8-K
GameSquare Holdings, Inc. (GAME)
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Dateof Report (Date of earliest event reported): August 15, 2024
GameSquareHoldings, Inc.
(ExactName of Registrant as Specified in Its Charter)
| Delaware | 001-39389 | 99-1946435 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 6775 Cowboys Way, Ste. 1335<br><br> <br>Frisco, Texas, USA | 75034 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’sTelephone Number, Including Area Code: (216) 464-6400
N/A
(FormerName or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common<br> Stock, no par value per share | GAME | The<br> Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item1.01 Entry into a Material Definitive Agreement.
SecondaryPreferred Stock Purchase Agreement
As previously announced, on June 17, 2024, FaZe Media Holdings, LLC, a Delaware limited liability company (the “Seller”) and subsidiary of GameSquare Holdings, Inc. (the “Company”), M40A3 LLC, a Delaware limited liability company (the “Purchaser”), Gigamoon Media LLC, a Delaware limited liability company, and FaZe Media, Inc., a Delaware corporation, and majority-owned entity of the Company (“FaZe Media”), entered into a Secondary Preferred Stock Purchase Agreement (the “Preferred Stock Purchase Agreement”) for the sale to Purchaser of 5,725,000 shares of Series A-1 Preferred Stock, $0.0001 par value per share (the “Series A-1 Preferred Stock”), at a purchase price of $1.66 per share, on the terms and subject to the conditions set forth in the Preferred Stock Purchase Agreement (the “Transaction”), the form of which was previously filed by the Company with the Securities and Exchange Commission as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 20, 2024 (the “Prior Current Report”). The first 2,862,500 share tranche of the Transaction occurred on June 17, 2024.
The second 2,862,500 share tranche of the Transaction occurred on August 15, 2024 (“Second Tranche”). The Second Tranche was completed on substantially the same terms as the first tranche under the Preferred Stock Purchase Agreement described in the Prior Current Report. The Purchaser paid the Seller an aggregate of $4,750,000 and the Company updated its books and records to reflect the transfer of 2,862,500 shares by the Seller to the Purchaser.
The foregoing summary of the Preferred Stock Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to (i) the Prior Current Report, which is incorporated herein by reference and (ii) the full text of the Preferred Stock Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item2.02 Results of Operations and Financial Condition.
On August 14, 2024, the Company issued a press release announcing its financial results for the three months ended June 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information contained in this Current Report on Form 8-K furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section, and they shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 10.1 | Secondary Preferred Stock Purchase Agreement, dated as of June 17, 2024, by and among FaZe Media Holdings, LLC, M40A3 LLC, Gigamoon Media LLC, and FaZe Media, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 20, 2024). |
| 99.1 | Press Release of GameSquare Holdings, Inc. issued on August 14, 2024. |
| 104 | Cover<br> Page Interactive Data File (formatted as Inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GAMESQUARE HOLDINGS, INC. | ||
|---|---|---|
| (Registrant) | ||
| Date:<br> August 19, 2024 | By: | /s/ Justin Kenna |
| Name: | Justin<br> Kenna | |
| Title: | Chief<br> Executive Officer and Director |
Exhibit99.1
GameSquareHoldings Reports Record 2024 Second Quarter Results
Q22024 proforma revenue increased 24% YoY and expanded 22% QoQ to a quarterly record of $28.6 million, reflecting value of operating enhancedplatform and success of growth initiatives
Q22024 proforma adjusted EBITDA loss improves significantly YoY and QoQ to $5.4 million, demonstrating benefits of growth strategies andcost reduction initiatives
$2.5million sequential improvement in proforma adjusted EBITDA, supports efforts to reach profitability by the fourth quarter of 2024 asthe Company expects further revenue growth, higher gross margin and additional operating cost reductions to benefit Q3 and Q4 results
August14, 2024, FRISCO, TX – GameSquare Holdings, Inc. (NASDAQ: GAME), (“GameSquare”, or the “Company”), today announced its financial results for the three and six-months ended June 30, 2024.
Justin Kenna, CEO of GameSquare, stated, “GameSquare delivered strong growth and record quarterly revenue, demonstrating the benefits of the next generation media platform we have created. Second quarter revenue of $28.6 million increased 22% over proforma revenue for the 2024 first quarter, as we continue to focus on integrating the FaZe Clan acquisition, and benefit from accelerating momentum across many areas of our business. Highlights for the quarter include expanding demand for our Unreal Editor for Fortnite (UEFN) world building creative services, and FaZe Media’s reboot and new creator roster, which garnered over 1.2 billion views during the quarter, a 28% increase over the past three months. FaZe Clan’s engaged community, combined with GameSquare’s technology assets, and media and creative services, has developed a powerful platform that provides global brands with significant value. As a result, we are seeing more demand for our offerings and expect to achieve between $55 and $60 million in higher-margin revenue during the second half of 2024.”
“During the second quarter, we pursued initiatives aimed at optimizing our business model and driving efficiencies across our business, which resulted in a $2.5 million improvement over the past three months in proforma adjusted EBITDA. In addition, throughout 2024, we have strengthened our balance sheet by raising over $36 million of non-dilutive capital, raised $6.5 million of capital through a paid advance agreement with Yorkville Advisors Global, and repaid the balance of our $5.7 million senior secured convertible note. We believe GameSquare has never been in a stronger financial position. As we look to the second half of the year, we are extremely excited by the direction GameSquare is headed. We believe our recent results reflect a clear path to reach positive adjusted EBITDA by the fourth quarter, supported by additional revenue growth, higher gross margin, and further operating cost reductions in the second half of the year,” concluded Mr. Kenna.
Reportedresults for the second quarter ended June 30, 2024, compared to June 30, 2023
| ● | Revenue<br> of $28.6 million, compared to $11.4 million |
|---|---|
| ● | Gross<br> profit of $4.2 million, compared to $2.8 million |
| ● | Net<br> loss of $12.0 million, compared to a net loss of $4.1 million |
| ● | Adjusted<br> EBITDA loss of $5.4 million, compared to a loss of $3.3 million |
Proforma*results for the second quarter ended June 30, 2024, compared to June 30, 2023
(unless otherwise noted)
| ● | Revenue<br> of $28.6 million, compared to $23.1 million |
|---|---|
| ● | Gross<br> profit of $4.2 million, compared to $4.6 million |
| ● | Operating<br> expenses of $10.0 million, or 35.1% of revenue, compared to $14.7 million or 63.6% of revenue<br> last year |
| ● | Adjusted<br> EBITDA loss of $5.4 million, compared to a loss of $10.0 million last year, and a loss of<br> $7.9 million for the quarter ended March 31, 2024 |
| --- | --- |
| ● | Adjusted<br> EBITDA loss was 18.9% of revenue versus 43.5% of revenue last year, and 33.7% of revenue<br> for the quarter ended March 31, 2024 |
* Proforma financial results includes a full quarter contribution of FaZe Clan in the 2024 periods, and includes a full quarter contribution of Engine and FaZe Clan in the 2023 periods.
Reportedresults for the six months ended June 30, 2024, compared to June 30, 2023
| ● | Revenue<br> of $46.3 million, compared to $14.2 million |
|---|---|
| ● | Gross<br> profit of $7.6 million, compared to $4.1 million |
| ● | Net<br> loss of $17.3 million, compared to a net loss of $8.4 million |
| ● | Adjusted<br> EBITDA loss of $9.5 million, compared to a loss of $4.8 million |
Proforma*results for the six months ended June 30, 2024, compared to June 30, 2023
| ● | Revenue<br> of $52.1 million, compared to $47.2 million |
|---|---|
| ● | Gross<br> profit of $7.9 million, compared to $8.6 million |
| ● | Operating<br> expenses of $21.6 million, or 41.5% of revenue, compared to $32.9 million or 69.8% of revenue<br> last year |
| ● | Adjusted<br> EBITDA loss of $13.3 million, compared to a loss of $24.3 million |
| ● | Adjusted<br> EBITDA loss was 25.6% of revenue versus 51.5% of revenue last year |
* Proforma financial results includes a full year-to-date contribution of FaZe Clan in the 2024 period, and includes a full year-to-date contribution of Engine and FaZe Clan in the 2023 period.
2024Annual Guidance
| ● | Management<br> expects over $100 million in annual revenue and annual gross margin to range between 22.5%<br> to 27.5% for 2024 |
|---|---|
| ● | 2024’s<br> annual guidance is based on a proforma basis and includes a full 12 months of contribution<br> from FaZe Clan, which was acquired on March 7, 2024 |
| ● | When<br> comparing the second quarter of 2024 and 2023 results of Faze Clan, the Company has removed<br> approximately $18 million of annualized costs, and expects to remove additional costs during<br> the second half of 2024 |
| ● | Management<br> anticipates continual quarterly improvements to profitability throughout 2024 supported by<br> sales growth, gross margin improvement, and the benefit of cost saving initiatives |
ConferenceCall Details
Justin Kenna, CEO, Lou Schwartz, President, and Mike Munoz CFO are scheduled to host a conference call with the investment community. Analysts and interested investors can join the call via the details below:
Date: August 14, 2024
Time: 5:00 pm ET
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Lcd9n9z4
CorporateContact
Lou Schwartz, President
Phone: (216) 464-6400
Email: ir@gamesquare.com
InvestorRelations
Andrew Berger
Phone: (216) 464-6400
Email: ir@gamesquare.com
MediaRelations
Chelsey Northern / The Untold
Phone: (254) 855-4028
Email: pr@gamesquare.com
AboutGameSquare Holdings, Inc.
GameSquare’s (NASDAQ: GAME) mission is to revolutionize the way brands and game publishers connect with hard-to-reach Gen Z, Gen Alpha, and Millennial audiences. Our next generation media, entertainment, and technology capabilities drive compelling outcomes for creators and maximize our brand partners’ return on investment. Through our purpose-built platform, we provide award winning marketing and creative services, offer leading data and analytics solutions, and amplify awareness through FaZe Clan, one of the most prominent and influential gaming organizations in the world. With one of the largest gaming media networks in North America, as verified by Comscore, we are reshaping the landscape of digital media and immersive entertainment. GameSquare’s largest investors are Dallas Cowboys owner Jerry Jones and the Goff family.
To learn more, visit www.gamesquare.com.
Forward-LookingInformation
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the Company’s and FaZe Media’s future performance, revenue, growth and profitability; and the Company’s and FaZe Media’s ability to execute their business plans. These forward-looking statements are provided only to provide information currently available to us and are not intended to serve as and must not be relied on by any investor as, a guarantee, assurance or definitive statement of fact or probability. Forward-looking statements are necessarily based upon a number of estimates and assumptions which include, but are not limited to: the Company’s and FaZe Media’s ability to grow their business and being able to execute on their business plans, the Company being able to complete and successfully integrate acquisitions, the Company being able to recognize and capitalize on opportunities and the Company continuing to attract qualified personnel to supports its development requirements. These assumptions, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the Company’s ability to achieve its objectives, the Company successfully executing its growth strategy, the ability of the Company to obtain future financings or complete offerings on acceptable terms, failure to leverage the Company’s portfolio across entertainment and media platforms, dependence on the Company’s key personnel and general business, economic, competitive, political and social uncertainties. These risk factors are not intended to represent a complete list of the factors that could affect the Company which are discussed in the Company’s most recent MD&A. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. GameSquare assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
GameSquareHoldings, Inc.
CondensedConsolidated Balance Sheets
(unaudited)
| June 30,<br> <br>2024 | December 31,<br> <br>2023 | |||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash | $ | 13,895,483 | $ | 2,945,373 | ||
| Restricted cash | 647,615 | 47,465 | ||||
| Accounts receivable, net | 27,217,541 | 16,459,684 | ||||
| Government remittances | 1,274,994 | 1,665,597 | ||||
| Contingent consideration, current | 293,445 | 207,673 | ||||
| Promissory note receivable, current | 378,878 | - | ||||
| Prepaid expenses and other current assets | 2,737,688 | 916,740 | ||||
| Total current assets | 46,445,644 | 22,242,532 | ||||
| Investment | 2,673,472 | 2,673,472 | ||||
| Contingent consideration, non-current | - | 293,445 | ||||
| Promissory note receivable | 8,753,884 | - | ||||
| Property and equipment, net | 618,272 | 2,464,633 | ||||
| Goodwill | 22,783,315 | 16,303,989 | ||||
| Intangible assets, net | 22,272,577 | 18,574,144 | ||||
| Right-of-use assets | 1,981,105 | 2,159,693 | ||||
| Total assets | $ | 105,528,269 | $ | 64,711,908 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Accounts payable | $ | 31,411,550 | $ | 23,493,472 | ||
| Accrued expenses and other current liabilities | 13,844,503 | 5,289,149 | ||||
| Players liability account | 47,535 | 47,465 | ||||
| Deferred revenue | 2,244,965 | 1,930,028 | ||||
| Current portion of operating lease liability | 375,155 | 367,487 | ||||
| Line of credit | 5,284,771 | 4,518,571 | ||||
| Warrant liability | 46,547 | 102,284 | ||||
| Arbitration reserve | 289,999 | 428,624 | ||||
| Total current liabilities | 53,545,025 | 36,177,080 | ||||
| Convertible debt carried at fair value | 7,840,442 | 8,176,928 | ||||
| Operating lease liability | 1,807,344 | 1,994,961 | ||||
| Total liabilities | 63,192,811 | 46,348,969 | ||||
| Commitments and contingencies (Note 14) | ||||||
| Preferred stock (no par value, unlimited shares authorized, zero shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively) | - | - | ||||
| Common stock (no par value, unlimited shares authorized, 30,990,847 and 12,989,128 shares issued<br> and outstanding as of June 30, 2024 and December 31, 2023, respectively) | - | - | ||||
| Additional paid-in capital | 117,388,594 | 91,915,169 | ||||
| Accumulated other comprehensive loss | (118,898 | ) | (132,081 | ) | ||
| Non-controlling interest | 15,360,410 | - | ||||
| Accumulated deficit | (90,294,648 | ) | (73,420,149 | ) | ||
| Total shareholders’ equity | 42,335,458 | 18,362,939 | ||||
| Total liabilities and shareholders’ equity | $ | 105,528,269 | $ | 64,711,908 |
GameSquareHoldings, Inc.
ConsolidatedStatements of Operations and Comprehensive Loss
(unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenue | $ | 28,586,965 | $ | 11,361,904 | $ | 46,315,189 | $ | 14,151,965 | ||||
| Cost of revenue | 24,352,762 | 8,573,785 | 38,687,829 | 10,085,002 | ||||||||
| Gross profit | 4,234,203 | 2,788,119 | 7,627,360 | 4,066,963 | ||||||||
| Operating expenses: | ||||||||||||
| General and administrative | 7,134,618 | 4,228,666 | 12,053,248 | 6,870,346 | ||||||||
| Selling and marketing | 2,432,939 | 1,740,694 | 4,654,592 | 2,481,722 | ||||||||
| Research and development | 881,516 | 660,969 | 1,566,669 | 660,969 | ||||||||
| Depreciation and amortization | 954,746 | 583,217 | 1,710,195 | 723,697 | ||||||||
| Restructuring charges | 123,846 | 10,388 | 123,846 | 294,286 | ||||||||
| Other operating expenses | 994,717 | 1,013,672 | 2,088,137 | 1,497,981 | ||||||||
| Total operating expenses | 12,522,382 | 8,237,606 | 22,196,687 | 12,529,001 | ||||||||
| Loss from continuing operations | (8,288,179 | ) | (5,449,487 | ) | (14,569,327 | ) | (8,462,038 | ) | ||||
| Other income (expense), net: | ||||||||||||
| Interest expense | (192,257 | ) | (122,227 | ) | (627,385 | ) | (145,324 | ) | ||||
| Change in fair value of convertible debt carried at fair value | 563,360 | 455,009 | 456,759 | 455,009 | ||||||||
| Change in fair value of warrant liability | 15,643 | 1,710,878 | 52,900 | 1,710,878 | ||||||||
| Arbitration settlement reserve | 43,500 | 739,644 | 138,625 | 739,644 | ||||||||
| Other income (expense), net | (3,948,274 | ) | 38,826 | (4,065,544 | ) | 37,894 | ||||||
| Total other income (expense), net | (3,518,028 | ) | 2,822,130 | (4,044,645 | ) | 2,798,101 | ||||||
| Loss from continuing operations before income taxes | (11,806,207 | ) | (2,627,357 | ) | (18,613,972 | ) | (5,663,937 | ) | ||||
| Income tax benefit | - | - | - | 5,027 | ||||||||
| Net loss from continuing operations | (11,806,207 | ) | (2,627,357 | ) | (18,613,972 | ) | (5,658,910 | ) | ||||
| Net income (loss) from discontinued operations | (196,934 | ) | (1,456,666 | ) | 1,349,883 | (2,770,547 | ) | |||||
| Net loss | (12,003,141 | ) | (4,084,023 | ) | (17,264,089 | ) | (8,429,457 | ) | ||||
| Net loss attributable to non-controlling interest | 389,590 | - | 389,590 | - | ||||||||
| Net loss attributable to attributable to GameSquare <br>Holdings, Inc. | $ | (11,613,551 | ) | $ | (4,084,023 | ) | $ | (16,874,499 | ) | $ | (8,429,457 | ) |
| Comprehensive loss, net of tax: | ||||||||||||
| Net loss | $ | (12,003,141 | ) | $ | (4,084,023 | ) | $ | (17,264,089 | ) | $ | (8,429,457 | ) |
| Change in foreign currency translation adjustment | (540,813 | ) | (104,704 | ) | 13,183 | (111,353 | ) | |||||
| Comprehensive loss | (12,543,954 | ) | (4,188,727 | ) | (17,250,906 | ) | (8,540,810 | ) | ||||
| Comprehensive loss attributable to non-controlling interest | 389,590 | - | 389,590 | - | ||||||||
| Comprehensive loss | $ | (12,154,364 | ) | $ | (4,188,727 | ) | $ | (16,861,316 | ) | $ | (8,540,810 | ) |
| Income (loss) per common share attributable to GameSquare Holdings, Inc. - basic and assuming dilution: | ||||||||||||
| From continuing operations | $ | (0.38 | ) | $ | (0.22 | ) | $ | (0.76 | ) | $ | (0.61 | ) |
| From discontinued operations | (0.01 | ) | (0.12 | ) | 0.06 | (0.30 | ) | |||||
| Loss per common share attributable to GameSquare Holdings, Inc. - basic and assuming dilution | $ | (0.38 | ) | $ | (0.34 | ) | $ | (0.71 | ) | $ | (0.91 | ) |
| Weighted average common shares outstanding - basic and diluted | 30,442,837 | 12,131,409 | 23,905,674 | 9,283,340 |
Management’suse of Non-GAAP Measures
This release contains certain financial performance measures, including “EBITDA” and “Adjusted EBITDA,” that are not recognized under accounting principles generally accepted in the United States of America (“GAAP”) and do not have a standardized meaning prescribed by GAAP. As a result, these measures may not be comparable to similar measures presented by other companies. For a reconciliation of these measures to the most directly comparable financial information presented in the Financial Statements in accordance with GAAP, see the section entitled “Reconciliation of Non-GAAP Measures” below.
We believe EBITDA is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of our underlying business performance and other one-time or non-recurring expenses. We define “EBITDA” as net income (loss) before (i) depreciation and amortization; (ii) income taxes; and (iii) interest expense.
AdjustedEBITDA
We believe Adjusted EBITDA is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of our underlying business performance and other one-time or non-recurring expenses. We define “Adjusted EBITDA” as EBITDA adjusted to exclude extraordinary items, non-recurring items and other non-cash items, including, but not limited to (i) share based compensation expense, (ii) transaction costs related to merger and acquisition activities, (iii) arbitration settlement reserves and other non-recurring legal settlement expenses, (iv) restructuring costs, primarily comprised of employee severance resulting from integration of acquired businesses, (v) impairment of goodwill and intangible assets, (vi) gains and losses on extinguishment of debt, (vii) change in fair value of assets and liabilities adjusted to fair value on a quarterly basis, (viii) gains and losses from discontinued operations, and (ix) net income (loss) attributable to non-controlling interest.
Reconciliationof Non-GAAP Measures
A reconciliation of Adjusted EBITDA to the most directly comparable measure determined under US GAAP is set out below.
| Three months ended June 30, | Six months ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net loss | $ | (12,003,141 | ) | $ | (4,084,023 | ) | $ | (17,264,089 | ) | $ | (8,429,457 | ) |
| Interest expense | 192,257 | 122,227 | 627,385 | 145,324 | ||||||||
| Income tax benefit | - | - | - | (5,027 | ) | |||||||
| Amortization and depreciation | 954,746 | 583,217 | 1,710,195 | 723,697 | ||||||||
| Share-based payments | 602,139 | 317,005 | 1,021,367 | 882,385 | ||||||||
| Transaction costs | 1,037,044 | 1,013,672 | 2,130,464 | 1,497,981 | ||||||||
| Arbitration settlement reserve | (43,500 | ) | (739,644 | ) | (138,625 | ) | (739,644 | ) | ||||
| Restructuring costs | 123,846 | 10,388 | 123,846 | 294,286 | ||||||||
| Legal settlement | - | 183,724 | - | 183,724 | ||||||||
| Change in fair value of contingent consideration | (42,327 | ) | - | (42,327 | ) | - | ||||||
| Change in fair value of warrant liability | (15,643 | ) | (1,710,878 | ) | (52,900 | ) | (1,710,878 | ) | ||||
| Change in fair value of convertible debt carried at fair value | (563,360 | ) | (455,009 | ) | (456,759 | ) | (455,009 | ) | ||||
| Gain on disposition of subsidiary | - | - | (3,009,891 | ) | - | |||||||
| Loss on disposition of assets | 3,764,474 | - | 3,764,474 | - | ||||||||
| Loss from discontinued operations | 196,934 | 1,456,666 | 1,660,008 | 2,770,547 | ||||||||
| Net loss attributable to non-controlling interest | 389,590 | - | 389,590 | - | ||||||||
| Adjusted EBITDA | $ | (5,406,941 | ) | $ | (3,302,655 | ) | $ | (9,537,262 | ) | $ | (4,842,071 | ) |