PLAYSTUDIOS, INC. DISCUSSION AND ANALYSIS OF THE MANAGEMENT OF THE FINANCIAL CONDITION AND THE RESULTS OF THE OPERATIONS (form 10-K)

The following discussion and analysis provides information which our management
believes is relevant to an assessment and understanding of our consolidated
results of operations and financial condition. The discussion and analysis
should be read in conjunction with the audited consolidated financial statements
and notes thereto contained in this Annual Report on Form 10-K. This discussion
contains forward-looking statements and involves numerous risks and
uncertainties, including, but not limited to, those described in the "Risk
Factors" section of this Annual Report on Form 10-K. Actual results may differ
materially from those contained in any forward-looking statements. Unless the
context otherwise requires, references to "we", "us", "our", and "the Company"
are intended to mean the business and operations of PLAYSTUDIOS, Inc. and its
consolidated subsidiaries.

Our actual results and the timing of certain events may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such a discrepancy include, but are not limited to, those discussed
elsewhere in this Annual Report on Form 10-K, particularly in the section titled
"Risk Factors" set forth in Part I, Item 1A of this Annual Report on Form 10-K.
All forward-looking statements in this Annual Report on Form 10-K are based on
information available to us as of the date hereof, and we assume no obligation
to update any such forward-looking statements to reflect future events or
circumstances, except as required by law.

Overview

We are a developer and publisher of free-to-play casual games for mobile and
social platforms each of which incorporate our unique playAWARDS loyalty
program. Over our ten-year history, we developed a portfolio of free-to-play
social casino games that are considered to be among the most innovative and
unique in the genre. They include the award-winning POP! Slots, myVEGAS Slots,
my KONAMI Slots, myVEGAS Blackjack and myVEGAS Bingo. Our games are based on
original content, real-world slot game content, as well as third-party licensed
brands and are downloadable and playable for free on multiple social and
mobile-based platforms, including the Apple App Store, Google Play Store, Amazon
Appstore, and Facebook.

Each of our games is powered by our proprietary playAWARDS program and
incorporates loyalty points that are earned by players as they engage with our
games. For the year ended December 31, 2021, these loyalty points could have
been exchanged for real-world rewards from 95 awards partners representing more
than 265 hospitality, entertainment, and leisure brands across 17 countries and
four continents. The rewards are provided by our collection of awards partners,
all of whom provide their rewards at no cost to us, in exchange for product
integration, marketing support, and participation in our loyalty program. The
program is enabled by our playAWARDS platform which consists of a robust suite
of tools that enable our awards partners to manage their rewards in real time,
measure the value of our players' engagement, and gain insight into the
effectiveness and value they derive from the program. Through our self-service
platform, awards partners can launch new rewards, make changes to existing
offers, and in real time see how players are engaging with their brands. The
platform tools also provide awards partners the ability to measure the off-line
value our players generate as consumers and patrons of their real-world
establishments.

PLAYSTUDIOS' playAWARDS platform embodies all of the features, tools, and
capabilities needed to deliver loyalty programs tailored for the games industry.
Our consumer-facing brand for our loyalty program is myVIP. The myVIP program is
an aspirational benefits framework, with in-game mechanics and rewards features,
along with a player development and hosting program. The program dynamically
ranks and assigns players to tiers based on their accumulation of tier points,
which are a proxy for their overall engagement with our games. The tier points
are separate from and are not interchangeable with the loyalty points earned in
the playAWARDS program. Qualified players are provided access to enhanced
benefits that increase with each tier. Higher tiers provide access to a VIP
player portal whereby players can view and purchase special chip bundles, redeem
loyalty points for a curated set of rewards, and communicate directly with a
dedicated personal host. The VIP player portal, concierge, and host programs,
enhance the in-game and real-world reward experience with both in-game and
in-person, invitation-only special events. We believe that the myVIP program
drives increased player engagement and retention, and therefore extends each
game's life-cycle and revenue potential.

We have primarily generated our revenue from the sale of virtual currency, which
players can choose to purchase at any time to enhance their playing experience.
Once purchased, our virtual currency cannot be withdrawn from the game,
transferred from one game to another or from one player to another, or be
redeemed for monetary value. Players who install our games receive free virtual
currency upon the initial launch of the game, and they may also collect virtual
currency free of charge at periodic intervals or through targeted marketing
promotions. Players may exhaust the free virtual currency and may choose to
purchase additional virtual currency. Additionally, players can send free
"gifts" of virtual currency to their friends
                                       50
--------------------------------------------------------------------------------

on Facebook. Our virtual currency revenue has been generated worldwide, but is largely focused on North America.

We also generate revenue from in-game advertising. Advertisements can be in the
form of an impression, click-throughs, banner ads, or offers, where players are
rewarded with virtual currency or loyalty points for watching a short video.

Impact of COVID-19

The ongoing COVID-19 pandemic and variants thereof and resulting social
distancing, shelter-in-place, quarantine, and similar governmental orders put in
place around the world have caused widespread disruption in global economies,
productivity, and financial markets and have materially altered the way in which
we conduct our day-to-day business. We have followed guidance by the U.S.,
Israel, Hong Kong, and other applicable foreign and local governments to protect
our employees and operations during the pandemic and have implemented a remote
environment for our business. We cannot predict the potential impacts of the
COVID-19 pandemic and variants thereof or the distribution of vaccines on our
business or operations, but we will continue to actively monitor the related
issues and may take further actions that alter our business operations,
including as may be required by federal, state, local, or foreign authorities or
that we determine are in the best interests of our employees, players, partners,
and stockholders.

In addition to the potential direct impacts to our business, the global economy
has been, and is likely to continue to be, significantly weakened as a result of
the actions taken in response to the COVID-19 pandemic and variants thereof, and
future government intervention remains uncertain. A weakened global economy may
impact our players and their purchasing decisions within our games, in
particular as a result of the limitations associated with redeeming real-world
rewards due to government-mandated or other restrictions on travel and other
activities and limitations on our players' discretionary spending, consumer
activity during the pandemic and its impact on advertising investments, and the
ability of our business partners, including our awards partners, to navigate
this complex social, health, and economic environment, any of which could result
in disruption to our business and results of our operations.

The duration and extent of the impact from the COVID-19 pandemic and variants
thereof depends on future developments that cannot be accurately predicted at
this time, such as the severity and transmission rate of the virus, the
existence of any additional waves of the COVID-19 pandemic and variants thereof,
the extent and effectiveness of containment actions, progress towards widespread
rapid testing, effective treatment alternatives, and the success and timing of
vaccination efforts, and the impact of these and other factors on our employees,
players, and business partners. We have recently observed labor shortages,
increasing competition for talent, and increasing employee attrition. If we are
not able to respond to and manage the impact of such events effectively, our
business may be harmed.

See “Risk Factors” for more information on the COVID-19 pandemic.

Key factors affecting our performance

There are a number of factors that affect the performance of our business and the comparability of our results from one period to another, such as:

•Third-Party Platform Agreements-We derive substantially all of our revenue from
in-game purchases of virtual currency that are processed by platform providers
such as the Apple App Store, Google Store, Amazon Appstore, and on Facebook. The
platform providers charge us a transaction fee to process payments from our
players for their purchase of in-game virtual currency. These platform fees are
generally set at 30% of the in-game purchase. Each platform provider has broad
discretion to set its platform fees and to change and interpret its terms of
service and other policies with respect to us and other developers in its sole
discretion, and those changes may be unfavorable to us.

•Player Acquisition-Establishing and maintaining a loyal network of players and
paying players is vital for our success. As such, we spend a significant amount
on advertising and other forms of player acquisition, such as traditional
marketing and advertising, email and push notifications, and cross promoting
between our games in order to grow our player base. These expenditures are
generally related to new content launches, game enhancements, and ongoing
programs to drive new player acquisition and the reactivation of lapsed player
engagement. Our player acquisition strategy is centered on a payback period
methodology, and we strive to optimize spend between the acquisition of new
players and the reactivation of inactive players.

•Player Monetization-Our revenue has been primarily driven through the sale of
virtual currency. Paying players purchase virtual currency in our games because
of the perceived value, which is dependent on the relative ease of obtaining
equivalent virtual currency by simply playing our game. The perceived value of
our virtual currency can be
                                       51
--------------------------------------------------------------------------------

impacted by various actions that we take in our games including offering
discounts for virtual currency or giving away virtual currency in promotions.
Managing game economies is difficult and relies on our assumptions and judgment.
If we fail to manage our virtual economies properly or fail to promptly and
successfully respond to any such disruption, our reputation may suffer and our
players may be less likely to play our games and to purchase virtual currency
from us in the future, which would cause our business, financial condition, and
results of operations to suffer.

•Investment in Game Development-In order to maintain interest from existing
players and add new players and achieve our desired revenue growth, we must
continually improve the content, offers, and features in our existing games and
the release of new games. As a result, we invest a significant amount of our
technological and creative resources to ensure that we support an appropriate
cadence of innovative content that our players will find appealing. These
expenditures generally occur in advance of the release of new content or the
launch of a new game, and the resulting revenue may not exceed the development
costs, or the game or feature may be abandoned in its entirety.

•Investment in our playAWARDS and myVIP programs-In order to drive player
engagement and retention we invest a significant amount of resources to enhance
the playAWARDS and myVIP programs. We continually evaluate these programs
through an iterative feedback process with our players and awards partners and
update them so that both our players and awards partners are able to optimize
their personalized experience. As a result, we continuously incur expenses to
enhance and update these programs. However, the results may not generate revenue
and the enhancements may require additional significant modifications or be
abandoned in their entirely.

•Real-World Rewards-We currently offer real-world rewards relating to, among
other things, dining, live entertainment shows, and hotel rooms, and we plan to
continue to expand and diversify our rewards loyalty program in order to
maintain and enhance the perceived value offering to our players. Our players'
willingness to make in-game purchases is directly impacted by our ability to
provide desirable rewards. The real-world rewards we offer to our players are
provided at no cost to us by our awards partners, and there is no obligation for
us to pay or otherwise compensate either our awards partners or players for any
player redemptions under our awards partner agreements.

Key performance indicators and non-GAAP measures

We manage our business by regularly reviewing several key operating metrics to
track historical performance, identify trends in player activity, and set
strategic goals for the future. Our key performance metrics are impacted by
several factors that could cause them to fluctuate on a quarterly basis, such as
platform providers' policies, seasonality, player connectivity, and the addition
of new content to games. We believe these measures are useful to investors for
the same reasons. In addition, we also present certain non-GAAP performance
measures. These performance measures are presented as supplemental disclosure
and should not be considered superior to or as a substitute for the consolidated
financial statements prepared under U.S. GAAP. The non-GAAP measures presented
in this Annual Report on Form 10-K should be read together with the consolidated
financial statements and the respective related notes thereto included elsewhere
in this Annual Report on Form 10-K. The key performance indicators and non-GAAP
measures presented in this Annual Report on Form 10-K may differ from similarly
titled measures presented by other companies and are not a substitute for
financial statements prepared in accordance with U.S. GAAP.

Key performance indicators

Daily active users (“DAU”)

DAU is defined as the number of individuals who played a game on a particular
day. We track DAU by the player ID, which is assigned for each game installed by
an individual. As such, an individual who plays two different games on the same
day is counted as two DAU while an individual who plays the same game on two
different devices is counted as one DAU. Average DAU is calculated as the
average of the DAU for each day during the period presented. We use DAU as a
measure of audience engagement to help us understand the size of the active
player base engaged with our games on a daily basis.

Monthly active users (“MAU”)

MAU is defined as the number of individuals who played a game in a particular
month. As with DAU, an individual who plays two different games in the same
month is counted as two MAU while an individual who plays the same game on two
different devices is counted as one MAU. Average MAU is calculated as the
average of MAU for each calendar month during the period presented. We use MAU
as a measure of audience engagement to help us understand the size of the active
player base engaged with our games on a monthly basis.
                                       52
--------------------------------------------------------------------------------

Daily Paid Users (“DPU”)

DPU is defined as the number of individuals who made a purchase in a mobile game
during a particular day. As with DAU and MAU, we track DPU based on account
activity. As such, an individual who makes a purchase in two different games in
a particular day is counted as two DPU while an individual who makes purchases
in the same game on two different devices is counted as one DPU. Average DPU is
calculated as the average of the DPU for each day during the period presented.
We use DPU to understand the size of our active player base that makes in-game
purchases. This focus directs our strategic goals in setting player acquisition
and pricing strategy.

Daily Payer Conversion

Daily Payer Conversion is defined as DPU as a percentage of DAU on a particular
day. Average Daily Payer Conversion is calculated as the average DPU divided by
average DAU for a given period. We use Daily Payer Conversion to understand the
monetization of our active players.

Average daily income per DAU (“ARPDAU”)

ARPDAU is defined for a given period as the average daily revenue per average
DAU, and is calculated as game and advertising revenue for the period, divided
by the number of days in the period, divided by the average DAU during the
period. We use ARPDAU as a measure of overall monetization of our players.

Non-GAAP measures

Adjusted EBITDA (“AEBITDA”) and AEBITDA Margin

Adjusted EBITDA, or AEBITDA, as used herein, is a non-GAAP financial performance
measure that is presented as a supplemental disclosure and is reconciled to net
income as the most directly comparable GAAP measure. We define AEBITDA as net
income before interest, income taxes, depreciation and amortization,
restructuring and related costs (consisting primarily of severance and other
restructuring related costs), stock-based compensation expense, changes in fair
value of warrant liabilities and other income and expense items (including
special infrequent items, foreign currency gains and losses, and other non-cash
items). We also use AEBITDA Margin, another non-GAAP measure, which we calculate
as the percentage of AEBITDA to revenue.

We use AEBITDA and AEBITDA Margin to monitor and evaluate the performance of our
business operations, facilitate internal comparisons of our operating
performance, and to analyze and evaluate decisions regarding future budgets and
initiatives. We believe that both measures are useful because they provide
investors with information regarding our operating performance that is used by
our management in its reporting and planning processes. AEBITDA and AEBITDA
Margin as calculated herein may not be comparable to similarly titled measures
and disclosures reported by other companies.
                                       53
--------------------------------------------------------------------------------

The following table sets forth the reconciliation of AEBITDA and AEBITDA Margin
to net income and net income margin, the most directly comparable GAAP measure
(in thousands, except percentages):

                                                         Years Ended December 31,
                                                    2021           2020           2019
Net income                                       $ 10,737       $ 12,807       $ 13,614
Depreciation & amortization                        27,398         22,192         25,154
Income tax expense (benefit)                         (258)        (1,671)         3,975
Stock-based compensation expense                    4,455          3,519    

5,884

Change in fair value of warrant liability         (13,933)             -              -
Special infrequent(1)                               7,500          1,427              -
Restructuring and related(2)                        3,082         20,092          1,234
Other(3)                                              565           (392)          (340)
AEBITDA                                            39,546         57,974         49,521

GAAP Revenue                                      287,419        269,882        239,421

Margin as a % of revenue
Net income margin                                     3.7  %         4.7  %         5.7  %
AEBITDA Margin                                       13.8  %        21.5  %        20.7  %



(1) Amounts communicated (i) during the closed financial year December 31, 2020 represent charitable donations made by us related to the COVID-19 pandemic and (ii) for the year ended December 31, 2021a transaction bonus and a charitable contribution under the terms of the merger agreement related to our business combination with Cutting Edge Acquisition Corp. (the “Merger Agreement”).

(2)Amounts reported during the years ended December 31, 2021, 2020 and 2019
consist of (i) severance-related costs, (ii) fees related to potential mergers
and acquisitions, and (iii) for the year ended December 31, 2020, include $20.0
million resulting from the termination of the profit share provision of the MGM
Marketing Agreement as further discussed in Note 4 - Related-Party Transactions
to our consolidated financial statements included elsewhere in this Annual
Report on Form 10-K.

(3) Amounts reported under “Other” include interest expense, interest income, foreign currency gains / losses and non-cash gains / losses on the sale of assets.

Results of operations

Comparison of the finished year December 31, 2021 with respect to the finished year
December 31, 2020

The following table summarizes our results of consolidated operations for the years ended December 31, 2021 and 2020 (in thousands, except percentages):

                               Years Ended December 31,
                                 2021              2020         $ Change      % Change
Net revenue                $    287,419        $ 269,882       $ 17,537          6.5  %
Operating expenses              290,409          259,533         30,876         11.9  %
Operating (loss) income          (2,990)          10,349        (13,339)      (128.9) %
Net income                       10,737           12,807         (2,070)       (16.2) %
AEBITDA                          39,546           57,974        (18,428)       (31.8) %
Net income margin                   3.7   %          4.7  %        (1.0)       (21.3) %
AEBITDA margin                     13.8   %         21.5  %        (7.7)       (35.8) %


                                       54
--------------------------------------------------------------------------------

Revenue and Key Performance Indicators (in thousands, except percentages and
ARPDAU):

                                     Years Ended December 31,
                                       2021              2020         $ Change      % Change
Virtual currency                 $    280,087        $ 268,137       $ 11,950          4.5  %
Advertising                             6,964            1,745          5,219        299.1  %
Other revenue                             368                -            368             N/A
Net revenue                      $    287,419        $ 269,882       $ 17,537          6.5  %

Average DAU                             1,244            1,459           (215)       (14.7) %
Average MAU                             4,111            4,251           (140)        (3.3) %
Average DPU                                34               33              1          3.0  %
Average Daily Payer Conversion            2.7   %          2.3  %         0.4pp       17.4  %
ARPDAU (in dollars)              $       0.63        $    0.51       $   0.12         23.5  %
pp = percentage points


Revenue information by geography is summarized as follows (in thousands, except
percentages):

                                                      Years Ended December 31,
                                                      2021                    2020             Change             % Change
United States                                 $     250,252               $ 228,568          $ 21,684                   9.5  %
North America (excluding United States)              15,692                  17,368            (1,676)                 (9.6) %
Other                                                21,475                  23,946            (2,471)                (10.3) %
Net revenue                                   $     287,419               $ 269,882          $ 17,537                   6.5  %


Net revenue increased $17.5 million, or 6.5%, to $287.4 million during the year
ended December 31, 2021 compared to $269.9 million during the year ended
December 31, 2020. The increase was primarily driven by increases in both daily
payer conversion and spending per player, despite an overall decrease in DAU and
MAU. Virtual currency revenue increased $12.0 million, or 4.5%, to $280.1
million during the year ended December 31, 2021 compared to $268.1 million
during the year ended December 31, 2020, primarily driven by the global launches
of myVEGAS Bingo and MGM Slots Live. Our average daily payer conversion rate
increased 0.4 percentage points to 2.7% during the year ended December 31, 2021
from 2.3% during the year ended December 31, 2020. Additionally, advertising
revenue increased $5.2 million, or 299%, to $7.0 million during the year ended
December 31, 2021 compared to $1.7 million during the year ended December 31,
2020. The increase in advertising revenue was primarily driven by an increase in
impression count with and focus on providing more opportunities for our players
to engage with advertisements, including the addition of Tetris to our games
portfolio.

Operating Expenses

The following table summarizes our consolidated operating expenses for the completed years December 31, 2021 and 2020 (in thousands, except percentages):

                                               Years Ended December 31,                                                                       % of Net Revenue
                                               2021                    2020              $ Change              % Change                  2021                  2020
Operating expenses:
Cost of revenue                        $      91,642               $  91,469          $       173                     0.2  %                31.9  %               33.9  %
Selling and marketing                         79,042                  57,124               21,918                    38.4  %                27.5  %               21.2  %
Research and development                      61,343                  51,696                9,647                    18.7  %                21.3  %               19.2  %
General and administrative                    27,902                  16,960               10,942                    64.5  %                 9.7  %                6.3  %
Depreciation and amortization                 27,398                  22,192                5,206                    23.5  %                 9.5  %                8.2  %
Restructuring expenses                         3,082                  20,092              (17,010)                  (84.7) %                 1.1  %                7.4  %
Total operating expenses               $     290,409               $ 259,533               30,876                    11.9  %               101.0  %               96.2  %


                                       55
--------------------------------------------------------------------------------

Cost of income

The cost of income increased $ 0.2 millionor 0.2%, during the closed year December 31, 2021 with respect to the finished year December 31, 2020. As a percentage of net income, the cost of revenue decreased from 33.9% in the closed year December 31, 2020 up to 31.9% for the closed year December 31, 2021. The decrease was due to an increase in non-platform advertising revenue and a reduction in royalty charges associated with our revenue.

Sales and marketing

Selling and marketing expenses increased by $21.9 million, or 38.4%, during the
year ended December 31, 2021 compared to the year ended December 31, 2020. The
increase was primarily due to increased user acquisition costs of $20.9 million.
Of the total user acquisition costs increase, $18.8 million related to the
global launches of new games myVEGAS Bingo, MGM Slots Live, and Kingdom Boss and
$2.1 million for existing games myVEGAS Mobile, POP! Slots and my Konami.
Additionally, there were increases to the marketing payroll of $1.5 million and
outside services of $0.4 million, offset by a reduction of $0.9 million in other
marketing costs. As a percentage of net revenue, selling and marketing expenses
increased from 21.2% for the year ended December 31, 2020 to 27.5% for the year
ended December 31, 2021.

Research and Development

Research and development expenses increased by $9.6 million, or 18.7%, during
the year ended December 31, 2021 compared to the year ended December 31, 2020.
The increase was primarily due to a $5.8 million increase of payroll expenses,
$2.6 million increase of outside services related to the development of new
games, $0.7 million due to the transaction bonus paid pursuant to the Merger
Agreement, and $0.3 million in stock compensation. As a percentage of net
revenue, research and development expenses increased from 19.2% for the year
ended December 31, 2020 to 21.3% for the year ended December 31, 2021.

General and Administrative

General and administrative expenses increased by $10.9 million, or 64.5%, during
the year ended December 31, 2021 compared to the year ended December 31, 2020.
The increase was primarily due to a $4.2 million transaction bonus and a $2.5
million charitable donation, both paid per the terms of the Merger Agreement, as
well as a one-time charge for a $1.1 million increase in stock-based
compensation related to the premium voting rights associated with the shares of
Class B common stock and $2.2 million related to D&O insurance, offset by a
decrease of $0.3 million in all other expenses. As a percentage of net revenue,
general and administrative expenses increased from 6.3% for the year
ended December 31, 2020, to 9.7% for the year ended December 31, 2021.

Depreciation and amortization

Depreciation and amortization expenses increased by $5.2 million, or 23.5%,
during the year ended December 31, 2021 compared to the year ended December 31,
2020. The increase was primarily due to the launch of myVEGAS Bingo in March
2021, the licensing agreement associated with Tetris, and the global launch of
Kingdom Boss in December 2021. As a percentage of net revenue, depreciation and
amortization expenses increased from 8.2% for the year ended December 31, 2020
to 9.5% for the year ended December 31, 2021. See Note 8-Internal-Use Software,
Net and Note 9-Goodwill and Intangible Assets in our consolidated financial
statements.

Restructuring costs

Restructuring expenses decreased by $17.0 million during the year ended
December 31, 2021 compared to the year ended December 31, 2020. The decrease is
due to the prior year recognition of a one-time expense of $20.0 million
resulting from the termination of the profit share provision of the MGM
Marketing Agreement, partially offset by a $2.7 million increase in mergers and
acquisition related expenses recognized in the current year. As a percentage of
net revenue, restructuring expenses decreased from 7.4% for the year ended
December 31, 2020 to 1.1% for the year ended December 31, 2021.
                                       56
--------------------------------------------------------------------------------

Other income (expenses), net

The following table summarizes our consolidated non-operating income (expense)
for the years ended December 31, 2021 and 2020 (in thousands,
except percentages):

                                                     Years Ended December 31,
                                                      2021              2020            $ Change            % Change
Change in fair value of warrant liabilities       $  13,933          $      -          $ 13,933                      N/A
Interest expense                                       (235)             (142)              (93)                 65.5  %
Other (expense) income                                 (229)              929            (1,158)               (124.7) %
Total other income, net                           $  13,469          $    787          $ 12,682                1611.4  %



The change in fair value of warrant liabilities is related to the warrants
discussed in Note 3-Business Combination to our consolidated financial
statements herein. Interest expense for the years ended December 31, 2021 and
2020 is related to the unused commitment fees and debt issue costs associated
with the Credit Agreement and the Private Venture Growth Capital Loan,
respectively, as discussed in Note 13-Long-Term Debt to our consolidated
financial statements herein. Other (expense) income primary relates to gains or
(losses) from foreign currency transactions with our foreign subsidiaries.

Provision for Income Tax

Income tax benefit was approximately $0.3 million for the year ended
December 31, 2021, as compared to an income tax benefit of $1.7 million for the
year ended December 31, 2020. The income tax benefit for the year ended
December 31, 2021 reflected an effective income tax rate of negative 2.5%, which
was less than the statutory tax rate of 21% primarily due to the fair value
adjustment related to warrants issued which do not have a tax impact and
research and development credits that may be used on our federal and state tax
returns. The decrease in our effective tax rate was partially offset by the
recognition of uncertain tax benefits on research and development tax credits
for tax years 2017 through 2021, as well as the recognition of additional state
tax liabilities due to an updated nexus study. The income tax benefit reflected
an effective income tax rate of negative 15.0% for the year ended December 31,
2020, which was less than the statutory federal rate of 21.0% primarily due to
benefits from the exercise of non-qualified stock options and research and
development tax credits.

Comparison of the finished year December 31, 2020 with respect to the finished year
December 31, 2019

The following table summarizes our results of consolidated operations for the years ended December 31, 2020 and 2019 (in thousands, except percentages):

                         Years Ended December 31,
                           2020              2019         $ Change      % Change
Net revenue          $    269,882        $ 239,421       $ 30,461         12.7  %
Operating expenses        259,533          222,284         37,249         16.8  %
Operating income           10,349           17,137         (6,788)       (39.6) %
Net income                 12,807           13,614           (807)        (5.9) %
AEBITDA                    57,974           49,521          8,453         17.1  %
Net income margin             4.7   %          5.7  %        (1.0)       (17.5) %
AEBITDA margin               21.5   %         20.7  %         0.8          3.9  %


                                       57
--------------------------------------------------------------------------------

Revenue and Key Performance Indicators (in thousands, except percentages and
ARPDAU):

                                     Years Ended December 31,
                                       2020              2019         $ Change      % Change
Virtual currency                 $    268,137        $ 231,726       $ 36,411         15.7  %
Advertising                             1,745              383          1,362        355.6  %
Other revenue                               -            7,312         (7,312)      (100.0) %
Net revenue                      $    269,882        $ 239,421       $ 30,461         12.7  %

Average DAU                             1,459            1,635           (176)       (10.8) %
Average MAU                             4,251            4,813           (562)       (11.7) %
Average DPU                                33               33              -            -  %
Average Daily Payer Conversion            2.3   %          2.0  %         0.3pp       15.0  %
ARPDAU (in dollars)              $       0.51        $    0.39       $   0.12         30.8  %
pp = percentage points


Revenue information by geography is summarized as follows (in thousands, except
percentages):

                                                        Years Ended December 31,
                                                        2020                    2019            $ Change            % Change
United States                                   $     228,568               $ 200,418          $ 28,150                  14.0  %
North America (excluding United States)                17,368                  14,314             3,054                  21.3  %
Other                                                  23,946                  24,689              (743)                 (3.0) %
Net revenue                                     $     269,882               $ 239,421          $ 30,461                  12.7  %


Net revenue increased $30.5 million, or 12.7%, to $269.9 million during the year
ended December 31, 2020 compared to $239.4 million during the year ended
December 31, 2019. The increase in net revenue is primarily due to a $36.4
million increase in the sale of virtual currency and $1.4 million increase in
advertising revenue, offset by a $7.3 million decrease in game development
service revenue due to the termination of the King Agreement in June 2019.

The increase in sale of virtual currency was driven by the increased spending
per player as shown in the year-over-year increase in ARPDAU. We believe this
increase was due, in part, to shelter-in-place mandates issued in response to
the COVID-19 pandemic. The increase in player spending was partially offset by a
decline in DAU and MAU during the year ended December 31, 2020 compared to the
year ended December 31, 2019. The decrease in players reflects the impact of the
COVID-19 pandemic on the travel and tourism industries and the reduced
availability of rewards offered in our playAWARDS program. This decrease has
reinforced our belief that our players place a significant value on the
real-world rewards made available through our playAWARDS program. We believe
that the attractiveness of our playAWARDS program will improve as the impacts of
the COVID-19 pandemic decrease and tourism resumes.

While DAU and MAU indicate the overall size of our player base, our primary
focus is on expanding and maintaining the population of DPU. Our average daily
payer conversion rate increased 0.3 percentage points to 2.3% during the year
ended December 31, 2020 from 2.0% during the year ended December 31, 2019.
                                       58
--------------------------------------------------------------------------------

Operating expenses

The following table summarizes our consolidated operating expenses for the completed years December 31, 2020 and 2019 (in thousands, except percentages):

                                               Years Ended December 31,                                                                        % of Net Revenue
                                               2020                    2019               $ Change               % Change                 2020                  2019
Operating expenses:
Cost of revenue                        $      91,469               $  80,267               11,202                      14.0  %               33.9  %               33.5  %
Selling and marketing                         57,124                  59,931               (2,807)                     (4.7) %               21.2  %               25.0  %
Research and development                      51,696                  38,986               12,710                      32.6  %               19.2  %               16.3  %
General and administrative                    16,960                  16,712                  248                       1.5  %                6.3  %                7.0  %
Depreciation and amortization                 22,192                  25,154               (2,962)                    (11.8) %                8.2  %               10.5  %
Restructuring expenses                        20,092                   1,234               18,858                    1528.2  %                7.4  %                0.5  %
Total operating expenses               $     259,533               $ 222,284               37,249                      16.8  %               96.2  %               92.8  %


Cost of Revenue

Cost of revenue increased by $11.2 million, or 14.0%, during the year
ended December 31, 2020 compared to the year ended December 31, 2019. The
increase was due in part to a $10.9 million increase in payment processing fees,
which represents a 15.7% increase year over year. The increase is consistent
with the increase in revenue from the sale of virtual currency, which grew by
the same percentage amount. The increase was also due to the recognition of $0.3
million in non-recurring profit share expense in 2020 resulting from our
Marketing Agreement with MGM. This was partially offset by a $0.9 million
decrease in costs related to licensed games. As a percentage of net revenue,
cost of revenue increased slightly from 33.5% for the year ended December 31,
2019 to 33.9% for the year ended December 31, 2020. The increase reflects the
increase in revenue from virtual currency sales as a percentage of total net
revenue during the year ended December 31, 2020.

Sales and marketing

Selling and marketing expenses decreased by $2.8 million, or 4.7%, during the
year ended December 31, 2020 compared to the year ended December 31, 2019. The
decrease was due to a $4.5 million decrease in total player acquisition spend,
offset by a $2.1 million increase in spending on marketing expenses, such as
traditional advertising TV and radio advertisement campaigns, as well as related
overhead. As a percentage of net revenue, selling and marketing expenses
decreased from 25.0% for the year ended December 31, 2019 to 21.2% for the year
ended December 31, 2020, which reflects the effectiveness of our player
acquisition and pricing strategy.

Research & Development

Research and development expenses increased by $12.7 million, or 32.6%, during
the year ended December 31, 2020 compared to the year ended December 31, 2019.
The increase was due to the development of the new games myVEGAS Bingo and
Kingdom Boss of $4.6 million as well as to increases in payroll and outside
services of $12.1 million related to increased development cadence for new
games. The increase was partially offset by a $2.5 million reduction in
stock-based compensation expense. As a percentage of net revenue, research and
development expenses increased from 16.3% for the year ended December 31, 2019
to 19.2% for the year ended December 31, 2020.

General and Administrative

General and administrative expenses increased by $0.2 million, or 1.5%, during
the year ended December 31, 2020 compared to the year ended December 31, 2019.
The increase was due to a $1.8 million increase in charitable donations related
to the COVID-19 pandemic and a $0.3 million increase in payroll for general and
administrative staff. The increase was partially offset by a decrease in outside
services of $0.8 million as well as a decrease in expenses related to travel of
$1.1
                                       59
--------------------------------------------------------------------------------

million. As a percentage of net revenue, general and administrative expenses
decreased from 7.0% for the year ended December 31, 2019 to 6.3% for the year
ended December 31, 2020.

Depreciation and amortization

Depreciation and amortization expenses decreased by $3.0 million, or 11.8%,
during the year ended December 31, 2020 compared to the year ended December 31,
2019. The decrease was due to $2.4 million decrease in capitalized software
amortization and $0.7 million decrease in intangible asset amortization, offset
by $0.2 million increase in depreciation expense of property and equipment. The
decrease in capitalized software amortization was due to accelerated
amortization recognized in 2019 as a result of the termination of the King
Agreement. As a percentage of net revenue, depreciation and amortization
expenses decreased from 10.5% for the year ended December 31, 2019 to 8.2% for
the year ended December 31, 2020.

Restructuring costs

Restructuring expenses increased by $18.9 million during the year
ended December 31, 2020 compared to the year ended December 31, 2019. The
increase is due to the recognition of a one-time expense of $20.0 million
resulting from the termination of the profit share provision of the MGM
Marketing Agreement, partially offset by a $1.1 million decrease in severance
costs due to higher severance payments recognized in 2019. As a percentage of
net revenue, restructuring expenses increased from 0.5% for the year ended
December 31, 2019 to 7.4% for the year ended December 31, 2020.

Other income (expenses), net

The following table summarizes our consolidated non-operating income (expense)
for the years ended December 31, 2020 and 2019 (in thousands,
except percentages):

                                   Years Ended December 31,
                                       2020                  2019       $ Change       % Change

Interest expense                    (142)                    (264)           122        (46.2) %
Other income                         929                      716            213         29.7  %
Total other income, net    $         787                    $ 452      $     335         74.1  %


Interest expense for the years ended December 31, 2020 and 2019 is related to
the unused commitment fees and debt issue costs associated with the Private
Venture Growth Capital Loan, as discussed in Note 13-Long-Term Debt to our
consolidated financial statements herein. Other income primary relates to gains
from foreign currency transactions with our foreign subsidiaries.

Provision for Income Tax

Provision for income taxes resulted in a tax benefit of $1.7 million for the
year ended December 31, 2020, compared to a tax expense of $4.0 million for the
year ended December 31, 2019. Our effective tax rate was (15.0%) for the year
ended December 31, 2020, compared to our statutory tax rate of 21%. Our
effective tax rate for the year was reduced by 19.2% for the recognition of
stock-based compensation expense and the other benefits from the exercise of
Israeli non-qualified stock options. Effective January 1, 2020, our Israel
subsidiary made a check-the-box election to be treated as a disregarded entity
for U.S. federal income tax purposes. Prior to January 1, 2020, benefits from
the exercise of Israeli non-qualified stock options were not deductible. The
effective tax rate was further reduced by 9.1% for foreign tax credits generated
from the payment of foreign income taxes by our Israel and Hong Kong
subsidiaries. We also elected to fully utilize our remaining federal R&D tax
credit carryforward, resulting in a favorable 11.5% reduction to our effective
tax rate. Other effects of the check-the-box election resulted in a favorable
6.2% reduction to our effective tax rate. The overall change in our effective
tax rate was negatively impacted by 9.0% for the recognition of a valuation
allowance due to the uncertainty of future foreign source taxable income and our
ability to utilize the foreign tax credit. Discussion of the recognition of our
valuation allowance is further discussed in Note 14-Income Taxes to our
consolidated financial statements.

Liquidity and capital resources

As of December 31, 2021, we had cash and cash equivalents of $213.5 million,
which consisted of cash on hand and money market mutual funds. Historically, we
have funded our operations, including capital expenditures, primarily through
cash flow from operating activities. We believe that our existing cash and cash
equivalents, the cash generated from
                                       60
--------------------------------------------------------------------------------

operations, and the borrowing capacity under our Credit Agreement as described
below will be sufficient to fund our operations and capital expenditures for the
foreseeable future. However, we intend to continue to make significant
investments to support our business growth and may require additional funds to
respond to business challenges, including the need to develop new games and
features or enhance our existing games, improve our operating infrastructure, or
acquire complementary businesses, personnel and technologies. Accordingly, we
may need to engage in equity or debt financings to secure additional funds or we
may decide to do so opportunistically.

Debt

On June 24, 2021, in connection with the Closing, Old PLAYSTUDIOS terminated and
replaced its then existing revolving credit facility with Silicon Valley Bank
(the "Revolver"). We, one of our subsidiaries, JPMorgan Chase Bank, N.A., as
administrative agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and
Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers
entered into a credit agreement (the "Credit Agreement") which provides for a
five year revolving credit facility in an aggregate principal amount of $75
million. Borrowings under the Credit Agreement may be borrowed, repaid, and
re-borrowed by us, and are available for working capital, general corporate
purposes, and permitted acquisitions. Commitment fees and interest rates are
determined on the basis of either a Eurodollar rate or an Alternate Base Rate
plus an applicable margin. The applicable margins are initially 2.50%, in the
case of Eurodollar loans, and 1.50%, in the case of Alternate Base Rate loans.
The applicable margin is subject to adjustment based upon our Total Net Leverage
Ratio (as defined in the Credit Agreement). Eurodollar rates and the Alternate
Base Rate are subject to floors of 0.00% and 1.00%, respectively. The Credit
Agreement contains various affirmative and negative financial and operational
covenants applicable to us and our subsidiaries. We are also obligated to comply
with two financial maintenance covenants as of the end of each fiscal quarter,
commencing with the quarter ended September 30, 2021: (i) we must maintain a
Total Net Leverage Ratio not to exceed 3.50:1.00 (subject to increase to
4.00:1.00 following consummation of certain material acquisitions) and (ii) we
must maintain a Fixed Charge Coverage Ratio of not less than 1.25:1.00. As of
December 31, 2021, we have not drawn any amounts under the Credit Agreement.

Cash flows

The following table present a summary of our cash flows for the periods
indicated (in thousands):

                                                              Years Ended December 31,
                                                          2021          2020          2019
Net cash provided by operating activities              $ 33,876      $ 48,400      $ 36,088
Net cash used in investing activities                   (56,936)      (27,002)      (25,292)
Net cash provided by (used in) financing activities     186,892        (3,635)       (7,348)
Effect of exchange rate on cash and cash equivalents        743           142           (26)
Increase in cash and cash equivalents                   164,575        17,905         3,422


Operating Activities

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. During
the year ended December 31, 2021, operating activities provided $33.9 million of
net cash as compared to $48.4 million during the year ended December 31, 2020.
The decrease in net cash provided from operating activities was primarily due to
a one-time charge for the $5.0 million transaction bonus and a $2.5 million
charitable donation, paid per the terms of the Merger Agreement.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019. During
the year ended December 31, 2020, operating activities provided $48.4 million of
net cash as compared to $36.1 million during the year ended December 31, 2019.
While net income decreased by $1.0 million during the year ended December 31,
2020, operating cash flows increased by $12.3 million during the period. This
was due to a one-time non-cash charge of $20.0 million from the termination of
the profit share provision of the MGM Marketing Agreement that had no impact on
operating cash flows during the period, as it was not paid as of December 31,
2020. On June 21, 2021 and in connection with the PIPE Financing, the Company
issued $20 million of Class A common stock to MGM related to the settlement of
the termination of the profit share provision. The increase in net cash provided
from operating activities was primarily due to this favorable change in accrued
liabilities. The impact of this favorable change was partially offset by the
$6.0 million decrease in deferred income tax expense.
                                       61
--------------------------------------------------------------------------------

Investment activities

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. During
the year ended December 31, 2021, investing activities used $56.9 million of net
cash as compared to $27.0 million during the year ended December 31, 2020. The
Company paid $13.0 million of upfront fees related to licensing agreements, $8.0
million in an advanced payment related to licensing agreements, and purchased
$9.5 million of investments and notes receivables. Capitalized cost of
development games increased by $2.5 million, reflecting the development of
myVEGAS Bingo and Kingdom Boss, both released in 2021, while property and
equipment purchases declined by $0.2 million between periods.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019. During
the year ended December 31, 2020, investing activities used $27.0 million of net
cash as compared to $25.3 million during the year ended December 31, 2019.
Capitalized cost of development games increased by $4.2 million, reflecting the
development of our games myVEGAS Bingo and Kingdom Boss, while property and
equipment purchases declined by $2.5 million between periods, as the 2019 period
reflected one-time leasehold improvements and purchases related to an increase
in workforce.

Financing Activities

Our cash flow from financing activities consists primarily of the proceeds of the business combination and PIPE financing and the exercise of stock options.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. During
the year ended December 31, 2021, financing activities provided $186.9 million
of net cash as compared to $3.6 million of net cash used in financing activities
during the year ended December 31, 2020. This increase is primarily due to
$185.2 million of net proceeds from the Business Combination and PIPE Financing
and $2.4 million of proceeds from the exercise of stock options offset by other
payments of $0.7 million compared to the year ended December 31, 2020.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019. During
the year ended December 31, 2020, financing activities used $3.6 million of net
cash as compared to $7.3 million during the year ended December 31, 2019. This
decrease is primarily due to less repurchases of common stock for retirement.

Contractual obligations, commitments and contingencies

The following table summarizes our contractual obligations as of December 31,
2021 (in thousands):

                                                     Less than 1                                                   More than 5
                                    Total                year              2-3 Years           4-5 Years              years
Operating leases                 $  18,739          $     4,200          $    8,764          $    5,143          $        632
Minimum guarantee
obligations                          5,200                5,200                   -                   -                     -
Total                               23,939                9,400               8,764               5,143                   632


Our other long-term liabilities in the consolidated balance sheet include
unrecognized tax benefits and related interest and penalties. As of December 31,
2021, we had gross unrecognized tax benefits of $0.6 million and an additional
$0.2 million for interest and penalties classified as long-term liabilities. At
this time, we are unable to make a reasonably reliable estimate of the timing of
payments in individual years in connection with these tax liabilities;
therefore, such amounts are not included in the above contractual obligation
table.

Critical accounting policies and estimates

Our management's discussion and analysis of our financial condition and results
of operations is based on our consolidated financial statements, which have been
prepared in accordance with U.S. GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements, as
well as the reported revenue generated and expenses incurred during the
reporting periods. Our estimates are based on our historical experience and
various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about items that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

Software for internal use

The company recognizes the costs of developing software for internal use in accordance with the Coding of Accounting Standards (ASC) 350-40, Software for internal use. Capitalized costs include consulting fees, payroll, and payroll

                                       62
--------------------------------------------------------------------------------

costs, and stock-based compensation for employees who devote time to the
Company's internal-use software projects. Capitalization begins when the
preliminary project stage is complete and the Company commits resources to the
software project and continues during the application development stage.
Capitalization ceases when the software has been tested and is ready for its
intended use. Qualified costs incurred during the
post-implementation/post-operation stage of the Company's software applications
relating to upgrades and enhancements are capitalized to the extent it is
probable that they will result in added functionality. Costs that cannot be
separated between maintenance of, and minor upgrades and enhancements to,
internal-use software are expensed as incurred. Capitalized internal-use
software development costs are amortized on a straight-line basis over a
three-year estimated useful life. The Company believes that a straight-line
basis for amortization best represents the pattern through which the Company
derives value from internal-use software. The Company evaluates the useful lives
of these assets and test for impairment whenever events or changes in
circumstances occur that could impact the recoverability of these assets.

Income recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No.
2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU
2014-09 combined with all subsequent amendments, which is collectively ASC 606,
Revenue from Contracts with Customers, provides guidance outlining a single
five-step comprehensive revenue model in accounting for revenue from contracts
with customers which supersedes all existing revenue recognition guidance,
including industry-specific guidance. ASU 2014-09 also required expanded
disclosures relating to the nature, amount, timing and uncertainty of revenue
and cash flows arising from contracts with customers. On January 1, 2019, the
Company adopted the new accounting standard and related amendments
(collectively, the "new revenue accounting standard") using the modified
retrospective method.

The company determines the recognition of income by:

• identify the contract, or contracts, with a client;

• identify the obligations to perform each contract;

• determine the price of the transaction;

• assign the transaction price to the obligations to perform each contract; i

• Recognize revenue when, or how, the company fulfills performance obligations by transferring the promised goods or services.

Virtual currency

The Company develops and operates free-to-play games which are downloaded and
played on social and mobile platforms. Players may collect virtual currency free
of charge through the passage of time or through targeted marketing promotions.
Additionally, players can send free "gifts" of virtual currency to their friends
through interactions with certain social platforms. Players may also purchase
additional virtual currency through accepted payment methods offered by the
respective platform. Once a purchase is completed, the virtual currency is
deposited into the player's account and is not separately identifiable from
previously purchased virtual currency obtained by the player for free. Once
obtained, virtual currency (either free or purchased) cannot be redeemed for
cash nor exchanged for anything other than game play. When virtual currency is
consumed in our games, the player could "win" and would be awarded additional
virtual currency or could "lose" and lose the future use of that virtual
currency. As the player does not receive any additional benefit from our games,
nor is the player entitled to any additional rights once the player's virtual
currency is substantially consumed, the Company has concluded that the virtual
currency represents consumable goods.

Players can earn loyalty points through a variety of activities, including but
not limited to playing the Company's games, engaging with in-game advertising,
engaging with marketing emails, and logging into the game. The loyalty points
can be redeemed for rewards offered by the Company's awards partners. There is
no obligation for the Company to pay or otherwise compensate the Company's
awards partners for any player redemptions under the Company's awards partner
agreements. In addition, both paying and non-paying players can earn loyalty
points. Therefore, the loyalty points earned by players are marketing offers and
do not provide players with material rights. Accordingly, the loyalty points do
not require any allocation to the transaction price of virtual currency.

Additionally, certain of the Company's games participate in an additional
program which ranks players into different tiers based on tier points earned
during a given time frame. Tier points can be earned through a variety of player
engagement activities, including but not limited to logging into our games,
achieving multi-day log-in streaks, collecting hourly bonuses,
                                       63
--------------------------------------------------------------------------------

and purchasing virtual currency bundles. Depending on the tier, players are
granted access to special benefits at the Company's discretion. Similar to
loyalty points that are redeemable into real-world rewards, the tier points are
not awarded as a result of a contract with a customer since both paying and
non-paying players can earn these tier points. As a result, the tier points
earned by players do not provide players with material rights and do not require
any allocation to the transaction price of virtual currency.

The Company has the performance obligation to display and provide access to the
virtual currency purchased by the Company's player within the game whenever the
player accesses the game until the virtual currency is consumed. Payment is
required at the time of purchase and the transaction price is fixed. The
transaction price, which is the amount paid for the virtual currency by the
player is allocated entirely to this single performance obligation.

As virtual currency represents consumable goods, the Company recognizes revenue
as the virtual currency is consumed over the estimated consumption period. Since
the Company is unable to distinguish between the consumption of purchased or
free virtual currency, the Company must estimate the amount of outstanding
purchased virtual currency at each reporting date based on player behavior. The
Company has determined through a review of player behavior that players who
purchase virtual currency generally are not purchasing additional virtual
currency if their existing virtual currency balances have not been substantially
consumed. As the Company can track the duration between purchases of virtual
currency for individual players, the Company is able to reliably estimate the
period over which virtual currency is consumed. Based upon an analysis of
players' historical play behavior, the timing difference between when virtual
currency is purchased by a player and when such virtual currency is consumed in
gameplay is relatively short, currently one to seven days with an average
consumption period of approximately one day. The Company recognizes revenue from
in-game purchases of virtual currency over this estimated average period between
when the virtual currency is purchased and consumed. If applicable, the Company
records the unconsumed virtual currency in "Deferred revenue" and records the
prepaid payment processing fees associated with this deferred revenue in
"Prepaid expenses".

The Company continues to gather detailed player behavior and assess this data in
relation to its revenue recognition policy. To the extent the player behavior
changes, the Company reassesses its estimates and assumptions used for revenue
recognition prospectively on the basis that such changes are caused by new
factors indicating a change in player behavior patterns.

Advertising revenue

The Company has contractual relationships with various advertising service
providers for advertisements within the Company's games. Advertisements can be
in the form of an impression, click-throughs, banner ads, or offers. Offers are
advertisements where the players are rewarded with virtual currency for watching
a short video. The Company has determined the advertising service provider to be
its customer and displaying the advertisements within its games is identified as
the single performance obligation. Revenue from advertisements and offers are
recognized at a point in time when the advertisements are displayed, or when the
player has completed the offer as the advertising service provider
simultaneously receives and consumes the benefits provided from these services.
The price can be determined by the applicable evidence of the arrangement, which
may include a master contract or a third-party statement of activity.

The transaction price is generally the product of the advertising units
delivered (e.g. impressions, videos viewed) and the contractually agreed upon
price per advertising unit. Further, the price per advertising unit can also be
based on revenue share percentages stated in the contract. The number of
advertising units delivered is determined at the end of each month so there is
no uncertainty about the transaction price. Payment terms are stipulated as a
specific number of days subsequent to end of the month, ranging from 45 to 60
days.

Principal Agent Considerations

The Company's games are played on various social and mobile third-party
platforms for which such third parties collect monies from players and remit net
proceeds after deducting payment processing fees. The Company is primarily
responsible for providing access to the virtual currency, has control over the
content and functionality of games before they are accessed by players, and has
the discretion to establish the pricing for the virtual currency. Therefore, the
Company concluded that it is the principal and as a result, revenues are
reported gross of payment processing fees. Payment processing fees are recorded
as a component of "Cost of revenue" in the accompanying Consolidated Statements
of Operations. The Company reports its advertising revenue net of amounts
retained by advertising service providers.
                                       64
--------------------------------------------------------------------------------

Income taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes,
which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in its
consolidated financial statements or tax returns. Under ASC 740, the Company
determines deferred tax assets and liabilities based on the temporary difference
between the consolidated financial statements and tax bases of assets and
liabilities using the enacted tax rates in effect for the year in which it
expects the differences to be recovered or settled. The Company establishes
valuation allowances when necessary, based on the weight of the available
positive and negative evidence, to reduce deferred tax assets to the amount that
is more likely than not to be realized.

The Company accounts for uncertain tax positions in accordance with ASC 740,
which requires companies to adjust their consolidated financial statements to
reflect only those tax positions that are more likely than not to be sustained
upon examination by taxing authorities based on the technical merits of the
issue. ASC 740 prescribes a comprehensive model for the consolidated financial
statement recognition, measurement, presentation, and disclosure of uncertain
tax positions taken or expected to be taken in income tax returns. The Company
recognizes interest and penalties related to unrecognized tax benefits in the
provision for income taxes.

We have elected to account for the impact of the global intangible low-taxed
income (GILTI) inclusion and base erosion anti-avoidance tax (BEAT) based on the
period cost method.

Recent accounting statements

See Note 2-Summary of Significant Accounting Policies to our consolidated
financial statements for more information about recent accounting
pronouncements, the timing of their adoption, and our assessment, to the extent
we have made one, of their potential impact on our financial condition and our
results of operations.

© Edgar Online, font Interviews

"mobile slot games" – Google News

Get Free 100 PHP by MNL168.com

#PLAYSTUDIOS #DISCUSSION #ANALYSIS #MANAGEMENT #FINANCIAL #CONDITION #RESULTS #OPERATIONS #form #10K

Previous post Rush Avenue Purchases Run It Once Poker Launch is envisioned in the US
Next post Evolution Baccarat Sport | Online games
jili777