Document:

Exhibit 4.2

 

 

 

BRAGG GAMING GROUP INC.

 

CONSOLIDATED

FINANCIAL
STATEMENTS

 

Years ended December 31,
2020 and 2019

Presented in Euros (Thousands)

 

     

     

    

 

TABLE OF CONTENTS

 

		CONSOLIDATED	STATEMENTS OF LOSS AND COMPREHENSIVE LOSS	1
		CONSOLIDATED	STATEMENTS OF FINANCIAL POSITION	2
		CONSOLIDATED	STATEMENTS OF CHANGES IN EQUITY	3
		CONSOLIDATED	STATEMENTS OF CASH FLOWS	4

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

	1	BASIS OF PRESENTATION AND GOING CONCERN	5
	2	SIGNIFICANT ACCOUNTING POLICIES	7
	3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS	19
	4	LOSS BEFORE INCOME TAXES CLASSIFIED BY NATURE	22
	5	DISCONTINUED OPERATIONS	23
	6	SHARE CAPITAL	26
	7	PUBLIC OFFERING COMPLETED NOVEMBER 18, 2020	27
	8	WARRANTS	28
	9	SHARE BASED PAYMENTS	31
	10	GOODWILL	34
	11	DEFERRED AND CONTINGENT CONSIDERATION	35
	12	INTANGIBLE ASSETS	37
	13	CASH AND CASH EQUIVALENTS	37
	14	TRADE AND OTHER RECEIVABLES	38
	15	TRADE PAYABLES AND OTHER LIABILITIES	38
	16	RELATED PARTY TRANSACTIONS	39
	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT	40
	18	SUPPLEMENTARY CASHFLOW INFORMATION	44
	19	SEGMENT INFORMATION	45
	20	INCOME TAXES	46
	21	CONTINGENT LIABILITIES	49
	22	SUBSEQUENT EVENTS	50

 

     

     

    

 

Management’s Statement of Responsibility
for Financial Reporting

 

The management of Bragg Gaming Group
Inc. is responsible for the preparation, presentation and integrity of the accompanying consolidated financial statements. This responsibility
includes the selection and consistent application of appropriate accounting principles and methods in addition to making the judgments
and estimates necessary to prepare the consolidated financial statements in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board.

 

Management is also responsible for
providing reasonable assurance that assets are safeguarded, and that relevant and reliable financial information is produced. Management
is required to design a system of internal controls and certify as to the design and operating effectiveness of internal controls over
financial reporting.

 

MNP LLP, whose report follows, were
appointed as independent auditors by a vote of the Company’s shareholders to audit the consolidated financial statements.

 

The Board of Directors, acting through
an Audit Committee comprised solely of directors who are independent, is responsible for determining that management fulfils its responsibilities
in the preparation of the consolidated financial statements and the financial control of operations. The Audit Committee recommends the
independent auditors for appointment by the shareholders. The Audit Committee meets regularly with senior and financial management and
the independent auditors to discuss internal controls, auditing activities and financial reporting matters. The independent auditors have
unrestricted access to the Audit Committee. These consolidated financial statements have been approved by the Board of Directors based
on the review and recommendation of the Audit Committee.

  

	Adam Arviv	Ronen Kannor
	Chief Executive Officer	Chief Financial Officer

 

Toronto, Canada

March 25, 2021

 

     

     

    

 

 

 

Independent
Auditor's Report

 

To the Shareholders of Bragg Gaming Group Inc.:

 

Opinion

 

We have audited the consolidated
financial statements of Bragg Gaming Group Inc. and its subsidiaries (the "Company"), which comprise the consolidated statements
of financial position as at December 31, 2020 and December 31, 2019, and the consolidated statements of loss and comprehensive loss, changes
in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.

 

In our opinion, the accompanying
consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December
31, 2020 and December 31, 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with International Financial Reporting Standards.

 

Basis for Opinion

 

We conducted our audits in accordance
with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance
with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.

 

Key Audit Matters

 

Key audit matters are those matters
that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

 

Key Audit Matter
Description

 

Impairment Analysis of Goodwill
and Long-Lived Assets

 

We draw attention to Note 3 and
10 to the consolidated financial statements. The Company has recorded goodwill, property and equipment, right-of-use assets and intangibles
assets of EUR 35,197 (in thousands) as of December 31, 2020. The Company performs impairment testing for goodwill and long-lived assets
on an annual basis or more frequently when there is an indication of impairment. An impairment is recognized if the carrying amount of
an asset, or its cash generating unit (CGU), exceeds its estimated recoverable amount. The recoverable amount of an asset is the greater
of its value-in-use and its fair value less costs of disposal. In determining the estimated recoverable amounts using a discounted cash
flow model, the Company’s significant assumptions include future cash flows based on expected operating results, long-term growth
rates and the discount rate.

 

We considered this a key audit
matter due to the significant judgment made by management in estimating the recoverable amount for goodwill and long-lived assets and
a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s
estimates. This resulted in an increased extent of audit effort, including the involvement of internal valuation specialists.

 

Audit Response

 

We responded to this matter by
performing procedures over the impairment of goodwill and long-lived assets. Our audit work in relation to this included, but was not
restricted to, the following:

 

		-	Tested management’s key assumptions, including a ‘retrospective review’
to compare management’s assumptions in prior year expected future cash flows to the actual results to assess the Company’s
budgeting process.
		-	Evaluated the reasonableness of key assumptions in the impairment model, including
future cash flows based on expected operating results, long-term growth rates and the discount rate.
		-	Tested the mathematical accuracy of management’s impairment model and supporting calculations.
		-	With the assistance of internal valuation specialists, we evaluated the reasonableness of the Company’s
impairment model, which included:

 

		(i)	Evaluating the reasonableness of the discount rates by comparing the Company’s weighted average
cost of capital against publicly available market data.
		(ii)	Developing a range of independent estimates and comparing those to the discount rate selected by management.
		(iii)	Performing sensitivity analysis by developing a range of independent estimates of growth rates and weighted
average cost of capital.

 

     

     

    

 

Other Information

 

Management is responsible for the
other information. The other information comprises Management’s Discussion and Analysis.

 

Our opinion on the consolidated
financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

 

In connection with our audits
of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise
appears to be materially misstated. We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report.
If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

 

Responsibilities
of Management and Those Charged with Governance for the Consolidated Financial Statements

 

Management is responsible for
the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards,
and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.

 

In preparing the consolidated financial
statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible
for overseeing the Company’s financial reporting process.

 

Auditor's Responsibilities
for the Audit of the Consolidated Financial Statements

 

Our objectives are to obtain
reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

 

As part of an audit in accordance
with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout
the audit. We also:

 

	·	Identify and assess the
risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
	·	Obtain an understanding
of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control.
	·	Evaluate the appropriateness
of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

 

 

     

     

    

  

	·	Conclude on the appropriateness
of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
	·	Evaluate the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
	·	Obtain sufficient appropriate
audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on
the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.

 

We communicate with those charged
with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any
significant deficiencies in internal control that we identify during our audits.

 

We also provide those charged
with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

From the matters communicated
with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.

 

The engagement partner on the audit
resulting in this independent auditor's report is Ajmer Singh Sran.

 

	Toronto, Ontario	Chartered Professional Accountants
	March 25, 2021	Licensed Public Accountants

 

 

 

     

    1 

    

 

BRAGG GAMING GROUP INC.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE
LOSS PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	 	 	 	Year
                                            Ended December 31,	 
	 	 	 	Note	 	 	 	2020	 	 	 	2019	 
	Revenue	 	 	4	 	 	 	46,421	 	 	 	26,592	 
	Cost of revenue	 	 	 	 	 	 	(26,232	)	 	 	(14,562	)
	Gross Profit	 	 	 	 	 	 	20,189	 	 	 	12,030	 
	Selling, general and administrative expenses	 	 	4	 	 	 	(22,828	)	 	 	(14,764	)
	Gain on remeasurement of consideration receivable	 	 	 	 	 	 	19	 	 	 	-	 
	Loss on remeasurement of deferred and contingent consideration	 	 	4, 11	 	 	 	(9,276	)	 	 	(5,347	)
	Operating Loss	 	 	 	 	 	 	(11,896	)	 	 	(8,081	)
	Net interest expense and other financing charges	 	 	4	 	 	 	(1,384	)	 	 	(1,754	)
	Loss Before Income Taxes	 	 	4	 	 	 	(13,280	)	 	 	(9,835	)
	Income taxes	 	 	20	 	 	 	(1,196	)	 	 	(541	)
	Net Loss from Continuing Operations	 	 	 	 	 	 	(14,476	)	 	 	(10,376	)
	Net loss from discontinued operations after tax	 	 	5	 	 	 	(90	)	 	 	(1,571	)
	Net Loss	 	 	 	 	 	 	(14,566	)	 	 	(11,947	)
	Items to be reclassified to net loss:	 	 	 	 	 	 	 	 	 	 	 	 
	Cumulative translation adjustment - continuing operations	 	 	 	 	 	 	157	 	 	 	(247	)
	Cumulative translation adjustment - discontinued operations	 	 	 	 	 	 	(95	)	 	 	74	 
	Net Comprehensive Loss	 	 	 	 	 	 	(14,504	)	 	 	(12,120	)
	Basic and Diluted Loss Per Share	 	 	 	 	 	 	 	 	 	 	 	 
	Continuing operations	 	 	 	 	 	 	(0.17	)	 	 	(0.14	)
	Discontinued operations	 	 	 	 	 	 	(0.00	)	 	 	(0.02	)
		 	 	 	 	 	 	(0.17	)	 	 	(0.16	)
	 	 	 	 	 	 	 	 Millions	 	 	 	 Millions	 
	Weighted average number of shares - basic and diluted	 	 	 	 	 	 	85.9	 	 	 	73.0	 

 

See accompanying notes to the consolidated financial statements.

 

     

    2 

    

 

BRAGG GAMING GROUP INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	 	 	 	 	 	 	 	As at

December 31,

	 	 	 	As at

December 31,

	 
	 	 	 	Note	 	 	 	2020	 	 	 	2019	 
	Cash and cash equivalents	 	 	13	 	 	 	26,102	 	 	 	682	 
	Trade and other receivables	 	 	14	 	 	 	10,297	 	 	 	6,180	 
	Prepaid expenses and other assets	 	 	 	 	 	 	263	 	 	 	333	 
	Consideration receivable	 	 	5	 	 	 	148	 	 	 	-	 
	Assets held for sale	 	 	5	 	 	 	-	 	 	 	1,142	 
	Total Current Assets	 	 	 	 	 	 	36,810	 	 	 	8,337	 
	Property and equipment	 	 	 	 	 	 	272	 	 	 	163	 
	Right-of-use assets	 	 	 	 	 	 	708	 	 	 	843	 
	Consideration receivable	 	 	5	 	 	 	44	 	 	 	-	 
	Intangible assets	 	 	12	 	 	 	14,279	 	 	 	14,561	 
	Goodwill	 	 	10	 	 	 	19,938	 	 	 	19,938	 
	Other assets	 	 	 	 	 	 	43	 	 	 	38	 
	Total Assets	 	 	 	 	 	 	72,094	 	 	 	43,880	 
	Trade payables and other liabilities	 	 	15	 	 	 	16,968	 	 	 	8,857	 
	Deferred revenue	 	 	 	 	 	 	102	 	 	 	-	 
	Income taxes payable	 	 	20	 	 	 	1,318	 	 	 	778	 
	Lease obligations on right of use assets - current	 	 	 	 	 	 	133	 	 	 	185	 
	Deferred and contingent consideration	 	 	11	 	 	 	11,521	 	 	 	9,482	 
	Liabilities held for sale	 	 	5	 	 	 	-	 	 	 	1,499	 
	Total Current Liabilities	 	 	 	 	 	 	30,042	 	 	 	20,801	 
	Deferred income tax liability	 	 	20	 	 	 	1,415	 	 	 	1,539	 
	Non-current lease obligations on right of use assets	 	 	 	 	 	 	593	 	 	 	674	 
	Other non-current liabilities 	 	 	 	 	 	 	147	 	 	 	-	 
	Deferred and contingent consideration	 	 	11	 	 	 	-	 	 	 	14,250	 
	Total Liabilities	 	 	 	 	 	 	32,197	 	 	 	37,264	 
	Share capital	 	 	6	 	 	 	62,304	 	 	 	40,204	 
	Warrants	 	 	8	 	 	 	1,642	 	 	 	1,565	 
	Broker warrants	 	 	8	 	 	 	399	 	 	 	-	 
	Special warrants - compensation options	 	 	8	 	 	 	-	 	 	 	660	 
	Shares to be issued	 	 	11, 13	 	 	 	22,608	 	 	 	-	 
	Contributed surplus	 	 	 	 	 	 	14,325	 	 	 	11,064	 
	Deficit	 	 	 	 	 	 	(61,231	)	 	 	(46,665	)
	Accumulated other comprehensive loss	 	 	 	 	 	 	(150	)	 	 	(212	)
	Total Equity	 	 	 	 	 	 	39,897	 	 	 	6,616	 
	Total Liabilities and Equity	 	 	 	 	 	 	72,094	 	 	 	43,880	 
	Going Concern
 
	 	 	1	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 

See accompanying notes to the consolidated financial statements.

 

Approved on behalf of the Board

 

	Adam Arviv	Jim Ryan
	Chief Executive Officer	Non Executive Director

 

     

    3 

    

 

BRAGG GAMING GROUP INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

PRESENTED IN EUROS (THOUSANDS, EXCEPT SHARE AMOUNTS)

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Special
 warrants
    -	 	 	Special	 	 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	broker	 	 	warrants -	 	 	 	 	 	 	 	 	 	 	 	other	 	 	 	 
	 	 	 	 	 	Share	 	 	Shares to	 	 	 	 	 	Special	 	 	compensation	 	 	compensation	 	 	Broker	 	 	Contributed	 	 	 	 	 	comprehensive	 	 	Total	 
	 	 	Note	 	 	capital	 	 	be
    issued	 	 	Warrants	 	 	warrants	 	 	options	 	 	options	 	 	warrants	 	 	surplus	 	 	Deficit	 	 	loss	 	 	Equity	 
	Balance as at January 1,
    2019	 	 	 	 	 	 	32,892	 	 	 	-	 	 	 	579	 	 	 	7,641	 	 	 	660	 	 	 	-	 	 	 	-	 	 	 	8,838	 	 	 	(34,675	)	 	 	(39	)	 	 	15,896	 
	Impact of adoption of IFRS 16	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(43	)	 	 	-	 	 	 	(43	)
	Shares issued as settlement of deferred consideration	 	 	11	 	 	 	1,236	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,236	 
	Conversion of special warrants 	 	 	6,
                                            8	 	 	 	6,076	 	 	 	-	 	 	 	1,565	 	 	 	(7,641	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Conversion of special warrants - broker

compensation options 	 	 	8	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(660	)	 	 	660	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Expiry of
warrants 	 	 	8	 	 	 	-	 	 	 	-	 	 	 	(579	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	579	 	 	 	-	 	 	 	-	 	 	 	-	 
	Share-based
compensation 	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,647	 	 	 	-	 	 	 	-	 	 	 	1,647	 
	Net loss for the period  	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(11,947	)	 	 	-	 	 	 	(11,947	)
	Other comprehensive income 	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(173	)	 	 	(173	)
	Balance as at December
    31, 2019	 	 	 	 	 	 	40,204	 	 	 	-	 	 	 	1,565	 	 	 	-	 	 	 	-	 	 	 	660	 	 	 	-	 	 	 	11,064	 	 	 	(46,665	)	 	 	(212	)	 	 	6,616	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2020	 	 	 	 	 	 	40,204	 	 	 	-	 	 	 	1,565	 	 	 	-	 	 	 	-	 	 	 	660	 	 	 	-	 	 	 	11,064	 	 	 	(46,665	)	 	 	(212	)	 	 	6,616	 
	Issue of securities upon Public Offering, net of issuance
    costs	 	 	7	 	 	 	10,086	 	 	 	-	 	 	 	1,642	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	399	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	12,127	 
	Shares to be issued upon completion of Oryx earn-out	 	 	11	 	 	 	-	 	 	 	22,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	22,000	 
	Shares to be issued upon completion of private placement	 	 	13,
                                            22	 	 	 	-	 	 	 	608	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	608	 
	Exercise of deferred stock units	 	 	6,
                                            9	 	 	 	219	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(219	)	 	 	-	 	 	 	-	 	 	 	-	 
	Exercise of stock options 	 	 	6,
                                            9	 	 	 	27	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(9	)	 	 	-	 	 	 	-	 	 	 	18	 
	Exercise of warrants 	 	 	8	 	 	 	10,708	 	 	 	-	 	 	 	(1,168	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	9,540	 
	Expiry of warrants	 	 	8	 	 	 	-	 	 	 	-	 	 	 	(526	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	526	 	 	 	-	 	 	 	-	 	 	 	-	 
	Exercise of special warrants - broker compensation options 	 		8	 	 		1,060	 	 		-	 	 		129	 	 		-	 	 		 -	 	 		(660	) 	 		- 	 	 		-	 	 		-	 	 		-	 	 		529
	Share-based compensation 	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	2,963	 	 	 	-	 	 	 	-	 	 	 	2,963	 
	Net loss for the period 	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(14,566	)	 	 	-	 	 	 	(14,566	)
	Other comprehensive income 	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	62	 	 	 	62	 
	Balance as at December
    31, 2020	 	 	 	 	 	 	62,304	 	 	 	22,608	 	 	 	1,642	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	399	 	 	 	14,325	 	 	 	(61,231	)	 	 	(150	)	 	 	39,897	 

 

See accompanying notes to the consolidated financial statements.

 

     

    4 

    

 

BRAGG GAMING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	 	 	Year Ended December 31,	 
	 	 	Note	 	 	2020	 	 	2019	 
	Operating Activities	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss from continuing operations	 	 	 	 	 	 	(14,476	)	 	 	(10,376	)
	Add:	 	 	 	 	 	 	 	 	 	 	 	 
	Net interest expense and other financing charges	 	 	 	 	 	 	1,384	 	 	 	1,754	 
	Depreciation and amortization	 	 	4	 	 	 	2,873	 	 	 	2,080	 
	Share based payments	 	 	4	 	 	 	2,963	 	 	 	1,647	 
	Gain on remeasurement of consideration receivable	 	 	 	 	 	 	(19	)	 	 	-	 
	Loss on remeasurement of deferred and contingent consideration	 	 	11	 	 	 	9,276	 	 	 	5,347	 
	Deferred income tax recovery	 	 	20	 	 	 	(125	)	 	 	(112	)
	 	 	 	 	 	 	 	1,876	 	 	 	340	 
	Change in non-cash working capital	 	 	18	 	 	 	4,313	 	 	 	(660	)
	Change in income taxes payable	 	 	 	 	 	 	540	 	 	 	222	 
	Cash Flows From (Used In) Operating Activities	 	 	 	 	 	 	6,729	 	 	 	(98	)
	 
Investing Activities
	 	 	 	 	 	 	 	 	 	 	 	 
	Purchases of property and equipment	 	 	 	 	 	 	(223	)	 	 	(120	)
	Proceeds from sale of equipment	 	 	 	 	 	 	-	 	 	 	16	 
	Additions of intangible assets	 	 	12	 	 	 	(2,286	)	 	 	(1,555	)
	Proceeds from sale of discontinued operations	 	 	5	 	 	 	259	 	 	 	-	 
	Deferred and contingent consideration payments	 	 	11	 	 	 	(527	)	 	 	(639	)
	Cash Flows Used In Investing Activities	 	 	 	 	 	 	(2,777	)	 	 	(2,298	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financing Activities	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds
from issuance of common shares and warrants, net of costs
	 	 	
7, 8
	 	 	 	12,127	 	 	 	-	 
	Proceeds from exercise of warrants and broker compensation options	 	 	8	 	 	 	10,069	 	 	 	-	 
	Proceeds from exercise of stock options	 	 	9	 	 	 	18	 	 	 	-	 
	Proceeds from shares to be issued upon private placement	 	 	13, 22	 	 	 	608	 	 	 	-	 
	Repayment of lease liability	 	 	 	 	 	 	(212	)	 	 	(109	)
	Repayment of loans	 	 	 	 	 	 	-	 	 	 	(375	)
	Interest income	 	 	 	 	 	 	6	 	 	 	4	 
	Interest and financing fees	 	 	 	 	 	 	(353	)	 	 	(41	)
	Cash Flows From (Used In) Financing Activities	 	 	 	 	 	 	22,263	 	 	 	(521	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Effect
of foreign currency exchange rate changes on cash and cash equivalents
	 	 	 	 	 	 	(307	)	 	 	(276	)
	Net cash flow used in discontinued operations	 	 	5	 	 	 	(488	)	 	 	(1,605	)
	Change in Cash and Cash Equivalents	 	 	 	 	 	 	25,420	 	 	 	(4,798	)
	Cash and cash equivalents at beginning of year	 	 	 	 	 	 	682	 	 	 	5,480	 
	Cash and Cash Equivalents at end of year	 	 	 	 	 	 	26,102	 	 	 	682	 
	See accompanying notes to the consolidated financial statements.	 	 	 	 	 	 	 	 	 	 	 	 

 

     

    5 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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.

 

Acquisition of Oryx Gaming

On December 20, 2018, the Company
completed a business combination transaction with AA Acquisition Group Inc. ("AAA") by way of a "three-cornered amalgamation"
whereby the Company acquired all of the issued and outstanding securities of AAA in exchange for the issuance to AAA shareholders of 20,999,995
Common Shares of the Company on a pro-rata basis amongst AAA shareholders, and whereby AAA amalgamated with a wholly owned subsidiary
of the Company. Upon completion of the Amalgamation, all of the property, rights, privileges and assets of AAA have continued as the property
rights, privileges and assets of the amalgamated entity, Bragg Oryx Holdings Inc., a wholly owned subsidiary of the Company.

 

AAA was a special purpose vehicle
incorporated on April 12, 2018 under the Ontario Business Corporations Act, with the primary purpose of acquiring share capital, trade
and assets of Oryx Gaming and its wholly owned subsidiaries. On December 20, 2018, AAA acquired all of the issued and outstanding membership
interests of Oryx Gaming before the three-cornered amalgamation as discussed above.

 

Acquisition of Win Gaming

On April 30, 2019, the Company completed
an acquisition transaction whereby it acquired all of the equity in WIN Gaming Limited ("WIN") in exchange for cash consideration
of EUR 66. The purpose of the acquisition was to acquire WIN’s remote gaming licence issued by the Malta Gaming Authority. WIN is
a private limited liability company incorporated in Malta.

 

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 consolidated financial statements ("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 financial statements
have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by International Accounting
Standards Board (“IASB”).

 

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
consolidated financial statements for all periods presented.

 

These financial statements were,
at the recommendation of the audit committee, approved and authorized for issuance by the Company’s Board of Directors on March
25, 2021.

 

     

    6 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		1	BASIS OF PRESENTATION AND GOING CONCERN (CONTINUED)

 

Going concern

The 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 financial statements. If the going concern
assumption is not appropriate, material adjustments to the financial statements could be required.

 

As at December 31, 2020, the Company
had current assets of EUR 36,810 (December 31, 2019: EUR 8,337) and current liabilities of EUR 30,042 (December 31, 2019: EUR 20,801).
As of December 31, 2020, the Company has a cumulative deficit of EUR 61,231 (December 31, 2019: EUR 46,665).

 

In the subsequent period to March
25, 2021, the Company raised additional cash proceeds of EUR 10,817 via exercise of share warrants and broker warrants issued November
18, 2020 (Note 7) and all contingent liabilities with K.A.V.O. Holdings Limited were settled in full on January 18, 2021 based upon shareholder
agreement obtained on November 27, 2020 (Note 22). In addition, on January 13, 2021, the Company completed a non-brokered private placement
offering comprised of 2,479,335 Common Shares at a price of CAD 1.21 per share for aggregate gross proceeds of EUR 1,937. These events
or conditions, along with the Company generating positive cash flows from operations indicates that the Company will be able to continue
on a going concern basis and any material uncertainty related to this basis no longer exists.

 

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 obviously been impacted
by the lack of professional sports.

 

As at the time of release of these
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.

 

     

    7 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES

 

Basis of consolidation

The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. 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 subsidiaries
and the functional currency for each subsidiary:

 

	 	
    Place of

    incorporation

    / operation
	
     

     

    Principal activity
	Functional 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
	Breaking Data Inc.	Canada	Dormant	CAD
	DSMIC Inc.	Canada	Dormant	CAD
	GMB Operations Ltd.	United Kingdom	Dormant	GBP
	Innovation Fund III Inc	United States	Dormant	USD
	Oryx Gaming 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
	Unomobi Inc.	United States	Dormant	USD
	Win Gaming Ltd.	Malta	Gaming licence holder	EUR

 

     

    8 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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 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 year and accrued income in relation to
receivables from customers that have yet to be invoiced, for services provided during the year ended December 31, 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 consolidated statements of loss and comprehensive loss.

 

     

    9 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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 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.

 

Assets held for sale

Non-current assets are classified
as assets held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing
use. To qualify as assets held for sale, the sale must be highly probable, assets must be available for immediate sale in their present
condition and management must be committed to a plan to sell assets that should be expected to close within one year from the date of
classification. Assets held for sale are recognized at the lower of their carrying amount and fair value less costs to sell and are not
depreciated.

 

     

    10 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Income taxes

Current and deferred taxes are recognized
in the consolidated statements of earnings, 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 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 years.

 

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 years 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 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 consolidated statements of loss and comprehensive loss.

 

Property and equipment are depreciated
on a straight-line basis over their estimated useful lives of 3 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.

 

     

    11 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Leases

Effective January 1, 2019, the Company
adopted IFRS 16 Leases which replaces IAS 17, Leases. This standard brings most leases on the statement of financial position for
lessees under a single model, eliminating the distinction between operating and financing leases and adding a requirement for the recognition
of a right-of-use asset and a lease liability at the commencement of all leases except short-term leases and leases of low value assets
for which the election has been applied.

 

In accordance with the transitional
provisions, the Company adopted the standard applying the modified retrospective approach, with right-of-use assets being measured at
the amount equal to the lease liability, adjusted for any amount of applicable prepaid or accrued lease payments recognized on the consolidated
statement of financial position as at December 31, 2018.

 

For contracts entered into on or
after January 1, 2019, 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.

 

For contracts entered into prior to January 1, 2019, the
Company had determined whether the arrangement contained a lease based on the following tests:

 

		-	assess whether fulfilment of the agreement was dependent on the use of specific assets; and

		-	assess whether the arrangement conveyed the right to use the asset if one of the following was met:

		-	the purchaser had the ability or right to operate the asset while obtaining or
controlling more than an insignificant amount of the output;

		-	the purchaser had the ability or right to control physical access to the asset
while obtaining or controlling more than an insignificant amount of the output;

		-	circumstances indicated that it was unlikely that third parties would take more
than an insignificant amount of the output, and the price per unit was not fixed per unit of output and not equal to the current market
price per unit of output.

 

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.

 

     

    12 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Leases (continued)

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.

 

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.

 

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.

 

     

    13 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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
	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 12). 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.

 

     

    14 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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 it’s 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.

 

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.

 

     

    15 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

2        SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

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

 

     

    16 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

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 year.

 

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 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.

 

     

    17 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

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

 

The company has 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 is recorded in the consolidated statements of loss and comprehensive loss as the discount is unwound towards
the reporting date. Upon remeasurement, any gain or loss on remeasurement is also recorded in the 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
is recorded as shares to be issued in the consolidated statements of changes in equity.

 

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.

 

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.

 

     

    18 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		2	SIGNIFICANT ACCOUNTING
                                            POLICIES (CONTINUED)

  

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.

 

Accounting standards implemented
in 2020 – Definition of a business (amendments to IFRS 3)

 

In October 2018, the IASB issued
amendments to IFRS 3, Business Combinations, incorporated into Part I of the CPA Canada Handbook – Accounting by the Accounting
Standards Board in December 2018. The amendments clarify the definition of a business, permitting a simplified assessment to determine
whether a transaction should be accounted for as a business combination or as an asset acquisition.

 

The amendments were effective for
transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January
1, 2020 with earlier application permitted. Effective January 1, 2019, the Company adopted the amendments and assessed various asset purchase
transactions entered into during the year to determine whether a transaction should be accounted for as a business combination or as an
asset acquisition.

 

Based on the clarification related
to the definition of a business, the Company determined the acquisition of WIN Gaming in April 2019 meets the criteria to be classified
as an asset acquisition.

 

     

    19 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

 

The preparation of the consolidated
financial statements requires management to make estimates and judgments in applying the Company’s accounting policies that affect
the reported amounts and disclosures made in the consolidated financial statements and accompanying notes.

 

Within the context of these consolidated
financial statements, a judgment is a decision made by management in respect of the application of an accounting policy, a recognized
or unrecognized financial statement amount and/or note disclosure, following an analysis of relevant information that may include estimates
and assumptions. Estimates and assumptions are used mainly in determining the measurement of balances recognized or disclosed in the consolidated
financial statements and are based on a set of underlying data that may include management’s historical experience, knowledge of
current events and conditions and other factors that are believed to be reasonable under the circumstances.

 

Management continually evaluates the estimates
and judgments it uses.

 

The following are the accounting
policies subject to judgments and key sources of estimation uncertainty that the Company believes could have the most significant impact
on the amounts recognized in the consolidated financial statements. The Company’s significant accounting policies are disclosed
in Note 2.

 

Impairment of non-financial assets
(property and equipment, right-of-use assets, intangible assets and goodwill)

 

		-	Judgments made in relation to accounting policies applied

 

Management is required to use judgment
in determining the grouping of assets to identify their CGUs for the purposes of testing property and equipment, intangible assets and
right-of-use assets for impairment. Judgment is further required to determine appropriate groupings of CGUs for the level at which goodwill
and intangible assets are tested for impairment.

 

The Company has determined that B2B
Online Gaming and Online Media are two separate CGUs for the purposes of property and equipment, intangible assets and right-of-use asset
impairment testing. For the purpose of goodwill impairment testing, CGUs are grouped at the lowest level at which goodwill is monitored
for internal management purposes. In addition, judgment is used to determine whether a triggering event has occurred requiring an impairment
test to be completed.

 

		-	Key sources of estimation

 

In determining the recoverable amount
of a CGU or a group of CGUs, various estimates are employed. The Company determines fair value less costs to sell using such estimates
as market rental rates for comparable properties, recoverable operating costs for leases with tenants, non-recoverable operating costs,
discount rates, capitalization rates and terminal capitalization rates. The Company determines value in use by using estimates including
projected future revenues, earnings and capital investment consistent with strategic plans presented to the Board. Discount rates are
consistent with external industry information reflecting the risk associated with the specific cash flows.

 

     

    20 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

 

Impairment of accounts receivable

 

In each stage of the ECL impairment
model, impairment is determined based on the probability of default, loss given default, and expected exposures at default. The application
of the ECL model requires management to apply the following significant judgments, assumptions, and estimations:

 

		-	movement of impairment measurement between the three stages of the ECL model,
based on the assessment of the increase in credit risks on accounts receivables. The assessment of changes in credit risks includes qualitative
and quantitative factors of the accounts, such as historical credit loss experience and external credit scores;
	 	 	 

		-	thresholds for significant increase in credit risks based on changes in probability
of default over the expected life of the instrument relative to initial recognition; and
	 	 	 

		-	forecasts of future economic conditions.
	 	 	 

Leases

 

		-	Judgments made in relation to accounting policies applied

 

Management exercises judgment in
determining the appropriate lease term on a lease-by-lease basis. Management considers all facts and circumstances that create an economic
incentive to exercise a renewal option or to not exercise a termination option including investments in major leaseholds and past business
practice and the length of time remaining before the option is exercisable. The periods covered by renewal options are only included in
the lease term if management is reasonably certain to renew. Management considers reasonably certain to be a high threshold. Changes in
the economic environment or changes in the office rental industry may impact management’s assessment of lease term, and any changes
in management’s estimate of lease terms may have a material impact on the Company’s consolidated statements of financial position
and consolidated statements of loss and comprehensive loss.

 

		-	Key sources of estimation

 

In determining the carrying amount
of right-of-use assets and lease liabilities, the Company is required to estimate the incremental borrowing rate specific to each leased
asset or portfolio of leased assets if the interest rate implicit in the lease is not readily determined. Management determines the incremental
borrowing rate using a base risk-free interest rate estimated by reference to the bond yield with an adjustment that reflects the Company’s
credit rating, the security, lease term and value of the underlying leased asset, and the economic environment in which the leased asset
operates. The incremental borrowing rates are subject to change due to changes in the business and macroeconomic environment.

 

Warrants and share options

 

		-	Judgments made in relation to accounting policies applied

 

Management exercises judgment in
determining the model used and the inputs therein to evaluate the value of share option grants and issued warrants. Management considers
all facts and circumstances for each grant issuance on an individual basis.

 

		-	Key sources of estimation

 

In determining the fair value of
warrants and share options, the Company is required to estimate the future volatility of the market value of the Company’s shares
by reference to its historical volatility or comparable companies over the previous years, a risk-free interest rate estimated by reference
to the Government of Canada bond yield, and a dividend yield of nil.

 

     

    21 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

 

Contingent consideration

 

		-	Judgments made in relation to accounting policies applied

 

Management exercises judgment in
determining the appropriate fair value of contingent consideration and considers all facts and circumstances relevant to the acquisition’s
future earnings upon which the liability is calculated. Any changes in the economic environment or operational activity of the acquisition
may impact management’s assessment of the liability and may have a material impact on the Company’s consolidated statements
of financial position and consolidated statements of loss and comprehensive loss.

 

		-	Key sources of estimation

 

In determining the fair value of
contingent consideration, the Company is required to estimate the future earnings generated by the acquisition over an agreed period after
the acquisition and apply defined and fixed rules in order to calculate the expected future payment. The Company determines fair value
by using estimates including projected future earnings of the acquisition consistent with strategic plans presented to the Board. Discount
rates are consistent with external industry information reflecting the risk associated with the specific cash flows.

 

     

    22 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		4	LOSS BEFORE INCOME TAXES CLASSIFIED BY NATURE

 

The loss before income taxes is classified as follows:

 

	 	 	 	 	Year Ended December 31,	 
	 	 	Note	 	2020	 	 	2019	 
	Revenue	 	 	 	 	46,421	 	 	 	26,592	 
	Third-party content	 	 	 	 	(26,232	)	 	 	(14,562	)
	 	 	 	 	 	 	 	 	 	 	 
	Gross
                                            Profit
	 	 	 	 	20,189	 	 	 	12,030	 
	 	 	 	 	 	 	 	 	 	 	 
	Salaries
                                            and subcontractors
	 	 	 	 	(9,011	)	 	 	(6,834	)
	Share based payments	 	 	 	 	(2,963	)	 	 	(1,647	)
	 	 	 	 	 	 	 	 	 	 	 
	Total
                                            employee costs
	 	 	 	 	(11,974	)	 	 	(8,481	)
	Depreciation and amortization	 	 	 	 	(2,873	)	 	 	(2,080	)
	IT and hosting	 	 	 	 	(1,372	)	 	 	(1,177	)
	Professional fees	 	 	 	 	(1,481	)	 	 	(825	)
	Corporate costs	 	 	 	 	(749	)	 	 	(488	)
	Sales and marketing	 	 	 	 	(213	)	 	 	(283	)
	Bad debt expense	 	14	 	 	(1,076	)	 	 	(283	)
	Travel and entertainment	 	 	 	 	(176	)	 	 	(455	)
	Transaction and acquisition costs	 	 	 	 	(2,212	)	 	 	(166	)
	Other operational costs	 	 	 	 	(702	)	 	 	(526	)
	 	 	 	 	 	 	 	 	 	 	 
	Selling,
                                            General and Administrative Expenses
	 	 	 	 	(22,828	)	 	 	(14,764	)
	 	 	 	 	 	 	 	 	 	 	 
	Gain
                                            on remeasurement of consideration receivable
	 	
5
	 	 	19	 	 	 	-	 
	Loss on remeasurement of deferred and contingent consideration	 	11	 	 	(9,276	)	 	 	(5,347	)
	 	 	 	 	 	 	 	 	 	 	 
	Operating
                                            Loss
	 	 	 	 	(11,896	)	 	 	(8,081	)
	 	 	 	 	 	 	 	 	 	 	 
	Interest income	 	 	 	 	6	 	 	 	4	 
	Accretion on liabilities	 	11	 	 	(1,037	)	 	 	(1,717	)
	Interest and financing fees	 	 	 	 	(353	)	 	 	(41	)
	 	 	 	 	 	 	 	 	 	 	 
	Net
                                            Interest Expense and Other Financing Charges
	 	 	 	 	(1,384	)	 	 	(1,754	)
	 	 	 	 	 	 	 	 	 	 	 
	Loss
                                            Before Income Taxes
	 	 	 	 	(13,280	)	 	 	(9,835	)

 

     

    23 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

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. The associated assets and liabilities within the disposal group
are presented as held for sale and the associated net loss is presented as discontinued operations in the consolidated financial statements.

 

On April 30, 2020, the Company discontinued
its GIVEMEBET operation and as of December 31, 2020, this subsidiary is considered dormant with no remaining assets and liabilities. The
associated net loss for this subsidiary continues to be presented as discontinued operations in the 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 December 31, 2020, consideration receivable has been recognized at a present value of EUR 192 of which EUR 148 is due
within twelve months of the reporting date. Consideration is settled in cash at three-month intervals from the date of sale.

 

Prior to disposal, during the year
ended December 31, 2020, after comparing the carrying value of the assets and liabilities designated as held for sale to their recoverable
value, no impairment was recognized. As of December 31, 2020, the Company has not identified any assets or liabilities as held for sale.

 

Consolidated statements of financial
position

 

	 	 	As at
 December 31
	 	 	As at
 December 31 
	 
	 	 	2020	 	 	2019	 
	Trade and other receivables	 	 	-	 	 	 	469	 
	Prepaid expenses and other assets	 	 	-	 	 	 	20	 
	Property and equipment	 	 	-	 	 	 	44	 
	Right-of-use assets	 	 	-	 	 	 	522	 
	Other assets	 	 	-	 	 	 	87	 
	Assets held for sale	 	 	-	 	 	 	1,142	 
	 	 	 	 	 	 	 	 	 
	Trade
payables and other liabilities
	 	 	-	 	 	 	923	 
	Deferred revenue	 	 	-	 	 	 	21	 
	Lease liabilities	 	 	-	 	 	 	555	 
	Liabilities held for sale	 	 	-	 	 	 	1,499	 

 

Consolidated statements of cash flows

 

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Net cash used in operating activities	 	 	(584	)	 	 	(1,176	)
	Net cash used in investing activities	 	 	-	 	 	 	(245	)
	Net cash used in financing activities	 	 	(74	)	 	 	(268	)
	Effect of currency translation	 	 	170	 	 	 	84	 
	Net cash flows for the year	 	 	(488	)	 	 	(1,605	)

 

     

    24 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

		5	DISCONTINUED OPERATIONS (CONTINUED)

 

Consolidated statements of loss and comprehensive loss

 

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Revenue	 	 	559	 	 	 	2,972	 
	Cost of revenue	 	 	(120	)	 	 	(1,300	)
	Gross Profit	 	 	439	 	 	 	1,672	 
	Selling, general and administrative expenses	 	 	(624	)	 	 	(2,881	)
	Impairment of goodwill and intangible assets	 	 	-	 	 	 	(201	)
	Operating Loss	 	 	(185	)	 	 	(1,410	)
	Net interest expense and other financing charges	 	 	(41	)	 	 	(156	)
	Gain on disposal of discontinued operations	 	 	136	 	 	 	-	 
	Loss Before Income Taxes	 	 	(90	)	 	 	(1,566	)
	Income taxes	 	 	-	 	 	 	(5	)
	Net Loss	 	 	(90	)	 	 	(1,571	)
	Cumulative translation adjustment	 	 	(95	)	 	 	74	 
	Net Comprehensive Loss	 	 	(185	)	 	 	(1,497	)

 

     

    25 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		5	DISCONTINUED OPERATIONS (CONTINUED)

 

Disposal of discontinued operation

 

	Cash consideration received	 	 	56	 
	Net assets working capital adjustment	 	 	127	 
	Consideration receivable - current	 	 	150	 
	Consideration receivable - non-current	 	 	108	 
	Total net consideration	 	 	441	 
	Net
assets disposed of:	 	 	 	 
	

                                                                           Accounts receivable
	 	 	170	 
	Prepaid expenses and other assets	 	 	107	 
	Cash and cash equivalents	 	 	118	 
	Property and equipment	 	 	34	 
	Right-of-use assets	 	 	431	 
	Trade payables and other liabilities	 	 	(249	)
	Deferred revenue	 	 	(20	)
	Lease liabilities	 	 	(546	)
	Total net assets disposed	 	 	45	 
	Disposal costs	 	 	(75	)
	Cumulative foreign exchange losses realised on disposal	 	 	(185	)
	Gain on disposal of discontinued operation	 	 	136	 

 

In the year ended December 31, 2020, remeasurement of the
present value of the consideration receivable resulted in a gain on remeasurement of consideration receivable of EUR 19 (year ended December
31, 2019: EUR nil).

 

During the year ended December 31, 2020, proceeds from sale
of discontinued operations amounted to EUR 259 (year ended December 31, 2019: EUR nil).

 

     

    26 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		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, 2019	 	 	Balance	 	 	 	 	 	 	50,805,049	 	 	 	32,892	 
	March 14, 2019	 	 	Conversion of special warrants	 	 	8	 	 	 	27,058,802	 	 	 	6,076	 
	September 23, 2019	 	 	Shares issued as settlement of deferred
    consideration	 	 	11	 	 	 	2,000,000	 	 	 	1,236	 
	December 31, 2019	 	 	Balance	 	 	 	 	 	 	79,863,851	 	 	 	40,204	 
	January
1, 2020
	 	 	Balance
	 	 	 	 	 	 	79,863,851	 	 	 	40,204	 
	June 2, 2020	 	 	Issuance of share capital upon exercise of DSUs	 	 	9	 	 	 	500,000	 	 	 	219	 
	October
                                            15, 2020 to
 December
                                            18, 2020
	 	 	 
Exercise
                                            of warrants
	 	 	8	 	 	 	19,457,928	 	 	 	10,708	 
	October
                                            16, 2020 to
 November
                                            23, 2020
	 	 	 
Exercise
                                            of special warrants - broker compensation options
	 	 	8	 	 	 	1,601,784	 	 	 	1,060	 
	November 18, 2020	 	 	Shares issued on completion of Public Offering	 	 	7	 	 	 	29,572,250	 	 	 	10,086	 
	December 22, 2020	 	 	Issuance of share capital upon exercise
    of FSOs	 	 	9	 	 	 	116,667	 	 	 	27	 
	December 31 2020	 	 	Balance	 	 	 	 	 	 	131,112,480	 	 	 	62,304	 

 

The Company’s common shares have no par value.

 

     

    27 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		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 co- pursuant to which the underwriters have agreed to
purchase 17,860,000 units (the "Units") from the treasury of the Company, at a price of $0.70 CAD 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 25,715,000 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, for market stabilization purposes and to cover over-allotments, if any.
The underwriters exercised the Over-Allotment Option in full and agreed to purchase 29,572,250 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 and the net proceeds
shall be used for growth initiatives, working capital and general corporate purposes.

 

Each Unit consists of one Common
Share (each a "Common Share") of the Company and one half of one warrant (each whole warrant, a "Public Offering Warrant")
of the Company. Each Public Offering Warrant will entitle the holder thereof to purchase one Common Share at a price equal to CAD 1.00
for a period of 36 months following the closing of the Offering (Note 8). The Warrants include an acceleration provision, exercisable
at the Company's option, if the Company's daily volume weighted average share price is greater than CAD 1.50 for at least ten consecutive
trading days (Note 22).

 

In addition to the Units, the Company
granted 1,774,335 broker warrants (“Broker Warrants”), each convertible to one Common Share and half of one Public Offering
Warrant at a price equal to CAD 0.70 (Note 8).

 

For the year ended December 31, 2020,
share issuance costs of EUR 1,370 and warrant issuance costs of EUR 245 have been recognized in the consolidated statements of changes
in equity of which EUR 399 relates to non-cash issuance of Broker Warrants, resulting in a net increase in share capital of EUR 10,086,
a net increase in warrants of EUR 1,642 and a fair value of Broker Warrants of EUR 399.

 

     

    28 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		8	WARRANTS

 

	The following are continuities of the Company’s warrants:	 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Special	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	warrants -	 	 	Special	 	 	 	 
	 	 	 	 	 	 	 	 	Warrants	 	 	 	 	 	broker	 	 	warrants -	 	 	 	 
	 	 	 	 	 	 	 	 	issued upon	 	 	Special	 	 	compensation	 	 	compensation	 	 	Broker	 
	Number
    Of Units	 	 	 	 	Warrants	 	 	Public
    Offering	 	 	warrants	 	 	options	 	 	options	 	 	warrants	 
	January
                                            1, 2019
 
	 	 	Balance	 	 	756,250	 	 	 	-	 	 	 	27,058,802	 	 	 	1,601,784	 	 	 	-	 	 	 	-	 
	 	 	 	Deemed exercise of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	March 14, 2019 	 	 	- special warrants to common share and Warrants	 	 	27,058,802	 	 	 	-	 	 	 	(27,058,802	)	 	 	-	 	 	 	-	 	 	 	-	 
	March 14, 2019	 	 	- special warrants - broker compensation options	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(1,601,784	)	 	 	1,601,784	 	 	 	-	 
	April 11, 2019	 	 	 Expiry
    of warrants 	 	 	(756,250	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	December
    31, 2019 	 	 	Balance	 	 	27,058,802 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,601,784	 	 	 	-	 
	January
1, 2020
	 	 	Balance	 	 	27,058,802	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,601,784	 	 	 	-	 
	 	 	 	Exercise of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	October
                                            15, 2020 to
 December
                                            18, 2020
	 	 	- warrants	 	 	(19,456,928	)	 	 	(1,000	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	October
                                            16, 2020 to
 November
                                            23, 2020
	 	 	- special warrants - compensation options	 	 	1,601,784	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(1,601,784	)	 	 	-	 
	November 30, 2020 	 	 	Expiry of warrants	 	 	(9,203,658	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	November 18, 2020	 	 	Issue of warrants upon Public Offering	 	 	-	 	 	 	14,786,125	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,774,335	 
	December
    31, 2020	 	 	Balance	 	 	-	 	 	 	14,785,125	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,774,335	 

 

Each unit consists of the following characteristics:

 

	 	 	 	Special	 	 	 	 	 	 	 
	 	 	 	warrants -	 	 	Special	 	 	 	 
	 	 	 	Warrants	 	 	Warrants	 	 	 	 	 	broker	 	 	warrants -	 	 	 	 
	 	 	 	issued	 	 	issued upon	 	 	Special	 	 	compensation	 	 	compensation	 	 	Broker	 
	 	 	 	March
    14, 2019	 	 	Public
    Offering	 	 	warrants	 	 	options	 	 	options	 	 	warrants	 
	Number
    of shares	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	1	 
	Number
    of Warrants	 	 	 	-	 	 	 	-	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	0.5	 
	Exercise
    price of unit (CAD)	 	 	 	0.76	 	 	 	1.00	 	 	 	0.76	 	 	 	0.76	 	 	 	0.51	 	 	 	0.70	 

 

     

    29 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		8	WARRANTS (CONTINUED)

 

Warrants issued March 14, 2019

 

On March 14, 2019, the special warrants
were converted to warrants. This resulted in an issuance of 27,058,802 shares, an increase in share capital of EUR 6,076 (Note 6) and
an increase in the fair value of warrants of EUR 1,565. The assumptions used to measure the fair value of the new warrants under the Black-Scholes
valuation model were as follows:

 

	Expected dividend yield (%)	 	 	0.0	 
	Expected share price volatility (%)	 	 	57.9	 
	Risk-free interest rate (%)	 	 	2.5	 
	Expected life of warrants (years)	 	 	2.0	 
	Underlying share price (CAD)	 	 	0.61	 

 

During the period of October 15,
2020 to November 30, 2020 19,456,928 warrants were exercised resulting in issuance of 19,456,928 shares and cash receipt upon exercise
in the amount of EUR 9,540.

 

9,203,658 outstanding warrants expired
on November 30, 2020 resulting in a reduction in warrants and corresponding increase in contributed surplus of EUR 526.

 

Exercise of special warrants –
compensation options

 

Between October 16, 2020 and November
23, 2020, all 1,601,784 special warrants - compensation options were converted to 1,601,784 warrants and resulted in an issuance of 1,601,784
shares and cash receipt upon exercise in the amount of EUR 529. An increase in share capital of EUR 1,060, an increase in the fair value
of warrants of EUR 129 and a decrease in special warrants – compensation options of EUR 660 was recognized in the consolidated statements
of changes in equity. The warrants were issued with an exercise price of CAD 0.76 and were convertible to one common share per warrant
expiring November 30, 2020 in line with the warrants issued on March 14, 2019. The assumptions used to measure the fair value of the new
warrants under the Black-Scholes valuation model were as follows:

 

	Expected dividend yield (%)	 	 	0.0	 
	Expected share price volatility (%)	 	 	103.7 - 105.7	 
	Risk-free interest rate (%)	 	 	0.08 - 0.10	 
	Expected life of warrants (years)	 	 	0.0 - 0.1	 
	Underlying share price (CAD)	 	 	0.73 - 0.81	 

 

     

    30 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		8	WARRANTS (CONTINUED)

 

Warrants issued upon completion of
Public Offering

 

Upon completion of the Public Offering
on November 18, 2020 (Note 7) 14,786,125 warrants (“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)	 	 	0.80	 

 

The Public Offering Warrants were
issued with an exercise price of CAD 1.00 and were convertible to one common share per Public Offering Warrant expiring November 18, 2023.
On December 18, 2020, 1,000 Public Offering Warrants were converted resulting in issuance of 1,000 shares and cash receipt of EUR 1. An
increase in share capital of EUR 1 and decrease in fair value of warrants of EUR 1 was recognized in the consolidated statements of changes
in equity.

 

The Public Offering Warrant indenture
includes an acceleration provision, exercisable at the Company's option, if the Company's daily volume weighted average common share price
is greater than CAD 1.50 for at least ten consecutive trading days. The Company may 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 the notice of warrant acceleration (Note 22).

 

Broker Warrants issued upon completion
of Public Offering

 

Upon completion of the Public Offering
on November 18, 2020 (Note 7), 1,774,335 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 0.70 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 new 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)	 	 	0.80	 

 

The underlying Public Offering Warrants
are subject to the same acceleration provision and notice of acceleration was given on January 21, 2021 (Note 22). Broker Warrants may
still be converted to common shares until date of expiry.

 

     

    31 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		9	SHARE BASED PAYMENTS

 

The Company maintains an Omnibus
Incentive Equity Plan ("OEIP") for certain employees and consultants. The plan was approved in an annual and special meeting
of shareholders on November 27, 2020. Under the plan, the company may grant options for up to 31,800,000 of its shares. Of this 1,200,000
has been utilized for grant of deferred share units (“DSU”), 2,100,000 for grant of restricted share units (“RSU”)
and 12,284,102 for grant of fixed stock options (“FSO”). At December 31, 2020 16,099,231 units are reserved under the OEIP
after deducting 116,667 of share options exercised in the year ended December 31, 2020 under the OEIP plan.

 

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

 

	 	 	DSU	 	 	RSU	 	 	FSO	 
	 	 	Outstanding 

DSU Units 

(Number of

of shares)	 	 	Outstanding 

RSU Units 

(Number of 

of shares)	 	 	Outstanding 

FSO Options 

(Number 

of shares)	 	 	Weighted 

Average 

Exercise 

Price / Share 

CAD	 
	As at January 1, 2019	 	 	1,450,000	 	 	 	-	 	 	 	6,592,168	 	 	 	1.27	 
	Granted	 	 	2,630,000	 	 	 	-	 	 	 	4,376,000	 	 	 	0.37	 
	Expired	 	 	-	 	 	 	-	 	 	 	(50,000	)	 	 	3.94	 
	Forfeited / Cancelled	 	 	-	 	 	 	-	 	 	 	(3,462,403	)	 	 	1.59	 
	As at December 31, 2019	 	 	4,080,000	 	 	 	-	 	 	 	7,455,765	 	 	 	0.60	 
	Granted	 	 	800,000	 	 	 	2,100,000	 	 	 	8,188,579	 	 	 	0.73	 
	Exercised	 	 	(500,000	)	 	 	-	 	 	 	(116,667	)	 	 	0.23	 
	Expired	 	 	-	 	 	 	-	 	 	 	(7,500	)	 	 	4.49	 
	Forfeited / Cancelled	 	 	(3,180,000	)	 	 	-	 	 	 	(3,236,075	)	 	 	0.79	 
	As at December 31, 2020	 	 	1,200,000	 	 	 	2,100,000	 	 	 	12,284,102	 	 	 	0.64	 

 

The following table summarizes
information about the outstanding share options as at December 31, 2020:

  

	 	 	 	Outstanding	 	 	Exercisable	 
	 	 	 	Options	 	 	Weighted 
Average
    

    Remaining	 	 	Weighted 
Average
    

    Exercise	 	 	Options	 	 	Weighted 
Average
    

    Exercise	 
	Range of exercise prices (CAD)	 	 	(Number 

    of shares)	 	 	Contractual 

    Life (Years)	 	 	Price / Share 
CAD	 	 	(Number 

    of shares)	 	 	Price / Share 
CAD	 
	0.23
    - 0.50	 	 	 	2,690,000	 	 	 	4	 	 	 	0.30	 	 	 	1,209,833	 	 	 	0.35	 
	0.51
    - 0.56	 	 	 	2,250,000	 	 	 	3	 	 	 	0.56	 	 	 	1,666,667	 	 	 	0.56	 
	0.57
    - 0.78	 	 	 	7,328,579	 	 	 	5	 	 	 	0.78	 	 	 	7,328,579	 	 	 	0.78	 
	0.79
    - 3.33	 	 	 	15,523	 	 	 	5	 	 	 	3.33	 	 	 	15,523	 	 	 	3.33	 
	 	 	 	 	12,284,102	 	 	 	4	 	 	 	0.64	 	 	 	10,220,602	 	 	 	0.70	 

 

     

    32 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		9	SHARE BASED PAYMENTS (CONTINUED)

 

The following table summarizes information
about the outstanding share options as at December 31, 2019:

 

	 	 	 	Outstanding	 	 	Exercisable	 
	 	 	 	 	 	 	Weighted	 	 	Weighted	 	 	 	 	 	Weighted	 
	 	 	 	 	 	 	Average	 	 	Average	 	 	 	 	 	Average	 
	 	 	 	Options	 	 	Remaining	 	 	Exercise	 	 	Options	 	 	Exercise	 
	Range of exercise prices	 	 	(Number	 	 	Contractual	 	 	Price / Share	 	 	(Number	 	 	Price / Share	 
	(CAD)	 	 	of shares)	 	 	Life (Years)	 	 	CAD	 	 	of shares)	 	 	CAD	 
	0.23 - 0.50	 	 	 	3,103,575	 	 	 	5	 	 	 	0.29	 	 	 	844,242	 	 	 	0.46	 
	0.51 - 0.56	 	 	 	3,366,667	 	 	 	4	 	 	 	0.56	 	 	 	1,116,667	 	 	 	0.56	 
	0.57 - 4.50	 	 	 	985,523	 	 	 	7	 	 	 	1.72	 	 	 	548,856	 	 	 	1.94	 
	 	 	 	 	7,455,765	 	 	 	5	 	 	 	0.60	 	 	 	2,509,765	 	 	 	0.89	 

 

During the year ended December 31,
2020, the Company granted 8,188,579 share options with a weighted average exercise price of CAD 0.73 per share (year ended December 31,
2019: 4,376,000 share options with a weighted average exercise price of CAD 0.37 per share) and a fair value of EUR 2,234 (year ended
December 31, 2019: EUR 716). The assumptions used to measure the grant date fair value of FSO options under the Black-Scholes valuation
model were as follows:

 

	 	 	2020	 	 	2019	 
	Expected dividend yield (%)	 	 	0.0	 	 	 	0.0	 
	Expected share price volatility (%)	 	 	65.0 - 85.8	 	 	 	55.0 - 61.0	 
	Risk-free interest rate (%)	 	 	0.2 - 0.4	 	 	 	1.4 - 2.5	 
	Expected life of options (years)	 	 	0.9 - 5.0	 	 	 	4.5 - 5.0	 
	Share price (CAD)	 	 	0.30 - 0.82	 	 	 	0.23 - 0.74	 
	Forfeiture rate (%)	 	 	0.0	 	 	 	0.0	 

 

During the year ended December 31,
2020, 116,667 share options were exercised at an exercise price of CAD 0.23 per option resulting in gross proceeds of EUR 18, an increase
in share capital of EUR 27 and decrease in contributed surplus of EUR 9 (year ended December 31, 2019: nil).

 

During the year ended December 31,
2020, a share based payment charge of EUR 2,159 has been recognized in the consolidated statements of loss and comprehensive loss (year
ended December 31, 2019: EUR 1,206) in relation to the fixed stock options. For share options exercised during the period, the weighted
average share price at the date of exercise was CAD 1.42.

 

During the year ended December 31,
2020, the Company modified 100,000 options that were previously granted to certain employees (year ended December 31, 2019: 700,000 to
certain employees and consultants). These modifications resulted in an additional 60,000 options being granted (2019: nil) and an increase
in incremental fair value of CAD 3 (year ended December 31, 2019: nil) which was measured as the difference between the fair value of
the modified option and that of the original option, both estimated as at the date of the modification.

 

     

    33 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

	9	SHARE BASED PAYMENTS (CONTINUED)

 

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 year ended December 31,
2020, 800,000 DSUs (year ended December 31, 2019: 2,630,000 DSUs) were granted with a fair value of CAD 0.82 per unit (year ended December
31, 2019: 2,530,000 at CAD 0.24 per unit and 100,000 DSUs at CAD 0.58 per unit) determined as the share price on the date of grant.

 

During the year ended December 31,
2020 a share based payment charge of EUR 427 has been recognized in the consolidated statements of loss and comprehensive loss (year ended
December 31, 2019: EUR 441) in relation to the deferred share units.

 

During the year ended December 31,
2020, 500,000 DSUs were exercised in exchange for 500,000 common shares of the Company resulting in an increase in share capital of EUR
219 and corresponding decrease in contributed surplus of EUR 219 (year ended December 31, 2019: nil). For deferred share units exercised
during the period, the weighted average share price at the date of exercise was CAD 0.39.

 

Restricted Share Units

 

During the year ended December 31,
2020, 900,000 RSUs (year ended December 31, 2019: nil) were granted with a fair value of CAD 0.75-0.82 per unit of which 450,000 vested
immediately and 450,000 vest in future periods. An additional 1,200,000 RSUs were granted with a fair value of CAD 0.82 per unit with
vesting conditions based on success in meeting future-period performance targets.

 

During the year ended December 31,
2020 a share based payment charge of EUR 377 has been recognized in the consolidated statements of loss and comprehensive loss (year ended
December 31, 2019: EUR nil) in relation to the restricted share units. Fair value was determined as the share price on the date of grant.
Exercises of grants can only be settled in shares.

 

     

    34 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

	10	GOODWILL

 

The following is a continuity of the Company’s goodwill:

 

	As at December 31, 2018	 	 	20,400	 
	Working capital adjustment	 	 	(462	)
	As at December 31, 2020 and December 31, 2019	 	 	19,938	 

 

The carrying amount of goodwill
is attributed to the B2B Online Gaming CGU. The Company completed its annual impairment tests for goodwill as at December 31, 2020 and
concluded that there was no impairment.

 

Key Assumptions

 

The recoverable amount of the Company’s
B2B Online Gaming CGU was determined based on a value in use calculation which uses cash flow projections based on financial budgets approved
by the Board and covering a five-year period and an after-tax discount rate of 16.0% (pre-tax rate 20.5%) per annum. The cash flows beyond
the five-year period have been extrapolated using a steady 3.0% per annum growth rate.

 

The cash flow projections used in
estimating the recoverable amounts are generally consistent with results achieved historically adjusted for anticipated growth. The Company
believes that any reasonably possible change in key assumptions on which the recoverable amounts were based would not cause the aggregate
carrying amount to exceed the aggregate recoverable amount of the CGU.

 

     

    35 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

	11	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 relates to two earnout
payments due, comprised of both cash and shares to be issued.

 

	The following is a continuity of the Company’s deferred and contingent consideration:	 	 	 
	 	 	 	 
	As at January 1, 2019	 	 	19,263	 
	Shares issued as settlement of deferred consideration	 	 	(1,236	)
	Cash paid on settlement of deferred consideration	 	 	(639	)
	Accretion expense	 	 	1,662	 
	Loss on remeasurement of deferred and contingent consideration	 	 	5,347	 
	Working capital adjustment	 	 	(462	)
	Other due from vendor	 	 	(356	)
	Effect of movements in exchange rates	 	 	153	 
	As at December 31, 2019	 	 	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	 

 

Deferred and contingent consideration
is disclosed on the consolidated statement of financial position as follows:

 

	 	 	As at	 	 	As at	 
	 	 	December 31,	 	 	December 31,	 
	 	 	2020       	 	 	2019	 
	Current
    liabilities	 	 	11,521	 	 	 	9,482	 
	Non-current
    liabilities	 	 	- 	 	 	 	14,250	 
	Deferred
    and Contingent Consideration	 	 	11,521	 	 	 	23,732	 

 

During year ended December 31, 2019,
the fair value of the contingent consideration was determined using an options pricing model with the following assumptions: stock price
of EUR 3,644 – EUR 5,611; strike price of EUR 2,000 – EUR 3,000, expected life of 0.5 years, risk free rate of 0.78% and volatility
of 50.0%. Some of the key estimates involved were budgeted EBITDA for fiscal 2020 and discount rate of 16.73%, which reflected the market
rate of return.

 

     

    36 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		11	DEFERRED AND CONTINGENT CONSIDERATION (CONTINUED)

 

On May 13, 2020, the Company entered
into an amending agreement with K.A.V.O. Holdings Limited, as vendor (the "Oryx Vendor"), and Matevž Mazij, whereby the
earn-out payment otherwise due to the Oryx Vendor on June 30, 2020 was extended to September 30, 2020 and the first earnout payment’s
range was agreed to be between EUR 10,020 and EUR 11,500. This resulted in a loss on remeasurement of deferred and contingent consideration
of EUR 415.

 

On September 29, 2020, the Company
entered into a further amending agreement with the Oryx Vendor, and Matevž Mazij, pursuant to which, the earnout payment otherwise
due to the Oryx Vendor on September 30, 2020 was further extended to January 31, 2021 and the first earnout payment was confirmed as EUR
10,548. In addition, it was agreed that EUR 1,500 would be payable to the Oryx Vendor in relation to successful collection of certain
trade receivables. This resulted in a loss on remeasurement of deferred and contingent consideration of EUR 2,028. It was also agreed
that interest would be payable at a rate of 10% per annum of the principal amount of the first earnout payment commencing October 1, 2020.

 

On November 13, 2020, the Company
amended and restated the September 29, 2020 amending agreement. As a part of this amendment, the second earnout payment was agreed to
be EUR 22,000, to be settled with 47,000,000 Common Shares of the Company, pending shareholder approval (the “equity component”).
If, and only if, shareholders do not approve the transactions, or the meeting of shareholders is postponed, the due date for settlement
of the equity component was further extended to December 1, 2021 and was to be settled in cash. A loss on remeasurement of deferred and
contingent consideration of EUR 6,758 was recognized in the consolidated statements of loss and comprehensive loss.

 

Upon shareholder approval of the
transactions on November 27, 2020, EUR 22,000 was transferred from deferred and contingent consideration payable in current liabilities
to shares to be issued in equity.

 

During the year ended December 31,
2020, an interest expense of EUR 266 was included in the consolidated statements of loss and comprehensive loss (2019: EUR nil), of which
EUR 176 was paid during the year. As of December 31, 2020, an interest payable balance of EUR 88 was recorded as a part of trade payables
and other liabilities within the consolidated statements of financial position (2019: EUR nil).

 

All contingent liabilities were settled
in full to the Oryx Vendor on January 18, 2021 (Note 22) upon shareholder approval on November 27, 2020.

 

     

    37 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		12	INTANGIBLE
ASSETS

 

	 	 	 	 	 	Deferred	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Intellectual	 	 	Development	 	 	Customer	 	 	 	 	 	 	 	 	 	 
	 	 	Property	 	 	Costs	 	 	Relationships	 	 	Brands	 	 	Other	 	 	Total	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As
    at December 31, 2018	 	 	8,596	 	 	 	-	 	 	 	4,903	 	 	 	1,357	 	 	 	-	 	 	 	14,856	 
	Additions	 	 	205	 	 	 	1,222	 	 	 	-	 	 	 	-	 	 	 	128	 	 	 	1,555	 
	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	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accumulated
    Amortization	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As
    at December 31, 2018	 	 	31	 	 	 	-	 	 	 	14	 	 	 	4	 	 	 	-	 	 	 	49	 
	Amortization	 	 	1,088	 	 	 	76	 	 	 	490	 	 	 	136	 	 	 	11	 	 	 	1,801	 
	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	 
	Carrying
Amount
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As
    at December 31, 2019	 	 	7,682	 	 	 	1,146	 	 	 	4,399	 	 	 	1,217	 	 	 	117	 	 	 	14,561	 
	As
    at December 31, 2020	 	 	6,678	 	 	 	2,467	 	 	 	3,909	 	 	 	1,081	 	 	 	144	 	 	 	14,279	 

 

		13	CASH AND CASH EQUIVALENTS

 

As at December 31, 2020 and December
31, 2019, cash and cash equivalents comprised 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 December 31, 2020, EUR 608
(December 31, 2019: EUR nil) 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 22). This amount was recorded in cash and cash equivalents.

 

     

    38 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

PRESENTED IN EUROS (THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

	

 

		14	TRADE
AND OTHER RECEIVABLES

 

	The following is an aging of the Company’s trade and other receivables:	 	 	 
	 	 	As at 
 December
                                                                                        31,
	 	 	As at

 December
 31,
	 
	 	 	2020	 	 	2019	 
	Less than one month	 	 	9,563	 	 	 	5,452	 
	Between two and three months	 	 	1,193	 	 	 	253	 
	Greater than three months	 	 	1,296	 	 	 	1,416	 
	 	 	 	12,052	 	 	 	7,121	 
	Provision for expected credit losses	 	 	(1,755	)	 	 	(941	)
	Trade and Other Receivables	 	 	10,297	 	 	 	6,180	 

 

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, 2018	 	 	1,771	 
	Reclassified as assets held for sale	 	 	(442	)
	Bad debt written-off	 	 	(762	)
	Net additional provision for doubtful debts	 	 	283	 
	Effect of movements in exchange rates	 	 	91	 
	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	 

 

	15	TRADE PAYABLES AND OTHER LIABILITIES

 

Trade payables and other liabilities comprises:

 

	 	 	As at	 	 	As at	 
	 	 	December
    31,	 	 	December 31	 
	 	 	2020	 	 	2019	 
	Trade payables	 	 	6,406	 	 	 	5,146	 
	Accrued liabilities	 	 	6,099	 	 	 	2,048	 
	Sales tax payable	 	 	4,356	 	 	 	1,058	 
	Other
    payables	 	 	107	 	 	 	605	 
	Trade
    Payables and Other Liabilities	 	 	16,968	 	 	 	8,857	 

 

     

    39 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

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 Interim Chief Executive Officer (“CEO”),
Chief Financial Officer (“CFO”), Chief Strategy Officer (“CSO”) and Managing Director of Oryx. Three key management
employees are also shareholders in the Company. Transactions and balances between the Company and its key management personnel are as
follows:

 

		·	Revenues for the year ended December 31, 2020 to a shareholder of the Company totalled
EUR 23 (year ended December 31, 2019: EUR 33)

		·	Total compensation for salaries, director fees, share-based payments and short-term
employee benefits of key management personnel of the Company for the year ended December 31, 2020 totalled EUR 4,559 (year ended December
31, 2019: EUR 2,230)

		·	Loss on remeasurement of deferred and contingent consideration payable to the
Managing Director of Oryx for the year ended December 31, 2020 totalled EUR 9,276 (year ended December 31, 2019: EUR 5,347)

		·	Interest expense on deferred and contingent consideration payable to the Managing
Director of Oryx for the year ended December 31, 2020 totalled EUR 266 (year ended December 31, 2019: nil)

		·	During the year ended December 31, 2020, a total of EUR 560 in payments were made
to the Managing Director of Oryx for deferred consideration (year ended December 31, 2019: EUR 639)

		·	During the year ended December 31, 2020, a total of EUR 176 in payments were made
to the Managing Director of Oryx for interest on deferred and contingent consideration payable (year ended December 31, 2019: nil)

		·	As at December 31, 2020, EUR 4 of trade and other receivables was receivable from
the Managing Director of Oryx and other shareholders (December 31, 2019: EUR nil)

		·	As at December 31, 2020, EUR nil of prepaid expenses and other assets was receivable
from a shareholder of the Company (December 31, 2019: EUR 98)

		·	As at December 31, 2020, EUR 166 of trade payables and other liabilities was due
to the CEO, CFO, the Managing Director of Oryx and member of Board (December 31, 2019: EUR 278)

		·	As at December 31, 2020, EUR 11,521 of deferred and contingent consideration (Note
11) was payable to the Managing Director of Oryx (December 31, 2019: EUR 23,732)

		·	As at December 31, 2020 EUR 22,000 of shares to be issued to the Managing Director
of Oryx was recognized in the consolidated statements of changes in equity (Note 11) (December 31, 2019: EUR nil)

		·	During the year ended December 31, 2020, EUR 246 additional share capital was recognized
in the consolidated statements of changes in equity with a corresponding reduction in contributed surplus for exercise of stock options
by former key management personnel of the Company (Note 6) (year ended December 31, 2019: nil)

 

     

    40 

    

 

	BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019 

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	 
	 	 	December 31,	 	 	December 31,	 
	 	 	2020	 	 	2019	 
	Trade and other receivables	 	 	10,297	 	 	 	6,180	 

 

Financial Liabilities

 

	 	 	Financial liabilities as subsequently measured at amortized cost	 
	 	 	December 31,	 	 	December 31,	 
	 	 	2020	 	 	2019	 
	Trade payables	 	 	6,406	 	 	 	5,146	 
	Accrued liabilities	 	 	6,099	 	 	 	2,048	 
	Other liabilities	 	 	107	 	 	 	605	 
	Lease obligations on right of use assets	 	 	726	 	 	 	859	 
	 	 	 	13,338	 	 	 	8,658	 

 

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

 

     

    41 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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.

 

	 	 	December 31, 2020	 	 	December 31, 2019	 
	 	 	Level 1	 	 	Level 3	 	 	Total	 	 	Level 1	 	 	Level 3	 	 	Total	 
	Financial assets 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fair value through profit and loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents	 	 	26,102	 	 	 	-	 	 	 	26,102	 	 	 	682	 	 	 	-	 	 	 	682	 
	Consideration receivable	 	 	-	 	 	 	192	 	 	 	192	 	 	 	-	 	 	 	-	 	 	 	-	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fair value through profit and loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred and contingent consideration	 	 	11,521	 	 	 	-	 	 	 	11,521	 	 	 	-	 	 	 	23,732	 	 	 	23,732	 

 

Due to the agreed amount of deferred and contingent consideration
payable as at December 31, 2020 (Note 11) there has been a transfer between level 3 and level 1 of the fair value hierarchy during the
periods.

 

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

 

During the year ended December 31,
2020, a loss of EUR 9,276 (year ended December 31, 2019: EUR 5,347), was recognized in the consolidated statements of loss and comprehensive
loss as loss on remeasurement of deferred and contingent consideration (Note 11) for financial instruments designated as FVTPL.

 

The fair value of the contingent
consideration liability is equal to the agreed earn-out payment of fixed value payable in a combination of cash and common shares plus
an additional cash settlement of up to EUR 973 as per the amending agreement with K.A.V.O. Holdings Limited dated September 29, 2020.

 

     

    42 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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 December 31, 2020:

 

	 	 	2021	 	 	2022	 	 	2023	 	 	2024	 	 	Thereafter	 	 	Total	 
	Trade payables and other liabilities	 	 	16,968	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	16,968	 
	Lease obligations on right of use assets	 	 	160	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	788	 
	Deferred and contingent consideration	 	 	11,521	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	11,521	 
	 	 	 	28,649	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	29,277	 

 

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 884 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.

 

     

    43 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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 December 31, 2020:

 

	 	 	 	 	 	Aging (months)	 	 	 	 
	 	 	Note	 	 	<1	 	 	1 - 3	 	 	>3	 	 	Total	 
	Gross accounts receivable	 	 	14	 	 	 	9,563	 	 	 	1,193	 	 	 	1,296	 	 	 	12,052	 
	Expected loss rate	 	 	 	 	 	 	4.51	%	 	 	14.84	%	 	 	88.50	%	 	 	14.56	%
	Expected Loss Provision	 	 	14	 	 	 	431	 	 	 	177	 	 	 	1,147	 	 	 	1,755	 

 

The provision matrix below shows
the expected credit loss rate for each aging category of accounts receivable as at December 31, 2019:

 

	 	 	 	 	 	Aging (months)	 	 	 	 
	 	 	Note	 	 	<1	 	 	1 - 3	 	 	>3	 	 	Total	 
	Gross accounts receivable	 	 	14	 	 	 	5,452	 	 	 	253	 	 	 	1,416	 	 	 	7,121	 
	Expected loss rate	 	 	 	 	 	 	1.69	%	 	 	10.28	%	 	 	58.12	%	 	 	13.21	%
	Expected Loss Provision	 	 	14	 	 	 	92	 	 	 	26	 	 	 	823	 	 	 	941	 

 

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

 

     

    44 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	17	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

 

Concentration risk

 

For the year ended December 31,
2020, one customer (year ended December 31, 2019: three customers) contributed more than 10% each to the Company’s revenues. Aggregate
revenues from this customer totalled EUR 6,342 (year ended December 31, 2019: EUR 10,011).

 

As at December 31, 2020, one customer
(December 31, 2019: two customers) constituted more than 10% each to the Company’s accounts receivable. Balances owed by this customer
totalled EUR 1,247 (December 31, 2019: EUR 1,700). 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:

 

	 	 	Year Ended December 31,	 
	Cash flows arising from movement in:	 	2020	 	 	2019	 
	Trade and other receivables	 	 	(4,117	)	 	 	(2,921	)
	Prepaid expenses and other assets	 	 	70	 	 	 	(168	)
	Deferred revenue	 	 	102	 	 	 	-	 
	Trade payables and other liabilities	 	 	8,111	 	 	 	2,429	 
	Other liabilities - non-current	 	 	147	 	 	 	-	 
	Changes in Non-Cash Working Capital	 	 	4,313	 	 	 	(660	)

 

     

    45 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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:

 

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Malta	 	 	31,416	 	 	 	14,758	 
	Curaçao	 	 	8,772	 	 	 	4,106	 
	Croatia	 	 	1,633	 	 	 	1,070	 
	Germany	 	 	684	 	 	 	3,739	 
	Romania	 	 	569	 	 	 	380	 
	Serbia	 	 	554	 	 	 	486	 
	Other	 	 	2,793	 	 	 	2,053	 
	Revenue	 	 	46,421	 	 	 	26,592	 

 

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 

December 31	 	 	As at

 December 31	 
	 	 	2020	 	 	2019	 
	United States	 	 	34,104	 	 	 	34,367	 
	Other	 	 	1,180	 	 	 	1,176	 
	Non-Current Assets	 	 	35,284	 	 	 	35,543	 

 

     

    46 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	20	INCOME TAXES

 

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

 

	 	 	As at 

December 31,	 	 	As at 

December 31,	 
	 	 	2020	 	 	2019	 
	Income taxes payable	 	 	1,318	 	 	 	778	 
	Deferred income tax liabilities	 	 	1,415	 	 	 	1,539	 

 

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

 

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Current period	 	 	1,194	 	 	 	643	 
	Adjustment in respect of prior periods	 	 	127	 	 	 	10	 
	Current Income Taxes	 	 	1,321	 	 	 	653	 
	Deferred income tax recovery	 	 	(125	)	 	 	(112	)
	Deferred Income Tax Recovery	 	 	(125	)	 	 	(112	)
	Income Taxes	 	 	1,196	 	 	 	541	 

 

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

 

     

    47 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	20	INCOME TAXES (CONTINUED)

 

The effective income tax rates in
the 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:

 

	 	 	Year Ended December 31,	 
	 	 	2020 

%	 	 	2019

%	 
	Canadian statutory tax rate	 	 	26.5	 	 	 	26.5	 
	Effect of tax rate in foreign jurisdictions	 	 	1.8	 	 	 	1.5	 
	Impact of foreign currency translation	 	 	(3.1	)	 	 	1.1	 
	Non-deductible and non-taxable items	 	 	(5.6	)	 	 	(8.3	)
	Remeasurement of contingent and deferred consideration	 	 	(18.4	)	 	 	(14.2	)
	Accretion expense of contingent consideration	 	 	(2.1	)	 	 	(4.5	)
	Share issue costs and financing costs	 	 	3.1	 	 	 	-	 
	Capital losses from sale of discontinued operation	 	 	26.1	 	 	 	-	 
	Change in tax benefits not recognized	 	 	(35.3	)	 	 	(5.1	)
	Adjustments in respect of prior periods	 	 	0.8	 	 	 	(2.2	)
	Adjustment of prior year tax payable	 	 	1.8	 	 	 	-	 
	Other	 	 	(4.6	)	 	 	(0.3	)
	Effective Income Tax Rate Applicable to Loss Before Income Taxes	 	 	(9.0	)	 	 	(5.5	)

 

Deferred income tax liabilities recognized
on the consolidated statements of financial position were attributable solely to acquired intangible assets (Note 12).

 

Deferred taxes are provided as a
result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and
liabilities. Deferred tax assets have not been recognized in respect of the following deductible temporary differences:

  

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Income tax losses - Canada	 	 	22,609	 	 	 	21,055	 
	Income tax losses - United Kingdom	 	 	1,743	 	 	 	9,958	 
	Deductible temporary differences	 	 	4,901	 	 	 	2,564	 
	Total unrecognized deductible temporary difference	 	 	29,253	 	 	 	33,577	 

 

     

    48 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	20	INCOME TAXES (CONTINUED)

 

Unrecognized
deductible temporary differences have been summarized between discontinued and continuing operations as follows:

 

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Discontinued Operations	 	 	 	 	 	 	 	 
	 Income tax losses - Canada	 	 	14,087	 	 	 	15,113	 
	Income tax losses - United Kingdom	 	 	720	 	 	 	9,955	 
	Deductible temporary differences	 	 	764	 	 	 	699	 
	Total unrecognized deductible temporary difference	 	 	15,571	 	 	 	25,767	 

 

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Continuing Operations	 	 	 	 	 	 	 	 
	 Income tax losses - Canada	 	 	8,522	 	 	 	5,942	 
	Income tax losses - United Kingdom	 	 	1,023	 	 	 	3	 
	Deductible temporary differences	 	 	4,137	 	 	 	1,865	 
	Total unrecognized deductible temporary difference	 	 	13,682	 	 	 	7,810	 

 

The portion of the income tax losses related to Canada which
have a limited carry-forward period expire in the years 2026 to 2040 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	 
	 	 	 	8,488	 

 

     

    49 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	20	INCOME TAXES (CONTINUED)

 

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.

 

     

    50 

    

 

BRAGG GAMING GROUP INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

PRESENTED IN EUROS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

	22	SUBSEQUENT EVENTS

 

Private placement

 

On January 13, 2021, the Company
completed a non-brokered private placement offering comprised of 2,479,335 Common Shares at a price of CAD 1.21 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 of December 31, 2020, EUR 608
(CAD 950) was held in trust in respect of the private placement, representing 785,124 in Common Shares to be issued at a price of CAD
1.21 per share.

 

Settlement of deferred and contingent
consideration

 

On January 18, 2021, the Company
satisfied its earn-out obligations to K.A.V.O. Holdings Limited (Note 11) via a combination of cash and Common Shares 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. A total of 47,000,000 Common Shares of the Company were issued to the vendor with a recorded fair-value
as at December 31, 2020 of EUR 22,000. The Common Shares are subject to a hold period expiring May 19, 2021.

 

Subsequent to this transaction Matevž
Mazij became a “control person” of the Company, in accordance with section 1(1) of the Ontario Securities Act, with total
shareholding of 49,000,000 representing over 27% of the outstanding Common Shares of the Company as of the settlement date.

 

	22	SUBSEQUENT EVENTS (CONTINUED)

 

Warrant acceleration

 

On January 21, 2021, the Company
announced that it elected to exercise its right under the terms of a warrant indenture dated November 18, 2020 governing the Public Offering
Warrants (Note 8) of the Company issued on November 18, 2020 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 is accelerated to February 22, 2021.

 

During the period from January 1,
2021 to February 22, 2021 a total of 15,540,822 Public Offering Warrants were exercised for cash receipts of EUR 10,087 and a total of
1,605,474 Broker Warrants were exercised for cash receipts of EUR 730.

 

Graduation to the Toronto Stock Exchange
(“TSX”)

 

On January 27, 2021, the Company
announced that it had graduated to the Toronto Stock Exchange. As of market open at 09:30 am ET on the date of announcement, 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.Exhibit 4.3

 

 

Bragg Gaming Group Inc

 

MANAGEMENT DISCUSSION & ANALYSIS
FOR THE THREE- AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2020

 

    

    

    

 

TABLE OF CONTENTS

 

MANAGEMENT DISCUSSION & ANALYSIS FOR THE THREE-
AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2020

 

TABLE OF CONTENTS

 

	1.	MANAGEMENT DISCUSSION & ANALYSIS	2
	 	 
	2.	CAUTION REGARDING FORWARD-LOOKING STATEMENTS	3
	 	 
	3.	LIMITATIONS OF KEY METRICS AND OTHER DATA	4
	 	 
	4.	OVERVIEW OF FINANCIAL YEAR 2020	6
	 	 
	 	4.1	Executive summary	6
	 	 
	5.	FINANCIAL RESULTS	15
	 	 
	 	5.1	Basis of financial discussion	15
	 	 
	 	5.2	Selected Annual Information	16
	 	 
	 	5.3	Other Financial Information	18
	 	 
	 	5.4	Selected Financial Information	19
	 	 
	 	5.5	Summary of Quarterly Results	21
	 	 
	 	5.6	Liquidity and Capital Resources	21
	 	 
	 	5.7	Cash Flow Summary	24
	 	 
	6	TRANSACTIONS BETWEEN RELATED PARTIES	25
	 	 
	7	DISCLOSURE OF OUTSTANDING SHARE DATA	26
	 	 
	8	CRITICAL ACCOUNTING ESTIMATES	28
	 	 
	9	CHANGES IN ACCOUNTING POLICY	31
	 	 
	10	RISK FACTORS AND UNCERTAINTIES	31
	 	 
	 	Limited Operating History	31
	 	 
	 	Key Personnel	32
	 	 
	 	Additional Financing Requirements 	32
	 	 
	 	Competition	32
	 	 
	 	Management of Growth	32
	 	 
	 	Absence of Profits	33
	 	 
	 	Conflicts of Interest	33
	 	 
	 	COVID-19	34
	 	 
	11	ADDITIONAL INFORMATION	34

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 1

     

    

 

		1.	MANAGEMENT DISCUSSION & ANALYSIS

 

This Management Discussion and Analysis
(“MD&A”) provides a review of the results of operations, financial condition and cash flows for Bragg Gaming Group Inc
on a consolidated basis, for the three months (“Q4 2020”) and year ended December 31, 2020. References to “Bragg”,
the “Company”, the “Group” or the “Corporation” in this MD&A refer to Bragg Gaming Group Inc and
its subsidiaries, unless the context requires otherwise. This document should be read in conjunction with the information presented in
the audited consolidated financial statements for the year ended December 31, 2020 (the “2020 Financial statements”).

 

For reporting purposes, the Corporation
prepared the 2020 Financial statements in European Euros (“EUR”) and, unless otherwise indicated, in conformity with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The
financial information contained in this MD&A was derived from the 2020 Financial statements. Unless otherwise indicated, all references
to a specific “note” refer to the notes to the 2020 Financial statements.

 

This MD&A references non-IFRS financial
measures, including those under the headings “Selected Financial Information” and “Key Metrics” below. The Corporation
believes these non- IFRS financial measures will provide investors with useful supplemental information about the financial performance
of its business, enable comparison of financial results between periods where certain items may vary independent of business performance,
and allow for greater transparency with respect to key metrics used by management in operating its business and making decisions. Although
management believes these financial measures are important in evaluating the Corporation, they are not intended to be considered in isolation
or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. Non- IFRS measures are not
recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. These measures may be different from non-IFRS
financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of certain of these
measures is provided for period-over-period comparison purposes, and investors should be cautioned that the effect of the adjustments
thereto provided herein have an actual effect on the Corporation’s operating results.

 

For purposes of this MD&A, the
term “gaming license” refers collectively to all the different licenses, consents, permits, authorizations, and other regulatory
approvals that are necessary to be obtained in order for the recipient to lawfully conduct (or be associated with) gaming in a particular
jurisdiction.

 

Unless otherwise stated, in preparing
this MD&A the Corporation has considered information available to it up to March 25, 2021, the date the Corporation’s board
of directors (the “Board”) approved this MD&A.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 2

     

    

 

		2.	CAUTION REGARDING FORWARD-LOOKING STATEMENTS

 

This MD&A may constitute forward-looking
information and statements (collectively, “forward- looking statements”) within the meaning of the Canadian securities legislation
and applicable securities laws, including financial and operational expectations and projections. These statements, other than statements
of historical fact, are based on management’s current expectations and are subject to a number of risks, uncertainties, and assumptions,
including market and economic conditions, business prospects or opportunities, future plans and strategies, projections, technological
developments, anticipated events and trends and regulatory changes that affect the Corporation, its subsidiaries and their respective
customers and industries. Although the Corporation and management believe the expectations reflected in such forward-looking statements
are reasonable and are based on reasonable assumptions and estimates as of the date hereof, there can be no assurance that these assumptions
or estimates are accurate or that any of these expectations will prove accurate. Forward-looking statements are inherently subject to
significant business, regulatory, economic and competitive risks, uncertainties and contingencies that could cause actual events to differ
materially from those expressed or implied in such statements. Forward-looking statements are often, but not always, identified by the
use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”,
 “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”,
 “intend”, “could”, “might”, “would”, “should”, “believe”, “objective”,
 “ongoing”, “imply” or the negative of these words or other variations or synonyms of these words or comparable
terminology and similar expressions.

 

By their nature forward-looking statements
are subject to known and unknown risks, uncertainties, and other factors which may cause actual results, events or developments to be
materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors
include, among other things, the Corporation’s stage of development, long-term capital requirements and future ability to fund operations,
future developments in the Corporation’s markets and the markets in which it expects to compete, risks associated with its strategic
alliances and the impact of entering new markets on the Corporation’s operations. Each factor should be considered carefully, and
readers are cautioned not to place undue reliance on such forward-looking statements. See the section, “Risk Factors and Uncertainties”,
below noting that these factors are not intended to represent a complete list of the factors that could affect the Corporation.

 

Shareholders and investors should not
place undue reliance on forward-looking statements as the plans, assumptions, intentions or expectations upon which they are based might
not occur. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. Unless otherwise
indicated by the Corporation, forward-looking statements in this MD&A describe the Corporation’s expectations as of March 25,
2021 and, accordingly, are subject to change after such date. The Corporation does not undertake to update or revise any forward-looking
statements, except in accordance with applicable securities laws.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 3

     

    

 

 

		3.	LIMITATIONS OF KEY METRICS AND OTHER DATA

 

The Corporation’s key metrics
are calculated using internal Corporation data. While these numbers are based on what the Corporation believes to be reasonable judgments
and estimates of customer numbers for the applicable period of measurement, there are certain challenges and limitations in measuring
the usage of its product offerings across its customer base. In addition, the Corporation’s key metrics and related estimates may
differ from estimates published by third parties or from similarly titled metrics of its competitors due to differences in methodology
and access to information.

 

For important information on the Corporation’s
non-IFRS measures, see the information presented in “Key metrics” and “Selected financial information” below.
The Corporation continually seeks to improve its estimates of its active customer base and the level of customer activity, and such estimates
may change due to improvements or changes in the Corporation’s methodology.

 

Bragg Gaming: Overview and Strategy

 

Bragg is an innovative B2B online gaming
solution provider. Leveraging its industry-leading technology, it offers a turnkey solution, including a proprietary omni-channel retail,
online and mobile iGaming platform, as well as advanced casino content aggregator, sportsbook, lottery, marketing, and operational services.
Renowned for its rapid and seamless integration, its content aggregator combines casino, slots, live dealer, lottery, virtual sports and
instant-win game content from top tier gaming content providers, along with proprietary content, and is fully compliant with major regulated
jurisdictions, allowing operators to access over 10,000 world- class games through a single account. Bragg aims to become the leading
online gaming solution provider. It focuses on three key pillars in order to achieve this goal: investment in its proprietary platforms,
diversification of its revenues and expansion into new geographies, and engagement with key strategic partners in the industry. Bragg
has heavily invested in its platform technology since the Company’s inception, introducing new key features and capabilities each
year that distinguishes it from competitors. In addition, Bragg continues to invest in its gaming content, partnering with top-tier names
in the space and consistently supplementing its portfolio of games, all available via a single integration.

 

Bragg has nearly tripled its customer
base in the last two years and continues to win large, notable clients with its popular and exclusive gaming content. Bragg’s content
partners include some of the most reputable companies in the space including Evolution, NetEnt, Golden Hero and Gamomat. Its primary operations
are provided through its wholly owned subsidiaries in Malta, Slovenia, and Cyprus. Bragg is compliant in Malta, Schleswig-Holstein Germany,
Romania, Croatia, Czech Republic, Serbia, Columbia, Sweden, and Denmark and anticipates further new licences into the next year. The Company
is particularly focused on expanding into lucrative geographies such as the United States, the UK and Latin America and has made significant
strides engaging with partners in these areas.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 4

     

    

 

Bragg continues to invest in building
a strong, experienced management team to drive these strategic initiatives. In the third quarter of 2020, Bragg introduced a new Chief
Executive Officer, Adam Arviv and a new Chairman of the Board, Richard Carter. Adam is the founder and a continued significant shareholder
of Bragg Gaming and brings over 30 years of experience in the gaming industry. Richard is an industry veteran and the previous CEO of
SBTech, which he led through their merger with DraftKings.

 

The Company was incorporated by Articles
of Incorporation pursuant to the provisions of the Canada Business Corporations Act on March 17, 2004.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 5

     

    

 

 

		4.	OVERVIEW OF FINANCIAL YEAR 2020

 

		4.1	EXECUTIVE SUMMARY

 

Financial performance in 2020

 

The Group is pleased to report on an
exceptional trading performance for the year ended December 31, 2020. The year was characterized with vast operational activity alongside
a global pandemic, with onboarding of new customers triggering high demand for Bragg’s products and services and supporting its
underlying growth. The Group has continued to deliver against its strategic objectives, achieving accelerated growth while remaining committed
to revenue diversification and geographic expansion.

 

Revenue

 

The Group’s revenue1
for the period of 12 months ended December 31, 2020 increased from the same period in the previous year by 74.6% to EUR 46.4m (2019:
EUR 26.6m) continuing a solid quarterly growth momentum since Q1 2019. The Group’s positive year-on-year revenue growth was derived
from organic growth from its existing customer base, alongside onboarding of new strategic customers in various jurisdictions. The Group’s
revenue growth was mainly derived from the games and content services which accounted for 89% of total revenues as demand for the Group’s
unique games and content and technology proposition continues to grow. The Company’s growth has been underpinned by continued investment
and innovation in its technology and product offering. These investments supported the hard launch of Oryx Hub and the launch of a new
data analytics platform and customer engagement platform earlier this year, demonstrating the potential of the Group to further leverage
its technology to accelerate growth.

 

The management is pleased that it continues
to see positive momentum in game play, unique player numbers and its engagements level. Total wagering generated by our customers in the
period were up by 73.5% from the same period in the previous year to EUR 11.8 billion (2019: EUR 6.8 billion) and the number of unique
players2 using our games and content increased by 113.6% to 5.87m (2019: 2.75m). These strong numbers are a result of significant
improvements to our core content offering including the recent technical developments giving the group a powerful competitive advantage.

 

Gross profit increased compared to the same period in the
previous year by 67.8% to EUR 20.2m (2019: EUR 12.0m) with gross margins decreasing by 1.7 base points to 43.5% (2019: 45.2%). The decline is mainly attributed to a relative
increase in revenues from iGaming and platform fees to games and content services which have higher associated cost of sales.

 

 

	1	Revenue includes group share in Game and content, platform fees and
management and turnkey solutions

	2	Unique players individuals who made a real money bet at least once
during the period

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 6

     

    

 

Selling, general and administrative
expenses increased from the same period in the previous year by 54.6% to EUR 22.8m (2019: EUR 14.8m) amounting to 49.2% of total revenue
(2019: 55.5%) which reflects an improvement in the operational leverage and cost control. Main movements in the year are driven by the
following:

 

	A.	Salaries and subcontractors increased by 31.9% to EUR 9.0m (2019: EUR 6.8m) mainly as the Group's continued investment in expanding
its software development, product and analytics teams during 2020 to support the rapid growth of new customers, growth of existing customers
base and enhancement of its technology offering.

 

Share based payment costs increased
by 79.9% to EUR 3.0m (2019: EUR 1.6m) predominantly due to the new share-based incentive plan award for the Bragg directors, management,
and consultants. During the year ended December 31, 2020, a total of 11.1m (2019: 7.0m) share based units were issued of which a
total of 10.2m were issued as part of the reorganisation of the capital structure in November 2020 supported by Bragg shareholders.
Share based units issued as part of the reorganisation of the capital structure contributed EUR 3.0m (2019: Nil) to share based payment
costs, EUR 0.4m (2019: 1.9m) was due to vesting of other share based units which was offset by EUR 0.4m (2019: EUR 0.3m) due to expiration
of awards.

 

Total employee costs increased by 41.2%
to EUR 12.0m (2019: EUR 8.5m).

 

	B.	IT hosting cost increased by 16.6% to EUR 1.4m (2019: EUR 1.2m) mainly due to increase of traffic and servers cost in line
with the revenue growth.

 

	C.	Professional fees increased by 79.5% to EUR 1.5m (2019: EUR 0.8m) mainly relating to increase of audit, legal and corporate
advisory services, as well as group tax advisory required with regards to restructuring of companies. Many of these costs are generated
due to growth of the company and as part of the reorganisation for the uplisting to the Toronto stock exchange (“TSX”).

 

	D.	Corporate costs increased by EUR 0.3m to EUR 0.8m (2019: 0.5m) as a result of the Group’s increased investment in corporate
marketing and investor relation activities.

 

	E.	Bad debt expense - increased by EUR 0.8m to EUR 1.1m (2019: 0.3m) due to an expectancy of the risk of the ageing and liquidity
of trade receivables alongside a general provision in light of the global pandemic and its effect on the global economy.

 

	F.	Transaction and acquisition costs - amounted to EUR 2.2m (2019: EUR 0.2m) and relates to costs associated with supporting the
financing in November 2020 in the amount of EUR 1.0m (2019: Nil), legal and financial fees relating to various debt and equity raise
processes that took place during the year amounting to EUR 1.2m (2019: Nil)
and other costs in relation to acquisitions of EUR 0.0m (2019: 0.2m).

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 7

     

    

 

	G.	The Group expansion also increased other costs compared with the 2019 financial year.

 

Group profitability continues to improve,
with Adjusted EBITDA (note 5.2) increasing from the same period in the previous year by EUR 4.5m to EUR 5.5m (2019: EUR 1.0m). Adjusted
EBITDA margins significantly increased by 8.0 base points to 11.9% (2019: 3.9%), achieved as a result of reaching higher scale and tight
cost control. A reconciliation between the current year’s reported figures and the prior year’s figures to Adjusted EBITDA
is shown in note 5.2.

 

Total net loss for the period increased
by EUR 2.6m from the same period in the previous year to net loss of 14.6m (2019: net loss EUR 12.0m). This is as a result of several
factors in particular the increased loss on the remeasurement of deferred and contingent consideration and accretion of liabilities of
EUR 10.3m (2019: EUR 7.1m) to reflect the final earnout agreement reached between KAVO and the Group, an increase of income tax expenses
to EUR 1.2m (2019: EUR 0.5m) as a result of an improved performance and a reduction in the cost of discontinued operations for this year
of net comprehensive loss EUR 0.2m (2019: loss of EUR 1.5m).

 

Cash flow from operating activities
for the twelve months ended December 31, 2020 amounted to EUR 6.7m (2019: EUR Negative 0.1m), the movement was primarily due to improvement
in profitability of the underlying business and in working capital movements. Cash conversion ratio of Adjusted EBITDA to changes in cash
and cash equivalents for the period was 4.6 (2019: Negative 4.6) showing again an improvement in Group operational liquidity.

 

Cash flow used in investing amounted
to EUR 2.8m (2019: EUR 2.3m) mainly attributable to capitalized software development costs. Cash flow from finance activities amounted
in EUR 22.3m (2019: Negative EUR 0.5m) which is predominantly due to the net proceeds from issuance of common shares and warrants in the
November 2020 equity raise of EUR 12.1m (2019: Nil), proceeds from the exercise of warrants and broker compensation options of EUR
10.1m (2019: Nil) and proceeds from shares to be issued in a private placement that completed in January 2021 of EUR 0.6m (2019:
Nil).

 

Cash and cash equivalents as of December 31,
2020 amounted to EUR 26.1m (December 31, 2019: EUR 0.7m).

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 8

     

    

 

Financial performance in Q4 2020

 

Revenue:

 

The Group’s revenue for the three
months ended December 31, 2020 increased from the same period in the previous year by 75.7% to EUR 13.8m (Q4 2019: EUR 7.8m) reflecting
another consecutive quarter of strong growth momentum. The Group’s revenue was up 17.6 % from the prior quarter (Q3 2020: EUR 11.7m)
due to seasonality and growth in its customer base. Total wagering generated by our customers in the three months ended December 2020
were up by 50% from the same period in the previous year to EUR 3.2 billion (Q4 2019: EUR 2.1 billion) and the number of unique players
using our games and content increased by 70% to 2.5m (Q4 2019: 1.5m) demonstrating continuous improvements to our core content offering.

 

Expenses

 

Cost of revenue for the three months
ended December 31, 2020 amounted to EUR 7.7m (Q4 2019: EUR 4.2m) an increase of 83.0% from the same period in the previous year.
This represents 56.2% of Group revenue, an increase of 2.2 base points (Q4 2019: EUR 54.0.%) as a result of a relative increase in games
and content revenues that incur higher underlying third-party costs to iGaming and turnkey projects.

 

Selling, General and Administrative
Expenses increased by EUR 6.4m to EUR 10.4m (Q4 2019: EUR 4.0m) predominantly driven by the increase of share based payments of EUR 3.0m
in November 2020 awarded to directors and management, EUR 1.7m of transaction and acquisition costs relating to financing and increased
salaries and subcontractors expenses of EUR 1.0m compared to the same period in previous year.

 

Loss on remeasurement of deferred and
contingent consideration and accretion on liabilities (both costs relating to Oryx first and second earnout payments) decreased in the
three months ended December 2020 by EUR 3.4m to EUR 0.8m (Q4 2019: EUR 4.2m) as an adjustment for the agreed final payment of the
Oryx earnout was recorded in the third quarter.

 

Profitability

 

Adjusted EBITDA in the three months
ended December 31, 2020 amounted to EUR 1.3m (Q4 2019: EUR 0.7m) with margins decreasing by 0.3 base points to 9.1% (Q4 2019: 9.4%)
largely due to the increase in professional fees and corporate costs in total of EUR 1.2m as part of the uplisting process to the Toronto
stock exchange. Should the increase in professional fees and corporate costs when comparing Q4 2019 to Q4 2020 not take place, on a like-for-like
basis, the Adjusted EBITDA margins would increase to approximately 17.5%.

 

Operating loss amounted to EUR 5.3m (Q4 2019:
EUR 2.9m) an increase of EUR 2.4m from the precious period, however in order to reflect the underlying performance of the Group in the
most effective way, excluding the increase in remeasurement of the deferred and contingent consideration, share based payments and transaction
and acquisition costs the adjusted operating income for the period would be EUR 0.3m (Q4 2019: EUR 0.2m).

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 9

     

    

 

Cash and cash equivalents

 

Cash flows from operating activities
during the three months ended December 31, 2020, amounted to EUR 0.1m (Q4 2019: EUR 1.7m) as a result of increase of operational
expenses during the period.

 

Cash flow from financing activities
during the three months ended December 31, 2020 amounted to EUR 22.4m (Q4 2019: negative EUR 0.2m) attributable to proceeds from
issuance of common shares and warrants, net of costs of EUR 12.1m (Q4 2019: Nil), proceeds from exercise of warrants and broker compensation
options of EUR 10.1m (Q4 2019: Nil) and proceeds from shares to be issued upon private placement of EUR 0.6m (Q4 2019: Nil).

 

Cash flows used in investing activities
during the three months ended December 31, 2020 amounted to EUR 1.0m (Q4 2020: 0.1m) due to partial settlement of deferred and contingent
consideration payable of EUR 0.5m and additions to intangible assets on EUR 0.6m, offset by EUR 0.2m in proceeds from the sale of discontinued
operations.

 

Cash and cash equivalents as of December 31,
2020 amounted to EUR 26.1m (December 31, 2019: EUR 0.7m).

 

November 2020 equity raise

 

In November 2020 the Group successfully
raised total CAD 36.3m through a combination of a bought deal with total gross proceeds of CAD 20.7m and CAD 15.6m through exercise of
warrants and broker compensation options. The proceeds will be used to satisfy the first earn-out payment to KAVO in partial consideration
of cash and equity for a previously completed acquisition of all of the issued and outstanding membership interests of its principal subsidiary,
Oryx Gaming and to improve the working capital position of the group and support its expansion plan.

 

Post year material events:

 

	(1)	Settlement of earn-out obligations

 

On January 18, 2021, the Company
satisfied its earnout obligations to the vendor of Oryx Limited (Kavo) via a combination of cash and Common Shares of the Company. Settlement
comprised of cash of EUR 11.6m and a total of 47m Common Shares of the Company issued to the vendor with a recorded fair-value as at December 31,
2020 of EUR 22m. The Common Shares are subject to a hold period expiring May 19, 2021.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 10

     

    

 

Subsequent to this transaction Matevž
Mazij became a “control person” of the Company with total shareholding of 49m representing over 27% of the outstanding Common
Shares of the Company as of the settlement date.

 

	(2)	Warrant acceleration

 

On January 21, 2021, the Company
announced that it has elected to exercise its right under the terms of a warrant indenture dated November 18, 2020 governing the
Public Offering Warrants of the Company issued on November 18, 2020 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 is accelerated to February 22, 2021.

 

During the period from January 1,
2021 to February 22, 2021 a total of 15,540,822 Public Offering Warrants were exercised for cash raise of EUR 10.1m and a total of
1,605,474 Broker Warrants were exercised for cash raise of EUR 0.7m.

 

	(3)	Graduation to the Toronto Stock Exchange (“TSX”)

 

On January 27, 2021, the Company
announced that it had graduated to the Toronto Stock Exchange. As the market open at 09:30 am ET on the date of announcement, 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.

 

Other:

 

	(1)	Share Capital: As at December 31, 2020, the number of issued and outstanding shares was 131,112,480 (2019: 79,863,851), the number
of outstanding awards from equity incentive plans were 15,584,102 (2019: 11,535,765), and the number of outstanding warrants were 16,559,460
(2019: 28,660,586).

 

	(2)	Employees: Excluding discontinued operations, as at December 31, 2020, the Group employed 241 employees (2019: 208) across Slovenia,
UK and Canada. Approximately 138 are part of the product and technology team, 38 are part of business development, sales and marketing,
37 are part of the platform service and turnkey solutions and 28 in corporate head-office and support services.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 11

     

    

 

Strategic progress

 

Bragg Gaming has a clear growth strategy
to become a leading worldwide online gaming B2B solution provider. This is based on three primary pillars of growth:

 

	1.	Enhance technology and Product offering

 

Oryx Hub is a fully customizable aggregator
platform solution available through a one-time, seamless contract and integration process. It offers operators immediate access to an
extensive library of over 10,000 games from over 100 of the industry’s leading content providers, such as Gamomat, Red Tiger, Evolution,
iSoftBet, NetEnt, Quickfire, PlayNGO, EGT, Gamesys, Pragmatic Play, Kalamba Games, Peter and sons and others. Uniquely, the advanced technical
developments with the Hub allows Oryx to offer promotions, customization and recommendation engines that are unique in the casino content
aggregator space, giving it a powerful competitive advantage.

 

During the second quarter of 2020,
Oryx was awarded with the leading international ISO/IEC 27001 certification, underlining the supplier’s commitment to information
security. The certification will enable ORYX Gaming to continue its global expansion into regulated markets and to provide its extensive
content portfolio to even more operator partners. During second half of 2020, the Group has been certified and approved to provide services
in Switzerland, Bulgaria, Portugal, Latvia, Czech Republic and Spain.

 

The Group launched the new Player Engagement
Platform that consolidates a number of functionalities that work together to increase player engagement and customer lifetime value. This
includes a set of targeted promotions, such as free spins, bonuses, jackpots, leaderboards and tournaments; a multi-channel communication
platform which supports traditional campaign channels such as SMS, email, social media; and a real-time campaign management system which
takes the platform to the next level by allowing operators to engage players onsite in real-time. Since launch in Q2 2020, the Group has
recognized very positive trends in its underlying performance indicators supporting that leaderboard tournaments result in higher player
engagement and increased gameplay.

 

Throughout 2020, the Group launched
the Data Analytics Platform which allows real-time collection and analysis of data from internal as well as third-party systems, enabling
operators to gain a better understanding of its end-users and effectively segment, target and engage them by triggering activities based
on behaviour and preferences. In turn, the Group benefits from increased revenues from its customers through increased operator gaming
revenues.

 

The Group continues to invest in its
human capital including talents in software development, business analytics, products, and compliance to expand into new verticals and
geographies. Capitalized development costs in the year totalled EUR 2.1m (2019: EUR 1.2m) and represented 4.5% of the total revenue (2019:
4.6%).

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 12

     

    

 

	2.	Revenue diversification, Expansion into new Geographies and regulatory changes

 

The Group maintains its existing customer
base with a high level of revenue retention and continues to on-board new clients and diversify its customer base. During 2020, the group
successfully signed agreements with 54 new operators3, including companies such as Skillonnet, Casino Secret, Maxent, Lucky
7 Ventures, 888 and others and is in advanced discussions to secure additional new customers in various licensed jurisdictions in Europe
and Latin America. During Q4 2020, 21 new operator agreements were signed for platform and content services and sales pipeline positively
developed for the following year.

 

As a result, customer concentration
from the top 10 customers4 is 58 % of total revenues for the year, down significantly from 72% of total revenues for the year
ended December 31, 2019. As of December 31, 2020, the Group’s total customer base exceeded 100 customers, an increase
of over 80% from December 31, 2019.

 

Regulatory changes:

 

The Group has exposure to revenues
derived from customers who have predominantly German facing end-users. Germany is to become one of Europe’s largest regulated gaming
markets and licences are anticipated to be issued to online casino operators by July 2021 once the transition period effectively
initiated on October 15, 2020 will be replaced by state licenses. The near-term impact of the changing regulatory landscape in the
German market is likely to create negative revenue headwinds mainly due to the introduction of restrictions on game play and social responsibility
methods. However, our view is that, in the medium and long-term, the introduction of more regulation, similar to other established regulated
markets will over time offset these negative headwinds as operators utilize more traditional marketing channels such as Television and
print media, which in turn helps increase participation and eventually the overall market size. The Group will continue to monitor how
the German market adjusts to the new regulatory framework and, is already closely working with its German facing customers on helping
to mitigate future adverse conditions.

 

	3.	Establishing strategic partnerships

 

The Group is constantly exploring strategic
partnership opportunities in new markets, leveraging the strength of its technology, product offering and the knowledge and experience
of its talented team. During the year, the Group signed various partnership deals for its player account management system (PAM) such
as Stanleybet (Romania), Casino Arena and Senator (Croatia) and the Group also agreed to a deal with the biggest Dutch land-based casino
JHV, all of which attest to the strength of our product and technology offering and the enhance the quality and longevity of our offering. In the
end of 2019, Bragg signed a new partnership deal with New York-based Seneca Gaming Corporation (SGC), representing the Group’s
entry into the US market.

 

 

3 An operator is a licensed entity that
contracts directly or indirectly with the group for B2B gaming services

4 A customer is a licensed entity that
contracts directly with the group for B2B gaming services

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 13

     

    

 

As part of the agreement, the Group
is providing casino services and its player account management system (PAM) to SGC’s three New York Casinos. The agreement is in
partnership with Kambi Group Plc, a provider of premium sports betting services to licensed B2B gaming operators. Throughout the year,
Bragg has dedicated resources to advance its technical, product and regulatory specification work in order to finalise the integration
road map. Bragg is now fully prepared to initiate integration. Entry into the U.S. market has been an initiative for the Group since the
company’s inception, and this series of agreements marks a significant milestone for the Company.

 

On January 26, 2021, the Group
announced the acceleration of its investment into the US and Canadian market with further enhancement of its technology offering, regulatory
and legal and business development as part of the group strategy and to establish long term partnership with local operators in gaming
market share in the most lucrative markets in the world.

 

Outlook and Guidance

 

The Group’s solid financial growth
has continued into the first quarter of 2021 with revenue tracking management expectations for the full year results. With a solid performance
throughout the financial year 2020, management is confident in achieving its objectives for the 2021 year- end. The Group continues to
grow and diversify its global footprint, winning new customers in new jurisdictions and securing recurring revenues for next financial
year. Guidance for 2021 remains unchanged.

 

The global outbreak of COVID-19 (coronavirus),
has had, and continues to have, a significant impact on the global economy. The Corporation derives the majority of its revenue from online
casino gaming, a sector that has largely benefited from the various international “lock-downs” which require people to stay
at home. As a result, such virtual forms of entertainment have prevailed in a similar fashion to the various streaming businesses such
as Netflix. Furthermore, the Corporation has limited exposure to sports betting revenues, which have been impacted by the lack of professional
sports. Management continues to monitor the effects COVID-19 on the Group’s performance and will amend its forecasts as, and if,
it deems necessary.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 14

     

    

 

		5.	FINANCIAL RESULTS

 

		5.1	BASIS OF FINANCIAL DISCUSSION

 

The financial information presented
below has been prepared to examine the results of operations from continuing activities. During the year ended December 31, 2019,
the Company decided to discontinue its online media business unit. As such, the performance of the online media division has been excluded.

 

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.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 15

     

    

 

		5.2	SELECTED ANNUAL INFORMATION

 

The following is selected financial
data of the Company for each of the three most recently completed financial years. In February 2019, the Company changed its fiscal
year-end to December 31, from its previous fiscal year-end of March 31. Consequently, the second comparative period is for the
nine months ended December 31, 2018.

 

The primary non-IFRS financial measure
which the Company uses is Adjusted EBITDA5. When internally analyzing underlying operating performance, management excludes
certain items from EBITDA (earnings before interest, tax, depreciation, and amortization).

 

	 	 	Year Ended	 	 	Year Ended	 	 	Nine Months Ended	 
	 	 	December 31	 	 	December 31	 	 	December 31	 
	EUR 000	 	2020	 	 	2019	 	 	2018	 
	Revenue	 	 	46,421	 	 	 	26,592	 	 	 	767	 
	Net Loss from continuing operations	 	 	(14,476	)	 	 	(10,376	)	 	 	(4,765	)
	EBITDA	 	 	(9,023	)	 	 	(6,001	)	 	 	(4,722	)
	Adjusted EBITDA	 	 	5,546	 	 	 	1,041	 	 	 	(403	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic and diluted loss per share-continuing operations	 	 	(0.17	)	 	 	(0.14	)	 	 	(0.16	)

 

	 	 	 	As at	 	 	 	As at	 	 	 	As at	 
	 	 	 	December 31	 	 	 	December 31	 	 	 	December 31	 
	 	 	 	2020	 	 	 	2019	 	 	 	2018	 
	Total assets	 	 	72,094	 	 	 	43,880	 	 	 	45,268	 
	Total non-current financial liabilities	 	 	593	 	 	 	14,924	 	 	 	17,599	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dividends paid	 	 	nil	 	 	 	nil	 	 	 	nil	 

 

In February 2019, the Company
changed its fiscal year-end to December 31, from its previous fiscal year-end of March 31. Consequently, the second comparative
period is for the nine months ended December 31, 2018.

 

After excluding the discontinued operation
of the online media division, revenues reported for the nine months ended December 31, 2018 consist of revenues from the online B2B
online gaming operation of Oryx Gaming International LLC acquired on December 20, 2018.

 

 

5 Adjusted EBITDA excludes
income or expenses that relate to exceptional items and non-cash share-based charges and includes deductions for lease expenses that are
recognized as part of depreciation and finance charges under IFRS 16.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 16

     

    

 

Non-current financial liabilities predominantly
consisted of deferred and contingent consideration payable of EUR 17.3m as at December 31, 2018, EUR 14.3m as at December 31,
2019 and EUR Nil as at December 31, 2020. All deferred and contingent consideration was settled in full on January 18, 2021.

 

With the exception of EBITDA and Adjusted
EBITDA, the financial data has been prepared to conform with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”). These accounting principles have been applied consistently across
for all three reporting periods.

 

    	 	Bragg Gaming Group Inc
 Management Discussion & Analysis

                                                                                December 31, 2020
	 17

     

    

 

		5.3	OTHER FINANCIAL INFORMATION

 

To supplement its 2020 financial statements
presented in accordance with IFRS, the Corporation considers certain financial measures that are not prepared in accordance with IFRS.
The Corporation uses such non-IFRS financial measures in evaluating its operating results and for financial and operational decision-making
purposes. The Corporation believes that such measures help identify underlying trends in its business that could otherwise be masked by
the effect of the expenses that it excludes in such measures.

 

The Corporation also believes that
such measures provide useful information about its operating results, enhance the overall understanding of its past performance and future
prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making.
However, these measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance
with IFRS. There are a number of limitations related to the use of such non-IFRS measures as opposed to their nearest IFRS equivalents.

 

A reconciliation of operating loss
to EBITDA and Adjusted EBITDA is as follows:

 

	 	 	Year Ended December 31,	 
	EUR 000	 	2020	 	 	2019	 
	Operating loss	 	 	(11,896	)	 	 	(8,081	)
	Depreciation and amortization	 	 	2,873	 	 	 	2,080	 
	 	 	 	 	 	 	 	 	 
	EBITDA	 	 	(9,023	)	 	 	(6,001	)
	Depreciation of right-of-use assets	 	 	(191	)	 	 	(167	)
	Lease interest expense	 	 	(23	)	 	 	(16	)
	Share based payments	 	 	2,963	 	 	 	1,647	 
	Transaction and acquisition costs	 	 	2,212	 	 	 	166	 
	Exceptional costs	 	 	332	 	 	 	65	 
	Loss (gain) on remeasurement of deferred and contingent 
consideration	 	 	9,276	 	 	 	5,347	 
	 	 	 	 	 	 	 	 	 
	Adjusted EBITDA	 	 	5,546	 	 	 	1,041	 

 

Exceptional costs include one-time
costs for the Company, of which EUR 0.3m (2019: 0.1m) related to severance.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 18

     

    

 

		5.4	SELECTED FINANCIAL INFORMATION

 

Selected financial information is as follows:

 

	 	 	Year Ended December 31,	 
	EUR 000	 	2020	 	 	2019	 
	Revenue	 	 	46,421	 	 	 	26,592	 
	Operating loss	 	 	(11,896	)	 	 	(8,081	)
	EBITDA	 	 	(9,023	)	 	 	(6,001	)
	Adjusted EBITDA	 	 	5,546	 	 	 	1,041	 
	 	 	 	 	 	 	 	 	 
	 	 	 	As at	 	 	 	As at	 
	 	 	 	December 31	 	 	 	December 31	 
	 	 	 	2020	 	 	 	2019	 
	Total assets	 	 	72,094	 	 	 	43,880	 
	Total liabilities	 	 	32,197	 	 	 	37,264	 

 

TRADE AND OTHER RECEIVABLES

 

	 	 	As at	 	 	As at	 
	 	 	December 31	 	 	December 31	 
	EUR 000	 	2020	 	 	2019	 
	Less than one month	 	 	9,563	 	 	 	5,452	 
	Between two and three months	 	 	1,193	 	 	 	253	 
	Greater than three months	 	 	1,296	 	 	 	1,416	 
	 	 	 	12,052	 	 	 	7,121	 
	Provision for expected credit losses	 	 	(1,755	)	 	 	(941	)
	Trade and Other Receivables	 	 	10,297	 	 	 	6,180	 

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 19

     

    

 

 

TRADE PAYABLES AND OTHER LIABILITIES

 

	 	 	As at	 	 	As at	 
	 	 	December 31,	 	 	December 31	 
	 	 	2020	 	 	2019	 
	Trade payables	 	 	6,406	 	 	 	5,146	 
	Accrued liabilities	 	 	6,099	 	 	 	2,048	 
	Sales tax payable	 	 	4,356	 	 	 	1,058	 
	Other payables	 	 	107	 	 	 	605	 
	Trade Payables and Other Liabilities	 	 	16,968	 	 	 	8,857	 

 

    	 	Bragg Gaming Group Inc
 Management Discussion & Analysis

                                                                                December 31, 2020
	 20

     

    

 

		5.5	SUMMARY OF QUARTERLY RESULTS

 

The following table presents the selected
financial data for continuing operations for each of the past eight quarters of the Group.

 

Since prior publication of these quarterly
results, the Group has modified Adjusted EBITDA to include an adjustment for right-of-use asset expenditure, i.e., office lease expenditure.
Right-of- use asset expenditure is recorded as a combination of depreciation of right-of-use asset expense and lease interest expense
under IFRS 16 and was introduced on January 1, 2019.

 

	 	 	 	1Q19		 	 	2Q19		 	 	3Q19		 	 	4Q19		 	 	1Q20		 	 	2Q20	 	 	 	3Q20		 	 	4Q20	
	 	 	 	2019	 	 	2020
	EUR 000	 	 	Q1	 	 	 	Q2	 	 	 	Q3	 	 	 	Q4	 	 	 	Q1	 	 	 	Q2	 	 	 	Q3	 	 	 	Q4	 
	Revenue	 	 	6,136	 	 	 	5,875	 	 	 	6,740	 	 	 	7,841	 	 	 	8,784	 	 	 	12,145	 	 	 	11,714	 	 	 	13,778	 
	Operating income (loss)	 	 	(136	)	 	 	(4,973	)	 	 	(77	)	 	 	(2,895	)	 	 	(5,080	)	 	 	762	 	 	 	(2,282	)	 	 	(5,296	)
	EBITDA	 	 	346	 	 	 	(4,427	)	 	 	456	 	 	 	(2,376	)	 	 	(4,296	)	 	 	1,429	 	 	 	(1,533	)	 	 	(4,623	)
	Adjusted EBITDA	 	 	379	 	 	 	(279	)	 	 	204	 	 	 	737	 	 	 	702	 	 	 	1,751	 	 	 	1,834	 	 	 	1,259	 
	Loss per share (EUR)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Basic and diluted	 	 	(0.03	)	 	 	(0.06	)	 	 	(0.00	)	 	 	(0.07	)	 	 	(0.07	)	 	 	(0.01	)	 	 	(0.04	)	 	 	(0.05	)

 

		5.6	LIQUIDITY AND CAPITAL RESOURCES

 

The Corporation’s principal sources
of liquidity are its cash generated from operations. Currently available funds consist primarily of cash on deposit with banks. The Corporation
calculates its working capital requirements from continuing operations as follows:

 

	 	 	As at	 	 	As at	 
	 	 	December 31	 	 	December 31	 
	EUR 000	 	2020	 	 	2019	 
	Cash and cash equivalents	 	 	26,102	 	 	 	682	 
	Trade and other receivables	 	 	10,297	 	 	 	6,180	 
	Prepaid expenses and other assets	 	 	263	 	 	 	333	 
	Consideration receivable	 	 	148	 	 	 	-	 
	Current liabilities excluding deferred and contingent consideration and available for sale liabilities	 	 	(18,521	)	 	 	(9,820	)
	Net working capital	 	 	18,289	 	 	 	(2,625	)
	Deferred and contingent consideration	 	 	(11,521	)	 	 	(9,482	)
	Net current liabilities from continuing operations	 	 	6,768	 	 	 	(12,107	)

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 21

     

    

 

On November 13, 2020, the Company
amended and restated the September 29, 2020 amending agreement with K.A.V.O. Holdings Limited, as vendor (the "Oryx Vendor"),
and Matevž Mazij, to extend the due date for settlement of the equity component of the earn-out to December 1, 2021, if and
only if, shareholders do not approve the transactions, or the meeting of shareholders is postponed. The equity component of the earnout
payments was agreed at fair value of EUR 22,000 for 47,000,000 Common Shares of the Company. Upon shareholder approval on November 27,
2020, EUR 22,000 was transferred from deferred and contingent consideration payable in current liabilities to shares to be issued in equity.
All contingent liabilities were settled in full to the Oryx Vendor on January 18, 2021 upon shareholder approval.

 

The undiscounted contractual maturities
of significant financial liabilities and the total contractual obligations of the Company as at December 31, 2020 for each of the
next five years and thereafter are below:

 

	 	 	2021	 	 	2022	 	 	2023	 	 	2024	 	 	2025	 	 	Thereafter	 	 	Total	 
	Trade payables and other liabilities	 	 	16,968	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	16,968	 
	Lease obligations on right of use assets	 	 	160	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	-	 	 	 	788	 
	Deferred and contingent consideration	 	 	11,521	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	11,521	 
	 	 	 	28,649	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	157	 	 	 	-	 	 	 	29,277	 

 

MARKET RISK

 

The Corporation is exposed to market
risks, including changes to foreign currency exchange rates and interest rates.

 

FOREIGN CURRENCY
EXCHANGE RISK

 

The Corporation is exposed to foreign
currency risk, which includes risks related to its revenue and operating expenses denominated in currencies other than EUR, which is both
the reporting currency and primary contracting currency of the Corporation’s customers. Accordingly, changes in exchange rates may
in the future reduce the purchasing power of the Corporation’s customers thereby potentially negatively affecting the Corporation’s
revenue and other operating results.

 

The Corporation has experienced and
will continue to experience fluctuations in its net earnings as a result of translation gains or losses related to revaluing certain
current asset and current liability balances that are denominated in currencies other than the functional currency of the entities
in which they are recorded.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 22

     

    

 

LIQUIDITY RISK

 

The Corporation is also exposed to
liquidity risk with respect to its contractual obligations and financial liabilities. The Corporation manages liquidity risk by continuously
monitoring its forecasted and actual cash flows, and matching maturity profiles of financial assets and liabilities.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 23

     

    

 

		5.7	CASH FLOW SUMMARY

 

The cash flow from continuing operations may be summarized
as follows:

 

	 	 	Year Ended December 31,	 
	EUR 000	 	2020	 	 	2019	 
	Operating activities	 	 	6,729	 	 	 	(98	)
	Investing activities	 	 	(2,777	)	 	 	(2,298	)
	Financing activities	 	 	22,263	 	 	 	(521	)
	Effect of foreign exchange	 	 	(307	)	 	 	(276	)
	Net cash flow from continuing operations	 	 	25,908	 	 	 	(3,193	)

 

Cash flows used in investing activities is primarily due
to capitalised development costs:

 

	 	 	Year Ended December 31,	 
	EUR 000	 	2020	 	 	2019	 
	Purchases of property and equipment	 	 	(223	)	 	 	(120	)
	Proceeds from sale of equipment	 	 	-	 	 	 	16	 
	Additions in intangible assets	 	 	(2,286	)	 	 	(1,555	)
	Proceeds from sale of discontinued operations	 	 	259	 	 	 	-	 
	Deferred and contingent consideration payments	 	 	(527	)	 	 	(639	)
	Cash Flows Used in Investing Activities	 	 	(2,777	)	 	 	(2,298	)

 

Cash flows from (used in) financing
activities comprises of EUR 12.1m from November 2020 equity raise and EUR 10.1m from exercise of warrants and broker compensation
options in the year ended December 31, 2020 (2019: Nil):

 

	 	 	Year Ended December 31,	 
	EUR 000	 	2020	 	 	2019	 
	Proceeds from issuance of common shares and warrants	 	 	12,127	 	 	 	-	 
	Proceeds from exercise of warrants and broker compensation options	 	 	10,069	 	 	 	-	 
	Proceeds from exercise of stock options	 	 	18	 	 	 	-	 
	Proceeds from shares to be issued upon private placement	 	 	608	 	 	 	-	 
	Repayment of lease liability	 	 	(212	)	 	 	(109	)
	Repayment of loans	 	 	-	 	 	 	(375	)
	Interest income	 	 	6	 	 	 	4	 
	Interest
    and financing fees	 	 	(353	)	 	 	(41	)
	Cash Flows From (Used in) Financing Activities	 	 	22,263	 	 	 	(521	)

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 24

     

    

 

		6	TRANSACTIONS BETWEEN RELATED PARTIES

 

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.

 

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

 

•     Revenues
for the year ended December 31, 2020 to a shareholder of the Company totalled EUR 23 (year ended December 31, 2019: EUR 33)

 

•     Total
compensation for salaries, director fees, share-based payments and short-term employee benefits of key management personnel of the Company
for the year ended December 31, 2020 totalled EUR 4,559 (year ended December 31, 2019: EUR 2,230)

 

•     Loss
on remeasurement of deferred and contingent consideration payable to the Managing Director of Oryx for the year ended December 31,
2020 totalled EUR 9,276 (year ended December 31, 2019: EUR 5,347)

 

•     Interest
expense on deferred and contingent consideration payable to the Managing Director of Oryx for the year ended December 31, 2020 totalled
EUR 266 (year ended December 31, 2019: nil)

 

•     During
the year ended December 31, 2020, a total of EUR 560 in payments were made to the Managing Director of Oryx for deferred consideration
(year ended December 31, 2019: EUR 639)

 

•     During
the year ended December 31, 2020, a total of EUR 176 in payments were made to the Managing Director of Oryx for interest on deferred
and contingent consideration payable (year ended December 31, 2019: nil)

 

•     As
at December 31, 2020, EUR 4 of trade and other receivables was receivable from the Managing Director of Oryx and other shareholders
(December 31, 2019: EUR nil)

 

•     As
at December 31, 2020, EUR nil of prepaid expenses and other assets was receivable from a shareholder of the Company (December 31,
2019: EUR 98)

 

•     As
at December 31, 2020, EUR 166 of trade payables and other liabilities was due to the CEO, CFO, the Managing Director of Oryx and
member of Board (December 31, 2019: EUR 278)

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 25

     

    

 

•     As
at December 31, 2020, EUR 11,521 of deferred and contingent consideration was payable to the Managing Director of Oryx (December 31,
2019: EUR 23,732)

 

•     As
at December 31, 2020 EUR 22,000 of shares to be issued to the Managing Director of Oryx was recognized in the consolidated statements
of changes in equity (December 31, 2019: EUR nil)

 

•     During
the year ended December 31, 2020, EUR 246 additional share capital was recognized in the consolidated statements of changes in equity
with a corresponding reduction in contributed surplus for exercise of stock options by former key management personnel of the Company
(year ended December 31, 2019: nil)

 

		7	DISCLOSURE OF OUTSTANDING SHARE DATA

 

On October 26, 2020, the Company
announced that it has entered into an agreement with a syndicate of underwriters pursuant to which the underwriters have agreed to purchase
17,860,000 units (the "Units") from the treasury of the Company, at a price of $0.70 CAD per Unit and offer them to the public
by way of short form prospectus for total gross proceeds of approximately $12,500,000 CAD (the "Offering"). On October 27,
2020, the Company agreed to increase the size of the Offering whereby the Underwriters agreed to purchase 25,715,000 Units for aggregate
gross proceeds of $18,000,500 CAD.

 

Each Unit consist of one Common Share
(each a "Common Share") of the Company and one half of one Warrant (each whole warrant, a "Warrant") of the Company.
Each Warrant entitles the holder thereof to purchase one Common Share at a price equal to $1.00 CAD for a period of 36 months following
the closing of the Offering. The Warrants include an acceleration provision, exercisable at the Company's option, if the Company's daily
volume weighted average share price is greater than $1.50 CAD for at least ten consecutive trading days.

 

In addition, 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, for market stabilization purposes and to cover
over-allotments, if any. Closing of the Offering occurred on November 18, 2020.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 26

     

    

 

The number of equity-based instruments
granted or issued may be summarized as follows:

 

	 	 	December 31	 	 	March 25	 
	 	 	2020	 	 	2021	 
	Common shares	 	 	131,112,480	 	 	 	198,238,111	 
	Warrants	 	 	14,785,125	 	 	 	-	 
	Broker Warrants	 	 	1,774,335	 	 	 	168,861	 
	Fixed Stock Options	 	 	12,284,102	 	 	 	14,270,852	 
	Restricted Share Units	 	 	2,100,000	 	 	 	1,600,000	 
	Deferred Share Units	 	 	1,200,000	 	 	 	1,299,000	 
	 	 	 	163,256,042	 	 	 	215,576,824	 

 

The increase of 67,125,631 in Common
Shares between the reporting date and the date of this MD&A is due to the issuance of 47,000,000 Common Shares as a result of the
settlement of the earnout with K.A.V.O. Holdings Limited, 15,540,822 as a result of exercise of warrants, 1,605,474 as a result of exercise
of broker warrants, 2,479,335 due to the private placement on January 13, 2021 and 500,000 were as a result of exercise of restricted
share units.

 

The decrease in warrants was due to
exercise of 15,540,822 warrants and expiry of 47,038 warrants, offset by an issue of 802,735 warrants upon exercise of 1,605,474 broker
warrants.

 

Fixed stock options increased by 1,986,750
due to issuance of 1,989,000 tandem options to members of the Board, offset by reduction of 2,250 options due to expiration. Restricted
share units reduced by 500,000 due to conversion and deferred share units increased by 99,000 due to grant of units to key management
personnel.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 27

     

    

 

		8	CRITICAL ACCOUNTING ESTIMATES

 

The preparation of the consolidated
financial statements requires management to make estimates and judgments in applying the Company’s accounting policies that affect
the reported amounts and disclosures made in the consolidated financial statements and accompanying notes.

 

Within the context of the consolidated
financial statements, a judgment is a decision made by management in respect of the application of an accounting policy, a recognized
or unrecognized financial statement amount and/or note disclosure, following an analysis of relevant information that may include estimates
and assumptions. Estimates and assumptions are used mainly in determining the measurement of balances recognized or disclosed in the consolidated
financial statements and are based on a set of underlying data that may include management’s historical experience, knowledge of
current events and conditions and other factors that are believed to be reasonable under the circumstances.

 

Management continually evaluates the
estimates and judgments it uses.

 

The following are the accounting policies
subject to judgments and key sources of estimation uncertainty that the Company believes could have the most significant impact on the
amounts recognized in the consolidated financial statements.

 

Impairment of non-financial assets
(property and equipment, right-of-use assets, intangible assets and goodwill)

 

		-	Judgments made in relation to accounting policies applied

 

Management is required to use judgment
in determining the grouping of assets to identify their CGUs for the purposes of testing property and equipment, intangible assets and
right-of-use assets for impairment. Judgment is further required to determine appropriate groupings of CGUs for the level at which goodwill
and intangible assets are tested for impairment.

 

The Company has determined that B2B
Online Gaming and Online Media are two separate CGUs for the purposes of property and equipment, intangible assets and right-of-use asset
impairment testing. For the purpose of goodwill impairment testing, CGUs are grouped at the lowest level at which goodwill is monitored
for internal management purposes. In addition, judgment is used to determine whether a triggering event has occurred requiring an impairment
test to be completed.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 28

     

    

 

		-	Key sources of estimation

 

In determining the recoverable amount
of a CGU or a group of CGUs, various estimates are employed. The Company determines fair value less costs to sell using such estimates
as market rental rates for comparable properties, recoverable operating costs for leases with tenants, non- recoverable operating costs,
discount rates, capitalization rates and terminal capitalization rates. The Company determines value in use by using estimates including
projected future revenues, earnings and capital investment consistent with strategic plans presented to the Board. Discount rates are
consistent with external industry information reflecting the risk associated with the specific cash flows.

 

Impairment of accounts receivable

 

In each stage of the ECL impairment
model, impairment is determined based on the probability of default, loss given default, and expected exposures at default. The application
of the ECL model requires management to apply the following significant judgments, assumptions, and estimations:

 

		-	movement of impairment measurement between the three stages of the ECL model, based on the assessment
of the increase in credit risks on accounts receivables. The assessment of changes in credit risks includes qualitative and quantitative
factors of the accounts, such as historical credit loss experience and external credit scores;

 

		-	thresholds for significant increase in credit risks based on changes in probability of default over the
expected life of the instrument relative to initial recognition; and

 

		-	forecasts of future economic conditions.

 

Leases

 

		-	Judgments made in relation to accounting policies applied

 

Management exercises judgment in determining
the appropriate lease term on a lease-by-lease basis. Management considers all facts and circumstances that create an economic incentive
to exercise a renewal option or to not exercise a termination option including investments in major leaseholds and past business practice
and the length of time remaining before the option is exercisable. The periods covered by renewal options are only included in the lease
term if management is reasonably certain to renew. Management considers reasonably certain to be a high threshold. Changes in the economic
environment or changes in the office rental industry may impact management’s assessment of lease term, and any changes in management’s
estimate of lease terms may have a material impact on the Company’s consolidated statements of financial position and consolidated
statements of loss and comprehensive loss.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 29

     

    

 

		-	Key sources of estimation

 

In determining the carrying amount
of right-of-use assets and lease liabilities, the Company is required to estimate the incremental borrowing rate specific to each leased
asset or portfolio of leased assets if the interest rate implicit in the lease is not readily determined. Management determines the incremental
borrowing rate using a base risk-free interest rate estimated by reference to the bond yield with an adjustment that reflects the Company’s
credit rating, the security, lease term and value of the underlying leased asset, and the economic environment in which the leased asset
operates. The incremental borrowing rates are subject to change due to changes in the business and macroeconomic environment.

 

Warrants and share options

 

		-	Judgments made in relation to accounting policies applied

 

Management exercises judgment in determining
the model used and the inputs therein to valuate the value of share option grants and issued warrants. Management considers all facts
and circumstances for each grant issuance on an individual basis.

 

		-	Key sources of estimation

 

In determining the fair value of warrants
and share options, the Company is required to estimate the future volatility of the market value of the Company’s shares by reference
to its historical volatility or comparable companies over the previous years, a risk-free interest rate estimated by reference to the
Government of Canada bond yield, and a dividend yield of nil.

 

Contingent consideration

 

		-	Judgments made in relation to accounting policies applied

 

Management exercises judgment in determining
the appropriate fair value of contingent consideration and considers all facts and circumstances relevant to the acquisition’s future
earnings upon which the liability is calculated. Any changes in the economic environment or operational activity of the acquisition may
impact management’s assessment of the liability and may have a material impact on the Company’s consolidated statements of
financial position and consolidated statements of loss and comprehensive loss.

 

		-	Key sources of estimation

 

In determining the fair value of contingent
consideration, the Company is required to estimate the future earnings generated by the acquisition over an agreed period after the acquisition
and apply defined and fixed rules in order to calculate the expected future payment. The Company determines fair value by using estimates
including projected future earnings of the acquisition consistent with strategic plans presented to the Board. Discount rates are consistent
with external industry information reflecting the risk associated with the specific cash flows.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 30

     

    

 

		9	CHANGES IN ACCOUNTING POLICY

 

Apart from adopting new IFRS standards
on their effective date, the Company changed its accounting policy related to presentation currency in the year ended December 31,
2019 from Canadian dollars to Euros to better align the functional currency and presentation currency of its main operating business.
As a result, the Company presented its consolidated financial statements in accordance with IAS 8, Accounting policies, changes in accounting
estimates and errors ("IAS 8") and presented an opening statement of financial position as at March 31, 2018.

 

There have been no changes in the Company’s
accounting policies in any of the reporting periods

 

discussed in this MD&A.

 

		10	RISK FACTORS AND UNCERTAINTIES

 

Certain factors, listed below, may
have a material adverse effect on the Corporation’s business, financial condition, and results of operations. Current and prospective
investors should carefully consider the risks and uncertainties and other information contained in this MD&A and the Financial Statements.

 

The risks and uncertainties described
herein and therein are not the only ones the Corporation may face. Additional risks and uncertainties that the Corporation is unaware
of, or that the Corporation currently believes are not material, may also become important factors that could adversely affect the Corporation’s
business. If any of such risks actually occur, the Corporation’s business, financial condition, results of operations, and future
prospects could be materially and adversely affected.

 

LIMITED OPERATING HISTORY

 

The Corporation has a limited operational
history. The Corporation has never paid dividends and has no present intention to pay dividends. The Corporation is in the early commercialization
stage of its business and therefore will be subject to the risks associated with early stage companies, including uncertainty of revenues,
markets and profitability and the need to obtain additional funding. The Corporation will be committing, and for the foreseeable future
will continue to commit, significant financial resources to marketing, product development and research. The Corporation's business and
prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in the early stage of
development. Such risks include the evolving and unpredictable nature of the Corporation's business, the Corporation's ability to anticipate
and adapt to a developing market and the ability to identify, attract and retain qualified personnel. There can be no assurance that the
Corporation will be successful in doing what is necessary to address these risks.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 31

     

    

 

KEY PERSONNEL

 

The success of the Corporation may
be dependent on the services of its senior management and consultants. The experience of these individuals may be a factor
contributing to the Corporation's continued success and growth. The loss of one or more of its key employees or consultants could
have a material adverse effect on the Corporation's operations and business prospects. In addition, the Corporation's future success
will depend in large part on its ability to attract and retain additional highly skilled technical, management, sales and marketing
personnel. There can be no assurance that the Corporation will be successful in attracting and retaining such personnel and the
failure to do so could have a material adverse effect on the Corporation's business, operating results, and financial condition.

 

ADDITIONAL FINANCING REQUIREMENTS

 

In order to accelerate the Corporation's
growth objectives, it may need to raise additional funds from lenders and equity markets in the future. There can be no assurance that
the Corporation will be able to raise additional capital on commercially reasonable terms to finance its growth objectives. The ability
of the Corporation to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as
the business performance of the Corporation. There can be no assurance that the Corporation will be successful in its efforts to arrange
additional financing on terms satisfactory to the Corporation. If additional financing is raised by the issuance of common shares from
the treasury of the Corporation, control of the Corporation may change, and shareholders may suffer additional dilution to current levels
as a result of shares under option and broker warrants.

 

COMPETITION

 

The Corporation may not be able to
compete successfully against current and future competitors, and the competitive pressures the Corporation faces could harm its business
and prospects. Broadly speaking, the market for gambling businesses and media companies is highly competitive. The level of competition
is likely to increase as current competitors improve their product offerings and as new participants enter the market. Some of the Corporation's
current and potential competitors have longer operating histories, larger customer bases, greater name and brand recognition and significantly
greater financial, sales, marketing, technical and other resources than the Corporation. Additionally, these competitors have research
and development capabilities that may allow them to develop new or improved products that may compete with products the Corporation markets
and distributes.

 

New technologies and the expansion
of existing technologies may also increase competitive pressures on the Corporation. Increased competition may result in reduced operating
margins as well as loss of market share.

 

MANAGEMENT OF GROWTH

 

The Corporation may be subject to
growth-related risks including capacity constraints and pressure on its operating systems and systems of internal controls. The
Corporation's ability to manage its growth effectively will require it to continue to implement and improve its operational and
financial systems and to expand, train and manage its employee base.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 32

     

    

 

The inability of the Corporation to
deal with this growth could have a material adverse impact on its business, operations, and prospects. While management believes that
it will have made the necessary investments in infrastructure to process anticipated volume increases in the short term, the Corporation
may experience growth in the number of its employees and the scope of its operating and financial systems, resulting in increased responsibilities
for the Corporation's personnel, the hiring of additional personnel and, in general, higher levels of operating expenses. In order to
manage its current operations and any future growth effectively, the Corporation will also need to continue to implement and improve its
operational, financial and management information systems and to hire, train, motivate, manage and retain its employees. There can be
no assurance that the Corporation will be able to manage such growth effectively, that its management, personnel or systems will be adequate
to support the Corporation's operations or that the Corporation will be able to achieve the increased levels of revenue commensurate with
the increased levels of operating expenses associated with this growth.

 

ABSENCE OF PROFITS

 

The Corporation has not earned any
profits to date and there is no assurance that it will earn any profits in the future, or that profitability, if achieved, will be sustained.
A significant portion of the Corporation's financial resources will continue to be directed to the development of its products and to
marketing activities. The success of the Corporation will ultimately depend on its ability to generate revenues such that the business
development and marketing activities may be financed by revenues from operations instead of external financing. There is no assurance
that future revenues will be sufficient to generate the required funds to continue such business development and marketing activities.

 

CONFLICTS OF INTEREST

 

Certain proposed directors and officers
of the Corporation may become associated with other reporting issuers or other Companies which may give rise to conflicts of interest.
In accordance with the Canada Business Corporations Act, directors who have a material interest or any person who is a party to a material
contract or a proposed material contract with the Corporation are required, subject to certain exceptions, to disclose that interest and
generally abstain from voting on any resolution to approve the contract. In addition, the directors are required to act honestly and in
good faith with a view to the best interests of the Corporation, as the case may be. Certain of the directors have either other employment
or other business or time restrictions placed on them and accordingly, these directors will only be able to devote part of their time
to the affairs of the Corporation.

 

    	 	Bragg Gaming Group Inc

Management Discussion & Analysis

December 31, 2020	 33

     

    

 

COVID-19

 

In December 2019 there was a global
outbreak of COVID-19 (coronavirus), which has had 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/quarantine orders.

 

At this time, it is unknown the extent
of the impact the COVID-19 outbreak may have on the Corporation 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, and quarantine/isolation measures that are currently,
or may be put, in place by Canada and other countries to fight the virus.

 

Our main priorities in dealing with
the COVID-19 situation are to minimize the risk of spreading the virus and to create a safe workplace for our employees as well as to
maintain the operation for our operators. We continue to comply with all the requirements from the authorities in the countries we operate
in, and in many instances we have taken more far-reaching initiatives. Thanks to the measures that have been implemented in terms of social
distancing, changed working processes and routines for our employees, our operations have been able to continue without any large negative
effects.

 

However, the Corporation 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 have. Furthermore, the Corporation has limited exposure to sports betting revenues that have obviously been
impacted by the lack of professional sports.

 

As at the time of publishing, the Corporation’s
financial performance, financial position and cash flow has been positively impacted as a result of people staying at home. Management
will continue to monitor events and effects to the Corporation closely and will amend its forecasts as and when it deems necessary.

 

		11	ADDITIONAL INFORMATION

 

Additional information relating to the
Corporation, including the Corporation’s annual information form, quarterly and annual reports and supplementary information is
available on SEDAR at www.sedar.com.

 

Press releases and other information are also available in
the Investor section of the Corporation’s website at www.bragg.games.

 

    	 	Bragg Gaming Group Inc
 Management Discussion & Analysis
 December 31, 2020	 34

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