Company: GCL
Filing Date: 2025-07-31
Form Type: 20-F
Source: 0001213900-25-069672
Chunk: 223

Company: GCL Global Holdings Ltd
Filing Date: 2025-07-31
Form: 20-F
Item: Item 19
Chunk 223
---
 the calculate the Exchange Ratio for the Business Combination is less than $10.00per share.
Epic SG has agreed to unconditionally guarantee all of the Company’s obligations and performance under $33,250,000of the Note,
including but not limited to the Company’s obligation to pay.

F-41

GCL GLOBAL HOLDINGS LTD
AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition, the issuance costs in connection with these Notes amounted
to $1,590,750and were expensed in full on the issuance date, as the Company elected to account for the convertible notes at fair value
under the fair value option.

Upon completion of the Business
Combination on February 13, 2025, the aggregate principal amount of the Notes, net of unamortized discount, amounted to $33,025,000which
was converted into7,338,887ordinary shares of the Company. In addition,2,201,665shares of the Company’s ordinary shares
were issued and held in an escrow account for three years as the Bonus Shares.

The Company evaluated the
convertible notes agreement under ASC 470 Debt (“ ASC 470”), and ASC 815 Derivatives and Hedging (“ ASC 815”). ASC
815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation
and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of
the host contract.

The Company elected to measure the entire convertible note, including
all embedded features, at fair value option under ASC 825 on the issuance date, with changes in fair value recognized through earnings
until conversion. The fair value of the convertible notes was determined the same as its carrying value at issuance than reevaluated upon
conversion by using a scenario-based probability-weighted approach for the conversion and bonus share components and a Monte Carlo simulation
model for the top-up share feature. Subsequently, the component of fair value changes relating to the instrument specific credit risk
of the convertible note is minimal. Key assumptions included stock price volatility, share price at measurement dates, risk-free rate,
and the expected holding period.

Upon the closing of the Business
Combination, the convertible notes automatically converted into equity, and the related embedded features were detached and re-evaluated.
The bonus share provision was determined to be clearly and closely related to equity and was not bifurcated. However,