Interim Condensed Consolidated Financial Statements

(Unaudited)

For the three and six months ended

February 28, 2023, and 2022

(Expressed in United States Dollars)

GameSquare Holdings, Inc.

(formerly Engine Gaming and Media, Inc.)

Table of Contents

Notice of No Auditor Review of Unaudited Interim Condensed Consolidated Financial Statements 3
Management's Responsibility for Financial Reporting 3
Unaudited Interim Condensed Consolidated Statements of Financial Position 4
Unaudited Interim Condensed Consolidated Statements of Income (loss) and Comprehensive Income (loss) 6
Unaudited Interim Condensed Consolidated Statements of Shareholders' Equity (Deficiency) 7
Unaudited Interim Condensed Consolidated Statements of Cash Flows 8
Notes to the Unaudited Interim Condensed Consolidated Financial Statements 9

Page 2of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

NOTICE OF NO AUDITOR REVIEW OF

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, the financial statements must be accompanied by a notice indicating that the condensed consolidated interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying interim condensed consolidated financial statements of GameSquare Holdings, Inc., (formerly Engine Gaming & Media, Inc.) (the "Company") are the responsibility of management and the Board of Directors.

The interim condensed consolidated financial statements have been prepared by management, on behalf of the Board of Directors, in accordance with the accounting policies disclosed in the notes to the interim condensed consolidated financial statements. Where necessary, management has made informed judgments and estimates in accounting for transactions which were not complete at the statement of financial position date. In the opinion of management, the interim condensed consolidated financial statements have been prepared within acceptable limits of materiality and are in accordance with International Accounting Standard 34 - Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards appropriate in the circumstances.

Management has established processes, which are in place to provide it with sufficient knowledge to support management representations that it has exercised reasonable diligence in that (i) the interim condensed consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of, and for the periods presented by, the interim condensed consolidated financial statements and (ii) the interim condensed consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented by the interim condensed consolidated financial statements.

The Board of Directors are responsible for reviewing and approving the interim condensed consolidated financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. The Company's Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the interim condensed consolidated financial statements together with other financial information of the Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the interim condensed consolidated financial statements together with other financial information of the Company for issuance to the shareholders.

Management recognizes its responsibility for conducting the Company's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.

Page 3of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Interim Condensed Consolidated Statements of Financial Position

(Unaudited)

(Expressed in United States Dollars)

Note February 28, 2023 August 31, 2022
$ $
ASSETS
Current
Cash 2,988,289 8,601,706
Restricted cash 14 47,455 47,455
Accounts and other receivables 6 6,267,810 8,404,009
Government remittances 995,341 874,334
Publisher advance, current 6 117,323 1,490,648
Prepaid expenses and other 1,116,083 2,064,221
Promissory notes receivable 7 - 576,528
11,532,301 22,058,901
Non-Current
Publisher advance, non-current 6 - -
Investment at FVTPL 8 2,629,851 2,629,851
Property and equipment 9 117,926 127,390
Goodwill 10 15,189,874 15,200,188
Intangible assets 11 2,082,027 2,667,363
Right-of-use assets 12 5,052 11,115
20,024,730 20,635,907
31,557,031 42,694,808

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Page 4of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Interim Condensed Consolidated Statements of Financial Position

(Unaudited)

(Expressed in United States Dollars)

Note February 28, 2023 August 31, 2022
$ $
LIABILITIES
Current
Accounts payable 26 11,032,774 12,772,375
Accrued liabilities 26 2,928,630 3,756,758
Players liability account 14 47,455 47,455
Deferred revenue 1,594,625 1,077,923
Lease liabilities, current 13 382,444 388,834
Promissory notes payable 15 821,815 771,762
Warrant liability 17 242,322 49,894
Convertible debt, current 16 5,150,429 2,267,367
Arbitration reserve 22 1,659,875 692,613
23,860,369 21,824,981
Convertible debt, non-current 16 2,328,057 4,983,236
2,328,057 4,983,236
26,188,426 26,808,217
SHAREHOLDERS' EQUITY (DEFICIENCY)
Share capital 18 126,847,679 124,897,859
Contributed surplus 20,834,158 20,351,522
Foreign currency translation reserve (2,296,618 ) (2,069,219 )
Deficit (140,016,614 ) (127,293,571 )
5,368,605 15,886,591
31,557,031 42,694,808
Going concern 1
Commitments and contingencies 22
Subsequent events 28
Approved on Behalf of Board:"Tom Rogers""Lou Schwartz"
Director Director

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Page 5of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Interim Condensed Consolidated Statements of Income (loss) and Comprehensive Income (loss)

(Unaudited)

(Expressed in United States Dollars)

For the three months ended For the six months ended
Note February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022
CONTINUING OPERATIONS$ $$ $
REVENUE
Direct to consumer - - - -
Software-as-a-service 2,441,736 2,139,463 4,881,420 4,589,298
Advertising 6,497,725 6,858,563 14,327,627 16,623,230
8,939,461 8,998,026 19,209,047 21,212,528
EXPENSES
Salaries and wages 25 3,086,097 3,733,521 6,124,701 6,924,528
Consulting 25 527,284 586,776 1,000,897 1,116,049
Professional fees 340,342 715,852 626,069 1,239,023
Revenue sharing expense 6,060,552 6,291,112 13,353,910 15,257,848
Sponsorships and tournaments - - - -
Advertising and promotion 148,587 335,678 281,206 698,801
Office and general 1,163,432 1,212,741 2,188,073 2,456,931
Technology expenses 613,655 652,232 1,366,895 1,335,818
Amortization and depreciation 9,11,12 308,211 306,905 615,801 619,258
Share-based payments 19,20 683,935 1,255,326 2,432,456 2,576,412
Interest expense 15, 16 161,453 197,855 314,324 395,105
(Gain) loss on foreign exchange 43,945 (13,025 ) 245,605 91,632
Gain on modification of debt - - (30,688 ) -
Transaction costs 681,447 349,404 799,532 356,523
Arbitration settlement reserve 22 1,096,096 (1,208,556 ) 967,262 (3,948,608 )
Restructuring costs 27 - 35,747 185,539 35,747
Change in fair value of promissory notes receivable 7 - - 3,757 -
Change in fair value of warrant liability 17 221,165 (998,757 ) 194,035 (3,940,303 )
Change in fair value of convertible debt 16 977,595 (293,762 ) 1,213,605 (1,976,934 )
16,113,796 13,159,049 31,882,979 23,237,830
Net income (loss) for the period before discontinued operations (7,174,335 ) (4,161,023 ) (12,673,932 ) (2,025,302 )
Income tax expense - -
(7,174,335 ) (4,161,023 ) (12,673,932 ) (2,025,302 )
DISCONTINUED OPERATIONS
Gain (loss) from discontinued operations 23 (183,026 ) (2,527,272 ) (49,111 ) (5,991,749 )
Net income (loss) for the period from discontinued operations (183,026 ) (2,527,272 ) (49,111 ) (5,991,749 )
Net loss for the period (7,357,361 ) (6,688,295 ) (12,723,043 ) (8,017,051 )
Net (income) loss attributable to non-controlling interest - (43,874 ) - (68,638 )
Net loss attributable to owners of the Company (7,357,361 ) (6,732,169 ) (12,723,043 ) (8,085,689 )
OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences 83,730 (64,559 ) (227,399 ) 104,859
Comprehensive loss for the period (7,273,631 ) (6,796,728 ) (12,950,442 ) (7,980,830 )
INCOME (LOSS) PER SHARE
Basic income (loss) per share - continuing operations 5 (0.45 ) (0.27 ) (0.80 ) (0.13 )
Basic income (loss) per share - discontinued operations (0.01 ) (0.16 ) - (0.38 )
Basic and diluted loss per share 5 (0.46 ) (0.43 ) (0.80 ) (0.51 )
Weighted average number of shares outstanding - Basic and Diluted 5 16,027,267 15,634,944 15,923,921 15,600,100

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Page 6of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Interim Condensed Consolidated Statements of Shareholders' Equity (Deficiency)

(Unaudited)

(Expressed in United States Dollars)

Share capital:
Number		 Share capital:
Amount		 Shares to be issued Contributed surplus Foreign currency translation reserve Deficit Total
equity before
non-controlling interest		 Non-controlling interest Total
equity
# $ $ $ $ $ $ $ $
Balance, as at August 31, 2021 15,543,309 122,741,230 - 17,819,933 (2,324,025 ) (112,814,973 ) 25,422,165 143,379 25,565,544
Share-based payments - - - 2,576,412 - - 2,576,412 - 2,576,412
Shares issued on vesting of RSUs 91,635 681,759 - (681,759 ) - - - - -
Non-controlling interest in subsidiary - - - - - - - - -
Net loss for the period - - - - - (8,085,689 ) (8,085,689 ) 68,638 (8,017,051 )
Foreign currency translation differences - - - - 104,859 - 104,859 - 104,859
Balance, as at February 28, 2022 15,634,944 123,422,989 - 19,714,586 (2,219,166 ) (120,900,662 ) 20,017,747 212,017 20,229,764
Balance, as at August 31, 2022 15,803,875 124,897,859 - 20,351,522 (2,069,219 ) (127,293,571 ) 15,886,591 - 15,886,591
Share-based payments - - - 2,432,456 - - 2,432,456 - 2,432,456
Return to treasury - Sideqik acquisition (9,098 ) - - - - - - - -
Shares issued on vesting of RSUs 118,433 616,486 - (616,486 ) - - - - -
Shares issued under shares for services 114,057 1,333,334 - (1,333,334 ) - - - - -
Net income for the year - - - - - (12,723,043 ) (12,723,043 ) - (12,723,043 )
Foreign currency translation differences - - - - (227,399 ) - (227,399 ) - (227,399 )
Balance, as at February 28, 2023 16,027,267 126,847,679 - 20,834,158 (2,296,618 ) (140,016,614 ) 5,368,605 - 5,368,605

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Page 7of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in United States Dollars)

For the six months ended
Note February 28, 2023 February 28, 2022
$ $
OPERATING ACTIVITIES
Net loss for the period (12,723,043 ) (8,017,051 )
Items not affecting cash:
Amortization and depreciation 9,11,12 637,932 2,059,965
Impairment expense - 266,470
Arbitration settlement reserve 22 967,262 (3,948,608 )
Gain on modification of debt (30,688 ) -
Change in fair value of promissory notes receivable 7 3,757 -
Change in fair value of warrant liability 17 194,035 (3,940,303 )
Change in fair value of convertible debt 16 1,213,605 (1,976,934 )
Accretion of debt - 4,610
Share-based payments 19, 20 2,432,456 2,576,412
(7,304,684 ) (12,975,439 )
Changes in non-cash working capital:
Restricted cash - 4,596
Accounts and other receivables 2,136,199 (884,149 )
Government remittances (121,007 ) (393,867 )
Publisher advance 6 1,373,325 1,526,326
Prepaid expenses and other 948,138 784,145
Held for sale - Eden - (275,191 )
Accounts payable (1,797,417 ) 2,923,555
Accrued liabilities (1,133,265 ) 942,053
Players liability account - (4,596 )
Deferred revenue 516,702 (1,469,385 )
1,922,675 3,153,487
(5,382,009 ) (9,821,952 )
INVESTING ACTIVITIES
Purchase of property and equipment (37,131 ) (47,671 )
(37,131 ) (47,671 )
FINANCING ACTIVITIES
Proceeds (payments) on promissory notes payable, net 15 50,053 (38,125 )
Payments on lease financing 13 (6,690 ) (141,077 )
Payments on long-term debt - (50,714 )
43,363 (229,916 )
Impact of foreign exchange on cash (237,640 ) 142,443
Change in cash (5,613,417 ) (9,957,096 )
Cash, beginning of period 8,601,706 15,305,996
Cash, end of period 2,988,289 5,348,900

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Page 8of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

1.Corporate information and going concern

(a) Corporate information

GameSquare Holdings, Inc. (formerly Engine Gaming & Media, Inc.) ("GameSquare" or the "Company") is a corporation existing under the Business Corporations Act (British Columbia) (and was originally incorporated under the Business Corporations Act (Ontario) on April 8, 2011). The registered head office of the Company is 2110 Powers Ferry Road, Suite 450, Atlanta Georgia, USA.

GameSquare Holdings, Inc. (formerly Engine Gaming and Media, Inc.), (NASDAQ: GAME; TSXV: GAME) completed its previously announced plan of arrangement (the "Arrangement") with GameSquare Esports Inc. ("GSQ") on April 11, 2023, resulting in the Company acquiring all the issued and outstanding securities of GSQ, see Note 28.

The Company focuses on accelerating new, live, immersive esports and interactive gaming experiences for consumers through its partnerships with traditional and emerging media companies and providing online interactive technology and monetization services.

(b) Going concern

These interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern, and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements. Such adjustments could be material. It is not possible to predict whether the Company will be able to raise adequate financing or to ultimately attain profit levels of operations.

The Company has not yet realized profitable operations and has incurred significant losses to date resulting in a cumulative deficit of $140,016,614as of February 28, 2023 (August 31, 2022 -$127,293,571). The recoverability of the carrying value of the assets and the Company's continued existence is dependent upon the achievement of profitable operations, or the ability of the Company to raise alternative financing, if necessary. While management has been historically successful in raising the necessary capital, it cannot provide assurance that it will be able to execute its business strategy or be successful in future financing activities. As of February 28, 2023, the Company had a working capital deficiency of $12,328,068(August 31, 2022 - working capital surplus of $233,920) which is comprised of current assets less current liabilities. The Company also faces uncertain future impacts from COVID-19, see Note 3(b).

These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern and, therefore, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.

Prior to the closing of the Arrangement, the Company closed a public offering of 7,673,000subscription receipts (the "Subscription Receipts") at an issue price of US$1.25per Subscription Receipt, including the partial exercise of the over-allotment option, for aggregate gross proceeds of US$9.59million.

Page 9of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

2.Basis of preparation

(a) Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These unaudited interim condensed consolidated financial statements are prepared on a basis consistent with the accounting policies disclosed in the audited consolidated financial statements for the fiscal year ended August 31, 2022; and should be read in conjunction with those audited consolidated financial statements. Interim results are not necessarily indicative of the results expected for the fiscal year.

These interim condensed consolidated financial statements were authorized for issuance by the Board of Directors of the Company on April 17, 2023.

(b) Basis of consolidation

The interim condensed consolidated financial statements comprise the accounts of the Company and its controlled subsidiaries. The financial statements of subsidiaries are included in the interim condensed consolidated financial statements from the date that control commences until the date that control ceases. Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

All transactions and balances between the Company and its subsidiaries are eliminated on consolidation, including unrealized gains and losses on transactions between companies. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Company's interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

The Company's material subsidiaries as of February 28, 2023, are as follows:

Name of Subsidiary Country of Incorporation

Ownership

Percentage

Functional

Currency

Frankly Inc. Canada 100 % Canadian Dollar
Stream Hatchet S.L. Spain 100 % Euro
SideQik, Inc. USA 100 % US Dollar

Non-controlling interests are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of acquisition. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Page 10of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

(c) Functional and presentation currency

The functional currency of the Company is the US Dollar ("USD). The functional currencies of the Company's subsidiaries are disclosed in Note 2(b). The presentation currency of the interim condensed consolidated financial statements is the US Dollar ("USD").

(d) Income taxes

The Company had no income tax expense for the six months ended February 28, 2023, and 2022. As of February 28, 2023, deferred tax assets have not been recognized because it has not been determined as probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.

3.Significant judgments, estimates and assumptions

The preparation of these interim condensed consolidated financial statements requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at the date of the interim condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates primarily relate to unsettled transactions and events as at the date of the interim condensed consolidated financial statements.

On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenues, and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different assumptions and conditions. Significant estimates and judgments made by management in the preparation of these interim condensed consolidated financial statements are outlined below.

The assessment of the Company's ability to execute its strategy by funding future working capital requirements involves judgment. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. There is a material uncertainty regarding the Company's ability to continue as a going concern.

Page 11of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

(a) Significant estimates and critical judgments

Information about significant estimates and critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the interim condensed consolidated financial statements is included in the following notes:

Note 1 Going concern;
Note 26 Expected credit losses;
Note 17 Valuation of warrant liability;
Notes 10 and 11 Goodwill and intangible assets;
Notes 19 and 20 Valuation of share-based payments;
Note 16 Valuation of convertible debt; and
Note 22 Contingencies.
(b) Uncertainty about the effects of COVID-19

The global COVID-19 pandemic remains an evolving situation. The Company will continue to actively monitor the developments of the pandemic and may take further actions that could alter business operations as may be required by federal, state, local, or foreign authorities, or that management determines are in the best interests of our employees, customers, partners, and shareholders. It is not clear what effects any such potential actions may have on the Company's business, including the effects on our employees, players and consumers, customers, partners, development and content pipelines, the Company's reputation, financial condition, results of operations, revenue, cash flows, liquidity, or stock price.

4.Changes in significant accounting policies

Future accounting pronouncements

The following standards have not yet been adopted and are being evaluated to determine their impact on the Company:

Amendments to IAS 1 - Classification of liabilities as current or non-current

Amendments to IAS 1 - Non-current Liabilities with Covenants

Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies

Amendments to IAS 8 - Definition of Accounting Estimates

Amendments to IAS 12 Income Taxes - Deferred Tax Related to Assets and liabilities Arising from a Single Transaction

Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or the Company is still assessing what the impact will be to the Company's financial statements.

Page 12of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

5.Net income (loss) per share

Basic net income (loss) per share is calculated using the weighted-average number of common shares outstanding during each period. Diluted net income (loss) per share assumes the conversion, exercise, or issuance of all potential common share equivalents unless the effect is to reduce the loss or increase the income per share. For purposes of this calculation, stock options, warrants and RSU's are potential common shares and are only included in the calculation of diluted net income (loss) per share when their effect is dilutive.

Due to the net loss from continuing operations during the three and six months ended February 28, 2023, and 2022 all outstanding options, restricted share units and warrants were excluded from diluted weighted-average common shares outstanding as their effect was anti-dilutive. Weighted average common shares outstanding for the three and six months ended February 28, 2023, were 16,027,267and 15,923,921, respectively (February 28, 2022- 15,634,944and 15,600,100), respectively.

6.Accounts, other receivables, and publisher advance

(a) Accounts and other receivables

The Company's accounts and other receivables are comprised of the following:

February 28,
2023		 August 31,
2022
$ $
Trade accounts receivable 7,445,121 9,750,619
Other receivables 4,429 9,028
Allowance for doubtful accounts (1,181,740 ) (1,355,638 )
6,267,810 8,404,009

A continuity of the Company's allowance for doubtful accounts is as follows:

2023 2022
$ $
Balance, August 31, (1,355,638 ) (1,084,305 )
Provision, bad debt expense (205,542 ) -
Write-offs 379,440 -
Balance, February 28, (1,181,740 ) (1,084,305 )
(b) Publisher advance

On February 7, 2021, the Company's subsidiary Frankly Media LLC, amended its commercial agreement with its largest publisher, which secured a long-term extension. The contract is expected to go through January 2024. One of the key terms of the amended agreement required the Company to advance $6million of revenue sharing payments to the publisher under the following schedule:

(i) $4million within one day of execution of the amendment;
(ii) $1million on or before February 28, 2021; and
(iii) $1million on or before March 31, 2021.

Page 13of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The advance is to be recouped through additional withholding on future advertising revenue share payments made to the publisher, beyond Frankly's share, and is effective for amounts billed for periods February 1, 2021, forward.

As of February 28, 2023, $6million had been advanced to the publisher and $5,882,677had been recouped through the process explained above. As of February 28, 2023, a net amount of $117,323was outstanding on the advance.

The breakout of the publisher advance into current and non-current portions is based on an estimate of advertising billings over the next twelve months and the resulting additional withholding on the related advertising revenue share payments.

7.Promissory notes receivable at FVTPL

Promissory notes receivable
$
Balance, August 31, 2022 576,528
Payments (591,781 )
Change in fair value (3,757 )
Effect of foreign exchange 19,010
Balance, February 28, 2023 -

To facilitate the sale of Eden Games, under a separate agreement, the Company agreed to purchase Euro- denominated 6% promissory notes amounting to Euro 1,453,154($1,585,783) that were due to the former co-founders of Eden Games from third parties. Euro 1,081,081($1,181,005) of the consideration was paid on the closing of the sale with the remainder due in two equal payments on April 4, 2023, and October 6, 2023. As of February 28, 2023, the remaining fair value of the promissory notes receivable is $0.

8.Investment at FVTPL

On August 25, 2020, the Company acquired a 20.48% interest in One Up Group, LLC ("One Up"). One Up operates a mobile app which allows gamers to organize and play one-on-one matches with other gamers and compete for money.

The fair value of the Company's investment in One Up is estimated at each reporting period, with reference to valuations underlying privately placed financing transactions closed by One Up and is classified with a level 3 in the fair value hierarchy, see Note 25. The fair value of this investment was $2,629,851on February 28, 2023, and August 31, 2022.

Page 14of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

9.Property and equipment

A continuity of the Company's property and equipment is as follows:

Cost Leasehold
improvements		 Computer equipment Furniture
and fixtures		 Total
$ $ $ $
August 31, 2021 218,851 603,607 173,044 995,502
Additions - 46,111 1,560 47,671
Impairment (153,193 ) - - (153,193 )
Held for sale - Eden Games (7,613 ) (323,150 ) (53,910 ) (384,673 )
Foreign exchange 1,216 (20,606 ) (3,076 ) (22,466 )
February 28, 2022 59,261 305,962 117,618 482,841
August 31, 2022 59,102 271,636 81,994 412,732
Additions - 37,131 - 37,131
Foreign exchange 77 (1,960 ) 215 (1,668 )
February 28, 2023 59,179 306,807 82,209 448,195
Accumulated depreciation Leasehold
improvements		 Computer equipment Furniture
and fixtures		 Total
$ $ $ $
August 31, 2021 63,367 406,231 122,093 591,691
Depreciation 3,725 54,281 12,909 70,915
Held for sale - Eden Games (7,361 ) (285,353 ) (48,392 ) (341,106 )
Foreign exchange (470 ) (2,734 ) (2,708 ) (5,912 )
February 28, 2022 59,261 172,425 83,902 315,588
August 31, 2022 59,102 180,579 45,661 285,342
Depreciation - 46,006 527 46,533
Foreign exchange 77 (1,899 ) 216 (1,606 )
February 28, 2023 59,179 224,686 46,404 330,269
Net book value Leasehold
improvements		 Computer equipment Furniture
and fixtures		 Total
$ $ $ $
August 31, 2022 - 91,057 36,333 127,390
February 28, 2023 - 82,121 35,805 117,926

Page 15of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

10.Goodwill

A continuity of the Company's goodwill is as follows:

2023 2022
$ $
Balance, August 31, 15,200,188 18,495,121
Held for sale - Eden Games (345,150 )
Effect of foreign exchange (10,314 ) (35,638 )
Balance, February 28, 15,189,874 18,114,333

11.Intangible assets

A continuity of the Company's intangibles is as follows:

Accumulated amortization Patents Application Platforms Software Brand Customer
Lists and
Contracts		 Total
$ $ $ $ $ $
August 31, 2021 2,514,737 966,444 6,340,302 1,375,647 916,368 12,113,498
Amortization 943,026 56,000 424,336 199,413 238,561 1,861,336
Held for Sale - Eden - (269,098 ) (4,709,219 ) (1,112,108 ) (254,960 ) (6,345,385 )
Foreign exchange - (14,451 ) (271,030 ) (58,913 ) (27,368 ) (371,762 )
February 28, 2022 3,457,763 738,895 1,784,389 404,039 872,601 7,257,687
August 31, 2022 4,400,790 496,228 2,193,913 232,209 709,167 8,032,307
Amortization - - 424,335 10,501 150,500 585,336
Foreign exchange - - (10,950 ) (1,733 ) - (12,683 )
February 28, 2023 4,400,790 496,228 2,607,298 240,977 859,667 8,604,960
Net book value Patents Application Platforms Software Brand Customer
Lists and
Contracts		 Total
$ $ $ $ $ $
August 31, 2022 - - 555,110 29,532 2,082,721 2,667,363
February 28, 2023 - - 130,775 19,031 1,932,221 2,082,027

Page 16of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

12.Right-of-use assets

A continuity of the Company's right-of-use assets is as follows:

2023 2022
$ $
Balance, August 31, 11,115 557,022
Depreciation (6,063 ) (127,714 )
Held for sale - Eden Games - (16,480 )
Effect of foreign exchange - (2,459 )
Balance, February 28, 5,052 410,369

Right of use assets consist primarily of leases for corporate office facilities and are amortized monthly over the term of the lease, or useful life, if shorter.

13.Lease liabilities

Lease liabilities are measured at the present value of the lease payments that were not paid at the financial statement date. The lease payments are discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate. The continuity of the lease liabilities is presented in the table below:

Equipment Office lease Total
$ $ $
Balance, August 31, 2021 24,048 563,503 587,551
Held for sale - Eden Games - (18,456 ) (18,456 )
Interest expense 701 15,262 15,963
Payments (6,690 ) (134,387 ) (141,077 )
Effect of foreign exchange - (2,696 ) (2,696 )
Balance, February 28, 2022 18,059 423,226 441,285
Balance, August 31, 2022 11,874 376,960 388,834
Acquired - - -
Disposal of Eden Games - - -
Interest expense 300 - 300
Payments (6,690 ) - (6,690 )
Balance, February 28, 2023 5,484 376,960 382,444

Page 17of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The Company's lease obligation is classified between current and non-current liabilities as follows:

Equipment Office lease Total
$ $ $
As of February 28, 2022:
Less than one year 12,575 142,968 155,543
Greater than one year 5,484 280,258 285,742
Total lease obligation 18,059 423,226 441,285
Equipment Office lease Total
$ $ $
As of February 28, 2023:
Less than one year 5,484 376,960 382,444
Total lease obligation 5,484 376,960 382,444

The future minimum undiscounted lease payments as of February 28, 2022, are presented below:

Equipment Office lease Total
Less than one year 5,575 404,271 409,846
Total undiscounted lease obligation 5,575 404,271 409,846

14.Players liability account

The Players liability account consists of UMG and Winview cash deposited by players, plus any prize winnings, less any fees for match game play and withdrawal requests processed to date. As of February 28, 2023, the players liability account balance is the total amount payable if all players were to request closure of their accounts. As of February 28, 2023, the players account liability and corresponding restricted cash balances were the same.

15.Promissory notes payable and other borrowings

(a) Promissory notes

The Company has promissory notes with a balance of $200,000(August 31, 2022 - $200,000) that are unsecured, due on demand, and bear interest at 18%. As of February 28, 2023, interest of $159,232has been accrued (August 31, 2022 - $141,940).

The Company, through its WinView subsidiary, has a secured promissory note outstanding for amounts due for the provision of services by the noteholder. As of February 28, 2023, $462,583was due under the note (August 31, 2022 - $429,822). The note is secured by the assets of WinView, bears interest at 8%, and is currently due.

(b) Paycheck Protection Program (the "PPP") loans

During April and May 2020, the Company entered into promissory notes (the "Notes") with three banks. The Notes evidence loans to the Company of $1,589,559pursuant to the PPP of the CARES Act administered by the U.S. Small Business Administration (the "SBA"). In accordance with the requirements of the CARES Act, the Company used the proceeds from the loans exclusively for qualified expenses under the PPP, including payroll costs, rent and utility costs, as further detailed in the CARES Act and applicable guidance issued by the SBA.

Page 18of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Interest will accrue on the outstanding balance of the Notes at a rate of 1.00%per annum. However, the Company expects to apply for and receive forgiveness of up to all amounts due under the Notes, in an amount equal to the sum of qualified expenses under the PPP during the twenty-four weeks following disbursement.

Subject to any forgiveness granted under the PPP, the Notes are scheduled to mature in April 2022 and require 18 equal monthly payments of principal and interest beginning November 2020. The Notes may be prepaid at any time prior to maturity with no prepayment penalties. The Notes provide for customary events of default, including, among others, those relating to failure to make payments, bankruptcy, breaches of representations, significant changes in ownership, and material adverse effects. The Company's obligations under the Notes are not secured by any collateral.

Upon the receipt of the proceeds of $1,589,559from the Notes, the Company accounted for the Notes as a grant in the form of forgivable loan and recorded the amount as a deferred income liability. The liability was reduced as the Company recognized expenses which qualified for forgiveness of the loan. As of February 28, 2023, the Company had incurred greater than $1,589,559of qualifying expenses and therefore had a remaining deferred income liability of $nil. The Company recognized the impact of the loan forgiveness as an offset against related salaries and wages expense, in the consolidated statement of income (loss) and comprehensive income (loss) for the year ended August 31, 2020. As of February 28, 2023, $209,875has not been formally forgiven.

16.Convertible debt

The continuity of convertible debt for the six months ended February 28, 2023, and 2022, is as follows:

2019
Series		 2020
Series		 EB CD Total
$ $ $
Balance, August 31, 2021 914,428 2,097,127 6,939,941 9,951,496
Interest expense 13,195 99,178 250,000 362,373
Accrued interest on conversion / interest payments - - (375,000 ) (375,000 )
Effect of foreign exchange (12,046 ) - - (12,046 )
Change in fair value (381,765 ) (145,317 ) (1,449,852 ) (1,976,934 )
Balance, February 28, 2022 533,812 2,050,988 5,365,089 7,949,889
2019
Series		 2020
Series		 EB CD Total
$ $ $
Balance, August 31, 2022 - 2,267,367 4,983,236 7,250,603
Interest expense - 66,884 250,000 316,884
Accrued interest on conversion / interest payments - - (375,000 ) (375,000 )
Principal and interest at maturity - (896,918 ) - (896,918 )
Gain on modification of debt - (30,688 ) - (30,688 )
Change in fair value - 921,412 292,193 1,213,605
Balance, February 28, 2023 - 2,328,057 5,150,429 7,478,486

Page 19of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The Company's convertible debt obligations are classified between current and non-current liabilities on February 28, 2023, as follows:

2020
Series		 EB CD Total
$ $ $
As of February 28, 2023:
Less than one year - 5,150,429 5,150,429
Greater than one year 2,328,057 - 2,328,057
Total convertible debt obligation 2,328,057 5,150,429 7,478,486
(a) 2020 Series

The 2020 Series debentures will mature twenty-four (24) monthsfrom the date of issuance and bear interest at a rate of 5%per annum (subject to adjustment as described below), payable on maturity. At the Company's option, interest under the 2020 Series debentures is payable in kind in common shares at an issue price which would be based on the trading price of the common shares at the time of such interest payment. The interest rate under the 2020 Series debentures will increase from 5% to 10% per annum on a prospective basis on December 19, 2020, if a public offering has not occurred by that date.

The 2020 Series debenture holders may convert all or a portion of the principal amount of the debentures into units ("Units") of the Company at a price (the "Conversion Price") equal to the lesser of (a) $11.25per Unit, and (b) if such conversion occurs after a public offering of securities by the Company (the "Public Offering"), a fifteen percent (15%) discount to the public offering price, provided that such conversion price shall not be less than $7.50per Unit.

Notwithstanding the foregoing, if by December 19, 2020, the Company has not obtained registration rights in the United States to allow sale in the United States of the common shares ("Common Shares") of the Company and the exercise of warrants (the "Warrants") of the Company to be issued pursuant to the conversion of the 2020 Series debentures, holders of 2020 Series debentures may convert such debentures into Units at $7.50per Unit.

Each Unit is comprised of one common share and one-half of one Warrant, with each Warrant exercisable into one common share of the Company at an exercise price of $15.00per share for a period of three years from the issuance of the 2020 Series debentures. Under certain circumstances, the Company shall be entitled to call for the exercise of any outstanding Warrants in the event that the closing trading price of the Company common shares on the NASDAQ is above $30.00per share for fifteen (15) consecutive trading days.

In the event that the Company's common shares are listed for trading on the NASDAQ Capital Market and the Company completes a Public Offering for an aggregate amount of at least US$30,000,000, the Company may cause the 2020 Series debentures to be converted at the Conversion Price by the Company delivering a notice to the holder not less than a minimum of 30 days and a maximum 60 days prior to the forced conversion date.

(b) 2020 Series - Standby

In September 2020, the Company entered into an $8,000,000stand-by convertible debenture facility (the "2020 Series Standby" debentures). The 2020 Series Standby Debenture has substantially similar terms as the 2020 Series debentures, except the following: (i) the references to a minimum $7.50conversion price (as described above) have been changed to $8.90; and (ii) the 2020 Series Standby debentures are only convertible into common shares of the Company, not units. In November 2020, the Company issued 224,719warrants in connection with this first draw of $2,000,000of the Standby Debentures, with each warrant exercisable into one common share the Company at an exercise price of $15.00per share for a period of two years, subject to the same acceleration clause as the warrants underlying the 2020 Series debentures.

Page 20of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The proceeds of $2,000,000from the first draw were allocated between convertible debt and warrant liability with $1,381,084allocated to convertible debt and $618,916allocated to the 224,719warrants issued.

The remaining $6,000,000of convertible debentures that are issuable under this facility have substantially similar terms as the 2020 Series debentures, including conversion into units consisting of one share and one-half warrant, provided that the conversion price of any additional convertible debentures will be based on the market price of the common shares at the time of such subscriptions and are subject to TSX-V approval.

On September 1, 2022, the Company extended convertible debentures that were due to expire in October and November 2022 with an aggregate principal amount of US$1,250,000. The original convertible debentures had an annual interest rate of 10% per annum and a conversion price of US$8.90per share. This modification was with a related party (Note 25) The modification consists of extension of the maturity date from November 20, 2022, to August 25, 2025, an interest rate reduction of 3%, and a decrease in the conversion price of $7.80constituting a substantial modification from a qualitative perspective. This means that the original convertible debt was effectively extinguished at the carrying value and replaced by the fair value of the modified certificate. The difference of $20,999between the carrying value of the original instruments and the fair value of the new instrument was recognized in profit or loss. Fair value was estimated using a binomial lattice method. The key assumptions used included share price of $.72, conversion price of $1.10, 3-year term, 7% interest rate, expected volatility of 100%, 3.51% risk free interest rate and 0% expected dividend yield. No costs or fees were incurred for this modification.

The remaining $750,000principal value of the Company's 2020 Series convertible debt that was due to mature in November 2022 was either settled by offset against the Company's promissory notes receivable or amended. Two of the three parties holding the convertible debt agreed to allow the Company to offset principal of $500,000and interest of $91,781due at maturity against the Company's promissory notes receivable (Note 7). The remaining $250,000principal value convertible debt was amended to extend the maturity date to February 28, 2023, with all other terms remaining unchanged. The modification of the certificate in the principal amount of $250,000consisting of extension of the maturity date from November 20, 2022, to February 28, 2023, is not a substantial modification from a qualitative perspective. However, the Company elected to designate this financial instrument at FVTPL, which is consistent with similar financial instruments. The original convertible debt was revalued at fair value on the modification date. The difference of $9,689between the carrying value of the original instruments and the fair value of the modified instrument was recognized in profit or loss. . Fair value was estimated using a binomial lattice method. The key assumptions used included share price of $.67, conversion price of $8.90, 3-month term, 10% interest rate, expected volatility of 90%, 4.01% risk free interest rate and 0% expected dividend yield. No costs or fees were incurred for this modification.

Page 21of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

As of February 28, 2023, the fair value of the 2020 Series convertible debentures was estimated using the binomial lattice model with the below assumptions:

2020 Series February 28, 2023
(US$)		 August 31,
2022
(US$)
Share price 1.71 0.72
Conversion price8.9and 1.10 8.90
Term, in years 2.51 0.22
Interest rate 7 % 10 %
Expected volatility 100.00 % 90.00 %
Risk-free interest rate 4.60 % 2.85 %
Expected dividend yield 0 % 0 %
(c) EB CD

On February 24, 2021, the Company extinguished the Amended EB Loan and issued the Lender a secured convertible debenture in the principal amount of $5million (the "EB CD"). The EB CD is convertible into units of the Company at a conversion price of $10.25per unit, with each unit comprised of one common share and one-half of a warrant, with each whole warrant exercisable into a common share at an exercise price of $15.00per share for a period of three years from the issuance of the EB CD. The EB CD has a term of three years. The convertible debenture is secured by the Company's real and personal property, fixtures, leasehold improvements, trade fixtures, equipment, and other personal property as well as all general intangibles relating to or arising from the personal property.

As of February 28, 2023, the fair value of the EB CD convertible debenture was estimated using the binomial lattice model with the below assumptions:

EB CD February 28, 2023
(US$)		 August 31,
2022
(US$)
Share price 1.71 0.72
Conversion price 10.25 10.25
Warrant exercise price 15.00 15.00
Term, in years 0.99 1.48
Interest rate 10 % 10 %
Expected volatility 120.00 % 90.00 %
Risk-free interest rate 4.96 % 3.45 %
Expected dividend yield 0 % 0 %

Page 22of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

(d) Fair value

The following table gives information about how the fair values of these financial liabilities are determined (in particular, the valuation technique and key inputs used).

Financial assets / financial liabilitiesValuation techniqueKey InputsRelationship and sensitivity of unobservable inputs to fair value to fair value
Convertible debt The fair value of the convertible debentures as of February 28, 2023 has been calculated using a binomial lattice methodology. Key observable inputs The estimated fair value would increase (decrease) if:
Share price CAD $2.33(USD $1.71) The share price was higher (lower)
Risk-free interest rate (4.60% to 4.96%) The risk-free interest rate was higher (lower)
Dividend yield (0%) The dividend yield was lower (higher)
Key unobservable inputs
Credit spread (3.43% to 4.49%) The credit spread was lower (higher)
Discount for lack of marketability (0%) The discount for lack of marketability was lower (higher)
Convertible debt The fair value of the convertible debentures as of August 31, 2022 has been calculated using a binomial lattice methodology. Key observable inputs The estimated fair value would increase (decrease) if:
Share price CAD$.94(USD $.72) The share price was higher (lower)
Risk-free interest rate (2.85% to 3.45%) The risk-free interest rate was higher (lower)
Dividend yield (0%) The dividend yield was lower (higher)
Key unobservable inputs
Credit spread (10.13% to 13.56%) The credit spread was lower (higher)
Discount for lack of marketability (0%) The discount for lack of marketability was lower (higher)

Page 23of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

17.Warrant liability

Liability measured warrants having CAD exercise price

The following tables reflect the continuity of the Company's liability measured warrants for the six months ended February 28, 2023, and 2022:

Amount
$
Balance at August 31, 2021 4,868,703
Change in fair value (3,940,303 )
Foreign exchange (69,213 )
Balance, February 28, 2022 859,187
Amount
$
Balance at August 31, 2022 49,894
Change in fair value 194,035
Foreign exchange (1,607 )
Balance, February 28, 2023 242,322

The following tables reflects the continuity of the Company's outstanding liability warrants for the six months ended February 28, 2023, and 2022:

Number of Weighted-average
exercise price
warrants CAD
# $
Outstanding, August 31, 2021 1,452,843 8.96
Outstanding as of February 28, 2022 1,452,843 8.96
Weighted-average
Number of exercise price
warrants CAD
# $
Outstanding, August 31, 2022 1,329,684 8.53
Expired (29,066 ) 27.00
Outstanding as of February 28, 2023 1,300,618 8.53

Page 24of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The following table reflects the liability measured warrants issued and outstanding as of February 28, 2023:

Warrants outstanding
Expiry date Number outstanding

Average exercise price

CAD

Average remaining contractual life (years)
March 20, 2023 27,777 13.50 0.05
March 30, 2023 46,909 13.50 0.08
March 31, 2023 17,222 13.50 0.08
May 27, 2023 130,304 13.50 0.24
July 8, 2024 445,982 7.50 1.36
July 25, 2024 401,624 7.50 1.41
August 8, 2024 230,800 7.50 1.44
1,300,618 $ 8.53 1.19
As at February 28, 2023, the fair value of the 1,300,618warrants outstanding (August 31, 2022 - 1,329,684) was determined to be $242,322(August 31, 2022 - $49,894) as calculated using the Black Scholes option pricing model with the following range of assumptions: 0.05- 1.44years (August 31, 2022 - 0.30- 1.65years) as expected average life; share price of CAD$2.33(August 31, 2022 - CAD$8.93); exercise price of CAD$7.50- CAD$13.50(August 31, 2022 - CAD$7.50- CAD$27.00); 90% expected volatility (August 31, 2022 - 90%); risk free interest rate of 4.84% (August 31, 2022 - 3.61% - 3.87%); and an expected dividend yield of 0%.

If all liability measured warrants outstanding and exercisable as of February 28, 2023, were exercised, the Company would receive cash from exercise of approximately $8.2million.

Equity measured warrants having USD exercise price

The Company's 3,511,577equity measured warrants as of February 28, 2023, and 3,736,296as of August 31, 2022, had an average weighted-average exercise price of $15.

The following table reflects the equity measured warrants issued and outstanding as of February 28, 2023:

Warrants outstanding
Expiry date Number outstanding

Average exercise price

USD

Average remaining contractual life (years)
January 8, 2024 1,868,787 15.00 1.11
January 22, 2024 522,898 15.00 1.15
February 24, 2024 1,058,227 15.00 1.24
August 19, 2024 49,999 15.00 1.72
September 15, 2024 11,666 15.00 1.79
3,511,577 $ 15.00 1.16

If all equity measured warrants outstanding and exercisable as of February 28, 2023, were exercised, the Company would receive cash from exercise of approximately $52.7million.

Page 25of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

18.Share capital

(a) Authorized

The Company is authorized to issue an unlimited number of common shares and an unlimited number of preference shares.

(b) Issued and outstanding, common shares
Shares Consideration
# $
Balance, August 31, 2021 15,543,309 122,741,230
Shares issued on vesting of RSUs 91,635 681,759
Balance, February 28, 2022 15,634,944 123,422,989
Shares Consideration
# $
Balance, August 31, 2022 15,803,875 124,897,859
Return to treasury - Sideqik acquisition (9,098 ) -
Shares issued on vesting of RSUs 118,433 616,486
Shares issued under shares for services 114,057 1,333,334
Balance, February 28, 2023 16,027,267 126,847,679
(c) Activity for the period

During the six months ended February 28, 2023, 9,098shares related to the completion of the Sideqik acquisition were returned to the Company. The Company issued 118,433common shares upon vesting of an equal number of RSUs, see (Note 20) and 114,057shares for services provided by certain officers of Sideqik.

During the six months ended February 28, 2022, the Company issued 91,635common shares upon vesting of an equal number of RSUs, see (Note 20).

19.Stock options

On October 6, 2021, the Company adopted an amended and restated equity incentive plan ("Omnibus Plan"), which amends and restates the equity incentive plan which was previously established as of July 15, 2020. Under the amendments, there were no changes in the terms of previously issued awards. Under the Omnibus Plan, the total number of common shares reserved and available for grant and issuance pursuant to stock options shall not exceed 10% of the then issued and outstanding shares.

Options may be exercisable over periods of up to 10years as determined by the Board of Directors of the Company and the exercise price shall not be less than the closing price of the shares on the day preceding the award date, subject to regulatory approval.

Page 26of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The following table reflects the continuity of stock options for the six months ended February 28, 2023, and 2022:

Weighted-average

Number of
stock options 		Exercise
price 		Grant-date
fair value 		Remaining
contractual
term
# $ $ (yrs.)
Balance, August 31, 2021 692,938 11.64 7.06 4.46
Granted 28,750 5.42 2.44
Forefitures (1,564 ) 71.84 1.43
Balance, February 28, 2022 720,124 11.26 6.89 4.08
Balance, August 31, 2022 1,143,182 1.49 2.45 5.64
Granted 637,176 0.65 0.43
Cancelled (229,600 ) 0.65 7.35
Forefitures (41,100 ) 6.35 3.59
Balance, February 28, 2023 1,512,787 1.13 0.83 5.33
Exercisable as of February 28 2023 1,089,319 1.14 0.78 5.30
On December 2, 2022, the Company completed an option repricing in which 266,160options were exchanged or 36,561with an exercise price of $.65, the exchanged options were at various exercise prices above $.65.

Page 27of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The following tables reflect the stock options issued and outstanding as of February 28, 2023:

Expiry date Outstanding options Weighted average exercise price USD Weighted average remaining contractual term (Years)
April 1, 2023 1,800 0.65 0.09
August 25, 2025 340 76.43 2.49
February 10, 2026 1,338 76.43 2.95
May 23, 2026 9 76.43 3.23
June 24, 2026 15,009 0.65 3.32
July 2, 2026 4,502 0.65 3.34
August 20, 2026 1,000 0.65 3.48
March 3, 2027 1,003 76.43 4.01
November 3, 2027 133 76.43 4.68
November 7, 2029 13,250 0.65 6.70
June 14, 2031 10,683 11.69 8.30
November 23, 2031 10,000 9.82 8.74
January 31, 2027 1,500 0.65 3.93
April 12, 2027 100,000 1.80 4.12
August 10, 2027 100,000 0.90 4.45
September 30, 2027 68,500 0.60 4.59
October 31, 2027 96,176 0.65 4.67
December 2, 2027 472,500 0.65 4.76
May 26, 2029 615,044 0.95 6.24
1,512,787 1.13 5.33

Of the 1,512,787options outstanding as of February 28, 2023 (August 31, 2022 - 1,143,182), 1,089,319are exercisable as of February 28, 2023 (August 31, 2022 - 555,934). During the six months ended February 28, 2023, share-based compensation expense for the Company's stock options was $1,868,377(February 28, 2022 - $1,704,023).

20.Restricted share units

The Omnibus Plan allows the Company to award restricted share units to officers, employees, directors and consultants of the Company and its subsidiaries upon such conditions as the Board may establish, including the attainment of performance goals recommended by the Company's compensation committee. The purchase price for common shares of the Company issuable under each Restricted Share Unit ("RSU") award, if any, shall be established by the Board at its discretion. Common shares issued pursuant to any RSU award may be made subject to vesting conditions based upon the satisfaction of service requirements, conditions, restrictions, time periods or performance goals established by the board.

Page 28of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The TSXV requires the Company to fix the number of common shares to be issued in settlement of awards that are not options. The maximum number of common shares available for issuance pursuant to the settlement of RSUs shall be an aggregate of 1,548,174common shares.

The Company's outstanding RSUs are as follows:

Number
#
Balance, August 31, 2021 490,174
Granted 100,626
Vested (91,635 )
Cancelled (26,520 )
Balance, February 28, 2022 472,645
Balance, August 31, 2022 1,196,211
Granted 160,758
Vested (118,433 )
Cancelled (23,294 )
Balance, February 28, 2023 1,215,242

During the six months ended February 28, 2023, , the Company granted 68,697to key management employees pursuant to the Company's incentive plan. The fair value of these RSUs was estimated based on the closing price CAD$.90for a total fair value of CAD$61,827. These RSUs have a performance condition that the Company estimates will be achieved during the fiscal quarter ending May 31, 2023. The fair value of the 68,697RSUs will be recognized as share-based compensation over the vesting period of five months. During the period the Company also granted 92,061RSUs to members of the board of directors pursuant to the Company's incentive plan. The fair value of these RSUs was estimated based on the closing prices of CAD$.79for a total fair value of CAD$72,728. The fair value of the RSUs will be recognized as share-based compensation expense over the vesting period, which is approximately ten months.

During the six months ended February 28, 2022, the Company granted 100,626to members of the board of directors pursuant to the Company's incentive plan. The fair value of these RSUs was estimated based on the closing prices of CAD$4.98to CAD$5.49for a total fair value of CAD$514,551. The fair value of the RSUs will be recognized as share-based compensation expense over the vesting period, which is approximately twelve months.

During the six months ended February 28, 2023, and 2022, share-based compensation expense for the Company's RSUs was $564,079and 872,295, respectively.

21.Capital management

The Company considers its capital to be its shareholders' equity.

As of February 28, 2023, the Company had shareholders' equity (deficit) before non-controlling interests of $5,368,605(August 31, 2022 - equity of $15,886,591). The Company's objective when managing its capital is to seek continuous improvement in the return to its shareholders while maintaining a moderate to high tolerance for risk. The objective is achieved by prudently managing the capital generated through internal growth and profitability, utilizing lower cost capital, including raising share capital or debt when required to fund opportunities as they arise.

Page 29of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The Company may also return capital to shareholders through the repurchase of shares, pay dividends, or reduce debt where it determines any of these to be an effective method of achieving the above objective. The Company does not use ratios in the management of its capital. There have been no changes to management's approach to managing its capital during the six months ended February 28, 2023, and 2022.

22.Commitments and contingencies

Litigation and arbitration

In April 2020, the Company announced its renegotiation of the acquisition of Allinsports. The revised purchase agreement provided for the acquisition of 100% of Allinsports in exchange for the issuance of 966,667common shares of the Company and other consideration, including payments of $1,200,000as a portion of the purchase consideration. In September 2020, the Company advised the shareholders of Allinsports that closing conditions of the transaction, including the requirement to provide audited financial statements, had not been satisfied.

In response, in November 2020, the shareholders of Allinsports commenced arbitration in Alberta, Canada seeking, among other things, to compel the Company to complete the acquisition of Allinsports without the audited financial statements, and to issue 966,667common shares of the Company to those shareholders. As alternative relief, the shareholders of Allinsports sought up to US$20,000,000in damages. As of August 31, 2020, the Company had recorded an impairment against the entire balance of advances to Allinsports, amounting to $2,625,657. A hearing in this matter was held in May of 2021, and by a decision dated September 30, 2021, the Arbitrator determined that the closing of the transaction had previously occurred and directed the Company to issue the 966,667common shares. The Company is pursuing regulatory approval to issue the shares and is also pursuing relief against the Allinsports shareholders for various alleged breaches of the share purchase agreement. The Company recognized a liability for the arbitration ruling of $1,659,875, which represents the fair value of the common shares directed to be delivered as of February 28, 2023. The liability is recorded as Arbitration reserve on the Company's Consolidated Statements of Financial Position. This liability will be adjusted to fair value at the end of each reporting period.

On January 21, 2021, eight former shareholders of Winview filed a Complaint in Delaware Chancery Court against four Winview directors (David Lockton, et al. v. Thomas S. Rogers, et al.) alleging that the defendants breached their fiduciary duties in connection with the sale of Winview to the Company. The relief sought includes rescission of the sale of Winview to the Company and compensatory damages. The defendants have filed a motion to dismiss the claims. By Decision dated March 1, 2022, the Court granted in part and denied in part, the defendants' Motion to Dismiss the Complaint. Neither the Company nor Winview have been named as parties to this action. Under the March 9, 2020, Business Combination Agreement pursuant to which the Company acquired Winview, the Company agreed to indemnify Winview's directors for any claims arising out of their service as directors for Winview.

In July of 2021, Winview Inc. filed separate patent infringement lawsuits against DraftKings Inc. and FanDuel, Inc in the United States District Court for the District of New Jersey, alleging that Sportsbook and Daily Fantasy Sports offerings of DraftKings and FanDuel infringe four of Winview's patents. These actions seek the recovery of damages and other appropriate relief. Draft Kings and FanDuel have filed motions to dismiss, which are pending and the court's review of these motions has been suspended pending the outcome of inter partes review proceedings filed with the United States Patent Office regarding some of the patents involved in these actions.

Page 30of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

By Order to Continue dated May 5, 2022, the Company was substituted in as the plaintiff in a matter pending in the Ontario Superior Court of Justice, seeking recovery of €1,903,153of principal and additional amounts of accrued interest under promissory notes acquired by the Company. The matter is in the discovery stage.

The outcomes of pending litigations in which the Company is involved are necessarily uncertain as are the Company's expenses in prosecuting and defending these actions. From time to time the Company may modify litigation strategy and/or the terms on which it retains counsel and other professionals in connection with such actions, which may affect the outcomes of and/or the expenses incurred in connection with such actions.

The Company is subject to various other claims, lawsuits and other complaints arising in the ordinary course of business. The Company records provisions for losses when claims become probable, and the amounts are estimable. Although the outcome of such matters cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material adverse effect on the Company's financial condition, operations, or liquidity.

23.Discontinued operations

Winview

During the fourth quarter of fiscal 2022, The Company executed a plan to discontinue operating the Winview business, following a strategic decision to focus the Company's resources on the key revenue streams of software-as-a-service and advertising. Winview was previously part of the Company's Gaming segment.

Accordingly, WinView results for the current and comparative periods have been presented as discontinued operations within the Consolidated Statements of Loss and Comprehensive Loss. Winview revenue was previously categorized as Direct to consumer.

During the three months ended August 31, 2022, the Company recognized patent impairment expense amounting to $5,029,475. The impairment expense reflects the impact of reductions in estimated future net cash flows for certain portfolios that management determined it would no longer allocate resources to in future periods. The impairment expense consisted of the excess of the asset's recoverable value over its fair value less costs of disposal. The key assumption in calculating the asset's recoverable value is cash flow projections of $0. The Company recorded impairment losses of $136,331to write down the right of use asset to fair value less costs of disposal, the remaining book value of these assets is $0. These impairments were recorded in the Gain (loss) from discontinued operations within the Consolidated Statements of Loss and Comprehensive Loss.

Page 31of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Results from the discontinued operations for Winview and the related cash flows are as follows:

For the three months ended For the six months ended
February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022
$ $
Revenues
Revenue - 45,136 - 54,156
Operating expenses
Salaries and wages - 605,264 - 1,184,544
Consulting - 388,747 - 756,027
Professional fees 106,958 95,430 108,554 325,017
Sponsorships and tournaments - 46,326 15,155 107,945
Advertising and promotion - 214,882 - 354,093
Office and general 11,047 152,544 21,322 306,269
Technology expenses - 19,537 - 39,208
Amortization and depreciation - 488,555 - 977,109
Impairment expense - - - -
Restructuring Costs - - 2,242 -
Interest expense 9,271 10,063 15,159 18,332
(Gain) loss on foreign exchange 351 1,218 852 1,218
Non-operational professional fees 50,000 625,944 10,933 1,600,391
Net income (loss) from discontinued operations (177,627 ) (2,603,374 ) (174,217 ) (5,615,997 )
For the six months ended
February 28, 2023 February 28, 2022
Net cash provided by (used in) operating activities (99,525 ) 110,929
Net cash used in financing activities 32,761 (106,212 )
Change in cash (66,764 ) 4,717
Cash, beginning of period 20,612 52,746
Cash, end of period (46,152 ) 57,463

UMG

The Company entered into an agreement on June 13, 2022, to sell certain assets of UMG for $100. On June 30, 2022, the Company completed the sale. Concurrently with the sale agreement the Company entered into a transition services agreement with the purchaser for a total value of $300,000of which $262,000has been recognized as additional purchase consideration in other receivables, with payments beginning July 31, 2022, and the remainder to be paid in full, 12 months following the first payment.

Accordingly, UMG results for the current and comparative periods have been presented as discontinued operations within the Consolidated Statements of Loss and Comprehensive Loss. UMG revenue was previously categorized as Direct to consumer.

During the quarter ended May 2022, the Company recognized impairment expense relating to assets not disposed of in connection with the UMG asset sale amounting to $476,404. The impairment expense reflects the reductions to $0of the right of use asset, application platform and brand intangible assets, and a group of fixed assets. The impairment expense consisted of the excess of the asset's carrying values over their fair values less costs of disposal. (Notes 10, 14 and 15). These impairments are recorded in the Gain (loss) from discontinued operations within the Consolidated Statements of Loss and Comprehensive Loss

Page 32of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Results from the discontinued operations for UMG and the related cash flows are as follows:

For the three months ended For the six months ended
February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022
$ $
Revenues
Revenue 7,022 221,899 14,065 245,729
Operating expenses
Salaries and wages 1,335 343,458 1,335 680,797
Consulting - - - -
Professional fees 840 17,666 1,980 3,701
Sponsorships and tournaments (121,827 ) 189,720 (121,827 ) 577,187
Advertising and promotion 126,202 6,212 29 16,243
Office and general 212 20,559 633 36,953
Technology expenses 116 34,533 3,316 62,347
Amortization and depreciation 6,672 111,764 22,131 240,609
Impairment expense - 266,470 - 266,470
Restructuring Costs - 90,539 - 90,539
Interest expense 120 4,360 265 9,497
(Gain) loss on foreign exchange (966 ) 1,376 (13,377 ) 30,166
Net income (loss) from discontinued operations (5,682 ) (864,758 ) 119,580 (1,768,780 )
For the six months ended
February 28, 2023 February 28, 2022
Net cash provided by (used in) operating activities (8,402 ) (263,996 )
Net cash used in financing activities - (43,273 )
Change in cash (8,402 ) (307,269 )
Cash, beginning of period 109,378 175,296
Cash, end of period 100,976 (131,973 )

Eden Games

The Company committed to a plan to sell Eden Games, S.A. ("Eden Games") during the second quarter of fiscal 2022, following a strategic decision to focus the Company's resources on the key revenue streams of direct-to- consumer, software-as-a-service, and advertising. Eden Games was previously part of the Company's Gaming segment. On April 6, 2022, the Company completed the sale of Eden Games.

To facilitate the sale of Eden Games, under a separate agreement, the Company agreed to purchase Euro- denominated 6% promissory notes amounting to Euro 1,453,154($1,558,319) that were due to the former co-founders of Eden Games from third parties. Euro 1,081,081($1,181,005) of the consideration was paid on the closing of the sale with the remainder due in two equal payments on April 4, 2023, and October 6, 2023. The promissory notes receivable was classified at fair value through profit and loss based on management's expectations about the proposed terms of settlement with the counterparties to the promissory notes and in accordance with the Company's accounting policies. In November 2022 the Company through a setoff agreement recovered $591,781(Notes 7 and 16). Currently the fair value of the remaining promissory notes receivable is estimated at $0.

Accordingly, Eden Games' results for the current and comparative periods have been presented as discontinued operations within the Interim Condensed Consolidated Statements of Income (loss) and Comprehensive Income (loss).

Page 33of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Results of discontinued operations for Eden and the related cash flows are as follows:

For the three months ended For the six months ended
February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022
$ $
Revenues
Revenue - 2,223,077 - 4,325,203
Operating expenses
Salaries and wages - 891,134 - 1,784,054
Consulting - 271,534 - 693,619
Professional fees - - - -
Sponsorships and tournaments - - - -
Advertising and promotion - - - -
Office and general - 9,602 - 185,096
Technology expenses - - - -
Amortization and depreciation - 109,894 - 222,989
Share-based payments - (46 ) - (94 )
Interest expense - 3,209 - 7,161
(Gain) loss on foreign exchange - 6,546 - 39,350
Net income (loss) from discontinued operations - 931,204 - 1,393,028
For the six months ended
February 28, 2023 February 28, 2022
$ $
Net cash provided by (used in) operating activities - 55,334
Net cash used in financing activities - (50,714 )
Change in cash - 4,620
Cash, beginning of period - 270,571
Cash, end of period - 275,191

Motorsport Group

On November 3, 2020, the Company, following a detailed strategic review in connection with the merger of Torque Esports, Frankly and WinView, announced that it has completed the sale of IDEAS+CARS, The Race Media, WTF1, Driver DataDB and Lets Go Racing (collectively the "Motorsport Group") to Ideas + Cars Holdings Limited, a third party investment group based in the UK. As a result, the Company eliminated its funding obligations related to the cost of maintaining and growing these auto media businesses and certain accrued liabilities. Accordingly, the operational results for this group were presented as a discontinued operation.

Page 34of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Results of discontinued operations for the Motorsports Group are as follows:

For the six months ended
February 28, 2023 February 28, 2022
$ $
Net cash provided by (used in) operating activities - -
Disposal of Motorsports - -
Change in cash - -
Cash, beginning of period - -
Cash, end of period - -

24.Segmented information

Information reported to the Company's Co-Chief Executives, the Chief Operating Decision Makers ("CODM"), for the purposes of resource allocation and assessment of segment performance is focused on the category of services for each type of activity. The principal categories of services are Gaming, Media, Corporate and Other. Discontinued operations have been removed from the segment information and prior periods have been rested to conform with current year presentation. The Group's reportable segments under IFRS 8 Operating Segments are therefore as follows:

Gaming - Services related to competitive organized video gaming or sporting events;
Media - Platform and advertising services provided to other broadcasters, primarily local TV and radio broadcasters;
Corporate and Other - Services provided to other businesses and other revenues;

The Corporate and Other segment primarily consists of support costs not allocated to the two other segments.

Page 35of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The following is an analysis of the Company's revenue and results by reportable segment for the three months ended February 28, 2023:

Three months ended Gaming Media

Corporate

and Other

Total
$ $ $ $
Revenue
External sales 744,203 8,195,258 - 8,939,461
Results
Segment loss 57,629 (2,345,257 ) - (2,287,628 )
Central administration costs - - 1,705,006 1,705,006
Other gains and losses 23,713 12,630 2,983,905 3,020,248
Finance costs - (163 ) 161,616 161,453
Loss before tax 33,916 (2,357,724 ) (4,850,527 ) (7,174,335 )
Income tax - - - -
Gain (Loss) for the year from:
Discontinued operations (183,026 ) - - (183,026 )
Net income (loss) (149,110 ) (2,357,724 ) (4,850,527 ) (7,357,361 )

The following is an analysis of the Company's revenue and results by reportable segment for the six months ended February 28, 2023:

Six months ended Gaming Media

Corporate

and Other

Total
$ $ $ $
Revenue
External sales 1,489,899 17,719,148 - 19,209,047
Results
Segment loss 148,098 (5,870,153 ) - (5,722,055 )
Central administration costs - - 3,058,906 3,058,906
Other gains and losses 6,301 186,614 3,385,732 3,578,647
Finance costs - (309 ) 314,633 314,324
Income (loss) before tax 141,797 (6,056,458 ) (6,759,271 ) (12,673,932 )
Income tax - - - -
Gain (Loss) for the period from:
Discontinued operations (49,111 ) - - (49,111 )
Net income (loss) 92,686 (6,056,458 ) (6,759,271 ) (12,723,043 )

Page 36of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The following is an analysis of the Company's revenue and results by reportable segment for the three months ended February 28, 2022:

Three months ended Gaming Media

Corporate

and Other

Total
$ $ $ $
Revenue
External sales 325,147 8,672,879 - 8,998,026
Results
Segment loss (269,544 ) (2,999,244 ) - (3,268,788 )
Central administration costs - - 2,823,329 2,823,329
Other gains and losses 4,606 37,190 (2,170,745 ) (2,128,949 )
Finance costs - 327 197,528 197,855
Loss before tax (274,150 ) (3,036,761 ) (850,112 ) (4,161,023 )
Income tax - - - -
Gain (Loss) for the year from:
Discontinued operations (2,445,227 ) - (82,045 ) (2,527,272 )
Non-controlling interest in net loss - - (43,874 ) (43,874 )
Net income (loss) (2,719,377 ) (3,036,761 ) (976,031 ) (6,732,169 )

The following is an analysis of the Company's revenue and results by reportable segment for the six months ended February 28, 2022:

Six months ended Gaming Media Corporate and Other Total
$ $ $ $
Revenue
External sales 727,565 20,484,963 - 21,212,528
Results
Segment loss (456,435 ) (4,981,159 ) - (5,437,594 )
Central administration costs - - 5,574,546 5,574,546
Other gains and losses 7,821 35,547 (9,425,311 ) (9,381,943 )
Finance costs (1 ) 702 394,404 395,105
Loss before tax (464,255 ) (5,017,408 ) 3,456,361 (2,025,302 )
Income tax - - - -
Gain (Loss) for the period from:
Discontinued operations (5,799,612 )- (192,137 ) (5,991,749 )
Non-controlling interest in net loss - - (68,638 ) (68,638 )
Net loss (6,263,867 ) (5,017,408 ) 3,195,586 (8,085,689 )

Segment loss - Segment loss includes total revenue less operating expenses including the following: salaries and wages, consulting, professional fees, revenue sharing expense, advertising and promotion, office and general, technology expenses, amortization and depreciation and share based payments.

Central administration costs - Central administration costs include corporate operating expenses including the following: salaries and wages, consulting, professional fees, advertising and promotion, office and general, technology expenses, amortization and depreciation and share based payments.

Other gains and losses - Other gains and losses includes gain / loss on foreign exchange, loss on extinguishment of debt, gain on retained interest in former associate, transaction costs, arbitration settlement reserve, impairment expense, restructuring costs, change in fair value of investment at FVTPL, change in fair value of warrant liability and change in fair value of convertible debt.

Page 37of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Finance costs - Finance costs include interest expenses.

Geographical breakdown

North America European Union Total
$ $ $
August 31, 2022
Assets 41,548,305 1,146,503 42,694,808
Long-term assets 20,635,907 - 20,635,907
February 28, 2023
Assets 30,311,853 1,245,179 31,557,031
Long-term assets 20,019,750 4,980 20,024,730

25.Related party transactions and balances

(a) Key management compensation

Key management includes the Company's directors, officers and any consultants with the authority and responsibility for planning, directing, and controlling the activities of an entity, directly or indirectly. Compensation awarded to key management for the six months ended February 28, 2023, and 2022, includes the following:

For the three months ended For the six months ended
February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022
$ $ $ $
Total compensation paid to key management 323,250 360,887 659,000 708,143
Share based payments 304,241 209,613 494,999 363,284

Total compensation paid to key management is recorded in consulting fees, salaries and wages and share based payments in the consolidated statement of income (loss) and comprehensive income (loss) for the six months ended February 28, 2023, and 2022.

Amounts due to related parties as of February 28, 2023, with respect to the above fees were $0( August 31, 2022 - $5,588). The amounts due to/from related parties are recorded within accounts payable and accrued liabilities on the consolidated statement of income (loss) and comprehensive income (loss). These amounts are unsecured, non-interest bearing and due on demand.

Convertible debenture with a director of the Company as counterparty

On September 1, 2022, the Company extended convertible debentures that were due to expire in October and November 2022with an aggregate principal amount of US$1,250,000. The original convertible debentures had an annual interest rate of 10% per annum and a conversion price of US$8.90per share. In place of the expiring convertible debentures, the Company has issued a new convertible debenture with an aggregate principal amount of US$1,250,000which expires on August 31, 2025, carries an annual interest rate of 7% per annum and is convertible into common shares of the Company at a conversion price of US$1.10per share (Note 16).

Page 38of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Each of the expiring convertible debentures and the replacement convertible debenture is beneficially held by a director of the Company. The participation of a director in the amendment of the convertible debentures constitutes a "related party transaction" as such term is defined by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on an exemption from the formal valuation requirements and the minority shareholder approval requirements under MI 61-101 as the fair market value of the amendment of the convertible debentures does not exceed 25% of the market capitalization of the Company.

Commitment to former holders of WinView to proceeds from the patent portfolio enforcement action

Pursuant to the Business Combination agreement dated March 9, 2020, among the Company, Frankly Inc. and Winview Inc., the Company is required to pay to certain former Winview securities holders ("Stubholders") fifty percent (50%) of the net license fees, damages awards or settlement amounts collected from third parties in connection with the Winview Patent Portfolio, after deduction of certain expenses. One of the directors of the Company are among the pool of Stubholders.

26.Financial instruments and risk management

(a) Financial risk management objectives and policies

The Company's activities expose it to a variety of financial risks including foreign currency risk, interest rate risk, credit risk, liquidity risk and market risk and other price risk. These financial instrument risks are actively managed by the Company under the policies approved by the Board of Directors. On an ongoing basis, the finance department actively manages market conditions with a view to minimizing the exposure of the Company to changing market factors, while at the same time limiting the funding costs to the Company. There have been no changes in objectives, policies or how the Company manages these risks.

The Board approves and monitors the risk management processes. The Board's main objectives for managing risks are to ensure liquidity, the fulfillment of obligations and limited exposure to credit and market risks while ensuring greater returns on any surplus funds.

(b) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company uses information supplied by independent rating agencies where available, and if not available, the Company uses other publicly available financial information and its own records to rate its customers.

Credit risk arises from cash and deposits with banks as well as credit exposure to outstanding receivables, the carrying amounts represent the Company's maximum exposure to credit risk.

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Company establishes an allowance for doubtful accounts that represents its estimate of expected losses in respect of accounts receivable. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. As of February 28, 2023, the allowance for doubtful accounts was $1,181,740(August 31, 2022-$1,355,638).

The Company's accounts receivable are concentrated among customers in the media and broadcasting industry, which may be affected by adverse economic factors impacting that industry. The Company performs ongoing credit evaluations of its major customers, maintains reserves for expected credit losses, and does not require any collateral deposits.

Page 39of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

As of February 28, 2023, one customer (August 31, 2022 - one) accounted for greater than 10% of the Company's accounts receivable balance. In total, one customer accounted for 14% and 16% of the Company's accounts and other receivables balance as of February 28, 2023, and August 31, 2022, respectively. During the six months ended February 28, 2023, one (February 28, 2022 - one) customer represented 62% (February 28, 2022 - 69%) of total revenue.

The below table reflects the aging of the Company's aging by invoice date of gross trade accounts receivable and allowance for doubtful accounts as of February 28, 2023:

Current 0 - 30 31 - 60 61 - 90 91+ Total
Trade accounts receivable 4,159,455 916,511 168,350 83,190 2,117,615 7,445,121
Allowance for doubtful accounts - - - - 1,181,740 1,181,740
% Allowance 0 % 0 % 0 % 0 % 56 % 16 %
(c) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company is exposed to liquidity risk with respect to its contractual obligations and financial liabilities. The Company manages liquidity risk by continuously monitoring forecasted and actual cash flows and matching maturity profiles of financial assets and liabilities. The Company seeks to ensure that it has sufficient capital to meet short-term financial obligations after taking into account its operating obligations and cash on hand.

The Company's policy is to seek to ensure adequate funding is available from operations and other sources, including debt and equity capital markets, as required.

< 1 year 2-5 years
$ $
Accounts payable 11,032,774 -
Accrued liabilities 2,928,630 -
Players liability account 47,455 -
Promissory notes payable 821,815 -
Convertible debt 5,150,429 2,328,057

Page 40of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

(d) Market Risk

Market risk represents the risk of loss that may impact the Company's financial position, results of operations, or cash flows due to adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, and other relevant market or price risks. The Company does not use derivative instruments to mitigate this risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to fair value risk with respect to debt which bears interest at fixed rates.

Currency Risk

The Company's exposure to the risk of changes in foreign exchange rates relates primarily to fluctuations of financial instruments related to cash, accounts and other receivables, and accounts payable

denominated in Euros, as well as debt denominated in Canadian dollars.

(e) Fair value hierarchy

The following tables combine information about:

● classes of financial instruments based on their nature and characteristics;
● the carrying amounts of financial instruments;
● fair values of financial instruments (except financial instruments when carrying amount approximates their fair value); and
● fair value hierarchy levels of financial assets and financial liabilities for which fair value was disclosed.

Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

● Level 1: unadjusted quoted prices in active markets for identical assets or liabilities;
● Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; or
● Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Carrying value at February 28, 2023 FVTPL - mandatorily measured Amortized cost
$ $
Financial assets:
Cash - 2,988,289
Restricted cash - 47,455
Accounts and other receivables - 6,267,810
Government remittances - 995,341
Publisher advance 117,323 -
Promissory notes receivable - -
Investment at FVTPL 2,629,851 -
2,747,174 10,298,895

Page 41of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

Carrying value at February 28, 2023 FVTPL - mandatorily measured FVTPL - designated Amortized cost
$ $ $
Financial liabilities:
Accounts payable - - 11,032,774
Accrued liabilities - - 2,928,630
Players liability account - - 47,455
Promissory notes payable - - 821,815
Warrant liability 242,322 - -
Convertible debt - 7,478,486 -
242,322 7,478,486 14,830,674
Carrying value at August 31, 2022 FVTPL -
mandatorily
measured		 Amortized
cost
$ $
Financial assets:
Cash - 8,601,706
Restricted cash - 47,455
Accounts and other receivables - 8,404,009
Government remittances - 874,334
Publisher advance 1,490,648 -
Promissory notes receivable 576,528 -
Investment at FVTPL 2,629,851 -
4,697,027 17,927,504
Carrying value at August 31, 2022 FVTPL - mandatorily measured FVTPL - designated Amortized cost
$ $ $
Financial liabilities:
Accounts payable - - 12,772,375
Accrued liabilities - - 3,756,758
Players liability account - - 47,455
Promissory notes payable - - 771,762
Warrant liability 49,894 - -
Convertible debt - 7,250,603 -
49,894 7,250,603 17,348,350

Page 42of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

A summary of instruments, with their classification in the fair value hierarchy is as follows:

Level 1 Level 2 Level 3 Fair value as
of February 28, 2023
$ $ $ $
Warrant liability - 242,322 - 242,322
Convertible debt - - 7,478,486 7,478,486
Publisher advance - - 117,323 117,323
Promissory notes receivable - - - -
Investment at FVTPL - - 2,629,851 2,629,851
Level 1 Level 2 Level 3 Fair value as
of August 31, 2022
$ $ $ $
Warrant liability - 49,894 - 49,894
Convertible debt - - 7,250,603 7,250,603
Publisher advance - - 1,490,648 1,490,648
Promissory notes receivable - - 576,528 576,528
Investment at FVTPL - - 2,629,851 2,629,851

Some of the Company's financial assets and financial liabilities are measured at fair value at the end of each reporting period.

27.Restructuring charges

During the six months ended February 28, 2023, a restructuring provision of $185,539was made primarily to cover employee related costs for headcount reductions at the Company's most recently acquired business.

During the six months ended February 28, 2022, a restructuring provision of $126,286was made primarily to cover employee related costs for headcount reductions due to shuttering of the UMG business and corporate workforce reductions.

28.Subsequent events

The Company has evaluated subsequent events from the balance sheet date through April 17, 2023, the date at which the unaudited interim condensed consolidated financial statements were available to be issued and determined there were no additional items to be disclosed except for the transaction described below.

Arrangement Agreement

GameSquare Holdings, Inc. (formerly Engine Gaming and Media, Inc.), completed its previously announced plan of arrangement with GameSquare Esports Inc. ("GSQ") on April 11, 2023, resulting in the Company acquiring all the issued and outstanding securities of GSQ. The combined entity is now known as GameSquare Holdings, Inc. with shares traded on the Nasdaq Capital Market and TSX Venture Exchange under the ticker symbol GAME.

Page 43of 44

GameSquare Holdings, Inc.

(formerly Engine Gaming & Media, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 28, 2023, and 2022

(Unaudited)

(Expressed in United States Dollars)

The Company and GSQ entered into a definitive arrangement agreement dated December 7, 2022, to combine their businesses via an all-share deal, whereby each common share of GameSquare will be exchanged for 0.08262common shares of the Company (on a pre-Consolidation basis).

Public Offering and Share Consolidation

Prior to the closing of the Arrangement, the Company closed a public offering of 7,673,000subscription receipts (the "Subscription Receipts") at an issue price of US$1.25per Subscription Receipt, including the partial exercise of the over-allotment option, for aggregate gross proceeds of US$9.59million. As a result of the closing of the Arrangement, the Subscription Receipts were consolidated on the same ratio as the Consolidation (as discussed below) and automatically exchanged on a one-to-one basis for common shares of the Company without any further action on the part of the holder and without payment of additional consideration.

On April 10, 2023, the Company enacted a reverse stock split to consolidate (the "Consolidation") the Company's outstanding common shares on the basis of one new common share for every four existing common shares. As a result, the Company has approximately 12.9million shares outstanding following completion of the Consolidation, the Arrangement and the conversion of the Subscription Receipts.

GameSquare Board of Directors and Management Team

The board of directors of GameSquare includes Justin Kenna, Tom Walker, Travis Goff, Jerami Gorman, Tom Rogers (Executive Chairman), Lou Schwartz, and Stu Porter.

The management team of GameSquare includes Justin Kenna as Chief Executive Officer, Lou Schwartz as President, Mike Munoz as Chief Financial Officer, Sean Horvath as Chief Revenue Officer, Paolo DiPasquale as Chief Strategy Officer, Tyler "Ninja" Blevins as Chief Innovation Officer, John Wilk as General Counsel, and Matt Ehrens as Chief Technology Officer.

Shares for Debt Settlement

The Company announced on March 23, 2023, that it has completed its shares for debt transaction whereby an aggregate of US$305,137of the Company's outstanding debt was extinguished by way of the issuance of 200,000common shares in the capital of the Company (the "Shares") at a deemed price of US$1.525(CDN$2.04) per Share. The Company has also issued 100,000common shares to fully settle an outstanding litigation matter. The Shares issued pursuant to the shares for debt transactions are subject to a four month plus one day hold period expiring on July 23, 2023.

Page 44of 44

Attachments

Disclaimer

Engine Media Holdings Inc. published this content on 17 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 April 2023 21:05:03 UTC.