Company: GAME
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010979
Chunk: 137

Company: GameSquare Holdings, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 137
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 a Membership Interest Purchase
Agreement (the “MIPA”) to sell all of the issued and outstanding equity interest of NextGen Tech, LLC (“Complexity”)
to Global Esports Properties, LLC (the “Buyer”) (the “Transaction”).

Pursuant
to the MIPA, Buyer paid the Company aggregate purchase consideration with a Transaction closing date fair value of $7.9 million in exchange
for the equity interests of Complexity, including $0.8 million paid in cash upon closing of the transaction and issuance of a secured
subordinated promissory note (the “Note”) with a Transaction closing date fair value of $7.1 million. The Note was valued
using a discount rate of 15% (Level 3).

As
a result of the Transaction, during the three months ended March 31, 2025 and 2024, Complexity met the requirements to be reported as
discontinued operations (see Note 17). The Company recognized a gain of $3.0 million in net income (loss) from discontinued operations
in the consolidated statements of operations and comprehensive loss after offsetting the consideration received with the carrying value
of the disposed assets and liabilities. Complexity assets and liabilities disposed had a net carrying value of $4.9 million and consist
primarily of $2.6 million of accounts receivable, $2.2 million of property and equipment, and $1.8 million of intangible assets, partially
offset by $0.8 million of accounts payable $1.4 million of accrued liabilities.

The
Note has a principal amount of $9.5 million and bears interest at 3.0% per annum. The principal amount of the Note, together with all
accrued interest, is due on February 28, 2027. The Note is secured by assets of the Buyer pursuant to a Security Agreement executed in
conjunction with the MIPA between the Company and the Buyer.

(c)
Frankly Media asset disposal

On
May 31, 2024, the Company, through its wholly owned subsidiary Frankly Media LLC (“Frankly”), entered into an Asset Purchase
Agreement (the “UNIV APA”) to sell the producer content management software platform and associated software technology (“CMS
Assets”) of Frankly to UNIV, Ltd (“UNIV”) (the “UNIV Asset Sale”).

Pursuant
to the UNIV APA, UNIV paid the Company aggregate purchase consideration with a transaction closing date