Company: GAME
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004869
Chunk: 584

Company: GameSquare Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 3
Chunk 584
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uals are required (see Note 18).

(s)
Fair value measurement

The
Company categorizes its financial assets and liabilities measured at fair value into one of three different levels depending on the observability
of the inputs used in the measurement.

Level
1: This level includes assets and liabilities measured at fair value based on unadjusted quoted prices for identical assets and liabilities
in active markets that are accessible at the measurement date.

    F-18

Level
2: This level includes valuations determined using directly or indirectly observable inputs other than quoted prices included within
Level 1.

Level
3: This level includes valuations based on inputs which are unobservable.

See
Note 21 for a summary of the Company’s financial assets and liabilities, detailed by level.

(t)
Fair value option for convertible debt

The
Company elected the Fair Value Option (“FVO”) for recognition of its convertible debt as permitted under ASC 825, Financial
Instruments. (see Note 11). Under the FVO, the Company recognizes the convertible debt at fair value with changes in fair value recognized
in earnings. The FVO may be applied instrument by instrument, but it is irrevocable. As a result of applying the FVO, any direct costs
and fees related to the convertible debt is recognized in operating expense in the consolidated statements of operations and comprehensive
loss as incurred and not deferred. Changes in fair value of the convertible debt is recognized as a separate line in the consolidated
statements of operations and comprehensive loss.

(u)
Share capital

Common
shares are classified as equity. Transaction costs directly attributable to the issue of common shares, share purchase options (“Options”),
and equity classified warrants are recognized as a deduction from equity, net of any tax effects. When share capital recognized as equity
is repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from total
equity.

As
discussed in Note 1(a) above, although the historical financial statements reflect the activity of GSQ, the equity structure, including
equity interest issued, is that of GameSquare (formerly Engine Gaming and Media, Inc.), the legal parent. Accordingly, all share activity
disclosed, and strike or exercise prices where applicable, have been retroactively adjusted to Common shares of GameSquare based on the
exchange ratio of 0.020655 (see Note 4).

(v)
Net loss per share attributable to common shareholders

The
Company calculates earnings per share attributable to