Company: GCL
Filing Date: 2025-08-27
Form Type: DRS
Source: 0001213900-25-080905
Chunk: 166

Company: GCL Global Holdings Ltd
Filing Date: 2025-08-27
Form: DRS
Chunk 166
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 to a loss of approximately $0.5 million, $0.3 million and
$0.9 million for the year ended March 31, 2025, 2024 and 2023, respectively. As of March 31, 2025 and 2024, the contingent consideration
for acquisition amounted to approximately $1.1 million and $3.7 million, respectively.

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Convertible notes and derivative liabilities

We determined that the convertible
notes issued in connection with the Business Combination contained multiple embedded features, including conversion rights and a Top-Up
Share provision. Because our ordinary shares were not publicly traded at the time of issuance, the embedded features did not meet the
net settlement criterion under ASC 815. As such, we accounted for the entire instrument as a hybrid financial instrument measured at
fair value, with changes in fair value recognized in our consolidated statements of operations and comprehensive income (loss) until
conversion. Upon the conversion of the notes into equity on February 13, 2025, the embedded features were detached and separately evaluated.

As of the issuance date,
we determined that the fair value of the convertible notes approximated their carrying amount. The fair value was subsequently remeasured
as of February 12, 2025 using a probability-weighted scenario analysis that considered expected outcomes associated with the conversion
feature. Key inputs included the number of shares issuable upon conversion, the fair value of our ordinary shares at the measurement
date, and relevant discount factors. The fair value of the convertible notes as of February 12, 2025 was approximately $25.0 million.

We concluded that the Top-Up
Share feature met the definition of a derivative liability under ASC 815-40 due to its variable settlement structure and the fact that
it was not considered indexed to our own stock. Accordingly, we accounted for the Top-Up Share provision as a standalone derivative liability,
which is measured at fair value upon initial recognition and remeasured at each reporting date until settlement or expiration. Changes
in fair value are recognized in our consolidated statements of operations and comprehensive income (loss).

The Top-Up Share liability
was valued as of February 12, 2025 and March 31, 2025, using a Monte Carlo simulation model based on unobservable inputs. The fair value
measurement incorporated key assumptions, including our stock price, expected volatility, holding period, and the risk-free interest
rate. As the conversion date occurred shortly before our March