Company: GCL
Filing Date: 2025-07-31
Form Type: 20-F
Source: 0001213900-25-069672
Chunk: 230

Company: GCL Global Holdings Ltd
Filing Date: 2025-07-31
Form: 20-F
Item: Item 19
Chunk 230
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 In addition, the Company recognized a derivative asset related to a contractual
buy-back option and obligation (“ Buy-Back Feature”) embedded in the agreement. Under the terms of the agreement, the Company
has the sole discretion to exercise the buy-back option or may enforce a buy-back obligation requiring the minority shareholders of 2Game
to repurchase the acquired shares at a specified premium if certain financial targets are not met within the twelve months ended March
31, 2026. In accordance with ASC 815-40 “ Derivatives and Hedging,” the Company determined that the Buy-Back Feature met the
definition of a derivative, and therefore need to bifurcate and separately accounted for. As a result, the Buy-Back feature is recognized
as a derivative asset, measured initially and subsequently at fair value, with changes in fair value recognized in the consolidated statements
of operations and comprehensive income (loss) in each reporting period until the obligation is settled or expires.

As of March 31, 2025, the
fair value of the Buy-Back Feature was determined to be $269,119. The valuation was performed using a weighted average probability scenario
analysis, incorporating two mutually exclusive outcomes: (i) if the performance targets are not met, the fair value was calculated using
a forward pricing model; and (ii) if the performance targets are met, the fair value was estimated using the Black-Scholes option pricing
model. A probability of50% was assigned to each scenario. Key assumptions included a risk-free rate of4.11%, a one-year time to expiration,
and a volatility estimate of approximately58%. Since the closing date of the transaction (March 19, 2025) is near the valuation date
(March 31, 2025), the fair value at initial recognition and at period-end were deemed to be similar, and therefore, no change in fair
value was recorded. The resulting valuation reflects Level 3 inputs under the fair value hierarchy due to the use of significant unobservable
assumptions.

All adjustments to additional
paid-in capital were made in accordance with ASC 810-10-45-23, “ Change in a parent’s ownership interest in a subsidiary,”
as there was no change in control.

Public and Private Placement Warrant (“ Warrant”)

In connection with the reverse
recapitalization, the Company assumed16,500,000Warrants outstanding from RFAC, consisting of11,500,000Public Warrants and5,