Company: GCL
Filing Date: 2025-07-31
Form Type: 20-F
Source: 0001213900-25-069672
Chunk: 182

Company: GCL Global Holdings Ltd
Filing Date: 2025-07-31
Form: 20-F
Item: Item 19
Chunk 182
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 asset

In connection with the share
sale and purchase Agreement (“2Game SPA”) executed on March 19, 2025 between the Company and 2Game’s minority shareholders,
for the acquisition of an additional10% controlling interest in 2Game, the Company recognized a derivative asset related to a contractual
buy-back option and obligation (“ Buy-Back Feature”) embedded in the agreement. Under the terms of the agreement, the Company
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.

Contingent consideration for acquisitions

In connection with the business
combination set forth in Note 4, the Company recognized contingent consideration for acquisition upon completion of the business combination
in accordance with ASC 805-10-55-28. The Company determined the fair value of the contingent consideration for acquisition as the Company
has the obligation to pay cash or issuing shares to settle the contingent consideration upon 2Game’s achievement of certain performance
milestones.

In accordance with ASC 815-40
“ Derivatives and Hedging”, the Company determined that the contingent consideration for acquisition should classified as a
liability as it does not consider indexed to the Company’s stock. As a result, the contingent consideration for acquisition shall
be measured initially, and subsequently at fair value on each reporting date. The Company will continue to adjust the carrying value of
the contingent consideration for acquisitions until contingency is finally determined. Any changes in fair value will be recorded as a
gain or loss in the statements of operations and comprehensive income (loss).

Contingent consideration
for acquisition was valued at the time of acquisitions and each of the financial statement date, using unobservable inputs and discounted
cash flow methodology. The determination of the fair value is based on discounted cash flows, the key assumptions include the probability
of meeting each performance target