GameSquare (GAME) Completes Faze Clan (FAZE) Acquisition

​GameSquare Holdings, Inc. (NASDAQ: GAME) and FaZe Holdings Inc. (NASDAQ: FAZE) today announced the completion of GameSquare's merger with FaZe that was originally announced on October 20, 2023. As a result of the merger, and effective as of the close of trading on March 8, 2024, FaZe's common stock (NASDAQ: FAZE) and FaZe warrants (NASDAQ: FAZEW) will cease trading.

As a combined company, GameSquare has become one of the largest gaming and esports organizations in the world based on the Company's audience reach of one billion. In addition, the Company is focused on revolutionizing the way brands and game publishers connect with hard-to-reach Gen Z, Gen Alpha, and Millennial audiences through a purpose-built next generation media platform that includes award winning marketing and creative services, data and analytics solutions, and Faze Clan, one of the most prominent and influential gaming organizations in the world.

Justin Kenna, CEO of GameSquare stated, "On behalf of everyone at GameSquare and FaZe, we are thrilled to announce the successful culmination of our merger, marking a significant milestone in our journey to revolutionize the gaming and media landscape. This strategic alliance strengthens our position across global industries, amplifies our ability to connect brands with elusive and influential youth audiences, and unlocks even more opportunities to support our partners with cutting-edge technology. Together, we will seek to redefine the future of esports and gaming by leveraging our combined expertise to pursue opportunities for growth and innovation. Our commitment remains unwavering as we aim to lead the way in shaping the ever-evolving intersection of gaming, media, and brand engagement."

"We are excited to complete the merger with GameSquare as together we have created a leading organization focused on gaming and youth culture," stated Paul Hamilton Director of FaZe. "On behalf of everyone at FaZe we are excited by the opportunities we are pursuing together to create value for our shareholders."

Throughout 2023, FaZe has been focused on reducing costs and driving efficiencies. As a result, FaZe removed approximately $31 million of annualized operating costs in the 2023 third quarter compared to the 2022 fourth quarter. FaZe expects to remove approximately $15 million of additional annualized costs during 2024.

Mr. Kenna continued, "The combination of GameSquare and FaZe strengthens our go-forward competitive advantage in a fluid advertising and esports market - especially as brands continue taking a more focused approach allocating ad dollars. Despite the short-term impact of these market trends on our results, we are confident that our purpose-built platform supports compelling growth opportunities in 2024 and beyond. In addition, we are committed to reducing costs, enhancing gross margin, and creating a profitable enterprise. We are excited by GameSquare's trajectory. Our highly committed teams reflect a unique blend of young internet natives alongside seasoned business leaders that are committed to creating value for global gaming fans, youth audiences, and our brand partners. As a result, we expect 2024 will be a transformational year for GameSquare and our shareholders."

Driving Engagement Through Leading, End-to-End Capabilities

Combined, GameSquare and FaZe have created a next generation media company that connects global brands with hard-to-reach audiences, which enhances GameSquare's growth potential by increasing brand opportunities across the Company's combined product offerings. As a result of the merger, GameSquare has an engaged global fanbase and an audience reach of over 1 billion across its media network and roster of creators, with a core focus on 13 - 34 -year-old audiences and supported by over 100 personalities.

The Company's innovative platform includes: award-winning marketing and media services; FaZe's top ranked esports franchises; cutting-edge creative services, including traditional production and emerging world-building experiences; and data and technology capabilities dedicated to global gaming and influencer markets. The combined company will benefit from some of the biggest names in gaming culture with a roster of talent including Ninja, TimTheTatman, Max Holloway, Trevon Diggs, FaZe Banks, FaZe Temperrr, FaZe Apex, FaZe Nickmercs, FaZe Rug, FaZe Swagg and many more. In addition, management believes there are significant revenue synergies and recurring revenue opportunities going forward, as GameSquare drives value to dozens of leading global brand partners including Porsche, Nike, Jack in the Box, Xfinity, Miller Lite, and GHOST.

Private Placement

The Company also closed its non-brokered private placement, initially announced on October 20, 2023, of units (the "Private Placement"), comprised of shares of common stock and warrants, as described in the Company's proxy circular for the special meeting. Pursuant to the Private Placement, a total of 7,194,244 units of the Company were issued at a price of US$1.39 per unit, for gross proceeds of US$10 million. Each unit consists of one common share of the Company and 0.15 of a common share purchase warrant of the Company, resulting in a total of 1,079,136 warrants being issued. Each whole warrant is exercisable for one common share at an exercise price of US$1.55 per warrant for a period of five years from the closing date of the Private Placement.

The shares of common stock issued pursuant to the Private Placement are subject to a four month hold period under Canadian securities laws expiring four months following the closing date for the Private Placement. The shares of common stock issued pursuant to the Private Placement will not be registered under the Securities Act of 1933, as amended, or any U.S. state securities laws, and will be sold pursuant to Regulation D of the Securities Act. The securities may not be offered or sold in the United States absent registration or pursuant to an exemption from the registration requirements of the Securities Act and applicable U.S. state securities laws. The Company has agreed to file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock issued in this Private Placement.

The Company had previously entered into a backstop agreement (the "Backstop Agreement") with Goff Jones Strategic Partners, LLC (formerly known as Goff & Jones Lending Co, LLC) ("Goff Jones") to purchase common stock to ensure the Private Placement was fully subscribed. The Backstop Agreement was originally announced on October 20, 2023. A total of US$6,000,000 was issued to Goff Jones in connection with the Backstop Agreement.

The Private Placement constituted a related party transaction pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") as a result of the participation of certain insiders pursuant to the Backstop Agreement and otherwise. The Company was exempt from seeking a formal valuation pursuant to Section 5.5(c) of MI 61-101. The Private Placement received the requisite minority approval at the special meeting in accordance with MI 61-101.

Net proceeds of the Private Placement will be used to support the FaZe merger, other growth initiatives and general corporate purposes.

Re-Domestication

As part of the transaction and as previously announced by the Company and approved at the recent special meeting of shareholders of GameSquare, the Company completed a re-domestication of the Company from British Columbia to Delaware.

Shares Outstanding:

As a result of the FaZe merger and Private Placement, there will be approximately 30.3 million common shares outstanding. Using GameSquare's March 6, 2024, closing price of US$1.55, the proforma market capitalization of the Company amounts to approximately US$47 million.

Inducement Awards

In connection with the acquisition of FaZe, an aggregate of 909,490 RSUs will be issued to three of the founders of FaZe, representing a total of 3% of the issued and outstanding shares of common stock of the Company, all as further described in the proxy circular for the special meeting.

Advisors

Oak Hills Securities, Inc. served as GameSquare's exclusive financial advisor and BakerHostetler and Blake, Cassels & Graydon LLP are its legal advisors. FaZe's legal advisor is Sullivan & Triggs, LLP. Current Capital Securities LLC rendered a fairness opinion to the Board of Directors of FaZe in connection with the transaction.

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