Company: GAME
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004869
Chunk: 579

Company: GameSquare Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 3
Chunk 579
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)
Accounts receivable and allowance for credit losses

Trade
accounts receivable are recorded at the invoiced amount and generally do not bear interest. The Company follows the allowance method
of recognizing uncollectible accounts receivable, which recognizes bad debt expense based on a review of the individual accounts outstanding
and prior history of uncollectible accounts receivable. Credit is extended based on evaluation of each of our customer’s financial
condition and is generally unsecured. Accounts receivable are stated net of an allowance for doubtful accounts in the consolidated balance
sheets. An allowance for doubtful accounts is established at origination and is based on the lifetime expected credit losses of the trade
receivables in consideration of a number of factors, including the length of time trade accounts are past due, previous loss history,
the creditworthiness of individual customers, and future economic outlook. The amount of any increase in the allowance for doubtful accounts
is recognized in the consolidated statements of operations and comprehensive loss. When a trade receivable is uncollectible, it is written
off against the allowance. Subsequent recoveries of amounts previously written off are credited to the consolidated statements of operations
and comprehensive loss. The Company had an allowance for doubtful accounts of $2.8 million and $1.2 million as of December 31, 2024 and
2023, respectively.

    F-15

(h)
Prepaid expenses and other current assets

Prepaid
expenses and other assets consist primarily of prepaid expenses such as insurance as well as acquisition costs of players and security
deposits. Acquisition costs of players are amortized on a straight-line basis over the players’ contract terms.

(i)
Promissory note receivable and allowance for credit losses

The
Company received a secured subordinated promissory note as part of the purchase consideration received for the sale of Complexity and
sale of Frankly Media assets (see Note 4). The promissory note receivables are classified as not held-for-sale and measured at amortized
cost, net of any allowance for credit losses, in accordance with ASC 310, Receivables. The Company maintains an allowance for
expected credit losses to reflect the expected collectability of the promissory note receivable based on historical collection data and
specific risks identified, as well as management’s expectation of future economic conditions. At each reporting date the Company
assesses whether the credit risk on its promissory note receivable has increased significantly since initial recognition.

The
promissory note rece