BDO Statsautoriseret revisionsaktieselskabHavneholmen 29DK-1561 København V20222670Årsrapport2024-07-15Nicolas William ManolisGAN INTEGRITY SOLUTIONS ApSKronprinsessegade 54 2.1306 Copenhagen KRevisionspåtegning282797792004-10-01Copenhagen2023-01-012023-12-312022-01-012022-12-31BDO Statsautoriseret revisionsaktieselskabHavneholmen291561Copenhagen VCopenhagen2024-07-15Nicholas William ManolisNeil HodgsonMonica Elizabeth BruniManaging DirectorDirectorDirectorManglende konklusionGrundlag for manglende konklusionCopenhagen2024-07-15BDO Statsautoriseret revisionsaktieselskab20222670Iben LarsenRevisionspåtegningState Authorised Public Accountantmne344743203133214069534351743684412905867505314127953-9893567-341874774274332220292433744-9853748-3418900100-9853748-34189001-9853748-34189001-9853748-34189001172296141094666817229614109466682265319426307813751619886053640480525168395527195527195527195527121825365171536221126004810502917150588991156298523431916079331772155517895718463836934056955385639671993247240089412894856906545458443107805287805287134390998538401-202396644-187642198-188152258-17829851026313423276942603111131215822147239520190263622433864020554248820645602013369164930711554258130919333909745328790723119912925721771223674161769065454584431078052878538401-187642198-98537489069218-9069218-4168520416852080528713439099-2023966444656338979324204993735961735191391681917272083517436844129058427433222042743322202924337442924337441922219511627203308493988275527534425713619784172296144263078286335401073788426307839371420187474919977596872321997759256198122653191375161955271955271955271Regnskabsklasse BtruetrueToday the Executive Board have discussed and approved the Annual Report of GAN INTEGRITY SOLUTIONS ApS for the financial year 1 January - 31 December 2023. The Annual Report is presented in accordance with the Danish Financial Statements Act. In our opinion the Financial Statements give a true and fair view of the Company's assets, liabilities and financial position at 31 December 2023 and of the results of the Company's operations for the financial year 1 January - 31 December 2023. The Management Commentary includes in our opinion a fair presentation of the matters dealt with in the Commentary. We recommend the Annual Report be approved at the Annual General Meeting. To the Shareholder of GAN INTEGRITY SOLUTIONS ApS We were engaged to audit the financial statements of GAN Integrity Solutions ApS for the financial year 1 January - 31 December 2023, which comprise income statement, balance sheet, statement of changes in equity, and notes to the financial statements, including a summary of accounting policies. The financial statements are prepared in accordance with the Danish Financial Statements Act. We do not express an opinion on the financial statements of the Company. Because of the significance of the matters described in the “Basis for Disclaimer of Opinion” section, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an opinion on the financial statements. Basis for Disclaimer of Opinion Grundlag for manglende konklusion The Company’s accounting records are incomplete and contains numerous errors in relation to several financial statement accounts. Management has not complied with the requirements for recognition and measurement within the selected accounting policies in accordance with Danish Financial Statements Act for several accounts, as accounting records were initially prepared in accordance with an inapplicable financial reporting framework. As of the date of our report, Management was still in the process of rectifying the accounting records and correcting the errors. We were unable to confirm or verify by alternative means the financial statements accounts. As a result, we were unable to determine whether any adjustments were necessary in respect to the financial statement 2023 and comparatives. Management's Responsibilities for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the 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 in preparing the financial statements unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Our responsibility is to conduct an audit of the Company’s financial statements in accordance with International Standards on Auditing (ISAs) and additional requirements applicable in Denmark and to issue an auditor’s report. However, because of the matters described in the “Basis for Disclaimer of Opinion” section, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Statement on Management Commentary As described in the ”Basis for Disclaimer of Opinion” paragraph, we have not been able to obtain sufficient and appropriate audit evidence to provide a basis for our opinion. We do not express an opinion on the Management Commentary. Report on other legal and regulatory requirements Non-compliance with the Danish Bookkeeping Act The Company has not complied with the requirements of the Danish Bookkeeping Act in respect of the bookkeeping being organized and effected in accordance with generally accepted accounting practice with due consideration for the Company’s complexity, the number of transactions and the financial scope of the transactions. Management may incur liability on basis of the non-compliance with the Danish Bookkeeping Act. Violation the Danish VAT legislation The Company has submitted incorrect VAT returns in violation of the Danish VAT legislation. Management may incur liability on basis of the violation with the Danish VAT legislation. Principal activities The principal activities comprise is to offer a Software as a Service (SaaS) platform that manage enterprise compliance and risk programs. Assumptions for continued operations The company is operating at a loss and has lost its equity. The ultimate parent company, GAN Integrity Holdings Inc., has issued a letter of support to the Company, in which the ultimate parent company commits to guaranteeing the company's obligations and thereby ensuring the subsidiary's continued operations until December 31, 2024. Based on this letter of support and management's assessment of the company's future earning potential, management believes that the company can continue its operations, and therefore the annual report has been prepared on a going concern basis. Please refer to note 10 "Going concern assumptions." Significant events after the end of the financial year No events have occurred after the end of the financial year of material importance for the Company's financial position. DKK Share Capital Reserve for development costs Retained earnings Total Equity at 1 January 2023 805.287 8.538.401 -187.642.198 -178.298.510 Proposed profit allocation -9.853.748 -9.853.748 Other legal bindings Capitalized development costs 9.069.218 -9.069.218 0 Transfers Depreciations -4.168.520 4.168.520 0 Equity at 31 December 2023 805.287 13.439.099 -202.396.644 -188.152.258 Staff costs 1 Average number of full time employees 46 56 Wages and salaries 33.897.932 42.049.937 Social security costs 359.617 351.913 Other staff costs 916.819 1.727.208 35.174.368 44.129.058 Other financial income 2 Other interest income 42.743 32.220 42.743 32.220 Other financial expenses 3 Other interest expenses 2.924 33.744 2.924 33.744 Intangible assets 4 DKK Development projects completed, including patents and similar rights originating from development projects Cost at 1 January 2023 19.222.195 Additions 11.627.203 Cost at 31 December 2023 30.849.398 Amortisation at 1 January 2023 8.275.527 Amortisation for the year 5.344.257 Amortisation at 31 December 2023 13.619.784 Carrying amount at 31 December 2023 17.229.614 Capitalized development projects are amortised over 3 years. Property, plant and equipment 5 DKK Land and buildings Other plant, fixtures and equipment Cost at 1 January 2023 4.263.078 2.863.354 Additions 0 1.073.788 Cost at 31 December 2023 4.263.078 3.937.142 Depreciation and impairment losses at 1 January 2023 0 1.874.749 Depreciation for the year 1.997.759 687.232 Depreciation and impairment losses at 31 December 2023 1.997.759 2.561.981 Carrying amount at 31 December 2023 2.265.319 1.375.161 Financial non-current assets 6 DKK Rent deposit and other receivables Cost at 1 January 2023 955.271 Cost at 31 December 2023 955.271 Carrying amount at 31 December 2023 955.271 Long-term liabilities 7 31/12 2023 Debt outstanding 31/12 2022 DKK total liabilities after 5 years total liabilities Lease liabilities 263.134 0 2.327.694 533.200 533.200.01 Deferred income 2.603.111 0 1.312.158 535.100 535.100.01 Payables to group enterprises 221.472.395 221.472.395 201.902.636 535.400 535.400.01 224.338.640 221.472.395 205.542.488 Contingent liabilities The company is taxed jointly with the other Danish companies in the group and has joint, several and unlimited liability for income taxes and any obligations to withhold tax at source on interest, royalties and dividends for the jointly taxed companies. The liability also includes any subsequent corrections to the calculated tax liability as a consequence of changes made to the jointly taxable income etc. Charges and securities 9 There are no charges and securities at the balance sheet date. Going concern assumptions 10 The company is operating at a loss and has lost its equity. The ultimate parent company, GAN Integrity Holdings Inc., has issued a letter of support to the Company, in which the ultimate parent company commits to guaranteeing the company's obligations and thereby ensuring the subsidiary's continued operations until December 31, 2024. Based on this letter of support and management's assessment of the company's future earning potential, management believes that the company can continue its operations, and therefore the annual report has been prepared on a going concern basis. Consolidated Financial Statements 11 The company is included in the consolidated financial statements of the parent company, GAN Integrity Holdings Inc. 228 Park Avenue S, PMB 44939 New York, NY 10003 USA The Annual Report of GAN INTEGRITY SOLUTIONS ApS for 2023 has been presented in accordance with the provisions of the Danish Financial Statements Act for enterprises in reporting class B and certain provisions applying to reporting class C. Regnskabsklasse B1 true true The Annual Report is prepared consistently with the accounting principles applied last year. Foreign currency translation Transactions in foreign currencies are translated at the rate of exchange on the transaction date. Exchange differences arising between the rate on the transaction date and the rate on the payment date are recognised in the Income Statement as a financial income or expense. Receivables, payables and other monetary items in foreign currencies that are not settled on the Balance Sheet date are translated at the exchange rate on the Balance Sheet date. The difference between the exchange rate on the Balance Sheet date and the exchange rate at the date when the receivables or payables come into existence recognised in the Income Statement as financial income or expenses. Fixed assets acquired in foreign currencies are translated at the rate of exchange on the transaction date. Net revenue Sale of services is generally recognised on the basis of a measurable degree of completion, using straight-line recognition of services delivered over time in a regular pattern. Where the degree of completion is not measurable or the sales value or the total costs of completion are uncertain, revenue is recognised by the amount that the enterprise as a maximum believes to have a right to claim and is expected to be received for services delivered at the Balance Sheet date. Cost of sales Cost of sales comprise costs incurred to achieve the net revenue for the year, including direct and indirect costs of raw materials and consumables. Other external expenses Other external expenses include other production, sales, delivery and administrative costs, including costs of energy, marketing, premises, loss on bad debts, operating lease expenses, etc Payments related to operating lease expenses and other lease agreements are recognised in the Income Statement over the contract period. The Company’s total liability concerning operating and other lease agreements are stated under contingencies, etc. Staff costs Staff costs comprise wages and salaries, including holiday pay and pensions, and other costs of social security etc., for the Company's employees. Financial income and expenses Financial income and expenses include interest income and expenses, financial expenses of finance leases, realised and unrealised gains and losses arising from securities, debt and transactions in foreign currencies, as well as charges and allowances under the tax-on-account scheme, etc. Financial income and expenses are recognised by the amounts that relate to the financial year. Interest income and expenses are calculated on amortised cost prices. Tax The tax for the year, which consists of the current tax for the year and changes in deferred tax, is recognised in the Income Statement by the share that may be attributed to the profit for the year, and is recognised directly in equity by the share that may be attributed to entries directly to equity. Intangible fixed assets Development projects comprise costs, including wages and salaries, and amortisation, which directly or indirectly can be related to the Company’s development activities and which fulfil the criteria for recognition in the Balance Sheet. The accounting item is measured at the lower of the capitalised costs less accumulated amortisation and recoverable amount. Capitalised development costs are amortised on a straight-line basis over the estimated useful life after completion of the development work. The amortisation period is normally 3 years. Intangible fixed assets are generally written down to the recoverable amount if this is lower than the carrying amount. Profit or loss from sale of intangible fixed assets is calculated at the difference between the sales price and the carrying amount at the time of the sale. Profit and loss are recognised in the Income Statement under other operating income or other operating expenses. Tangible fixed assets Land and buildings, other plant, fixtures and equipment are measured at cost less accumulated depreciation and impairment losses. The depreciation base is cost less estimated residual value after end of useful life. The cost includes the acquisition price and costs incurred directly in connection with the acquisition until the time when the asset is ready to be used. Straight-line depreciation is provided on the basis of an assessment of the expected useful lives of the assets and their residual value: Useful lifeResidual value Buildings 3 years 0 % Other plant, fixtures and equipment 3-4 years 0 % Profit or loss on sale of tangible fixed assets is stated as the difference between the sales price less selling costs and the carrying amount at the date of sale. Profit or loss is recognised in the Income Statement as other operating income or other operating expenses. Financial non-current assets Deposits include rental deposits which are recognised and measured at cost. Deposits are not depreciated. Impairment of fixed assets The carrying amount of intangible fixed and tangible assets together with fixed assets, which are not measured at fair value,, are assessed annually for indications of impairment other than that reflected by amortisation and depreciation. In the event of impairment indications, an impairment test is made for each asset or group of assets, respectively. If the recoverable amount is lower than the carrying amount, the asset is written down to the recoverable amount. The recoverable amount is calculated at the higher of the capital value and the sales value less expected costs of a sale. The capital value is determined as the Company's share in the current value of the net cash flows which the subsidiary is expected to generate through its activities and from sale of assets after the end of their useful lives. A discount rate is used which reflects the risk-free market rate and the owners' minimum return on interest requirements for similar assets. The growth rate in the terminal period is determined in accordance with the standards within the industry. Receivables Receivables are measured at amortised cost which usually corresponds to nominal value. The value is written down to meet expected losses. Write-off is performed to provide for losses when an objective indication has been assessed to have incurred that a receivable or a portfolio of receivables are impaired. If there is an objective indication that an individual receivable is impaired, the write-off is performed at individual level. Receivables for which there are no objective indication of impairment at individual level are assessed at portfolio level for objective indication of impairment. The portfolios are primarily based on the debtors’ registered office and credit rating in accordance with the Company’s policy for credit risk management. The objective indicators, which are applied for portfolios, are determined based on the historical loss experiences. Write-off is determined as the difference between the carrying amount of receivables and the present value of the expected cash flows, including realisable value of any received collaterals. The effective interest rate is used as discount rate for the single receivable or portfolio. Prepayments Prepayments include costs incurred relating to the subsequent financial year. Tax payable and deferred tax Current tax liabilities and receivable current tax are recognised in the Balance Sheet as the calculated tax on the taxable income for the year, adjusted for tax on the taxable income for previous years and taxes paid on account. Deferred tax is measured on the temporary differences between the carrying amount and the tax value of assets and liabilities. Deferred tax assets, including the tax value of tax loss carryforwards, are measured at the amount at which the asset is expected to be used within a reasonable number of years, either by setoff against tax on future earnings or by setoff against deferred tax liabilities within the same legal tax entity. Deferred tax is measured on the basis of the tax rules and tax rates that under the legislation in force on the Balance Sheet date will be applicable when the deferred tax is expected to crystallise as current tax. Any changes in the deferred tax resulting from changes in tax rates, are recognised in the income statement, except from items recognised directly in equity. Liabilities Financial liabilities are recognised at the time of borrowing by the amount of proceeds received less transaction costs. In subsequent periods, the financial liabilities are measured at amortised cost equal to the capitalised value when using the effective interest, the difference between the proceeds and the nominal value being recognised in the Income Statement over the loan period. The amortised cost of current liabilities corresponds usually to the nominal value. 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