Note 12 — Related party transactions

Service Agreements

The Company had previously entered into an Intra-Group Services Agreement with Interactive, pursuant to which, among other things, the Company and its subsidiaries provided certain specified services to Interactive. In addition, Interactive provides certain services to the Company. Beginning in 2022, the Company no longer provided specified services to Interactive, but Interactive continued to provide specified services to the Company. There also exists an agreement with another affiliate, Spike Up, wherein Spike Up provides marketing and promotion and other operating support for the Company.

For the three months ended June 30, 2025 and 2024, the Company generated revenues of $1.1 million and $111 thousand, respectively, related to the services performed by Interactive and Spike Up for the Company, which was included in net revenues in the unaudited condensed consolidated statements of operations. For the six months ended June 30, 2025 and 2024, the Company generated revenues of $2.7 million and $290 thousand, respectively, related to the services performed by Interactive and Spike Up for the Company, which was included in net revenues in the unaudited condensed consolidated statements of operations.

For the three months ended June 30, 2025 and 2024, the Company recognized $259 thousand and $139 thousand, respectively, for marketing and other operating costs performed by Spike Up on behalf of the Company, which was included in advertising and promotion in the unaudited condensed consolidated statements of operations.  For the six months ended June 30, 2025 and 2024, the Company recognized $985 thousand and $272 thousand, respectively, for marketing and other operating costs performed by Spike Up on behalf of the Company, which was included in advertising and promotion in the unaudited condensed consolidated statements of operations. 

For the three months ended June 30, 2025 and 2024, the Company also incurred other costs from Spike Up that were included in the unaudited condensed consolidated statement of operations, consisting of $449 thousand and $645 thousand, respectively, included in direct operating costs.  For the six months ended June 30, 2025 and 2024, the Company also incurred other costs from Spike Up that were included in the unaudited condensed consolidated statement of operations, consisting of $896 thousand and $1.4 million, respectively, included in direct operating costs. 

For the three and six months ended June 30, 2025 and 2024, the Company recognized an amount less than a thousand dollars in both periods, for services performed by Interactive for the Company which was included in general and administrative expenses in the unaudited condensed consolidated statements of operations. 

Happy Hour Solutions Ltd., a company registered in Cyprus and a subsidiary of Happy Hour Entertainment Holdings Ltd., one of our principal shareholders, is the holder of an Estonian gaming license, and as of October 21, 2021 entered into a Services Agreement with HR Entertainment Ltd., a company registered in the British Virgin Islands, whereby Happy Hour Solutions would provide gaming and technical and solutions, as well as hosting and cloud services, customer services, management information systems and other operational services for HR Entertainment. Pending receipt of an Estonian gaming license, for which we intend to apply following close of our public offering, we entered into several agreements with Happy Hour Solutions Ltd., including:

The Happy Hour Solutions Agreements collectively allow Interstellar Entertainment N.V. access to additional online gaming revenues. In consideration of these agreements, HR Entertainment pays Happy Hour Solutions consideration of 1 thousand euros per month. Beginning in the fourth quarter of 2023, the Company also recognized certain administrative costs performed by certain subsidiaries of Happy Hour Entertainment Holdings. For the three and six months ended June 30, 2025 and 2024, the Company recognized an immaterial amount in both periods, for services performed for the Company by Happy Hour Entertainment Holdings and its wholly owned subsidiaries which was included in general and administrative expenses in condensed consolidated statements of operations. 

As of March 1, 2022, the Company entered into an agreement with Funnz (formerly known as WKND) to perform various services in connection with the conduct of the Company’s business. Funnz is a wholly-owned subsidiary of Happy Hour Entertainment Holdings Ltd. For the three and six months ended  June 30, 2025, the Company recognized an immaterial amount for services performed by Funnz, which was included general and administrative expenses in the unaudited condensed consolidated statement of operations. For the three months ended June 30, 2024, the Company recognized $34 thousand for services performed by Funnz, with $22 thousand included in general and administrative expenses and $12 thousand included in product and software development expenses in the unaudited condensed consolidated statement of operations. For the six months ended June 30, 2024, such services totaled $67 thousand, with $37 thousand included in general and administrative expenses and $30 thousand included in product and software development expenses in the unaudited condensed consolidated statement of operations. 

Due From/Due to Affiliates

The components of related party balances included in due from affiliates and due to affiliates on the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, are summarized as follows:

As of June 30, 2025 and December 31, 2024, the total amount due to Spike Up includes $1.9 million related to the HighRoller.com domain name purchase (see Note 6), with the respective remaining balances related to user acquisition costs.

Short-Term Unsecured Notes Payable to Stockholders 

On June 6, 2024, the Company entered into interest free short-term unsecured loans with existing shareholders for $500 thousand. The loans are due and payable on or before December 31, 2024. If not paid on or before maturity, the notes will accrue interest at a rate of 10% per year from the date of the original receipt of the funds. The loans are expected to be repaid substantially from operations. The Company repaid $35 thousand on October 28, 2024, converted $375 thousand of the loan into common stock on December 20, 2024, and paid the remaining balance of the loan on January 3, 2025, leaving a loan balance of $0 as of June 30, 2025.