Company: GCL
Filing Date: 2025-08-27
Form Type: DRS
Source: 0001213900-25-080905
Chunk: 283

Company: GCL Global Holdings Ltd
Filing Date: 2025-08-27
Form: DRS
Chunk 283
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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 of 50% was assigned to each scenario. Key assumptions included a risk-free rate of 4.11%, a one-year time to expiration,
and a volatility estimate of approximately 58%. 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.

In connection with the reverse
recapitalization, the Company assumed 16,500,000 Warrants outstanding from RFAC, consisting of 11,500,000 Public Warrants and 5,000,000
Private Placement Warrants. Both the Public Warrants and Private Placement Warrants met the criteria for equity classification. As the
fair value of the Warrants increased upon replacement in connection with the Business Combination,