FRISCO, TX – GameSquare Holdings, Inc. (NASDAQ:GAME), an esports and gaming company, has filed a Form S-1 registration statement with the Securities and Exchange Commission (SEC) on Thursday, July 18, 2024. The filing is part of the company's normal business operations and registers shares that have already been issued, including those from recent private placements and a pre-paid advance agreement.
The Form S-1 registers 10,144,698 shares of common stock and 1,161,252 shares issuable upon the exercise of warrants from a March 2024 private placement, as well as 26 million shares related to a July 2024 pre-paid advance agreement with Yorkville Advisors Global. The conversion price for the advance will be the lower of a fixed or variable price, with a floor set at $1.375 per share.
GameSquare's CEO, Justin Kenna, expressed confidence in the company's financial position, highlighting the recent accumulation of over $36 million in non-dilutive capital and repayment of a $5.7 million senior secured convertible note. Kenna also noted that insiders, including himself, have been buying shares in the open market.
The company has completed several transactions to streamline its business and focus on high-growth areas. These include the sale of non-core radio business assets in December 2023, the sale of Complexity Gaming in March 2024, and a recent investment into FaZe Media in May 2024. Moreover, GameSquare sold a 25.5% interest in FaZe Media for $9.5 million in June 2024.
GameSquare's acquisitions and divestitures are part of a strategy to grow revenue organically and through strategic purchases, aiming for over $100 million in proforma revenue in 2024. The company's largest investors include Dallas Cowboys owner Jerry Jones and the Goff family.
This news release contains forward-looking statements regarding the company's future performance and its ability to execute business plans. These statements are based on current expectations and assumptions, which are subject to risks and uncertainties that could cause actual results to differ materially.
The information presented is based on a press release statement from GameSquare Holdings, Inc.
In other recent news, GameSquare Holdings, Inc. has released its preliminary financial results for Q2, expecting a revenue of $27 million, largely due to the acquisition of FaZe Clan and robust sales momentum.
The company's preliminary results also indicate revenues from Owned and Operated IP at $12 million, Agency and Media at $13 million, and Software as a Service (SaaS) at $2 million. GameSquare's CEO, Justin Kenna, projects a significant uptick in profitability in the latter half of 2024, with anticipated revenue between $55 and $60 million.
In addition, GameSquare has secured a $20 million pre-paid advance from an investment fund managed by Yorkville Advisors Global L.P. This financing agreement follows the company's sale of non-core assets, generating over $36 million in non-dilutive capital. The funds will be used to repay a $5.7 million balance on a senior secured convertible note with King Street Partners LLC.
Roth/MKM has maintained its Buy rating on GameSquare, citing the company's strategic financial decisions, including the acquisition of FaZe Clan and divestiture of Complexity. These decisions have resulted in a valuation significantly higher than the initial investment in FaZe Clan. GameSquare aims to achieve over $100 million in annual revenue and expects profitability in the coming quarters, reflecting its commitment to value generation for shareholders.
InvestingPro Insights
As GameSquare Holdings, Inc. (NASDAQ:GAME) continues to navigate its financial journey, recent data from InvestingPro provides a nuanced view of the company's market position. With a market capitalization of $30.62 million, GameSquare is considered a small-cap company, which often means it could offer higher growth potential but also comes with greater risk.
The company's revenue has shown a remarkable surge over the last twelve months as of Q1 2024, with a growth rate of 159.12%, reflecting its aggressive strategy towards acquisitions and divestitures aimed at boosting its financials.
InvestingPro Tips suggest that while analysts are optimistic about sales growth in the current year, they do not expect the company to be profitable within this timeframe. This aligns with the company's reported revenue growth but also underscores the challenges it faces in terms of profitability.
Moreover, GameSquare's stock has experienced significant volatility, with a price decrease of over 19% in the past week and nearing its 52-week low, which could indicate a potential buying opportunity for investors who believe in the company's long-term growth strategy.
For investors considering taking a position in GameSquare, it is important to note that the company is trading at a low revenue valuation multiple, which suggests that the stock may be undervalued relative to its sales. This could be an attractive entry point for value investors. Still, the company's quick cash burn and its short-term obligations exceeding its liquid assets may raise concerns about its financial stability in the near term.
To gain a deeper understanding of GameSquare's financial health and future prospects, interested investors can access additional InvestingPro Tips at https://www.investing.com/pro/GAME. There are 13 more tips available, which could provide valuable insights into the company's performance and potential investment risks. Moreover, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, enhancing your investment research with comprehensive data and expert analysis.
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