Company: GAME
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023589
Chunk: 196

Company: GameSquare Holdings, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 196
---
 the Company
may first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the Company determines
it is more likely than not that goodwill is not impaired, an impairment test is not necessary. If an impairment test is necessary, management
estimates the fair value of the Company. If the carrying value of the Company exceeds its fair value, goodwill is determined to be impaired,
and an impairment charge equal to the excess of the carrying value over the related fair value of the Company will be recorded. If the
qualitative assessment indicates that it is more likely than not that goodwill is not impaired, further testing is unnecessary.

45

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. 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.

Contingencies

The
Company estimates loss contingencies in accordance with ASC 450-20, Loss Contingencies, which states that a loss contingency shall
be accrued by a charge to income if both of the following conditions are met: (i) information available before the consolidated financial
statements are issued or are available to be issued indicates that it is probable that a liability had been incurred at the date of the
consolidated financial statements and (ii) the amount of loss can be reasonably estimated. Management regularly evaluates current information
available to determine whether such accruals should be adjusted and whether new accruals are required.

Off-Balance
Sheet Arrangements

We
do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the
results of operations or financial condition of the Company including, without limitation, such considerations as liquidity and capital
resources.

Critical
Accounting Policies and Estimates

Our
discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements,
which have been prepared in accordance with GAAP. The preparation