize the benefits.

 

		21	CONTINGENT LIABILITIES

 

In the ordinary course of business, the Company
is involved in and potentially subject to, legal actions and proceedings. In addition, the Company is subject to tax audits from various
tax authorities on an ongoing basis. As a result, from time to time, tax authorities may disagree with the positions and conclusions taken
by the Company in its tax filings or legislation could be amended or interpretations of current legislation could change, any of which
events could lead to reassessments.

 

The Company is not aware of any legal, administrative,
or other proceedings pending, which would materially affect its financial condition.

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