UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
UNIV Asset Sale
On May 31, 2024, Frankly Media LLC (“Frankly”), a wholly-owned subsidiary of GameSquare Holdings, Inc. (the “Company”), completed the sale of all of the assets (the “ UNIV Sale”) listed on Schedule 1 of Exhibit A annexed to the Asset Purchase Agreement (“UNIV Purchase Agreement”) by and between Frankly and UNIV, Ltd. (“UNIV”), which includes but is not limited to the Frankly Producer CMS platform and associated software. The UNIV Purchase Agreement contains customary representations, warranties and covenants of each of the parties thereto. Pursuant to the UNIV Purchase Agreement, UNIV paid Frankly a purchase price of $1.50 million, evidenced by a secured promissory note (the “UNIV Promissory Note”).
The payment schedule under the UNIV Promissory Note is as follows: (i) $25,000.00 on closing date of the UNIV Purchase Agreement; (ii) $25,000.00 per month for a period of eleven (11) months commencing on the first day of the calendar month occurring following the ninety (90)-day period after the closing date of the UNIV Purchase Agreement; (iii) $45,000.00 per month for a period of twelve (12) months commencing at the end of the period set forth above in (ii); and (iv) $55,000.00 per month for a period of twelve (12) months commencing at the end of the period set forth above in (iii). The UNIV Promissory Note bears interest at a rate equal to eight percent (8%) per annum.
The UNIV Promissory Note is secured by all the personal property of UNIV, pursuant to a Security Agreement (the “UNIV Security Agreement”), dated May 31, 2024, by and between Frankly and UNIV.
In connection with the UNIV Sale, Frankly agreed to provide certain transition services to UNIV until June 30, 2024, in accordance with the terms and conditions set forth in that certain Transition Services Agreement dated as of May 31, 2024 by and between Frankly and UNIV (“Transition Services Agreement”).
Moreover, in connection with the UNIV Sale, Frankly entered into a Service Order dated May 31, 2024, by and between UNIV and Frankly (“Service Order”), to serve as the exclusive sales representative for sales of programmatic display, video streaming, Ads on stream, OTT and VOD direct and programmatic video advertising inventory controlled by UNIV on the websites, OTT and mobile applications for the customers acquired by UNIV pursuant to the UNIV Purchase Agreement, for a period of twelve months. In turn, Frankly will receive a 50% net advertising sales commission.
The foregoing descriptions of the UNIV Purchase Agreement, the UNIV Promissory Note, the UNIV Security Agreement, the Transition Services Agreement, and the Service Order are not complete and are qualified in their entirety by reference to the full text of the Agreements filed as Exhibits 2.1, 10.1, 10.2, 10.3, and 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
XPR Asset Sale
Also on May 31, 2024, Frankly completed the sale of all of the assets (the “ XPR Sale”) listed on Schedule A annexed to the Asset Purchase Agreement (“XPR Purchase Agreement”) by and between Frankly and XPR Media LLC (“XPR”), which includes but is not limited to written agreements for press release and content distribution services. The XPR Purchase Agreement contains customary representations, warranties and covenants of each of the parties thereto. Pursuant to the XPR Purchase Agreement, XPR paid Frankly a purchase price of $700,000, evidenced by a secured promissory note (the “XPR Promissory Note”).
The payment schedule under the XPR Promissory Note begins in May 2024 and runs through July 2027. The XPR Promissory Note bears interest at a rate equal to eight percent (8%) per annum.
The XPR Promissory Note is secured by all the rights of XPR to customer agreements, (streaming) publishers agreements and (non-streaming) publisher agreements, pursuant to a Security Agreement (the “XPR Security Agreement”), dated May 31, 2024, by and between Frankly and XPR.
The foregoing descriptions of the XPR Purchase Agreement, the XPR Promissory Note, and the XPR Security Agreement are not complete and are qualified in their entirety by reference to the full text of the Agreements filed as Exhibits 2.2, 10.5, and 10.6 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
On May 31, 2024, the Company and its Frankly Media LLC subsidiary sold certain non-core assets. UNIV, Ltd. acquired Frankly’s Content Management Software and XPR Media LLC acquired Frankly’s PR distribution business. Combined, Frankly’s CMS and PR distribution assets generated approximately $1.6 million in annual revenue, and the Company sold these non-core assets for a total consideration of $2.2 million, which will be paid over a three-year period. The Company also removed approximately $2.3 million of annual operating expenses associated with these businesses.
| Item 7.01 | Regulation FD Disclosure. |
On May 31, 2024, the Company issued a press release announcing the closing of the transactions referenced herein. A copy of the press release is furnished hereto as Exhibit 99.1.
The information in this Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
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: June 6, 2024 | By: | /s/ Justin Kenna |
| Name: | Justin Kenna | |
| Title: | Chief Executive Officer and Director | |