Business Context and Reporting Period
This Form 6-K filing by GameSquare Holdings, Inc. (GameSquare) covers the month of October 2023. The primary purpose of the filing is to disclose the execution of a definitive Merger Agreement dated October 19, 2023, between GameSquare, its wholly-owned subsidiary GameSquare Merger Sub I, Inc., and FaZe Holdings Inc. (FaZe). Under the agreement, Merger Sub will merge with and into FaZe, with FaZe surviving as a wholly-owned subsidiary of GameSquare.
Key Financial Metrics and Transaction Terms
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, or margins for the reporting period. Instead, it details the financial structure of the proposed merger and associated financing:
- Merger Consideration: Each outstanding share of FaZe Common Stock will be converted into the right to receive 0.13091 shares of GameSquare Common Stock (the "Exchange Ratio").
- Equity Treatment: Outstanding FaZe equity awards and warrants will be assumed by GameSquare and converted into GameSquare equity awards and warrants using the Exchange Ratio.
- GameSquare Financing: To support the transaction, GameSquare is undertaking a financing package consisting of:
- A private placement (PIPE Financing) to raise $10,000,000, backed by a backstop agreement with Goff & Jones Lending Co, LLC.
- An asset-based loan facility with SLR Digital Finance LLC for up to $10,000,000 with a three-year term.
- A disposition of non-core assets with a gross sales price of approximately $4,000,000.
Material Changes and Conditions
The filing represents a material change in corporate structure pending the closing of the merger. The transaction is subject to several conditions, including:
- Approval by stockholders of both FaZe and GameSquare.
- Listing approval of the GameSquare Common Stock issued as consideration on the Nasdaq Capital Market.
- Effectiveness of the registration statement filed with the SEC.
- Completion of the GameSquare Financing described above.
- Receipt of required antitrust approvals and the absence of any laws prohibiting the merger.
- Accuracy of representations and warranties and the absence of a material adverse effect on either party.
Post-closing governance will include the appointment of two directors to GameSquare's board determined by FaZe, plus a third mutually agreed-upon member.
Guidance, Outlook, and Risks
The filing contains forward-looking statements regarding the anticipated benefits, synergies, and timing of the transaction, but provides no specific financial guidance or earnings outlook for the combined entity. Key risks and contingencies identified include:
- Termination Rights: The agreement may be terminated if the merger is not completed by December 31, 2023, if stockholder approvals are not obtained, or if a superior proposal is authorized.
- Regulatory and Market Risks: Uncertainty regarding regulatory approvals, potential competing proposals, and disruptions to financial markets.
- Financing Risks: The transaction is contingent on GameSquare successfully securing the PIPE financing and asset-based loan.
- Forward-Looking Disclaimers: Actual results may differ materially from expectations due to factors beyond the parties' control, including economic conditions and regulatory actions.
Investor Verification Checklist
- Verify the status of stockholder approvals for both GameSquare and FaZe.
- Confirm the effectiveness of the SEC registration statement and the listing approval on the Nasdaq Capital Market.
- Monitor the completion of the $10,000,000 PIPE financing and the $10,000,000 asset-based loan facility.
- Review the full text of the Merger Agreement (Exhibit 2.1) for detailed representations, warranties, and termination provisions.
- Check for any updates regarding the disposition of non-core assets valued at approximately $4,000,000.
- Assess the timeline for closing, noting the December 31, 2023, end date for the agreement.