Company: GAME
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004869
Chunk: 684

Company: GameSquare Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 4
Chunk 684
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 complex and required significant auditor judgment due to the significant estimation uncertainty in determining the fair
value of the respective reporting units. Management used a combination of income and market-based approaches to estimate the fair value
of each reporting unit. A significant emphasis is placed on the appropriateness of the estimate considerations used by management to determine
the fair value of reporting units due to the sensitivity of the fair value to the underlying assumptions. The significant assumptions
include forecasted revenues and the discount rate used to discount future cash flows. These significant assumptions related to the fair
value of these reporting units are forward-looking and could be affected by future economic and market conditions.

How
the Critical Audit Matter Was Addressed in the Audit

In
testing the valuation of each reporting unit, we performed audit procedures that included, among others:

    ■
    Obtaining
    an understanding of internal controls over the Company’s process for determining the fair value of reporting units used in
    the impairment assessment. This included controls over management’s development of the above-described assumptions
    used in the valuation model applied. 

    ■
    Evaluating
    the Company’s use of the income and market-based approaches and testing the significant assumptions used in the model, as
    described above. 

    ■
    We
    evaluated the completeness and accuracy of underlying data used in supporting the assumptions and estimates. 

    ■
    We
    evaluated the reasonableness of significant assumptions such as the projected revenue growth used within the forecast against
    analyst expectations, industry trends, market trends, and other market information. 

    ■
    We
    involved valuation specialists to assist in evaluating the Company’s use of the income and market-based approaches and
    selection of the discount rate. Our valuation specialists evaluated the discount rate by comparing it against a discount rate range
    that was independently developed using publicly available market data for comparable entities.

Revenue recognition 

Description of the Matter

As described in Note 2(e) to the consolidated financial
statements, the Company’s revenue includes brand sponsorships, content creation and monetization, league participation, talent representation,
influencer promotions, software-as-a-service and advertising. For all contracts, management identifies the performance obligations at
contract inception by evaluating whether the promised services are distinct. Performance obligations within the majority of the Company’s
contracts comprise a series of distinct services that are recognized over time and are treated as a single performance obligation or at
a point in time and are treated as a single performance obligation, as applicable