Core Viewpoint - GameSquare Holdings, Inc. has initiated its first stock repurchase under a $5 million authorization, indicating a strategic move to enhance shareholder value [1] Group 1: Stock Repurchase Details - The company repurchased 833,124 shares of its common stock for a total of $599,148 [1] - The average price per share for the repurchase was approximately $0.7192 [1]

Core Points - GameSquare Holdings is urging shareholders to vote by October 6, 2025, for a statutory merger aimed at modernizing governance and simplifying corporate structure to support long-term growth [1] - The Click acquisition is highlighted as a strategic move to enhance access to talent and brand relationships, facilitating smarter capital allocation and strategic options [3] Financial Highlights - Click Management generated $12.4 million in revenue in 2024 and has completed over 545 commercial deals globally [5] - GameSquare anticipates Click will contribute $14.5 million in annualized pro forma revenue and approximately $1.2 million in annualized pro forma EBITDA in the second half of 2025, excluding operating synergies [5] - On a pro forma basis, GameSquare expects $36.8 million in revenue and $2.9 million in adjusted EBITDA for the second half of 2025 [5] - As of August 31, 2025, GameSquare holds $87.7 million in cash and on-chain assets, with less than $2 million in outstanding debt [5] - The consolidation of Sideqik into the Stream Hatchet offering is projected to reduce annual operating expenses by about $1.25 million [5]

Core Insights - GameSquare Holdings, Inc. has expanded its esports sponsorship deal with Rollbit, increasing annual revenue from $1.75 million to $3.25 million, marking one of the largest partnerships in esports history [1][2][3] Group 1: Partnership Details - The expanded partnership will deepen Rollbit's sponsorship of FaZe Clan's Counter-Strike team, featuring the Rollbit logo prominently on FaZe Clan Esports jerseys [2] - This agreement reflects Rollbit's commitment to the esports sector and its confidence in FaZe Clan's ongoing success [3] Group 2: Financial Impact - GameSquare's Web3 growth strategy has generated over $8 million in new annual revenue during Q3 2025, with expectations for continued revenue contributions from new partnerships [1][3] - The company has also secured additional partnerships, including a $2.0 million deal with Rekt Brands Inc. and a $2.5 million deal with Animecoin Foundation, further enhancing its revenue potential [3] Group 3: Strategic Vision - GameSquare aims to build sustainable, high-growth businesses at the intersection of culture and technology, leveraging its unique platform that integrates esports, media, and Web3 [3] - The company has developed an innovative treasury management program to enhance capital efficiency and generate yield, reinforcing its commitment to dynamic media operations [3]

Core Insights - Madison Square Garden Sports Corp. has announced a landmark partnership with GAME 7, marking GAME 7 as the first-ever jersey patch partner of the New York Rangers [1] Group 1 - The partnership will commence with the Rangers' centennial season in 2025-26 [1] - The collaboration will provide GAME 7 with year-round exposure across MSG's extensive sports and entertainment properties [1]

Core Insights - GameSquare Holdings, Inc. has launched an Ethereum treasury strategy aimed at generating onchain yield, with initial results showing a monthly yield of 7.84% as of August 31, 2025, significantly outperforming traditional staking yields [2][4] - The company has also initiated an NFT yielding program expected to enhance annualized yields and strengthen its position in onchain financial innovation [1][2] Financial Performance - As of July 31, 2025, GameSquare held 14,227.55 ETH valued at approximately $53.14 million, which increased to 15,731.07 ETH worth about $69.09 million by August 31, 2025 [2] - The company purchased 1,402.52 ETH on August 1, 2025, at a price of $3,565 per ETH [3] - The net asset value per share is reported at $0.78 based on a total of 98,361,398 shares outstanding [4] Strategic Initiatives - The NFT yielding program, managed by 1OF1 AG, commenced on September 1, 2025, and is anticipated to contribute positively to the company's annualized yields [1][2] - GameSquare has launched a dedicated website, holdings.gamesquare.com, to provide real-time updates on the value of its onchain assets, enhancing transparency for investors [4][6] Market Position - GameSquare's annualized yield of 7.84% is notably higher than Coinbase's staking yield of 1.89% and Ethereum's current staking yield, which is more than four times lower [4] - The company has eliminated all long-term debt during the third quarter, positioning itself for profitability through its onchain treasury management program [4]

Strategic Partnership - GameSquare Holdings 将购买价值 200 万美元的 REKT 代币 [1] - GameSquare 成为首家建立 REKT Treasury 的上市公司 (纳斯达克股票代码: GAME) [1] Market Impact - 该合作被视为 REKT 团队的重大新闻 [1]

[Executive Summary & Strategic Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Strategic%20Highlights) GameSquare is undergoing a transformative year, focusing on building a leading digital-first platform and targeting profitability by Q3 2025 [Key Business Developments & Strategic Initiatives](index=1&type=section&id=Key%20Business%20Developments%20%26%20Strategic%20Initiatives) GameSquare is transforming into a digital-first platform through divestitures, operational restructuring, strategic alliances, and investments in high-growth areas, aiming for profitability by Q3 2025 - 2025 is on track to be a transformative year for GameSquare, building a leading digital-first platform at the intersection of media, technology, esports, and onchain finance[2](index=2&type=chunk) - Completed divestiture of FaZe Media on April 1, 2025, restructured operations to streamline costs, formed a strategic alliance with GGTech Entertainment, and doubled down on high-growth areas across Experiences, Managed Services, and Technology[1](index=1&type=chunk)[2](index=2&type=chunk) - Launched a **$250 million** authorized onchain treasury management program, raising approximately **$90 million** in gross proceeds to strengthen the balance sheet and fund the initial phase[2](index=2&type=chunk) - Actively discussing with over **15 crypto-native organizations** for partnerships, expecting incremental, high-margin revenue streams starting **Q3** and building into **Q4**[3](index=3&type=chunk) - Targeting profitability for **2025 third quarter**, with the second half of 2025 positioned for revenue growth, enhanced margins, and reduced operating expenses[1](index=1&type=chunk)[4](index=4&type=chunk) [Treasury Management Update](index=2&type=section&id=Treasury%20Management%20Update) GameSquare established a strong financial position via its treasury management strategy, including significant Ethereum holdings, an NFT asset, and a yield strategy | Asset/Strategy | Details (as of Aug 13, 2025) | | :------------- | :----------------------------- | | ETH Holdings | 15,630.07 ETH | | Original Cost Basis (ETH) | $55 million | | Market Value (ETH) | $74.3 million | | Unrealized ETH Gains | ~$19.3 million | | NFT Holdings | CryptoPunk 5577 (purchased July 24, 2025 for $5.15M) | | NFT Yield Target | 6% to 10% annualized (managed by 1OF1 AG) | | Onchain Yield Strategy | Commenced Aug 1, 2025, targeting 8% to 14% annualized yields (with Dialectic) | | Total ETH + Cash | $99 million ($1.00 per share) | | Total Debt | $1.25 million | [Financial Performance Overview](index=2&type=section&id=Financial%20Performance%20Overview) GameSquare's financial performance shows decreased revenue but significantly reduced net losses and improved Adjusted EBITDA losses, reflecting operational efficiency [Three Months Ended June 30, 2025 (Q2 2025)](index=2&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20%28Q2%202025%29) Q2 2025 saw a revenue decrease but a substantial reduction in net loss and an improved Adjusted EBITDA loss, indicating progress in cost streamlining | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Revenue | $15.9 million | $17.8 million | -10.67% | | Gross Profit | $2.4 million | $2.5 million | -4.00% | | Net Loss Attributable to GameSquare | $3.0 million | $11.6 million | -74.14% | | Adjusted EBITDA Loss | $3.5 million | $4.2 million | -16.67% | | Adjusted EBITDA Loss % of Revenue | 22.1% | 23.4% | -1.3 ppts | [Six Months Ended June 30, 2025 (H1 2025)](index=2&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20%28H1%202025%29) H1 2025 experienced a slight revenue decline but achieved a notable increase in gross profit and a substantial reduction in net loss and Adjusted EBITDA loss | Metric | H1 2025 | H1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Revenue | $30.6 million | $33.4 million | -8.38% | | Gross Profit | $5.8 million | $4.6 million | +26.09% | | Net Loss Attributable to GameSquare | $8.2 million | $16.9 million | -51.48% | | Adjusted EBITDA Loss | $6.5 million | $8.7 million | -25.30% | | Adjusted EBITDA Loss % of Revenue | 21.1% | 26.0% | -4.9 ppts | [Updated 2025 Outlook](index=3&type=section&id=Updated%202025%20Outlook) GameSquare anticipates a significantly stronger operating and financial trajectory in H2 2025, driven by its Ethereum-based treasury management and restructuring [Outlook Summary](index=3&type=section&id=Outlook%20Summary) GameSquare expects a stronger H2 2025 due to treasury management and restructuring, planning to reintroduce full-year guidance in Q3 2025 - Company expects to reintroduce full-year guidance in the **third quarter of 2025** due to strong performance from treasury management and restructuring[9](index=9&type=chunk) - Operating and financial trajectory in the **second half of 2025** is expected to be significantly stronger[9](index=9&type=chunk) - Combination of improving operating profile and onchain treasury strategy provides a powerful foundation for long-term growth and shareholder value creation[10](index=10&type=chunk) [Key Drivers for H2 2025 Performance](index=3&type=section&id=Key%20Drivers%20for%20H2%202025%20Performance) H2 2025 performance is driven by the Ethereum yield strategy, unrealized ETH gains, back-half revenue weighting, pipeline closures, and reduced operating expenses - Launch of Ethereum Yield Strategy on **August 1, 2025**, targeting annualized onchain yields of **8% to 14%**[11](index=11&type=chunk) - Unrealized ETH Gains of approximately **$19.3 million** as of **August 13, 2025**[11](index=11&type=chunk) - Approximately **60% of 2025 core revenue** expected in **H2**, with Agency and Teams revenue improving consolidated gross margin[11](index=11&type=chunk) - Pipeline opportunities shifted from Q2 are now on track to close, expecting meaningful sequential revenue growth in **Q3** and **Q4**[11](index=11&type=chunk) - Ongoing restructuring initiatives to lower operating expenses in **H2 2025**, with an additional **$5 million** in annualized savings starting **Q3**[11](index=11&type=chunk) [Company Information & Disclosures](index=4&type=section&id=Company%20Information%20%26%20Disclosures) This section provides details on GameSquare's conference call, company overview, and important forward-looking information disclosures [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) GameSquare Holdings, Inc. held a conference call on August 14, 2025, to discuss results, featuring CEO Justin Kenna, President Lou Schwartz, and CFO Mike Munoz - Conference call held on **August 14, 2025**, at **5:00 pm ET**, hosted by CEO Justin Kenna, President Lou Schwartz, and CFO Mike Munoz[12](index=12&type=chunk) [About GameSquare Holdings, Inc.](index=4&type=section&id=About%20GameSquare%20Holdings%2C%20Inc.) GameSquare is a media, entertainment, and technology company connecting brands with Gen Z, Gen Alpha, and Millennial audiences, also operating a blockchain-native Ethereum treasury management program - GameSquare (NASDAQ:GAME) is a cutting-edge media, entertainment, and technology company targeting **Gen Z, Gen Alpha, and Millennial audiences**[13](index=13&type=chunk) - Platform includes award-winning creative services, advanced analytics, and FaZe Clan, operating one of the **largest gaming media networks in North America**[13](index=13&type=chunk) - Operates a blockchain-native Ethereum treasury management program to generate onchain yield and enhance capital efficiency[13](index=13&type=chunk) [Forward-Looking Information](index=4&type=section&id=Forward-Looking%20Information) This section contains standard forward-looking statements regarding future performance, revenue, growth, profitability, and business plans, subject to risks and uncertainties - News release contains forward-looking statements regarding future performance, revenue, growth, profitability, and business plans[15](index=15&type=chunk) - Forward-looking statements are based on estimates and assumptions, subject to known and unknown risks and uncertainties, which may cause actual results to differ materially[15](index=15&type=chunk) - Readers should not place undue reliance on forward-looking statements, and the Company assumes no obligation to update them except as required by law[15](index=15&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present GameSquare's balance sheets and statements of operations, reflecting changes in assets, liabilities, and net loss [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and liabilities from December 31, 2024, to June 30, 2025, resulting in a shift to a shareholders' deficit | Balance Sheet Item | June 30, 2025 | December 31, 2024 | Change | | :----------------- | :------------ | :---------------- | :----- | | Total Assets | $44,087,793 | $78,730,447 | -$34,642,654 | | Total Liabilities | $49,630,176 | $66,726,199 | -$17,096,023 | | Total Shareholders' Equity | $(5,542,383) | $12,004,248 | -$17,546,631 | | Cash | $4,697,832 | $12,094,950 | -$7,397,118 | | Accounts Receivable, net | $12,954,496 | $21,330,847 | -$8,376,351 | | Goodwill | $5,557,551 | $12,704,979 | -$7,147,428 | | Intangible Assets, net | $5,231,027 | $15,265,736 | -$10,034,709 | [Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The statements of operations show a significantly improved net loss for Q2 and H1 2025 compared to prior years, partly due to net income from discontinued operations | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $15,852,706 | $17,829,175 | $30,583,937 | $33,406,699 | | Gross Profit | $2,426,454 | $2,521,294 | $5,790,080 | $4,590,642 | | Net Loss | $(3,018,346) | $(12,003,141) | $(10,192,082) | $(17,264,089) | | Net Loss Attributable to GameSquare Holdings, Inc. | $(3,018,346) | $(11,613,551) | $(8,173,950) | $(16,874,499) | | Net Income (Loss) from Discontinued Operations | $3,020,335 | $(2,342,513) | $108,531 | $(533,355) | | Loss per common share (basic and diluted) | $(0.08) | $(0.38) | $(0.22) | $(0.71) | [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) This section explains GameSquare's use of non-GAAP financial measures like EBITDA and Adjusted EBITDA to provide a clearer view of underlying business performance [Management's Use of Non-GAAP Measures](index=8&type=section&id=Management%27s%20Use%20of%20Non-GAAP%20Measures) GameSquare uses non-GAAP measures like EBITDA and Adjusted EBITDA to assess performance, excluding non-recurring or non-cash expenses for a clearer business view - Company uses non-GAAP measures (**EBITDA, Adjusted EBITDA**) to assess performance, excluding expenses not reflective of underlying business or one-time/non-recurring items[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - EBITDA is defined as net income (loss) before depreciation and amortization, income taxes, and interest expense[21](index=21&type=chunk) - Adjusted EBITDA further excludes extraordinary, non-recurring, and non-cash items such as share-based compensation, transaction costs, restructuring costs, impairment, and fair value changes[22](index=22&type=chunk) [Reconciliation of Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This reconciliation details adjustments from net loss to Adjusted EBITDA for Q2 and H1 2025 and 2024, including interest, depreciation, share-based payments, and transaction costs | Reconciliation Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(3,018,346) | $(12,003,141) | $(10,192,082) | $(17,264,089) | | Interest expense | $(44,590) | $192,257 | $4,968 | $627,385 | | Amortization and depreciation | $302,360 | $564,346 | $558,825 | $1,182,368 | | Share-based payments | $5,616 | $602,139 | $34,614 | $1,021,367 | | Transaction costs | $547,188 | $1,037,044 | $1,292,565 | $2,130,464 | | Restructuring costs | $165,328 | $- | $782,541 | $- | | Gain on disposition of subsidiary | $(3,020,335) | $- | $(2,721,953) | $(3,009,891) | | Loss from discontinued operations | $- | $2,342,513 | $2,613,422 | $3,543,246 | | **Adjusted EBITDA** | **$(3,495,651)** | **$(4,165,198)** | **$(6,454,379)** | **$(8,695,287)** |

分组1 - GameSquare Holdings, Inc. reported a quarterly loss of $0.11 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.10, but an improvement from a loss of $0.26 per share a year ago, indicating a -10.00% earnings surprise [1] - The company posted revenues of $15.85 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 27.94%, and down from $28.59 million in the same quarter last year [2] - GameSquare Holdings, Inc. shares have increased by approximately 12.4% since the beginning of the year, outperforming the S&P 500's gain of 10% [3] 分组2 - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The estimate revisions trend for GameSquare Holdings, Inc. was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [6] - The current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $27 million, and for the current fiscal year, it is -$0.36 on revenues of $100.1 million [7] 分组3 - The gaming industry, to which GameSquare Holdings, Inc. belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Another company in the gaming industry, GDEV Inc., is expected to report quarterly earnings of $0.26 per share, reflecting a year-over-year decline of 67.9%, with revenues projected at $89.35 million, down 15.6% from the previous year [9]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $15.8 million, down 11% year-over-year from $17.8 million, primarily due to a reduction in programmatic advertising revenue [18] - Gross margin for Q2 2025 was $2.4 million, or 15.3% of sales, compared to $2.5 million, or 14.1% of sales, for the same period last year [18] - Adjusted EBITDA loss for Q2 2025 was $3.5 million, an improvement from a loss of $4.2 million in the previous year [18] Business Line Data and Key Metrics Changes - The company completed the divestiture of Faze Media, selling its remaining 25.5% stake for over $39 million, simplifying operations and reducing working capital requirements [6] - The agency business is experiencing an accelerating demand environment, with a strong sales pipeline and expectations for significant revenue growth in Q3 and Q4 [8][9] Market Data and Key Metrics Changes - The company holds 15,630 ETH with a current market value of $74.3 million, reflecting a significant unrealized gain since the launch of its treasury management strategy [3][16] - The company is in active discussions with over 15 crypto-native organizations, representing potential deal values in the eight figures [11] Company Strategy and Development Direction - GameSquare aims to build a leading digital-first platform at the intersection of media, technology, gaming, and on-chain finance, with a focus on profitability and higher-margin revenue opportunities [3][5] - The company is pursuing a three-pronged crypto-native growth strategy, including an Ethereum-based treasury strategy targeting annualized yields of 8% to 14% [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted that Q2 revenue was slightly below expectations due to macroeconomic factors, including tariffs affecting large deals with global gaming companies [28][29] - The company expects meaningful sequential growth in Q3 and Q4, supported by new wins and expansion with existing partners, with approximately 60% of 2025 revenue expected to be generated in the second half of the year [21][22] Other Important Information - The company has identified an additional $5 million in annualized savings from restructuring efforts, expected to contribute in Q3 [5][23] - A share repurchase program has been approved, allowing the company to buy back up to $5 million of its common stock, funded by the net proceeds of its on-chain yield strategy [17] Q&A Session Summary Question: Can you provide more color on the revenue performance being lighter than expected? - Management identified three main factors: macroeconomic impacts from tariffs, a slowdown in programmatic advertising revenue, and a renewed focus on the crypto space with active conversations ongoing [28][29][34] Question: What is the timing of the opportunities in the crypto space? - Management indicated that there are numerous active conversations and expects material results in the back half of the year, with several deals anticipated to close soon [36][44] Question: Where do you expect to derive additional restructuring savings from? - Management mentioned consolidating technology platforms and pulling out efficiencies within the business as key areas for additional savings [38][39]

[PART I – FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section covers the company's unaudited financial statements and management's analysis of its financial condition and operations [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company reported an $8.2 million net loss for H1 2025, with total assets decreasing to $44.1 million and a $27.6 million working capital deficiency raising going concern doubts [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a 44% decrease in total assets to $44.1 million and a negative shareholders' equity, indicating severe liquidity issues Balance Sheet Summary (as of June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash | $4,697,832 | $12,094,950 | -61.2% | | Total Current Assets | $20,623,889 | $36,472,572 | -43.4% | | Goodwill | $5,557,551 | $12,704,979 | -56.3% | | Intangible assets, net | $5,231,027 | $15,265,736 | -65.7% | | **Total Assets** | **$44,087,793** | **$78,730,447** | **-44.0%** | | **Liabilities & Equity** | | | | | Total Current Liabilities | $48,256,122 | $54,762,972 | -11.9% | | Total Liabilities | $49,630,176 | $66,726,199 | -25.6% | | **Total Shareholders' Equity** | **($5,542,383)** | **$12,004,248** | **-146.2%** | - The company reported a working capital deficiency of **$27.6 million** as of June 30, 2025, a significant increase from the **$18.3 million** deficiency at the end of 2024, indicating severe liquidity pressure[29](index=29&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported an $8.2 million net loss for H1 2025, an improvement from the prior year, despite an 8.5% revenue decline Statement of Operations Summary (Three Months Ended June 30) | Metric | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $15,852,706 | $17,829,175 | -11.1% | | Gross Profit | $2,426,454 | $2,521,294 | -3.8% | | Loss from Continuing Operations | ($4,719,312) | ($6,177,101) | +23.6% | | Net Income (Loss) from Discontinued Operations | $3,020,335 | ($2,342,513) | N/A | | **Net Loss Attributable to GameSquare** | **($3,018,346)** | **($11,613,551)** | **+74.0%** | Statement of Operations Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $30,583,937 | $33,406,699 | -8.5% | | Gross Profit | $5,790,080 | $4,590,642 | +26.1% | | Loss from Continuing Operations | ($9,252,551) | ($12,720,590) | +27.3% | | Net Income (Loss) from Discontinued Operations | $108,531 | ($533,355) | N/A | | **Net Loss Attributable to GameSquare** | **($8,173,950)** | **($16,874,499)** | **+51.6%** | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Shareholders' equity turned negative to ($5.5 million) due to net losses and the disposal of FaZe Media Inc - Shareholders' equity turned negative, falling to a deficit of **($5.5 million)** as of June 30, 2025, from a positive **$12.0 million** at the start of the year, driven by a net loss of **$10.2 million** and the disposal of Faze Media Inc., which removed **$12.9 million** in non-controlling interest[19](index=19&type=chunk) - During the first six months of 2025, the company issued **5.0 million shares** for the conversion of convertible debt and **1.4 million shares** to settle outstanding payables[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and restricted cash decreased by $6.7 million in H1 2025, contrasting with a significant increase in the prior year Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,883,147) | ($17,600,158) | | Net cash (used in) provided by investing activities | ($1,013,391) | $2,768,226 | | Net cash provided by financing activities | $1,951,544 | $26,281,258 | | **Net (decrease) increase in cash and restricted cash** | **($6,661,889)** | **$11,550,260** | - Cash and restricted cash decreased by **$6.7 million** in the first half of 2025, ending the period at **$6.5 million**, contrasting sharply with an **$11.6 million** increase in the same period of 2024, which was bolstered by significant financing activities[22](index=22&type=chunk)[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail a $130.3 million accumulated deficit, the FaZe acquisition, asset divestitures, and significant post-quarter financing - The company has incurred significant losses, resulting in an accumulated deficit of **$130.3 million** as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern[29](index=29&type=chunk)[30](index=30&type=chunk) - On March 7, 2024, the company completed its acquisition of FaZe Holdings, Inc. for a total purchase price of **$14.6 million**, which included the issuance of **10.1 million common shares**, adding **$7.1 million** in goodwill[42](index=42&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - The company divested several assets, including Complexity on March 1, 2024 (gain of **$3.0 million**), Frankly Media assets on May 31, 2024, and FaZe Media on April 1, 2025 (gain of **$3.0 million**), now reported as discontinued operations[48](index=48&type=chunk)[53](index=53&type=chunk)[66](index=66&type=chunk) - Subsequent to the quarter end, in July 2025, the company raised approximately **$89.6 million** in gross proceeds through multiple equity and preferred stock offerings, significantly improving its liquidity position[141](index=141&type=chunk)[143](index=143&type=chunk)[147](index=147&type=chunk) - On August 1, 2025, the Board authorized a share repurchase program for up to **$5.0 million** of its common stock, to be funded from surplus cash or its Ethereum yield strategy[148](index=148&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights a revenue decrease to $30.6 million, improved net loss, a new crypto treasury strategy, and post-quarter financing addressing liquidity concerns [Overview and Strategy](index=36&type=section&id=Overview%20and%20Strategy) The company, a digital media and entertainment firm, is implementing an Ethereum-based treasury strategy with a $250 million allocation - GameSquare is a vertically integrated digital media, entertainment, and technology company connecting brands with gaming and youth culture audiences through its various subsidiaries like FaZe, Zoned, GCN, and Stream Hatchet[155](index=155&type=chunk) - The company is implementing an Ethereum (ETH) based treasury strategy, partnering with Dialetic, with the Board approving an ETH allocation of up to **$250 million**, and over **$60 million** in ETH and NFTs purchased to date to support growth initiatives[157](index=157&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Revenue decreased by $2.8 million in H1 2025 due to asset sales, while net loss improved significantly due to cost reductions Results of Operations (Six Months Ended June 30) | Metric | 2025 | 2024 | Variance | | :--- | :--- | :--- | :--- | | Revenue | $30,583,937 | $33,406,699 | ($2,822,762) | | Gross Profit | $5,790,080 | $4,590,642 | $1,199,438 | | Total Operating Expenses | $15,042,631 | $17,311,232 | ($2,268,601) | | Net Loss Attributable to GameSquare | ($8,173,950) | ($16,874,499) | $8,700,549 | - Revenue for H1 2025 decreased by **$2.8 million** YoY, primarily due to a decline in the SaaS + Advertising segment after Frankly Media sold its SaaS assets in May 2024[198](index=198&type=chunk)[201](index=201&type=chunk) - Teams revenue for H1 2025 increased to **$4.9 million** from **$2.9 million** YoY, mainly due to the inclusion of a full six months of operations from the FaZe acquisition, which closed in March 2024[199](index=199&type=chunk) - General and administrative expenses decreased by **$1.0 million** in H1 2025 compared to H1 2024, reflecting successful cost reduction efforts, including reductions in headcount and overhead[203](index=203&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) A $27.6 million working capital deficiency and $130.3 million accumulated deficit raise going concern doubts, mitigated by $89.6 million post-quarter financing - As of June 30, 2025, the company had a working capital deficiency of **$27.6 million** and an accumulated deficit of **$130.3 million**, raising substantial doubt about its ability to continue as a going concern[245](index=245&type=chunk)[246](index=246&type=chunk) - Subsequent to the quarter's end, in July 2025, the company significantly improved its liquidity by raising gross proceeds of **$89.6 million** through three separate offerings of common and preferred stock[250](index=250&type=chunk) - Net cash used in operating activities for the first six months of 2025 was **$6.9 million**, a significant improvement from the **$17.6 million** used in the same period of 2024[253](index=253&type=chunk) [Critical Accounting Policies](index=55&type=section&id=Critical%20Accounting%20Policies) Key policies include revenue recognition for sponsorships, fair value option for convertible debt, and goodwill impairment testing - Revenue from brand sponsorship agreements is recognized ratably over the contract term, as the various services are not considered distinct within the context of the contracts[262](index=262&type=chunk) - The company has elected the Fair Value Option (FVO) for its convertible debt, meaning changes in the debt's fair value are recognized in earnings each period[291](index=291&type=chunk) - Goodwill and indefinite life intangible assets are tested for impairment annually or when a triggering event occurs, with the company potentially first assessing qualitative factors to determine if a full impairment test is necessary[289](index=289&type=chunk)[290](index=290&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is a smaller reporting company and is not required to provide this information - As a smaller reporting company, GameSquare is exempt from the requirement to provide quantitative and qualitative disclosures about market risk[296](index=296&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of June 30, 2025, due to material weaknesses in control design and monitoring, with remediation planned by December 2026 - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025[298](index=298&type=chunk) - Material weaknesses were identified in the Design and Implementation of Control Activities and Monitoring Activities, as the company lacked sufficient resources to perform an effective risk assessment and design controls based on the COSO Framework[298](index=298&type=chunk)[299](index=299&type=chunk) - The company is engaging outside resources and implementing remediation measures to address the deficiencies, with a target completion date of December 31, 2026[300](index=300&type=chunk) [PART II – OTHER INFORMATION](index=61&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section details legal proceedings, risk factors, unregistered equity sales, and other pertinent information [Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company faces multiple legal proceedings, including arbitration, a SPAC merger complaint, and a settled lawsuit, with no material adverse effect expected - The company is in arbitration with Allinsports and has been directed to issue **241,666 common shares**, for which it has recognized a liability of **$1.5 million**[304](index=304&type=chunk)[305](index=305&type=chunk) - A complaint regarding the July 2022 merger between B. Riley 150 Merger Corp. and FaZe Holdings, Inc. is subject to a proposed settlement where the company will contribute **$1,050,000** in cash and stock[307](index=307&type=chunk) - On August 11, 2025, the company settled a lawsuit with Alta Partners by agreeing to issue **$150,000** of restricted common stock, with a potential cash true-up payment[309](index=309&type=chunk) [Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) The company is a smaller reporting company and is not required to provide this information - As a smaller reporting company, GameSquare is exempt from the requirement to provide a detailed discussion of risk factors in its Form 10-Q[312](index=312&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no repurchases of its shares during the period - There were no repurchases of shares during the reporting period[313](index=313&type=chunk) [Other Information](index=63&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in the three months ended June 30, 2025[316](index=316&type=chunk)