Company: GAME
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004869
Chunk: 1355

Company: GameSquare Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 8
Chunk 1355
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 the Company, through its wholly owned subsidiary GameSquare Esports (USA), Inc., entered into 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 year ended December 31, 2024, Complexity met the requirements to be reported as discontinued
operations (see Note 19). 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.

(e)
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, UN