[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)

Core Viewpoint - GameSquare Holdings, Inc. has announced a strategic partnership with the Animecoin Foundation, which includes a revenue agreement worth $2.5 million and aims to enhance GameSquare's presence in the Web3 space while adding valuable digital assets to its treasury [1][2][3] Group 1: Partnership Details - GameSquare will purchase up to $2.5 million in Animecoin, expanding its crypto-native treasury with a culturally significant asset [2] - The partnership includes GameSquare becoming the agency of record for the Animecoin Foundation, providing creative and agency services [2] - The collaboration aims to strengthen the Animecoin Foundation's position in the global gaming fandom [2][4] Group 2: Growth Strategy - GameSquare's growth strategy consists of three main components: an Ethereum-based treasury strategy targeting annualized yields of 8% to 14%, a financialized art and cultural asset strategy targeting 6% to 10% annualized stablecoin yields, and a Web3 operating strategy to help crypto-native organizations grow [7] - The CEO of GameSquare highlighted that the partnership with Animecoin not only provides immediate revenue but also long-term asset value [3] Group 3: Market Potential - The global anime market is projected to grow to over $37.7 billion by 2025, indicating significant market opportunities for GameSquare [6] - Animecoin currently has a fully diluted value of over $180 million, focusing on the growth of the entertainment ecosystem across gaming and anime [5] Group 4: Cultural Collaboration - GameSquare will collaborate with Azuki to create both physical and digital products targeting gaming and anime fandoms [4] - The partnership aims to merge anime culture with immersive gaming experiences, enhancing brand awareness for Animecoin [4][5]

Group 1 - Ethereum experienced a short-term surge, breaking the $4000 mark [1] - U.S. stocks related to Ethereum reserves saw significant gains, with Bitmine Immersion Technologies (BMNR.US) rising nearly 14% [1] - BTCS Inc (BTCS.US) increased by over 7%, while GameSquare (GAME.US) and SharpLink Gaming (SBET.US) both rose by more than 4% [1]

Core Viewpoint - The majority of Bitcoin-related stocks experienced an upward trend on Monday, indicating positive market sentiment towards the cryptocurrency sector [1] Company Performance - Coinbase (COIN.US) saw an increase of 0.58% - Strategy (MSTR.US) rose by over 2.4% - Bit Origin (BTOG.US) increased by more than 5.7% - SharpLink Gaming (SBET.US) surged by over 12% - GameSquare (GAME.US) jumped by over 13% - Circle (CRCL.US) declined by more than 4% [1]

Core Viewpoint - The majority of Bitcoin-related stocks experienced an upward trend on Monday, indicating positive market sentiment towards the cryptocurrency sector [1] Company Performance - Coinbase (COIN.US) saw an increase of 0.58% [1] - MicroStrategy (MSTR.US) rose by over 2.4% [1] - Bit Origin (BTOG.US) increased by over 5.7% [1] - SharpLink Gaming (SBET.US) surged by over 12% [1] - GameSquare (GAME.US) jumped by over 13% [1] - Circle (CRCL.US) declined by over 4% [1]

Core Insights - GameSquare Holdings, Inc. has initiated its Ethereum treasury strategy, purchasing 2,717 ETH for $10 million, increasing total holdings to 15,630.07 ETH [1] - The company aims for annualized yields of 8% to 14% through its partnership with Dialectic, marking a shift from passive asset management to income generation [3][4] Treasury Strategy - The Ethereum treasury strategy is a central element of GameSquare's crypto-native initiative, with a total authorization of up to $250 million for this strategy [4] - The company has launched a stock repurchase program, allowing for the buyback of up to $5 million in common stock, funded by net proceeds from the onchain yield platform [2] Capital Allocation - CEO Justin Kenna emphasized a disciplined approach to capital allocation, stating that net income from the Ethereum yield strategy will be used for stock buybacks if shares trade below $1.50 [3] - Over $60 million has been deployed in ETH and NFT purchases, focusing on transforming Ethereum into a recurring revenue source [4] Company Overview - GameSquare is positioned as a next-generation media, entertainment, and technology company, targeting Gen Z, Gen Alpha, and Millennial audiences [5] - The company operates one of the largest gaming media networks in North America and is committed to enhancing capital efficiency through its blockchain-native treasury management program [5]

Summary of GameSquare Holdings Conference Call Company Overview - **Company**: GameSquare Holdings - **Industry**: Digital media, entertainment, and technology ecosystem focused on connecting digital native audiences with brands and creators [5][4] - **Recent Developments**: Raised $80.4 million in fresh capital and acquired a notable NFT, the Cowboy Ape CryptoPunk [3][12] Core Strategies and Financials - **Revenue Growth**: Achieved over $100 million in pro forma annual revenue within four years of operation [5] - **Treasury Strategy**: Implementing a $250 million on-chain treasury strategy aimed at generating yields of 8% to 14% through a partnership with Dialectic [9][8] - **Current Holdings**: East Treasury holdings valued at approximately $55 million, including $5 million in unrealized gains [10] - **Valuation Metrics**: Stock trading at approximately 1.19 times East and cash asset value, not accounting for operational value or future cash flows [11] NFT and Crypto Strategy - **NFT Acquisition**: Purchase of the Cowboy Ape CryptoPunk NFT, viewed as a long-term investment in digital identity and cultural capital [12][15] - **Yield Generation**: Targeting an expected annual return of 6% to 10% from the NFT strategy, diversifying the treasury program [12] - **Expertise in Digital Art**: Strategic adviser Ron Zura, a leading authority on digital art, will manage the NFT yield strategy [13] Risk Management and Yield Generation - **Yield Mechanism**: Utilizing a high-yield machine called Medici, which produced 26.99% on U.S. Dollar stables and 14.02% on ETH last year [20][28] - **Risk Controls**: Advanced analytics and machine learning employed for risk management, ensuring no down months and consistent compounding [30][24] Market Position and Future Outlook - **Unique Positioning**: GameSquare is positioned as both an Ethereum accumulator and integrator, exploring various crypto-native activities beyond traditional equity [32] - **Growth Potential**: Anticipates profitability in the operating business by the second half of the year, with a strong focus on acquiring digital assets [37] - **Increased Interest**: Notable increase in inbound interest from blockchain gaming developers and other crypto-related businesses since announcing the treasury strategy [38] Conclusion - **Positive Outlook**: GameSquare expresses confidence in its differentiated strategy and growth trajectory, with plans for continued updates and announcements [40]

Group 1 - Bitcoin-related stocks and Ethereum holdings experienced a general decline on Tuesday, with SharpLink Gaming (SBET.US) dropping over 6.5% [2] - GameSquare (GAME.US) saw a significant decrease of over 9.8% [2] - BTCS Inc (BTCS.US) fell by over 0.8%, while Strategy (MSTR.US) decreased by 0.49% [2] - Mara Holdings (MARA.US) also reported a decline of 0.76% [2] - In contrast, Circle (CRCL.US) experienced an increase of 1% [2]

Group 1 - Bitcoin-related stocks and Ethereum holdings experienced a decline on Tuesday, with SharpLink Gaming (SBET.US) dropping over 6.5% [1] - GameSquare (GAME.US) saw a significant decrease of over 9.8% [1] - BTCS Inc (BTCS.US) fell by over 0.8% [1] - MicroStrategy (MSTR.US) decreased by 0.49% [1] - Marathon Holdings (MARA.US) declined by 0.76% [1] - Circle (CRCL.US) was the only stock to rise, increasing by 1% [1]

Core Viewpoint - GameSquare Holdings, Inc. is set to host a livestream on July 29, 2025, to discuss its innovative $250 million Ethereum treasury strategy aimed at achieving onchain yields of 8–14% [1][5] Group 1: Ethereum Treasury Strategy - The company plans to leverage a differentiated Ethereum treasury strategy designed to deliver superior onchain yields compared to traditional methods [1][5] - The ETH-focused yield program utilizes Dialectic's proprietary platform, Medici, which employs machine learning and automated optimization to achieve yields significantly above the 3–4% ETH staking benchmark [5] Group 2: NFT Strategy and Acquisitions - GameSquare's recent acquisition of the Cowboy Ape CryptoPunk is part of its broader NFT strategy, targeting annualized stablecoin returns of 6–10% [2] - This acquisition underscores the company's belief in the long-term cultural and financial value of digital assets [4] Group 3: Tokenization and Business Transformation - The company is pursuing the tokenization of key assets across its business, which is expected to unlock significant value in areas such as digital rights and IP monetization [3] - This initiative represents a critical phase in GameSquare's transformation into a market-leading, fully digital-native company [3] Group 4: Leadership and Vision - Justin Kenna, CEO of GameSquare, emphasizes the company's commitment to building a high-yielding onchain treasury and leading public markets in understanding onchain ecosystems [4] - The livestream is positioned as a pivotal moment for the company as it accelerates its strategic moves in the crypto space [4]