Engine Gaming & Media, Inc. (Form: 40-F, Received: 11/26/2021 08:01:44)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2021

Commission File Number 333-39389

ENGINE GAMING AND MEDIA, INC.

(Exact name of Registrant as specified in its charter)

British Columbia

(Province or other jurisdiction of incorporation or organization)

7372

(Primary Standard Industrial Classification Code Number (if applicable))

Not Applicable

(I.R.S. Employer Identification Number (if applicable))

77 King Street West,

Suite 3000, PO Box 95

Toronto, Ontario, Canada M5K 1G8

(705) 445-3006

(Address and telephone number of Registrant’s principal executive offices)

Louis Schwartz

Engine Gaming and Media, Inc.

2110 Powers Ferry Road SE

Suite 450

Atlanta, Georgia

United States, 30339

(212) 931-1200

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Shares, no par value		GAME		The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act: Not applicable.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: Not applicable.

For annual reports, indicate by check mark the information filed with this Form:

☒

Annual information form

☒

Audited annual financial statements

Number of outstanding shares of each of the issuer’s classes of

capital or common stock as of August 31, 2021:

15,543,309 Common Shares, no par value

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company ☒

If an emerging growth company that prepares is financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

EXPLANATORY NOTE

Engine Gaming and Media, Inc. (the “Company” or the “Registrant”) is a Canadian issuer that is permitted, under the multijurisdictional disclosure system adopted in the United States, to prepare this Annual Report on Form 40-F (this “Annual Report”) pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in accordance with Canadian disclosure requirements, which are different from those of the United States. The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act of 1933, as amended. Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 thereunder.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report, including any documents incorporated by reference herein, contains certain “forward-looking information” and “forward-looking statements” as defined under applicable Canadian and United States securities laws (collectively, “forward-looking statements”). These statements relate to future events or future performance and reflect the Company’s expectations and assumptions regarding such future events and performance. In particular, all statements, other than historical facts, included in this Annual Report, including any documents incorporated by reference herein, that address activities, events or developments that management of the Company expect or anticipate will or may occur in the future are forward-looking statements, including but not limited to, statements with respect to:

	●	financial, operational and other projections and outlooks as well as statements or information concerning future operation plans, objectives, performance, revenues, growth, acquisition strategy, profits or operating expenses;
	●	the Company’s ability to successfully execute its business plan;
	●	any expectation of regulatory approval and receipt of certifications with respect to the Company’s current and proposed business transactions;
	●	expectations regarding existing products and plans to develop, implement or adopt new technology or products;
	●	the expectation of obtaining new customers for the Company’s products and services, as well as expectations regarding expansion and acceptance of the Company’s brand and products to new markets;
	●	estimates and projections regarding the industry in which the Company operates and adoption of technologies, including expectations regarding the growth and impact of esports;
	●	requirements for additional capital and future financing options;
	●	the risks inherent in international operations;
	●	marketing plans;
	●	the Company’s ability to compete with its competitors and their technologies;
	●	the Company’s reliance on key executives and the ability to attract and retain qualified personnel;
	●	the availability of intellectual property protection for the Company’s products, and the Company’s ability to expand and exploit its intellectual property;
	●	statements related to the expected or potential impact of the novel coronavirus (“COVID-19”) pandemic;
	●	the completion of and the Company’s use of the proceeds of any offering; and
	●	other expectations of the Company.

Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

Such statements, made as of the date hereof, or in the case of a document incorporated by reference, the date thereof, reflect the Company’s views with respect to future events and are based on information as of the date of such statements and are subject to and involve certain known and unknown risks, uncertainties, assumptions and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed in or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

When relying on forward-looking statements to make decisions, readers should ensure that the preceding information, the risk factors described in the Company’s Annual Information Form for the fiscal year ended August 31, 2021, attached hereto as Exhibit 99.1 (the “AIF”), under the section entitled “Risk Factors”, and the contents of the AIF are all carefully considered. These forward-looking statements are made as of the date of this Annual Report, or in the case of a document incorporated by reference, the date thereof, and, except as may be required by law, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained in this Annual Report or incorporated by reference herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or circumstances on which any statement is based. Readers should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. In addition to the disclosure contained herein, for more information concerning the Company’s various risks and uncertainties, please refer to the Company’s periodic public filings available under its profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

NOTE TO UNITED STATES READERS - DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Registrant is permitted, under the multi-jurisdictional disclosure system adopted by the United States Securities and Exchange Commission (the “SEC”), to prepare this Annual Report in accordance with Canadian disclosure requirements, which differ from those of the United States. The Company has prepared its financial statements, which are filed as Exhibit 99.2 to this Annual Report and incorporated by reference herein, in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board and they are not comparable to financial statements of United States companies.

ANNUAL INFORMATION FORM

The Registrant’s AIF is filed as Exhibit 99.1 to this Annual Report and is incorporated by reference herein.

AUDITED ANNUAL FINANCIAL STATEMENTS

The Registrant’s audited consolidated financial statements for the years ended August 31, 2021 and 2020, including the report of the independent auditor thereon, are filed as Exhibit 99.2 to this Annual Report and are incorporated by reference herein.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The Registrant’s Management’s Discussion and Analysis for the years ended August 31, 2021 and 2020, is filed as Exhibit 99.3 (the “MD&A”) to this Annual Report and is incorporated by reference herein.

TAX MATTERS

Purchasing, holding, or disposing of the Company’s securities may have tax consequences under the laws of the United States and Canada that are not described in this Annual Report.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report, the Company carried out an evaluation, under the supervision of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company’s CEO and CFO have concluded that, as of the end of the period covered by this Annual Report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

While the Company’s principal executive officer and principal financial officer believe that the Company’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Company’s disclosure controls and procedures or internal control over financial reporting will prevent all errors or fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Management’s Annual Report on Internal Control over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies.

Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Changes in Internal Control over Financial Reporting

During the period covered by this Annual Report, no change occurred in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

CORPORATE GOVERNANCE

The Company’s Board of Directors (the “Board of Directors”) is responsible for the Company’s corporate governance and has a separately designated standing Audit Committee. The Board of Directors has determined that all of the members of the Audit Committee are independent, based on the criteria for independence prescribed by Section 5605(a)(2) of the NASDAQ Stock Market Rules.

Nominating and Governance Committee

The Nominating and Governance Committee is responsible for, among other things: maintaining oversight of the governance functions and effectiveness of the Board of Directors and the Company’s governance functions; identifying, screening and recommending qualified candidates to serve as directors; reviewing and evaluating the Board of Directors; and addressing any related matters required by applicable law. The Company’s Nominating and Governance Committee is comprised of Hank Ratner, Lawrence Rutkowski and Lori Conkling, all of whom are independent based on the criteria for independence prescribed by Rule 5605(a)(2) of the NASDAQ Stock Market Rules.

Compensation Committee

The Compensation Committee is responsible for assisting the Board of Directors with, among other things: evaluation and compensation of the Company’s senior management; compensation of the Board of Directors; and additional matters delegated to the Compensation Committee by the Board of Directors. The Compensation Committee is comprised of Hank Ratner and Lawrence Rutkowski, both of whom are independent based on the criteria for independence prescribed by Rule 5605(a)(2) of the NASDAQ Stock Market Rules.

Patent Committee

The Patent Committee is responsible for, among other things: overseeing the Company’s patent portfolio. The Patent Committee is comprised of Louis Schwartz, Lawrence Rutkowski and Lori Conkling. Mr. Rutkowski and Ms. Conkling are independent as prescribed by Section 5605(a)(2) of the NASDAQ Stock Market Rules.

AUDIT COMMITTEE

The Board of Directors has a separately designated standing Audit Committee established for the purpose of overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company in accordance with Section 3(a)(58)(A) of the Exchange Act and Rule 5602(c) of the NASDAQ Stock Market Rules. As of the date of this Annual Report, the Company’s Audit Committee is comprised of Lawrence Rutkowski, Hank Ratner and Rudolph Cline-Thomas, all of whom are independent based on the criteria for independence prescribed by Rule 10A-3 of the Exchange Act and Rule 5605(a)(2) of the NASDAQ Stock Market Rules. The Audit Committee meets the composition requirements set forth by Section 5605(c)(2) of the NASDAQ Stock Market Rules.

The Board of Directors has also determined that each member of the Audit Committee is financially literate, meaning each such member has the ability to read and understand a set of financial statements that present a breadth and level of complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.

Audit Committee Financial Expert

The Board of Directors has determined that Lawrence Rutkowski qualifies as a financial expert (as defined in Item 407(d)(5)(ii) of Regulation S-K under the Exchange Act) and Rule 5605(c)(2)(A) of the NASDAQ Stock Market Rules; and (ii) is independent (as determined under Exchange Act Rule 10A-3 and Rule 5605(a)(2) of the NASDAQ Stock Market Rules).

The SEC has indicated that the designation or identification of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose any duties, obligations or liability on such person that are greater than those imposed on members of the audit committee and the board of directors who do not carry this designation or identification, or affect the duties, obligations or liability of any other member of the audit committee or board of directors.

PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PROVIDED BY INDEPENDENT AUDITOR

The Audit Committee pre-approves all audit services to be provided to the Company by its independent auditors. The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information provided under the heading “External Auditor Service Fees” contained in the AIF, filed as Exhibit 99.1 hereto, is incorporated by reference herein.

OFF-BALANCE SHEET ARRANGEMENTS

The information provided under the heading “Off-balance sheet arrangements” contained in the MD&A, filed as Exhibit 99.3 hereto, is incorporated by reference herein.

CODE OF ETHICS

The Company has adopted a Code of Business Conduct and Ethics that applies to directors, officers and employees of, and consultants to, the Company (the “Code”). The Code is posted on the Company’s website at www.enginemediainc.com. The Code meets the requirements for a “code of ethics” within the meaning of that term in General Instruction 9(b) of Form 40-F.

All waivers of the Code with respect to any of the employees, officers or directors covered by it will be promptly disclosed as required by applicable securities rules and regulations. During the fiscal year ended August 31, 2021, the Company did not waive or implicitly waive any provision of the Code with respect to any of the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table lists, as of August 31, 2021, information with respect to the Registrant’s known contractual obligations.

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations		106,330		106,330		-		-		-
Convertible Debt		7,449,713		449,713		7,000,000		-		-
Promissory Notes Payable		682,304		682,304		-		-		-
Lease Obligations		903,062		313,198		468,929		120,935		-
Total		9,141,409		1,551,545		7,468,929		120,935		-

NOTICES PURSUANT TO REGULATION BTR

There were no notices required by Rule 104 of Regulation BTR that the Company sent during the year ended August 31, 2021 concerning any equity security subject to a blackout period under Rule 101 of Regulation BTR.

MINE SAFETY DISCLOSURE

Not Applicable.

NASDAQ STATEMENT OF GOVERNANCE DIFFERENCES

The Company is a “foreign private issuer” as defined in Rule 3b-4 under Exchange Act and its Common Shares are listed on The NASDAQ Stock Market LLC (“NASDAQ”) and the TSX Venture Exchange (“TSXV”). Rule 5615(a)(3) of NASDAQ Stock Market Rules permits foreign private issuers to follow home country practices in lieu of certain provisions of NASDAQ Stock Market Rules. A foreign private issuer that follows home country practices in lieu of certain provisions of NASDAQ Stock Market Rules must disclose ways in which its corporate governance practices differ from those followed by domestic companies either on its website or in the annual report that it distributes to shareholders in the United States. A description of the ways in which the Company’s governance practices differ from those followed by domestic companies pursuant to NASDAQ standards are as follows:

Shareholder Meeting Quorum Requirement: NASDAQ Stock Market Rule 5620(c) (“Rule 5620(c)”) requires that the minimum quorum requirement for a meeting of shareholders be 33 1/3 % of the outstanding common shares. In addition, Rule 5620(c) requires that an issuer listed on NASDAQ state its quorum requirement in its by-laws. In lieu of following Rule 5620(c), has elected to follow Canadian practices consistent with the requirements of the TSXV and the Business Corporations Act (British Columbia).

UNDERTAKING

The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by SEC staff, and to furnish promptly, when requested to do so by SEC staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

CONSENT TO SERVICE OF PROCESS

The Company has previously filed with the SEC a written consent to service of process on Form F-X. Any change to the name or address of the Company’s agent for service shall be communicated promptly to the SEC by amendment to the Form F-X referencing the file number of the Company.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

DATED this 26^th day of November, 2021.


	ENGINE GAMING AND MEDIA, INC.

	By:	/s/ Louis Schwartz
	Name:	Louis Schwartz
	Title:	Chief Executive Officer

EXHIBIT INDEX

The following documents are being filed with the SEC as Exhibits to this Form 40-F:

Exhibit Number		Description
99.1		Annual Information Form dated November 26, 2021 for the fiscal year ended August 31, 2021

99.2		Audited Consolidated Financial Statements for the years ended August 31, 2021 and 2020

99.3		Management’s Discussion and Analysis for the years ended August 31, 2021 and 2020

99.4		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934, as amended

99.5		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934, as amended

99.6		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.7		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.8		Consent of Baker Tilly WM LLP

101.INS*		XBRL Instance

101.SCH*		XBRL Taxonomy Extension Schema

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase

101.DEF*		XBRL Taxonomy Extension Definition Linkbase

101.LAB*		XBRL Taxonomy Extension Label Linkbase

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

* To be filed by amendment.

Exhibit 99.1

ENGINE GAMING AND MEDIA, INC.

ANNUAL INFORMATION FORM

FOR THE FISCAL YEAR ENDED AUGUST 31, 2021

Dated November 26, 2021

TABLE OF CONTENTS

Item 1.	EXPLANATORY NOTES, CAUTIONARY STATEMENTS AND GLOSSARY OF TERMS		1
	1.1	Explanatory Notes	1
	1.2	Caution Regarding Forward-Looking Information	1
	1.3	Exchange Rate Data	2
	1.4	Glossary of Certain Terms	3

Item 2.	CORPORATE STRUCTURE		4
	2.1	Name, Address and Incorporation	4
	2.2	Intercorporate Relationships	4

Item 3.	GENERAL DEVELOPMENT OF THE BUSINESS		5
	Three Year History		7
	Recent Developments		11

Item 4.	DESCRIPTION OF THE BUSINESS		11
	4.1	Business Overview	11
	4.2	Industry Overview and Principal Markets	12
	4.3	Revenue Model	12
	4.4	Customers	15
	4.5	Foreign Operations	16
	4.6	Competitive Conditions	16
	4.7	Proprietary Protection	16
	4.8	Employees	16
	4.9	Specialized Skill and Knowledge	17
	4.10	Risk Factors	17

Item 5.	DIVIDENDS		24
	5.1	Dividends	24

Item 6.	DESCRIPTION OF SHARE CAPITAL		24
	6.1	Common Shares	24
	6.2	Preference Shares	24
	6.3	Warrants and Finder Warrants	25
	6.4	Awards	26
	6.5	Debt Securities	27

Item 7.	MARKET FOR SECURITIES		28
	7.1	Trading Price and Volume	28
	7.2	Prior Sales	29

Item 8.	Securities subject to contractual restriction on transfer		31

Item 9.	DIRECTORS AND executive OFFICERS		32
	9.1	Name, Occupation and Security Holding	32
	9.2	Orders, Penalties and Bankruptcies	33
	9.3	Audit Committee Disclosure	34
	9.4	Conflicts of Interest	38

Item 10.	INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS		38
	10.1	Interest of Management and Others in Material Transactions	38

Item 11.	TRANSFER AGENT AND REGISTRAR		39
	11.1	Transfer Agents and Registrar	39

Item 12.	MATERIAL CONTRACTS		39
	12.1	Material Contracts	39

Item 13.	Interests of Experts		39
	13.1	Interests of Experts	39

Item 14.	ADDITIONAL INFORMATION		39
	14.1	Additional Information	39

ANNUAL INFORMATION FORM

Item 1.

EXPLANATORY NOTES, CAUTIONARY STATEMENTS AND GLOSSARY OF TERMS

1.1

Explanatory Notes

In this Annual Information Form (the “AIF”), the term “Company”, or “Engine” refers to Engine Gaming and Media, Inc. and its subsidiaries as a whole, unless otherwise specified or the context otherwise requires.

Information contained in this AIF is given as of August 31, 2021, the fiscal year end of Company, unless otherwise specifically stated.

Unless otherwise indicated in this AIF, references to “$”, “US$” or “U.S dollars” are to United States dollars, references to “Canadian dollars” or “CDN$” are to the currency of Canada, and references to “EUR”, “€” or “Euros” are to European Euros.

Market and industry data used throughout this AIF was obtained from various publicly available sources. Although the Company believes that these independent sources are generally reliable, the accuracy and completeness of such information are not guaranteed and have not been verified due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and the limitations and uncertainty inherent in any statistical survey of market size, conditions and prospects.

This AIF should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis for the year ended August 31, 2021. The financial statements and management’s discussion and analysis are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com. The financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).

1.2

Caution Regarding Forward-Looking Information

This AIF contains “forward-looking statements” within the meaning of that term under Canadian securities laws. These statements relate to future events or future performance and reflect the Company’s expectations and assumptions regarding such future events and performance. In particular, all statements, other than historical facts, included in this AIF that address activities, events or developments that management of the Company expect or anticipate will or may occur in the future are forward-looking statements, including but not limited to, statements with respect to:

●	financial, operational and other projections and outlooks as well as statements or information concerning future operation plans, objectives, performance, revenues, growth, acquisition strategy, profits or operating expenses;
●	the Company’s ability to successfully execute its business plan;
●	any expectation of regulatory approval and receipt of certifications with respect to the Company’s current and proposed business transactions;
●	expectations regarding existing products and plans to develop, implement or adopt new technology or products;
●	the expectation of obtaining new customers for the Company’s products and services, as well as expectations regarding expansion and acceptance of the Company’s brand and products to new markets;
●	estimates and projections regarding the industry in which the Company operates and adoption of technologies, including expectations regarding the growth and impact of esports;
●	requirements for additional capital and future financing options;
●	the risks inherent in international operations;
●	marketing plans;
●	the Company’s ability to compete with its competitors and their technologies;
●	the Company’s reliance on key executives and the ability to attract and retain qualified personnel;
●	the availability of intellectual property protection for the Company’s products, and the Company’s ability to expand and exploit its intellectual property;
●	statements related to the expected or potential impact of the novel coronavirus (“COVID-19”) pandemic;
●	the completion of and the Company’s use of the proceeds of any offering; and
●	other expectations of the Company.

Such statements, made as of the date hereof, reflect the Company’s current views with respect to future events and are based on information currently available to the Company and are subject to and involve certain known and unknown risks, uncertainties, assumptions and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed in or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

When relying on forward-looking statements to make decisions, readers should ensure that the preceding information, the risk factors described herein under the section entitled “Risk Factors”, and the contents of this AIF are all carefully considered. These forward-looking statements are made as of the date of this AIF, and, except as may be required by law, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or circumstances on which any statement is based. Readers should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. In addition to the disclosure contained herein, for more information concerning the Company’s various risks and uncertainties, please refer to the Company’s periodic public filings available under its profile on SEDAR at www.sedar.com.

1.3

Exchange Rate Data

The following table sets forth the rate of exchange for the Canadian dollar, expressed in United States dollars in effect at various times.

Canadian Dollars to U.S. Dollars	Year Ended August 31, 2021		Year Ended August 31, 2020
High for period		0.8306		0.7710
Low for period		0.7465		0.6898
Average rate for period		0.7887		0.7436
Rate at end of period		0.7926		0.7668

As of November 23, 2021, the closing exchange rate for Canadian dollars in terms of the United States dollar, as quoted by the Bank of Canada, was CDN$1.00= US$0.7870.

The following table sets forth the rate of exchange for the Canadian dollar, expressed in Euros in effect at various times.

Canadian Dollars to Euros	Year Ended August 31, 2021		Year Ended August 31, 2020
High for period		0.6840		0.7002
Low for period		0.6357		0.6309
Average rate for period		0.6598		0.6678
Rate at end of period		0.6709		0.6421

As of November 23, 2021, the closing exchange rate for Canadian dollars in terms of Euros, as quoted by the Bank of Canada, was CDN$1.00= EUR€0.6993.

1.4

Glossary of Certain Terms

In this AIF, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the meanings set out below. This list is not exhaustive and terms otherwise defined in the body of the AIF shall have the meaning ascribed thereto.

“AIF” means this Annual Information Form.

“Audit Committee” means the audit committee of the Board.

“Board” means the board of directors of the Company.

“BCBCA” Business Corporation Act (British Columbia)

“Capital Pool Company” or “CPC” means a corporation:

	(a)	that has been incorporated or organized in a jurisdiction in Canada;
	(b)	that has filed and obtained a receipt for a preliminary CPC prospectus from one or more of the securities regulatory authorities in compliance with the CPC Policy; and
	(c)	in regard to which the completion of a Qualifying Transaction has not yet occurred.

“Common Shares” means the common shares in the capital of the Company.

“Company” or “Engine” means Engine Gaming and Media, Inc., a company existing under the BCBCA.

“CPC Policy” means Policy 2.4 of the Exchange Corporate Finance Manual entitled “Capital Pool Companies”.

“esports” means organized multiplayer video game competitions.

“IFRS” means the International Financial Reporting Standards set by the International Accounting Standards Board which are applicable on the date on which any calculation is to be effective or the date of any financial statements referred to herein, as the case may be.

“Insider” when used in relation to the Company, means:

	(a)	a director or senior officer of the Company;
	(b)	a director or senior officer of a company that is an Insider or subsidiary of the Company;
	(c)	a Person that beneficially owns or controls, directly or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the Company; or
	(d)	the Company itself if it holds any of its own securities.

“Securities Exchange Agreement” shall have the meaning ascribed to such term in Item 3.1.

“SEDAR” means System for Electronic Document Analysis and Retrieval.

“Qualifying Transaction” means a transaction where a CPC acquires significant assets other than cash, by way of purchase, amalgamation, merger or arrangement with another company or by other means.

“TSXV” means the TSX Venture Exchange.

Item 2.

CORPORATE STRUCTURE

2.1

Name, Address and Incorporation

The Company was incorporated as “Stratton Capital Corp.” under the Business Corporations Act (Ontario) pursuant to articles of incorporation on April 8, 2011. On October 19, 2016, the Company filed Articles of Amendment changing its name from “Stratton Capital Corp.” to “Millennial Esports Corp.”

On June 7, 2019, the Company filed Articles of Amendment to effect a consolidation of the Common Shares on the basis of one post-consolidation Common Share for every fifteen pre-consolidation Common Shares (the “June 2019 Consolidation”). On October 17, 2019, the Company filed Articles of Amendment to (i) change its name from “Millennial Esports Corp.” to “Torque Esports Corp.”, and (ii) to effect a consolidation of the Common Shares on the basis of one post-consolidation Common Share for every five pre-consolidation Common Shares (the “October 2019 Consolidation”).

On August 13, 2020, the Company filed Articles of Amendment to (i) change its name from “Torque Esports Corp.” to “Engine Gaming and Media, Inc.”, and (ii) to effect a consolidation of the Common Shares on the basis of one post-consolidation Common Share for every fifteen pre-consolidation Common Shares (the “August 2020 Consolidation”).

On December 18, 2020, the Company filed a Continuance Application with the British Columbia Registrar of Companies to continue into British Columbia under the BCBCA.

On October 19, 2021, the Company changed its name from “Engine Media Holdings, Inc.” to “Engine Gaming and Media, Inc.”

The head office of the Company is located at 33 Whitehall Street, 8th Floor, New York, NY 10004 and the registered office of the Company is located at 77 King Street West, Suite 3000, PO Box 95, Toronto, Ontario M5K 1G8.

The Company is a reporting issuer in the provinces of Alberta, British Columbia, Ontario, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland. The Common Shares are listed and posted for trading on the TSXV under the trading symbol “GAME”, on the NASDAQ Global Market (the “NASDAQ”) under the symbol “GAME”, and the OTCQB under the trading symbol “GAME”.

2.2

Intercorporate Relationships

The following is a summary of the inter-corporate relationships between the Company and its subsidiaries, which together comprise the consolidated Company as at the date hereof:

Item 3.

GENERAL DEVELOPMENT OF THE BUSINESS

Businesses of Engine

Engine is a building a leading media and gaming platform for sports and esports for fans, publishers, influencers and brands.. The Company offers a unique combination of esports content, streaming technology, gaming platforms, data analytics and intellectual property.

Engine is focused on accelerating new, live, immersive esports and interactive gaming experiences for consumers through its partnerships with traditional and emerging media companies. Engine clients include more than 1,200 television, print and radio brands including CNN, ESPN, Discovery / Eurosport, Fox, Vice, Newsweek, and Cumulus; dozens of gaming and technology companies including EA, Activision, Blizzard, Take2Interactive, Microsoft, Google, Twitch, and Ubisoft; and has connectivity into hundreds of millions of homes around the world through content, distribution, and technology.

Engine Media operates a portfolio of businesses that bring together key capabilities and technology for the benefit of its customers. Engine’s media focused businesses include Frankly, Stream Hatchet, and Sideqik and its gaming platform and gaming businesses included WinView Games, Eden Games and UMG Gaming.

Engine generates revenue through a combination of direct-to-consumer and subscription fees; streaming technology and data software-as-a-service (“SaaS”) based offerings; and, programmatic advertising and sponsorships.

Media

Frankly

Frankly, through its wholly-owned subsidiary Frankly Media, LLC, provides a complete suite of solutions that give publishers a unified workflow for the creation, management, publishing and monetization of digital content to any device, while maximizing audience value and revenue.

Frankly’s products include a ground-breaking online video platform for Live, Video-on-Demand (“VOD”) and Live-to-VOD workflows, a full-featured content management system with rich storytelling capabilities, as well as native apps for iOS, Android, Apple TV, Fire TV and Roku.

Frankly also provides comprehensive advertising products and services, including direct sales and programmatic ad support. With the release of its server-side ad insertion (SSAI) platform, Frankly has been positioned to help video producers take full advantage of the growing market in addressable advertising.

Stream Hatchet

Stream Hatchet S.L (“Stream Hatchet”), is a data analytics company based in Terrassa, Spain, providing intelligence for persons and entities involved in video game streaming. Stream Hatchet provides real-time data analytics and viewership information that assists in the development and marketing decisions of the Company’s initiatives. This is a service that no other publisher or esports operator owns in-house. These unique data analytic capabilities provide the Company an edge in accessing sponsorships and promotions from major brands focused on esports, as the Company has proprietary data on esports viewership, brand exposure and sponsorship valuation to quantify the value of our brand exposure on multiple streaming platforms around the globe.

Stream Hatchet, through a SaaS offering, also generates significant independent revenue for the Company as a standalone unit without infringing upon its strategic value to the Company. Stream Hatchet provides holistic data to its users, which include streamers, esports organizations, video game producers, and advertising agencies. Stream Hatchet provides a clearly-delineated product offering with a high degree of automation, and a strong pipeline of clients and brands looking for intelligence in the esports & gaming landscape. Stream Hatchet’s innovative reporting and data analytics are unique in the industry, with services and reporting having been sold to major brands in the technology space.

Gaming

Eden Games

Eden Games is a game developer with market-leading competency in building mobile games, currently focused on the racing genre. They are well-known in the industry for the multiple racing franchises they have created and are considered experts in the fields of licensing and racing technology. Founded in 1998 in Lyon, France, by two experienced Atari developers, Eden Games is a household name in development circles and has both a storied history of success and a strong pipeline of future engagements. Its current development deals include such partners as Codemasters/Electronic Arts (F1 Mobile Racing) and Microids (Gear.Club Unlimited Franchise), which post its huge success on Nintendo Switch, and will expand to additional console platforms such as Xbox and Playstation. These two contracts, as well as others, provide regular revenue contracted from third parties and a share of the revenue from game sales or in-app purchases.

Eden has produced the following video game titles: V-Rally (1998); V-Rally 2 (1999); Need for Speed: Porsche (2000); V-Rally 3 (2002); KYA: Dark Lineage (2003); TITEUF: Mega Compet (2004); Test Drive Unlimited (2006); Alone in the Dark (2008); Test Drive Unlimited 2 (2011); TDU2 Casino Online (2011); Gear.Club Mobile (2016 – 2020); Gear.Club Unlimited (2017); F1 Mobile (2018 – 2020); and Gear.Club Unlimited 2 (2018 – 2020). In addition, the Company has planned releases throughout both 2022 and 2023.

UMG Gaming

The Company acquired UMG on December 31, 2019. UMG is a premier esports company in North America, offering a turnkey platform for esports events, live gaming entertainment events and online play. UMG provides online and live tournaments as well as the creation and distribution of original esports content.

UMG, through its wholly-owned subsidiary UMG Events LLC, which was founded in 2012, is actively involved in many aspects of the esports industry. UMG is deeply ingrained in the gaming community and very well established within the competitive gaming sector with over 2.5 million registered users.

UMG is a diversified esports company that has operations involved in:

	●	Live tournaments
	●	Online contests
	●	Creation and distribution of original content
	●	Esports tournament operations through its proprietary tournament management app

WinView

WinView is a Silicon Valley-based company, pioneering second-screen interactive TV. WinView is a leading skill-based sports prediction mobile games platform. WinView plans to leverage its extensive experience in pioneering real-time interactive television games played on the mobile second screen, its foundational patents and unique business model. The WinView app is an end-to-end two-screen TV synchronization platform for both television programming and commercials. The paid entry, skill-based WinView Games app uniquely enhances TV viewing enjoyment and rewards sports fans with prizes as they answer in-game questions while competing in real-time during live televised sports. WinView also holds the foundational patents on the synchronized second screen experience.

Three Year History

The following is a description of how the business of the Company developed over the three most recently completed financial years and the current financial year.

Fiscal Year Ended August 31, 2019

Convertible Debenture Financing

On July 8, 2019, the Company closed a first tranche of a non-brokered private placement of convertible debentures in the amount of CDN$5,251,112 (“2019 Convertible Debentures”). The 2019 Convertible Debentures will mature 36 months from the date of issuance and bear interest at a rate of 6% per annum, payable on maturity. Holders of the 2019 Convertible Debentures may convert all or a portion of the principal amount of the 2019 Convertible Debentures into units of Engine at a price of CDN$7.50 per unit. Each unit is comprised of one Common Share and one Warrant, with each Warrant exercisable into a Common Share at an exercise price of CDN$7.50 per share for a period of five years from the issuance of the 2019 Convertible Debentures. The Company shall be entitled to call for the exercise of any outstanding Warrants following the 6 month anniversary of closing in the event that the closing trading price of the Common Shares is above CDN$45.00 for 15 consecutive trading days. On July 25, 2019 the Company closed an additional tranche of principal amount 2019 Convertible Debentures of CDN$5,342,000 and on August 8, 2019, the Company closed a final tranche of principal amount 2019 Convertible Debentures of CDN$4,406,900. The non-brokered private placement of 2019 Convertible Debentures was fully subscribed for a total of principal amount of CDN$15,000,012.

Fiscal Year Ended August 31, 2020

Acquisition of UMG

On November 6, 2019, the Company signed a definitive agreement to acquire UMG Media Ltd. (“UMG”). The transaction closed on December 31, 2019 and was carried out by way of a plan of arrangement under the Business Corporations Act (Alberta). Pursuant to the arrangement, the Company acquired all of the issued and outstanding common shares of UMG, by way of a plan of arrangement, based on an exchange ratio of 0.0428803 (0.0643205 on a pre-August 2020 Consolidation basis) of a Common Share for each UMG common share held by the former UMG shareholders. In total, the Company issued 288,560 Common Shares in exchange for the outstanding UMG securities, including to holders of shares of UMG issued pursuant to a non-brokered private placement conducted by UMG I conjunction with the transaction. In addition, each outstanding option and warrant to purchase a common share of UMG was exchanged for an option or warrant, as applicable, to purchase a Common Share of the Company, based upon the exchange ratio. This transaction was approved at the special meeting of UMG shareholders held on December 17, 2019 and the final order regarding the arrangement was granted by the Court of Queen’s Bench of Alberta on December 18, 2019. The plan of arrangement was completed on December 31, 2019.

Frankly Arrangement and WinView Merger

On March 10, 2020, the Company, Frankly Inc. (“Frankly”) and WinView Inc. (“WinView”) announced that they had entered into a business combination agreement dated March 9, 2020 (the “Business Combination Agreement”) where the three companies agreed to form an integrated news, gaming, sports and esports platform (the “FW Transaction”).

On May 8, 2020, the Company acquired all of the issued and outstanding common shares of Frankly in exchange for consideration of one Engine Common Share for each Frankly common share acquired, pursuant to a court approved plan of arrangement under the Business Corporations Act (British Columbia), resulting in the issuance of 2,258,215 Common Shares upon closing the business combination. All outstanding convertible securities of Frankly were exchanged for equivalent securities of the Company (other than outstanding warrants to purchase common shares of Frankly, which remain outstanding and have the terms of such securities adjusted to reflect the exchange ratio). The Company also concurrently indirectly acquired WinView, pursuant to a statutory merger under the laws of the State of Delaware, with WinView securityholders receiving an aggregate of 1,759,997 Common Shares of the Company as well as certain contingent consideration. The contingent consideration entitles WinView holders to proceeds from the enforcement of WinView’s patent portfolio, equal to 50% of the net license fees, damages awards or settlement amounts collected from third parties, with such payments to be calculated after deduction of certain amounts. In connection with the transaction, it was announced that the combined company would be co-led by Darren Cox and Frankly Chief Executive Officer Lou Schwartz, and WinView Executive Chairman Tom Rogers, who also served as Chairman of Frankly, would serve as Executive Chairman of the combined company.

For more information on the FW Transaction, see the Company’s business acquisition report dated November 13, 2020 on www.sedar.com.

Convertible Debentures

On August 19, 2020, the Company closed a first tranche of a non-brokered private placement of convertible debentures in the amount of US$5,750,000 (“2020 Convertible Debentures”). The 2020 Convertible Debentures will mature 24 months from the date of issuance and bear interest at a rate of 5% per annum (subject to the following adjustments), payable on maturity. At the Company’s option, interest under the 2020 Convertible 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 Convertible 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 Convertible Debentures holders may convert all or a portion of the principal amount of the 2020 Convertible Debentures into units of the Company at a price equal to the lesser of (a) US$11.25 per unit, and (b) if such conversion occurs after a public offering of securities by the Company, a 15% discount to the public offering price, provided that such conversion price shall not be less than US$7.50 per 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 of the Company and the exercise of Warrants of the Company to be issued pursuant to the conversion of the 2020 Convertible Debentures, holders of 2020 Convertible Debentures may convert such convertible debentures into units at US$7.50 per unit. As of December 19, 2020, the Company had not obtained registration rights in the United States. As such, the conversion price is US$7.50 per unit and the interest rate increased to 10% on December 19, 2020.

Each unit is comprised of one Common Shares and one-half of one warrant, with each Warrant exercisable into one Common Shares of the Company at an exercise price of US$15.00 per share for a period of three years from the issuance of the 2020 Convertible Debentures. Under certain circumstances, the Company shall be entitled to call for the exercise of any outstanding Warrants in the event.

Acquisition of Interest in One Up Group

On August 25, 2020, Engine announced it completed the acquisition of a 20.48% interest in mobile gaming company One Up Group, LLC (“One Up”). One Up operates the OneUp mobile app, which allows gamers to organize and play one-on-one matches with other gamers and compete for money. The purchase price was satisfied with the issuance of principal amount US$3 million convertible debentures, having the same terms as the 2020 Convertible Debentures, except that references therein to US$7.50 have been changed to US$9.50.

Fiscal Year Ended August 31, 2021

Financings

On September 15, 2020, the Company closed the final tranche of 2020 Convertible Debentures in the amount of US$1,901,393.

On October 16, 2020, the Company announced that it closed a first tranche of principal amount US$1,050,000 of the first US$2,000,000 draw of a US$8,000,000 stand-by convertible debenture facility (“Standby Debentures”). The Standby Debentures have substantially similar terms as the 2020 Convertible Debentures, described above, except the following: (i) the references therein to a minimum US$7.50 conversion price have been changed to US$8.90; and (ii) the Standby Debentures are only convertible into common shares of the Company, not units.

On October 16, 2020, the Company announced that it closed a principal US$1 million convertible debenture financing which has similar terms to the 2020 Convertible Debentures, described above, except the references therein to US$7.50 have been changed to US$7.80 (the “2020 Convertible Debentures ($7.80)”).

On November 20, 2020, the Company announced that it closed the final tranche of the previously announced US$2,000,000 draw of the Standby Debentures, for total proceeds of US$950,000. In connection with the Standby Debentures, the Company issued 224,719 Warrants, with each Warrant exercisable into a Common Share at an exercise price of US$15.00 until November 20, 2024.

On December 2, 2020, the Company announced that its wholly-owned subsidiaries Frankly Media LLC and Frankly have amended the existing secured credit facility (as amended, the “EB Loan”) with arm’s length lender EB Acquisition Company, LLC (the “EB Lender”), in connection with the advance of an additional US$1,000,000 under the EB Loan, which is convertible at the option of the EB Lender, at a conversion price per share of US$11.25. The credit limit under the EB Loan of US$5 million is now fully drawn. In connection with the amendment, the maturity date of the EB Loan has been extended from January 5, 2021 until January 5, 2022. Additionally, the Company has guaranteed the obligations under the EB Loan and has granted a security interest in favour of the EB Lender over the assets of the Company. In consideration of the extension of the maturity date, the Company has agreed to issue to the EB Lender an aggregate of 6,666 Common Shares and an amendment fee of US$100,000 which forms part of the outstanding principal under the EB Loan. The Common Shares issuable will be subject to a hold period expiring four months and a day following the date of issuance, as well as restrictions on transfer under applicable securities laws.

On January 8, 2021 the Company settled convertible debentures (the “Debt Settlements”) of an aggregate principal amount of US$10,726,393 in outstanding convertible debentures through the issuance of 1,430,186 units at a deemed price of US$7.50 per unit, with each unit consisting of a Common Share and three-quarters of a warrant, with each whole Warrant exercisable into a Common Share at an exercise price of US$15.00 per share for a period of three years. Included in the Debt Settlements was the US$3,000,000 convertible debenture that was issued in connection with the Company’s acquisition of an interest in One Up.

On December 23, 2020, the Company announced its intention to complete a non-brokered private placement of up to approximately 3,300,000 units at a price of US$7.50 per unit for gross proceeds of up to US$25,000,000 (“December 2020 Private Placement”). Each Unit consists of one Common Share and one-half of one common share purchase warrant. Each whole Warrant entitles the holder to acquire one additional Common Share of the Company at a price of US$15.00 per share for a period of 3 years provided that: (i) if the Common Shares are listed for trading on NASDAQ, (ii) the Company completes an offering of securities under a short form prospectus for an aggregate amount of at least US$30,000,000, and (iii) the closing price of the common shares on NASDAQ is US$30.00 or greater for a period of 15 consecutive trading days, then the Company may accelerate the expiry date of the warrants to the 30^thday after the date written notice is provided to the holders.

On January 8, 2021, the Company closed the first tranche of the December 2020 Private Placement for aggregate gross proceeds of US$10,540,883 and 1,405,451 units were issued. The Company paid cash commissions to eligible finders totalling US$284,989 and also issued the following securities as partial payment of commissions to finders: 36,948 units; and, 74,947 finders warrants, with each finder warrant exercisable into a common share at an exercise price of US$15.00 per share for 3 years subject to the same acceleration terms described above.

In January and February 2021, the Company completed multiple tranches of equity financings totaling 4,371,767 units at an issue price of US$7.50 per unit, for gross proceeds of US$32,788,253. Each unit consisted of one Common Share and one-half of one Common Share purchase warrant. Each whole Warrant entitles the holder to acquire one additional share of the Company at a price of US$15.00 per share for a period of 3 years provided that: (i) if the Common Shares are listed for trading on NASDAQ, (ii) the Company completes an offering of securities under a short form prospectus for an aggregate amount of at least $30,000,000, and (iii) the closing price of the common shares on NASDAQ is $30.00 or greater for a period of 15 consecutive trading days, then the Company may accelerate the expiry date of the warrants to the 30^th day after the date written notice is provided to the holders.

On February 26, 2021 the EB Lender converted the EB Loan into a US$5,000,000 secured convertible debenture, which is convertible into units of the Company at a conversion price of US$10.25 per unit. Each such unit is comprised of one Common Share and one-half of one common share purchase warrant, with each whole Warrant exercisable into a Common Share at an exercise price of US$15.00 per share for a period of three years from the issuance of the convertible debenture.

On March 25, 2021, the Company filed a final short form base shelf prospectus (with the securities regulators in each province of Canada, except for the Province of Québec) (the “Base Shelf Prospectus”) and a corresponding shelf registration statement on Form F-10 with the U.S. Securities and Exchange Commission. The prospectus and registration statement allow the Company to offer up to US$150 million of common shares, preference shares, warrants, subscription receipts, debt securities, units, or any combination thereof during the 25-month period that the shelf prospectus is effective.

On June 7, 2021, the Company received approval to list its shares on NASDAQ. The Company’s Common Shares commenced trading on NASDAQ on June 17, 2021.

On August 10, 2021, the Company entered into an at-the-market Equity Distribution Agreement (the “Equity Distribution Agreement”) with Canaccord Genuity LLC (“Canaccord”), on behalf of itself and co-sales agents Oppenheimer & Co. Inc. and B. Riley Securities, Inc., to establish an at-the-market equity program (the “ATM Program”). Under the ATM Program, the Company will have the flexibility through the expiration date of its Base Shelf Prospectus to issue up to US$50 million of Common Shares as needed to support the Company’s ongoing business activities. Any Common Shares sold under the ATM Program will be sold at the prevailing market price at the time of sale, when sold through NASDAQ. No Common Shares will be offered or sold in Canada. As of the date hereof, the Company has not yet issued any shares under the ATM Program.

Patent Lawsuits with Against DraftKings and FanDuel

On July 7, 2021, Engine announced that its Winview subsidiary commenced an action in the United States District Court for the District of New Jersey against DraftKings Inc. (NASDAQ: DKNG), alleging infringement of patents owned by Winview. The lawsuit alleges that various gaming services provided by DraftKings infringe Winview’s United States Patent No. 9,878,243 (the “‘243 Patent”) entitled “Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming” and United States Patent No. 10,721,543 (the “‘543 Patent”) entitled “Method Of and System For Managing Client Resources and Assets for Activities On Computing Devices.” The action seeks the recovery of damages and other appropriate relief.

On July 20, 2021, Engine announced that its Winview subsidiary commenced an action in the United States District Court for the District of New Jersey against FanDuel, Inc., alleging infringement of patents owned by Winview. The lawsuit alleges that various gaming services provided by FanDuel infringe Winview’s 243 Patent and 543 Patent. The action seeks the recovery of damages and other appropriate relief.

On July 29, 2021, Engine announced that its Winview subsidiary filed amended complaints in its patent infringement lawsuits against DraftKings, and FanDuel, which are pending in the United States District Court for the District of New Jersey, to include allegations that the gaming services provided by DraftKings and FanDuel infringe two additional patents owned by Winview: United States Patent No. 9,993,730 entitled “Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming,” and United States Patent No. 10,806,988 entitled “Method Of and System For Conducting Multiple Contests of Skill with a Single Performance.” These actions seek the recovery of damages and other appropriate relief.

Acquisition of Sideqik

On July 6, 2021, the Company announced the completion of the acquisition of Sideqik, Inc. (“Sideqik”). Engine will integrate Sideqik with its subsidiary Stream Hatchet, a global leader in live gaming video distribution analytics and audience engagement. Sideqik’s and Stream Hatchet’s combined assets will allow brands and agencies to have a one-stop-shop solution with proven expertise in evaluating and generating efficiencies across all live and non-live influencer marketing expenditures. With this focus on influencer marketing, Engine will empower brands to discover and connect with content creating influencers across any content vertical. It will provide tools to best shape the creation of authentic content that resonates with consumers, as well as best in class measurement to determine earned media value, sales effectiveness, and campaign return on investment.

Recent Developments

Name Change

On October 19, 2021, the Company changed its name from “Engine Media Holdings, Inc.” to “Engine Gaming and Media, Inc.”

Allinsports Arbitration

On October 1, 2021, the arbitration in Ontario commenced by the shareholders of Allinsports was completed. The arbitration sought, among other things, a ruling that the Company’s pending acquisition of Allinsports, a manufacturer of motorsports racing simulators, had been completed and that the selling shareholders were entitled to receive the outstanding payment of 966,667 Common Shares due under the acquisition agreement. The arbitrator determined that the transaction was completed and that the Allinsports shareholders are entitled to receive the outstanding share consideration under the acquisition agreement. The Company is reviewing the decision to determine its options, including other relief and remedies it may pursue.

Normal Course Issuer Bid

On October 27, 2021, the TSXV accepted the Company’s Notice of Intention to implement a normal course issuer bid (“NCIB”). Pursuant to the NCIB, Engine may, during the 12-month period commencing November 1, 2021 and ending October 31, 2022, purchase up to 777,165 Common Shares, being approximately 5% of the outstanding Common Shares of the Company. The NCIB shall terminate on the earlier of October 31, 2022 and the date on which the maximum number of Common Shares purchasable under the NCIB is acquired by the Company.

Item 4.

DESCRIPTION OF THE BUSINESS

4.1

Business Overview

The Company is addressing massive market opportunities in esports, gaming, data, and streaming content distribution. The three-way merger of Torque Esports, Frankly Media and WinView Games which closed on May 8, 2020 brings together a unique combination of technology assets that include: (i) a market leading video gaming competition platform – UMG; (ii) a skills-based mobile engagement platform for traditional sports and esports – WinView; (iii) a data intelligence platform – Stream Hatchet; (iv) influencer marketing – Sideqik; (v) a content management and streaming video platform that supports over 1,200 news sites and engages over 100 million monthly active users across some of the top media companies in world - Frankly; and (vi) a development studio that’s dedicated to making the best racing games for mobile – Eden Games.

4.2

Industry Overview and Principal Markets

Video gaming is one of the largest and fastest growing markets in the entertainment sector, with an estimated 2.6 billion gamers globally, with esports being the major source of growth. Esports is a term that comprises a diverse offering of competitive electronic games that gamers play against each other. One of the biggest differences between esports and video games of old is the community and spectator nature of esports - the competitive play against another person, either one-on-one or in teams, is a central feature of esports. Since players play against each other online, a global network of players and viewers has developed as these players compete against each other worldwide. Additionally, game developers have greatly increased the entertainment value of games, which has made the spectator aspect of gaming much more prevalent and further drives expansion of the gaming market.

The expanded reach of broadband service and the computer technology advances in the last decade have also greatly accelerated the growth of esports. Esports has become so popular that many high schools and colleges now offer programs to support students’ interest in esports, as well as tournaments and scholarships. The best-known esports teams are receiving marquee sponsorships and are being purchased or invested in by a range of financial and strategic partners. The highest profile esports gamers have significant online audiences as they stream themselves playing against other players online and potentially can generate millions of dollars in sponsorship money and affiliate fees from their online streaming channels. It is projected that by 2023, approximately 650 million people will be watching esports globally. Most major professional esports events and a wide range of amateur esports events are broadcast live via streaming services, including Twitch.tv, Youtube.com and Facebook Gaming.

4.3

Revenue Model

Overview

The Company generates revenue through a combination of (i) direct-to-consumer fees (subscription, rake, advertising and sponsorship, and merchandise sales); (ii) business-to-business software-as-a-service (“SaaS”) subscription and professional service fees; and (iii) programmatic advertising sales and brand sponsorships. The Company is uniquely positioned with a base of predictable business-to-business revenues and an extensive network of media and gaming publisher relationships. These media and gaming publishers engage over one hundred (100) million monthly active users. Leveraging these relationships to efficiently create awareness for our gaming competition platform, where players and fans can play, watch and engage with other members of the esports community, is key to the Company’s long-term growth strategy.

Brands

UMG

UMG is a premier esports company in North America, offering live gaming entertainment events and online play. UMG provides online and live tournaments as well as the creation and distribution of original esports content.

UMG, through its wholly owned subsidiary UMG Events LLC, which was founded in 2012, is actively involved in many aspects of the esports industry. UMG is deeply ingrained in the gaming community and very well established within the competitive gaming sector with approximately 2.1 million registered users and over 18 million matches played live and online through its platform.

UMG is a diversified esports company that has operations involved in:

	●	Live tournaments
	●	Online contests
	●	Creation and distribution of original content
	●	Esports tournament operations through its proprietary tournament management app

UMG TV by UMG Gaming is a live 24/7 linear and on-demand streaming video channel dedicated to gaming, esports and entertainment audiences. UMG TV is distributed across a broad range of media platforms including Twitch, YouTube, Apple TV, Roku, Amazon Fire, VIZIO and more. Some of the featured programming on UMG TV includes the following: UMG Rewind, The Race, Collegiate Clash, Emergence Days, Valorant, and UMG Classic.

WinView Games

WinView Games is a digital technology company that pioneered second-screen interactive television technologies and holds foundational patents on the synchronized second-screen experience. WinView plans to leverage its extensive experience in pioneering real-time interactive television games played on the mobile second-screen, its foundational patents and unique business model. The WinView app is currently an end-to-end two screen TV synchronization platform for both television programming and commercials. The paid entry, skill-based games app uniquely enhances TV viewing enjoyment and rewards sports fans with prizes as they answer in-game questions while competing in real-time during live televised sports. WinView has a portfolio of more than 68 issued patents on mobile sports gaming technologies and distributed entertainment systems.

Stream Hatchet

Stream Hatchet is a data analytics company based in Terrassa, Spain, providing intelligence for persons and entities involved in video game streaming. Stream Hatchet provides real-time data analytics and viewership information that assists in the development and marketing decisions of the Company’s initiatives. These unique data analytic capabilities provide the Company an edge in accessing sponsorships and promotions from major brands focused on esports, as the Company has proprietary data on esports viewership, brand exposure and sponsorship valuation to quantify the value of our brand exposure on multiple streaming platforms around the globe.

		Stream Hatchet, through a SaaS offering, also generates significant independent revenue for the Company as a standalone unit without infringing upon its strategic value to the Company. Stream Hatchet provides holistic data to its users, which include streamers, esports organizations and video game producers. Stream Hatchet provides a clearly-delineated product offering with a high degree of automation, and a strong pipeline of clients and brands looking for intelligence in the esports & gaming landscape. Stream Hatchet’s innovative reporting and data analytics are unique in the industry, with services and reporting having been sold to major brands in the technology space. Stream Hatchet’s customers include industry leaders such as Microsoft, Allied Esports, Activision and Twitch.

		Sideqik Sideqik is an influencer marketing platform that offers brands, direct marketers, and agencies tools to discover, connect and execute marketing campaigns with content creators. Sideqik’s end-to-end solutions offer marketers advanced capabilities to discover influencers with demographic and content filtering; connect and message influencers; share marketing collateral such as campaign briefs, photos, logos, videos; measure reach, sentiment, and engagement across all major social media platforms; and evaluate earned media value and return on investment across the entire campaign.

		Frankly Media Frankly Media provides a complete suite of content management, video streaming and engagement solutions that give broadcasters and publishers a unified workflow for the creation, management, publishing and monetization of digital content to any device, while maximizing audience value and revenue. Frankly delivers publishers and their audiences the solutions and services to meet the dynamic challenges of a multi-screen content distribution world. Frankly Media’s products include a groundbreaking online video platform for Live, VOD and Live-to-VOD workflows, a full-featured CMS with rich storytelling capabilities, as well as native apps for iOS, Android, Apple TV, Fire TV and Roku. Additionally, Frankly’s in-house team of digital advertising sales and operations experts monetize billions of monthly display and video advertising impressions through programmatic and direct brand sales across client and owned and operated media properties. Frankly has over 1,200 radio, TV and print media brands, including CNN, Newsweek and Vice Media; TV affiliates of NBC, CBS, FOX and ABC, and radio station groups such as Cumulus.

Eden Games

Eden Games is a game developer with market-leading competency in building mobile racing games. They are well-known in the industry for the multiple racing franchises they have created and are considered experts in the fields of licensing and racing technology. Founded in 1998 in Lyon, France, by two experienced Atari developers, Eden Games is a household name in development circles and has both a storied history of success and a strong pipeline of future engagements. Its current development deals are for the official F1 mobile game and porting its Gear.Club franchise onto the hugely successful Nintendo Switch. These two contracts provide regular revenue contracted from third parties and a share of the revenue from game sales or in-app purchases.

Eden has produced the following video game titles: V-Rally (1998); V-Rally 2 (1999); Need for Speed: Porsche (2000); V- Rally 3 (2002); KYA: Dark Lineage (2003); TITEUF: Mega Compet’ (2004); Test Drive Unlimited (2006); Alone in the Dark (2008); Test Drive Unlimited 2 (2011); TDU2 Casino Online (2011); Gear.Club Mobile (2016 – 2020); Gear.Club Unlimited (2017); F1 Mobile (2018 – 2020); and Gear.Club Unlimited 2 (2018 – 2020).

Breakdown of Revenue Streams

The following table provides the breakdown for the main streams of revenue for the two most recently completed financial years:

Source of Revenue	Twelve-month period ended August 31, 2021 ($ and %)	Twelve-month period ended August 31, 2020 ($ and %)
Eden Games	3,422,202 (9.2%)	2,732,846 (24.6%)
Stream Hatchet	1,401,980 (3.8%)	1,041,516 (9.4%)
UMG	449,857 (1.2%)	314,948 (2.8%)
Frankly	31,530,306 (84.7%)	6,404,736 (57.7%)
WinView	3,543 (0.0%)	51,422 (0.5%)
Sideqik⁽¹⁾	412,981 (1.1%)	N/A

Notes:

(1)	The acquisition of Sideqik was completed on July 6, 2021.

Disposition of Motorsport Assets

In November 2020, following a detailed strategic review in connection with the merger of Torque Esports, Frankly Media and WinView Games, the Company sold IDEAS+CARS, The Race Media, WTF1 and Driver DataBase (collectively the “Motorsport Assets”) 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. These auto-related businesses sold are not focused on gaming but instead, are developing esport and traditional sport racing audiences with the creation and production of auto racing content. While reducing its cost base, the Company maintained the ability to work with the Motorsports Assets. The Company will continue to support racing as a category through its competitive gaming platform, UMG, as it expands relationships across the entire esports sector as the leading destination for tournament play. For the year ended August 31, 2020, the Motorsport Assets had revenue of approximately $0.56 million and an operating loss of $5.86 million.

4.4

Customers

The Company has different business segments which target different customers.

Frankly’s services are currently being used by approximately 1,200+ U.S. local news and radio stations, mostly affiliated with large broadcasting networks such as Cumulus, NBC, CBS, FOX and ABC.

The Company’s esports properties target esports enthusiasts and amateur gamers. Amateur gamers both consume esports content and actively play. Males aged 21-35 make up the majority of esports enthusiasts in the U.S. (43%) and Western Europe (45%) and contrary to expectation, these enthusiasts are more likely than the average gamer to be married (52% versus 39%), and have a full-time job (71% versus 50%).

In addition to esports enthusiasts, the Company targets brands (including multinational companies) that are interested in sponsoring or placing advertisements at tournament events.

4.5

Foreign Operations

Although the Company is headquartered in Canada, the majority of its business is conducted outside of Canada:

	●	Stream Hatchet has an office in Terrassa, Spain;

	●	Eden Games has an office in Lyon, France;

	●	WinView has an office in California, United States;

	●	Frankly has an office in New York, United States.

	●	Sideqik has an office in Atlanta, Georgia.

See “Item 4.10 – Risk Factors”.

4.6

Competitive Conditions

The Company competes in highly competitive and fragmented sectors, which include esports content, streaming technology, gaming platforms, data analytics and intellectual property. Some of the Company’s most direct competitors in North America and Europe include well capitalized and multinational companies.

The major competitors in the Company’s markets include:

	●	Codemasters Software Company Limited
	●	Nielsen Holdings Plc
	●	FanAI Inc.

Despite intense competition, the Company believes it is well positioned to compete with its competitors by means of having an industry-leading management team and directors, integrated business model, in-house data analytics and in being a market leader in expanding key verticals. The Company’s management and directors have broad and extensive experience, an optimal blend of abilities across channels and assets, and a global footprint. The Company currently holds a number of growth assets that offer its customers the ability to deliver marketing, innovative games, and analytics to an expanding global customer base.

4.7

Proprietary Protection

The Company considers the creation, use, and protection of intellectual property to be crucial to its business. The Company’s general practice is to require all key employees and consultants to sign confidentiality agreements and assign all rights of inventions to the Company. In addition to the above contractual arrangements, the Company also relies on a combination of trade secret, copyright, domain name and other legal rights to protect its intellectual property. The Company typically owns the copyright to the software code to its content as well as the brand or title name under which its games are marketed. The Company believes that it has provided sufficient security for its intellectual property.

Non-patent intellectual properties owned by the Company include:

	●	Trade secrets and know-how that it uses to develop games and processes;
	●	Common law trademarks, including product names and graphics, music and other audio-visual elements of games;
	●	Software code relating to its products;
	●	Certain program assets; and
	●	Sports and esports-focused apps.

4.8

Employees

As at August 31, 2021, the Company had approximately 195 employees globally. Of these employees, approximately 2 are located in Canada, 57 in France, 21 in Spain, 7 in India, and 108 in the United Sates. None of the Company’s employees are represented by a collective bargaining agreement. The Company considers its relations with its employees to be strong and views its employees as an important competitive advantage.

4.9

Specialized Skill and Knowledge

Specialized skill and knowledge is necessary to capitalize on significant trends, esports, news streaming and gaming. The Company has assembled experienced management and technical teams within its portfolio companies.

As part of the Company’s acquisition of Frankly and WinView, media/technology industry veteran, founder of CNBC and long-time CEO of TiVo, Tom Rogers, joined the Company as executive chairman and board member. Additionally, seasoned executive Lou Schwartz joined the Company and is now its CEO.

David Nadal and his team at Eden Games have been making racing games as a tight-knit, innovative group of experts for over 20 years. Over that time they have built a unique portfolio of back-end IP, technical “building blocks” and industry recognition as leaders in the mobile racing space. For illustrative purposes, the experience of the Eden Games team, and Eden Games’ portfolio of IP enabled Eden Games to be selected as the developers of the F1^® Mobile Racing game and deliver the product to market in just over a year from their commission.

Stream Hatchet are the leaders in the provision of data for esports companies from leading streaming platforms. Stream Hatchet has developed unique back-end IP and technology for its data collection services.

UMG was early in the Esports Live events and programming market. The unique approach for UMG was in the development of the platform that allows players to challenge each other for cash and prizes (props) at scale. This persistent ability to create these mini-events with machines and AI is a very unique position for the company. As the success of UMG grew, competitors like CMG were able to replicate the live event streaming part of the business and start taking props for their own events. Competition in live event streaming is a risk on the major events side of the business. The Company will address the threat with more programming and creating a consistent media presence. With the Company’s 2021 content plan, it believes it will grow and maintain a strong presence.

The Sideqik software platform enables discovery, collaboration, and technology integration with social media influencers, as well as engagement with a target audience, across all major social media platforms. The discovery feature in the software enables searching of relevant influencers by keywords, interest, location, brand affinity, and other such parameters. The audience engagement tool utilizes artificial intelligence to provide insight into how influencers perform before launching a relationship. Audience analytics breakdown demographics of users and audiences by age, gender, race, income, and other such parameters to ensure audiences align with target demographics. The influencer relationship manager streamlines communication with influencers with messages, emails, and attachments centralized inside of the platform. Customizable groups allow users to organize and identify influencers and group them by different pre-sets.

4.10

Risk Factors

The Company’s operations and financial performance are subject to the normal risks of its industry and are subject to various factors which are beyond the control of the Company. Certain of these risk factors are described below. The risks described below are not the only ones facing the Company. Additional risks not currently known to the Company, or that it currently considers immaterial, may also adversely impact the Company’s business, operations, financial results or prospects, should any such other events occur.

Risks Associated with the Business and Industry of the Company

Liquidity concerns and future financings

Although the Company has been successful in the past in financing its activities, there can be no assurance that it will be able to obtain additional financing as and when needed in the future to execute its business plan and future operations. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of the Company. It may be difficult or impossible for the Company to obtain financing on commercially acceptable terms. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. There is a risk that interest rates will increase given the current historical low level of interest rates. An increase in interest rates could result in a significant increase in the amount that the Company pays to service future debt incurred by the Company and affect the Company’s ability to fund ongoing operations.

Failure to obtain additional financing on a timely basis could also result in delay or indefinite postponement of further development of its products. Such delay would have a material and adverse effect on the Company’s business, financial condition and results of operations.

The Company may not be able to successfully execute its business plan

The execution of the Company’s business plan poses many challenges and is based on a number of assumptions. The Company may not be able to successfully execute its business plan. If the Company’s business plan is more costly than anticipated or there are significant cost overruns, certain products and development activities may be delayed or eliminated or the Company may be compelled to secure additional funding (which may or may not be available) to execute its business plan. The Company cannot predict with certainty its future revenues or results from its operations. If the assumptions on which revenue or expenditure forecasts are based change, the benefits of the Company’s business plan may change as well. In addition, the Company may consider expanding its business beyond what is currently contemplated in its business plan. Depending on the financing requirements of a potential acquisition or new product opportunity, the Company may be required to raise additional capital through the issuance of equity or debt. If the Company is unable to raise additional capital on acceptable terms, the Company may be unable to pursue a potential acquisition or new product opportunity.

Difficulties integrating acquisitions and strategic investments

The Company has acquired businesses, personnel and technologies in the past and expects to continue to pursue acquisitions, such as the completed acquisitions of Frankly, WinView, UMG, Eden Games, Stream Hatchet, SideQik, and other investments that are complementary to the existing business, and expanding the employee base and the breadth of the Company’s offerings. The Company’s ability to grow through future acquisitions will depend on the availability of suitable acquisition and investment candidates at an acceptable cost, the ability to compete effectively to attract these candidates and the availability of financing to complete larger acquisitions. Since the Company expects the esports industry to consolidate in the future, the Company may face significant competition in executing its growth strategy. Future acquisitions or investments could result in potential dilutive issuances of equity securities, use of significant cash balances or incurrence of debt, and contingent liabilities or amortization expenses related to goodwill and other intangible assets, any of which could adversely affect the financial condition and results of operations of the Company. The benefits of an acquisition or investment may also take considerable time to develop, and the Company cannot be certain that any particular acquisition or investment will produce the intended benefits.

The above risks and difficulties, if they materialize, could disrupt the Company’s ongoing business, distract management, result in the loss of key personnel, increase expenses and otherwise have a material adverse effect on the Company’s business, results of operations and financial performance.

Management of growth

The Company has grown rapidly since its inception and it plans to continue to grow at a rapid pace. This growth has put significant demands on the Company’s processes, systems and personnel.

The Company may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of the Company to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. Managing the Company’s growth will require significant expenditures and allocation of valuable management resources. The inability of the Company to deal with this growth may have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.

The Company may continue to have reduced cash reserves

The Company expects its cash reserves will be reduced due to future operating losses, working capital requirements, capital expenditures, and potential acquisitions and other investments by its business, and the Company cannot provide certainty as to how long its cash reserves will last or that it will be able to access additional capital when necessary.

The Company expects to incur continued losses and generate negative cash flow until it can produce sufficient revenues to cover its costs. The Company may never become profitable. Even if the Company does achieve profitability, it may be unable to sustain or increase profitability in the future. For the reasons discussed in more detail below, there are substantial uncertainties associated with the Company achieving and sustaining profitability. The Company expects its cash reserves will be reduced due to future operating losses, and working capital requirements, and the Company cannot provide certainty as to how long its cash reserves will last or that it will be able to access additional capital if and when necessary.

Competition

The Company’s failure to compete successfully in its various markets could have a material adverse effect on the Company’s business, financial condition and results of operations. The market for the various types of product and service offerings of the Company is very competitive and rapidly changing. The Company faces competition from other esports businesses, many of which are larger and better funded than the Company. There can be no guarantee that the Company’s current and future competitors will not develop similar or superior services to the Company’s products and services which may render the Company uncompetitive. Increasing competition could result in fewer future customers, reduced revenue, reduced sales margins and loss of market share, any one of which could harm the business of the Company.

Players in the current market face a vast array of entertainment choices. Other forms of entertainment, such as offline, traditional online, personal computer and console games, television, movies, sports and the Internet are much larger and more well-established markets and may be perceived by the Company’s customers to offer greater variety, affordability, interactivity and enjoyment. These other forms of entertainment compete for the discretionary time and income of the Company’s customers. If the Company is unable to sustain sufficient interest in its games in comparison to other forms of entertainment, including new forms, the business model may no longer be viable.

For a detailed description of the competitive environment faced by the Company, see “Item 4.6 – Competitive Conditions”.

Security and privacy breaches

Security or privacy breaches may result in an interruption of service or a reduced quality of service, which could increase the Company’s costs or result in a reduction in the use of the Company’s services by its customers. The Company’s systems may be vulnerable to physical break-ins, computer viruses, attacks by computer hackers or similar disruptive problems. If unauthorized users gain access to the Company’s databases, they may be able to steal, publish, delete or modify sensitive information that is stored or transmitted on the Company’s networks and which the Company is required by its contracts to keep confidential. A security or privacy breach could result in an interruption of service or a reduced quality of service. Confidential information internal to the Company may also be disclosed to unauthorized personnel who may use such information in a manner adverse to the Company’s interests. Hackers may attempt to “flood” the network, thereby preventing legitimate network traffic or to disrupt the network, thereby preventing access to a service or preventing a particular individual from accessing a service. The Company may therefore be required to make significant expenditures in connection with corresponding corrective or preventive measures. In addition, a security or privacy breach may harm the Company’s reputation and cause its customers to reduce their use of the Company’s services, which could harm the Company’s revenue and business prospects. In addition, the Company’s revenue may be adversely affected by un-captured usage, in the event that the Company’s system is “hacked”, resulting in transmissions that may not be detected by its billing system. Further, the increase in traffic as a result of such unauthorized “hacking” may slow or overload the Company’s transmission network, thereby adversely affecting the overall quality of services which the Company provides to its paying customers. If the Company incurs any such losses or liabilities, the Company’s operating results, financial condition, business and prospects may be adversely affected.

The development of high-quality products requires substantial up-front expenditures

Consumer preferences for games are usually cyclical and difficult to predict, and even the most successful titles remain popular for only limited periods of time, unless refreshed with new content or otherwise enhanced. In order to remain competitive, the Company must continuously develop new products or enhancements to existing products. The amount of lead time and cost involved in the development of high-quality products is increasing, and the longer the lead time involved in developing a product and the greater the allocation of financial resources to such product, the more critical it is that the Company accurately predicts consumer demand for such product. If its future products do not achieve expected consumer acceptance or generate sufficient revenues upon introduction, the Company may not be able to recover the substantial development and marketing costs associated with those products.

Rapid technological changes

Rapid technological changes may increase competition and render the Company’s technologies, products or services obsolete or cause the Company to lose market share. The online gaming software industry is subject to rapid and significant changes in technology, frequent new service introductions and evolving industry standards. Such changes may adversely affect the Company’s revenue. There can be no assurance that the Company can improve the features, functionality, reliability and responsiveness of infrastructure. Similarly, the technologies that the Company employs may become obsolete or subject to intense competition from new technologies in the future. If the Company fails to develop, or obtain timely access to, new technologies, or if it fails to obtain the necessary licenses for the provision of services using these new technologies, the Company may lose market share, and its results of operations would be adversely affected.

Failure to license necessary third party software for use in the Company’s products and services, or failure to successfully integrate third party software, could cause delays or reductions in the Company’s sales, or errors or failures of the Company’s service

The Company licenses third party software that it incorporates into its products and services. In the future, the Company might need to license other software to enhance its products and meet evolving customer requirements. These licenses may not continue to be available on commercially reasonable terms or at all. Some of this technology could be difficult to replace once integrated. The loss of, or inability to obtain, these licenses could result in delays or reductions of the Company’s applications until it identifies, licenses and integrates or develops equivalent software, and new licenses could require the Company to pay higher royalties. If the Company is unable to successfully license and integrate third party technology, it could experience a reduction in functionality and/or errors or failures of the Company’s products, which may reduce demand for its products and services.

Third-party licenses may expose the Company to increased risks, including risks associated with the integration of new technology, the impact of new technology integration on existing technology, open source software disclosure risks, the diversion of resources from the development of the Company’s own proprietary technology, and inability to generate revenue from new technology sufficient to offset associated acquisition and maintenance costs.

Proprietary protection and intellectual property disputes

Protection of the trade secrets, copyrights, trademarks, domain names and other product rights of the Company are important to its success. The Company protects its intellectual property rights by relying on trademark protection, common law rights as well as contractual restrictions. However, many of the Company’s proprietary technologies are currently unpatented nor has the Company made any applications for such intellectual property registrations and has no present intention to do so in the near future. As such, the current steps that it takes to protect its intellectual property, including contractual arrangements, may not be sufficient to prevent the misappropriation of its proprietary information or deter independent development of similar technologies by others.

Should the Company decide to register its intellectual property in one or more jurisdictions, it will be an expensive and time consuming process and there is no assurance that the Company will be successful in any or all of such jurisdictions. The absence of registered intellectual property rights, or the failure to obtain such registrations in the future, may result in the Company being unable to successfully prevent its competitors from imitating its solutions or using some or all of its processes. Even if patents and other registered intellectual property rights were to be issued to the Company, its intellectual property rights may not be sufficiently comprehensive to prevent its competitors from developing similar competitive products and technologies.

With the Company’s acquisition of WinView, it acquired WinView’s intellectual property portfolio. WinView’s patent portfolio is an important asset to the Company and the Company’s patent strategy with respect to the WinView patent portfolio is to pursue the broadest possible patent protection of its technologies in selected jurisdictions. Litigation may be necessary to enforce the intellectual property rights of the Company. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity or diversion of management and technical resources, any of which could adversely affect the business and operating results of the Company. Moreover, due to the differences in foreign patent, trademark, copyright and other laws concerning proprietary rights, the Company’s intellectual property may not receive the same degree of protection in foreign countries as it would in Canada or the United States. The Company’s failure to possess, obtain or maintain adequate protection of its intellectual property rights for any reason could have a material adverse effect on its business, results of operations and financial condition.

The Company may also face allegations that it has infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including from its competitors and former employers of the Company’s personnel. Whether a product infringes a patent or other intellectual property right involves complex legal and factual issues, the determination of which is often uncertain. As the result of any court judgment or settlement, the Company may be obligated to cancel the launch of a new game or product offering, cease offering a game or certain features of a game, pay royalties or significant settlement costs, purchase licenses or modify the Company’s software and features, or develop substitutes. The Company has already had communication from trade mark trolls in this respect. At this time these actions are a nuisance rather than a quantifiable business risk.

In addition, the Company uses open source software in its games and expects to continue to use open source software in the future. From time to time, the Company may face claims from companies that incorporate open source software into their products, claiming ownership of, or demanding release of, the source code, the open source software and/or derivative works that were developed using such software, or otherwise seeking to enforce the terms of the applicable open source license. These claims could also result in litigation, require the Company to purchase a costly license or require the Company to devote additional research and development resources to change its games, any of which would have a negative effect on the Company’s business and operating results.

System failures, delays and other technical problems

System failures, delays and other technical problems could harm the Company’s reputation and business, causing the Company to lose customers and expose it to customer liability. The Company may experience failures or interruptions of its systems and services, or other problems in connection with its operations as a result of, amongst other things:

	●	damage to, or failure of, its computer software or hardware or its infrastructure and connections;
	●	data processing errors by its systems;
	●	computer viruses or software defects; and
	●	physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events.

If the Company cannot adequately ensure that its network services perform consistently at a high level or otherwise fail to meet its customers’ expectations:

	●	it may experience damage to its reputation, which may adversely affect its ability to attract or retain customers who participate in online esports tournaments;
	●	its operating expenses or capital expenditures may increase as a result of corrective actions that the Company must perform; or
	●	one or more of its significant contracts may be terminated early, or may not be renewed.

Transmission of User Data

The Company transmits and stores a large volume of data. The Company is subject to legislation and regulations on the collection, storage, retention, transmission and use of user-data that it collects. The Company’s efforts to protect the personal information of its users, partners and clients may be unsuccessful due to the actions of third parties, software bugs or technical malfunctions, employee error or malfeasance, or other factors. In addition, third parties may attempt to fraudulently induce employees or users to disclose information in order to gain access to the Company’s data, users’ data, partners’ data or clients’ data. If any of these events occur, users’, partners’ or clients’ information could be accessed or disclosed improperly. Any incidents involving the unauthorized access to or improper use of the information of users or incidents involving violation of the Company’s terms of service or policies could damage the Company’s reputation and brands and diminish its competitive position. Moreover, affected users, clients or governmental authorities could initiate legal or regulatory action against the Company in connection with such incidents, which could cause the Company to incur significant expense and liability or result in orders or consent decrees forcing the Company to modify its business practices and remediate the effects of any such incidents of unauthorized access or use. Any of these events could have a material adverse effect on the Company’s prospects, businesses, financial condition or results of operations.

Data collection risks

The Company partially relies on data captured by Stream Hatchet for its revenues and for assessing the performance of some of its brands. Capturing accurate data is subject to various limitations. For example, Stream Hatchet may need to collect certain data from mobile carriers or other third parties such as various viewing platforms, which limits the Company’s ability to verify the reliability of such data. Further, Stream Hatchet may not be able to collect any data from third parties at all. Failure to capture accurate data or an incorrect assessment of this data may materially harm business and operating results.

Mobile gaming and the free-to-play business model

Eden Games is partially reliant on the free-to-play business model where monetization is through in-app purchases. The risks of that business model include the dependence on a relatively small number of consumers for a significant portion of revenues and profits from any given game, including the current title, Gear.Club. If the Company increases its reliance on the free-to-play model, the Company may be exposed to increased risk. For example, the Company may invest in the development of new free-to-play interactive entertainment products that do not achieve significant commercial success, in which case the Company’s revenues from those products likely will be lower than anticipated and the Company may not recover its development costs. Further, if: (1) the Company fails to offer monetization features that appeal to its consumers; (2) these consumers do not continue to play the free-to-play games or purchase virtual items at the same rate; (3) the Company’s platform providers make it more difficult or expensive for players to purchase the Company’s virtual currency; or (4) the Company cannot encourage significant additional consumers to purchase virtual items in its free-to-play games, the Company’s business may be negatively impacted.

Global economy

The business of the Company is subject to general economic conditions. Adverse changes in general economic and market conditions could adversely impact demand for the Company’s products, prices, revenue, operating costs, results of financing efforts, and the timing and extent of capital expenditures.

Foreign operational risks

A significant portion of the business and operations of the Company is conducted in foreign jurisdictions, including the United States, Spain and France. As such, the Company’s business and operations may be adversely affected by changes in foreign government policies and legislation or social instability and other factors which are not within the control of the Company, including, but not limited to, renegotiation or nullification of existing contracts or licenses, changes in policies, regulatory requirements or the personnel administering them, economic sanctions, risk of terrorist activities, revolution, border disputes, implementation of tariffs and other trade barriers and protectionist practices, volatility of financial markets, labour disputes and other risks arising out of foreign governmental sovereignty over the areas in which the Company’s business is conducted. The Company’s operations may also be adversely affected by laws and policies of such foreign jurisdictions affecting foreign trade, taxation and investment.

If the Company’s operations are disrupted and/or the economic integrity of its contracts is threatened for unexpected reasons, its business may be harmed. In the event of a dispute arising in connection with the Company’s operations in a foreign jurisdiction where the Company conducts or will conduct its business, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of Canada or enforcing Canadian judgments in such other jurisdictions. The Company may also be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. Accordingly, the Company’s activities in foreign jurisdictions could be substantially affected by factors beyond their control, any of which could have a material adverse effect on the Company. The Company believes that its management is sufficiently experienced to manage these risks.

Regulation

The Company is subject to general business regulations and laws as well as regulations and laws specifically governing the internet, gaming, e-commerce and electronic devices. Existing and future laws and regulations may impede the Company’s growth or strategy. These regulations and laws cover taxation, privacy, data protection, pricing, content, copyrights, distribution, mobile communications, consumer protection, web services, wagering, the provision of online payment services, websites and the characteristics and quality or products and services. Unfavourable changes in regulations and laws could decrease demand for the Company’s events, online offering and merchandise, increase its cost of doing business or otherwise have a material adverse effect on the Company’s reputation, popularity, results of operations and financial condition.

The Company has never paid dividends and may not do so in the foreseeable future

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

The market price for Common Shares has been volatile in the past, and may be subject to fluctuations in the future

The market price of the Common Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company’s control. This volatility may affect the ability of holders of Common Shares to sell their securities at an advantageous price. Market price fluctuations in the Common Shares may be due to the Company’s operating results failing to meet expectations of securities analysts or investors in any period, downward revision in securities analysts’ estimates, adverse changes in general market conditions or economic trends, acquisitions, dispositions or other material public announcements by the Company or its competitors, along with a variety of additional factors. These broad market fluctuations may adversely affect the market price of the Common Shares.

Financial markets historically at times experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the Common Shares may decline even if the Company’s operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue, the Company’s operations could be adversely impacted and the trading price of the Common Shares may be materially adversely affected.

Emerging diseases, like COVID-19, may adversely affect the Company’s operations, suppliers, or customers

Emerging diseases, like COVID-19, and government actions to address them, may adversely affect the Company’s operations, suppliers, or customers. The COVID-19 pandemic continues to evolve rapidly and, as a result, it is difficult to accurately assess its continued magnitude, outcome and duration, but it could:

	●	worsen economic conditions, which could negatively impact access to capital;
	●	reduce consumer spending;
	●	limit the Company’s employees from travelling which could affect the execution of the Company’s business plan given the Company is multi-jurisdictional; or
	●	result in governmental regulation adversely impacting the Company’s business

all of which could have a material adverse effect on the Company’s business, financial condition and results of operations, which could be rapid and unexpected.

Item 5.

DIVIDENDS

5.1

Dividends

The Company has not paid any dividends since its incorporation. Any determination to pay any future dividends will remain at the discretion of the Board and will be made based on the Company’s financial condition and other factors deemed relevant by the Board. There are currently no restrictions on the ability of the Company to pay dividends except as set out under the Company’s governing statute.

Item 6.

DESCRIPTION OF SHARE CAPITAL

The Company is authorized to issue an unlimited number of Common Shares and an unlimited number of preference shares (“Preference Shares”).

6.1

Common Shares

As of the date of this AIF, 15,543,309 Common Shares were issued and outstanding. The Common Shares are the only class of shares currently issued by the Company, and the only equity and voting securities of the Company. The holders of Common Shares are entitled to dividends, subject to the rights of holders of any other class of shares of the Company, if, as and when declared by the Board, to one vote per share at meetings of the shareholders of the Company and, subject to the rights of holders of any other class of shares of the Company, to share, on a pro rata basis with the other holders of Common Shares, the net assets of the Company, upon liquidation, dissolution or winding up of the Company. The Common Shares are not subject to call or assessment nor do they carry any pre-emptive or conversion rights. There are no provisions attached to such shares for redemption, purchase for cancellation, surrender or sinking or purchase funds.

6.2

Preference Shares

As of the date hereof, no Preference Shares are issued and outstanding. Holders of Preference Shares shall not be entitled to receive notice of, or attend or vote at, any meeting of shareholders of the Company except as required by law or as provided in the special rights and restrictions attached to any series of Preference Shares. Holders of Preference Shares shall be entitled, on the distribution of assets or property of the Company on the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or on any other distribution of assets or property of the Company among its shareholders for the purpose of winding up its affairs, to receive, before any distribution or payment is made to holders as set out in the special rights and restrictions attached to the applicable series of Preference Shares. After payment to holders of Preference Shares of the amounts so payable to them, they shall not, as such, be entitled to share in any further distribution of assets or property of the Company except as specifically provided in the special rights and restrictions attached to any particular series of Preference Shares.

6.3

Warrants and Finder Warrants

As of the date of this AIF, the Company has outstanding Warrants and Finder Warrants to purchase 5,189,139 Common Shares. The following table summarizes the Warrants and Agent Options outstanding as of the date of this AIF:

Date of Issue

Type of Warrant / Option

Number of
Warrants / Options

Exercise Price
(CDN$)

Expiry Date

October 18, 2019 – August 31, 2021

Common Share purchase warrant⁽¹⁾

445,982

7.50

July 8, 2024

October 18, 2019 – August 31, 2021

Common Share purchase warrant⁽¹⁾

401,624

7.50

July 25, 2024

August 20, 2020 – August 31, 2021

Common Share purchase warrant⁽¹⁾

230,800

7.50

August 8, 2024

December 18, 2019

Common Share purchase warrant⁽²⁾

29,066

December 20, 2022

March 20, 2020 – May 27, 2020

Common Share purchase warrant⁽⁴⁾

222,212

13.50

March 20 – May 27, 2023

May 8, 2020

Warrants (Frankly)⁽⁵⁾

123,159

10.50

March 13, 2022

November 20, 2020

Common Share purchase warrant⁽⁶⁾

224,719

US$15

November 20, 2022

January 8, 2021

Common Share purchase warrant⁽⁷⁾

1,072,640

US$15

August 19, 2023

January 8, 2021

Common Share purchase warrant⁽⁸⁾

796,147

US$15

January 8, 2024

January 22, 2021

Common Share purchase warrant⁽⁹⁾

522,898

US$15

January 22, 2024

February 24, 2021

Common Share purchase warrant⁽¹⁰⁾

1,058,227

US$15

February 24, 2024

February – March , 2021

Common Share purchase warrant⁽¹¹⁾

49,999

US$15

August 19, 2023

March 18, 2021

Common Share purchase warrant⁽¹¹⁾

11,666

US$15

September 15, 2023

Notes:

(1) Common Share purchase warrants issued on conversion of the 2019 Convertible Debentures. Each warrant is exercisable into a Common Share at an exercise price of $7.50 per share until either July 8, 2024, July 25, 2024 or August 8, 2024.

(2) Common Share purchase warrants issued under the December 18, 2019 non-brokered private placement. On December 18, 2019, the Company closed a non-brokered private placement of up to 266,666 units at a price of CDN$18.75 per unit for gross proceeds of up to CDN$5,000,000. A total of 58,133 units were issued for cash proceeds of CDN$550,000 and CDN$540,000 issued to creditors to settle amounts owing on the closing of this first tranche of the Offering. Each unit consisted of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one additional share of the Company for a period of 36 months from the date of issuance at a price of CDN$27.00 per share. Of the CDN$1,090,000 raised, CDN$100,000 were subscribed to by a director of the Company.

(3) Common Share purchase warrants, Agent’s Options and Stock Options which were exchanged in connection to Engine’s acquisition of UMG. On November 6, 2019, the Company signed a definitive agreement to acquire UMG. The transaction closed on December 31, 2019 and was carried out by way of a plan of arrangement under the Business Corporations Act (Alberta). Pursuant to the UMG Arrangement, Engine acquired all of the issued and outstanding UMG common shares, by way of a plan of arrangement, based on an exchange ratio of 0.0428803 (0.0643205 on a pre-August 2020 Consolidation basis) of a Common Share for each UMG common share held by the former UMG shareholders. In total, the Company issued 288,560 Common Shares in exchange for the UMG securities exchanged pursuant to the transaction, including the securities issued pursuant to the UMG private placement (a total of 54,157 of these Common Shares were issued to the UMG private placement shareholders and the remainder were issued to the UMG shareholders). In addition, each outstanding option and warrant to purchase a UMG common share was exchanged for an option or warrant, as applicable, to purchase an Engine Common Share, based upon the exchange ratio. This transaction was approved at the special meeting of UMG shareholders held on December 17, 2019 and the final order regarding the Arrangement was granted by the Court of Queen’s Bench of Alberta on December 18, 2019. The plan of arrangement was completed on December 31, 2019.

(4) Common Share purchase warrants issued under the March 20 – May 27, 2020 non-brokered private placement. On March 25, 2020, the Company announced it closed the first tranche of its non-brokered private placement of up to 444,444 units at a price of CDN$9.00 per unit for gross proceeds of up to CDN$4,000,000. Each unit consisted of one Common Share of Engine and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one additional Common Share of Engine for a period of 36 months from the date of issuance at a price of CDN$13.50 per share. Aggregate proceeds of CDN$500,000 were raised and 55,555 units were issued on the closing of the first tranche of the offering. On March 30, 2020, the Company announced it closed the second tranche of the offering, for aggregate gross proceeds of CDN$844,370 and 93,818 units were issued on the closing of the tranche. On March 31, 2020, the Company announced it closed an additional tranche of the offering, for aggregate gross proceeds of CDN$310,000 and 34,444 units were issued on the closing of the tranche. On May 28, 2020, the Company announced it closed the final tranche of the offering, for aggregate gross proceeds of CDN$2,344,890 and 260,609 units were issued on the closing of this final tranche.

(5) Common Share purchase warrants and options which were exchanged in connection to Engine’s acquisition of Frankly. On May 8, 2020, the Company acquired all of the issued and outstanding shares of Frankly in exchange for consideration of one Engine Common Share for each Frankly common share acquired, pursuant to a court approved plan of arrangement, resulting in the issuance of 2,258,215 Common Shares upon closing the business combination described herein. The Company also concurrently indirectly acquired WinView, pursuant to a statutory merger under the laws of the State of Delaware, with WinView securityholders receiving an aggregate of 1,759,997 Common Shares of Engine as well as certain contingent consideration. All outstanding convertible securities of Frankly were exchanged for equivalent securities of Engine (other than outstanding warrants to purchase common shares of Frankly, which will remain outstanding and have the terms of such securities adjusted to reflect the exchange ratio).

(6) Common Share purchase warrants issued in connection with the Standby Debentures. See Note (4) of “Prior Sales” below for further details.

(7) Common Share purchase warrants issued in connection with the Debt Settlements. See Note (15) of “Prior Sales” below for further details.

(8) Common Share purchase warrants issued in connection with the December 2020 Private Placement. See Note (16) of “Prior Sales” below for further details.

(9) Common Share purchase warrants issued in connection with the second tranche of the December 2020 Private Placement. See Note (17) of “Prior Sales” below for further details.

(10) Common Share purchase warrants issued in connection with the final tranche of the December 2020 Private Placement. See Note (17) of “Prior Sales” below for further details.

(11) Common Share purchase warrants issued in connection with the conversion of the 2020 Convertible Debentures. See Notes (1) and (19) of “Prior Sales” below for further details.

6.4

Awards

The Company has adopted an omnibus equity incentive plan (the “Omnibus Plan”) in accordance with the policies of the TSXV which provides that the Board may from time to time, in its discretion and in accordance with TSXV requirements, grant to directors, officers, employees and consultants of the Company and/or its affiliates (“Eligible Participants”), Common Share purchase options (“Options”), restricted share units (“RSUs”), and deferred share units (“DSUs”, and collectively with the Options and RSUs, the “Awards”).

Under the policies of the TSXV, except in certain circumstances, Awards granted under the Omnibus Plan are not required to have a vesting period, although the directors may continue to grant Awards with vesting periods, as the circumstances require. The Omnibus Plan authorizes the Board to grant Awards to Eligible Participants on the following terms:

1.	Under the Omnibus Plan, the total number of Common Shares reserved and available for grant and issuance pursuant to Options shall not exceed 10% of the issued and outstanding Common Shares.

2.	For so long as the Company is listed on the TSXV or on another exchange that 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 and DSUs together shall be an aggregate of 1,548,174 Common Shares.

3.	The aggregate number of Common Shares for which Awards may be issued to any one participant in any 12-month period shall not exceed 5% of the outstanding Common Shares, unless the Company obtains disinterested shareholder approval as required by the policies of the TSXV. The aggregate number of Common Shares for which Awards may be issued to any one consultant within any 12-month period shall not exceed 2% of the outstanding Common Shares, calculated on the date an Award is granted to the consultant. The aggregate number of Common Shares for which Options may be issued to any persons retained to provide Investor Relations Activities (as defined by the TSXV) within any 12-month period shall not exceed 2% of the outstanding Shares, calculated on the date an Option is granted to such persons.

4.	Unless disinterested shareholder approval as required by the policies of the TSXV is obtained: (i) the maximum number of Common Shares for which Awards may be issued to insiders of the Company (as a group) at any point in time shall not exceed 10% of the outstanding Common Shares; and (ii) the aggregate number of Awards granted to insiders of the Company (as a group), within any 12-month period, shall not exceed 10% of the outstanding Common Shares, calculated at the date an Award is granted to any insider.

5.	The Board may not grant Awards to Directors if, after giving effect to such grant of Awards, the aggregate number of Common Shares issuable to Directors, at the time of the grant, would exceed 1% of the total issued and outstanding Common Shares on a non-diluted basis, and within any one financial year of the Corporation, (A) the aggregate fair value on the grant date of all Options granted to any one Director shall not exceed $100,000, and (B) the aggregate fair market value on the grant date of all Awards (including, for greater certainty, the fair market value of the Options) granted to any one Director shall not exceed $150,000; provided that such limits shall not apply to (i) Awards taken in lieu of any cash retainer or meeting director fees, and (ii) a one-time initial grant to a Director upon such Director joining the Board.

6.	All Awards granted under the Omnibus Plan are non-transferable in any manner, including assignment, except as may be permitted by the Board (or the designate committee of the Board), or as specifically provided in the agreement for an Award granted under the Omnibus Plan.

The Omnibus Plan was approved by shareholders of the Company at a meeting held on October 6, 2021, which amends and restates the equity incentive plan which was previously established as of July 15, 2020. As of August 31, 2021, there were an aggregate of 692,938 Options, nil DSUs, and 490,174 RSUs outstanding under the existing Omnibus Plan.

6.5

Debt Securities

As of the date of this AIF, the company had the following debt securities outstanding:

Type of Debt Security		Amount Outstanding as of the Date of this AIF
2019 Convertible Debentures⁽¹⁾		US$449,713
2020 Convertible Debentures⁽²⁾		US$2,000,000
EB Loan⁽³⁾		US$5,000,000

Notes:

(1)	For more information on the 2019 Convertible Debentures, see “3.2 – Three Year History – Fiscal Year Ended August 31, 2019 – Convertible Debenture Financing”.

(2)	For more information on the 2020 Convertible Debentures, see Note (1) of “Prior Sales” below.

(3)	For more information on the EB Loan, see Note (14) of “Prior Sales” below.

Item 7.

MARKET FOR SECURITIES

7.1

Trading Price and Volume

Common Shares

The Common Shares are listed and posted for trading on the TSXV and on the NASDAQ under the trading symbol “GAME”. The following table sets forth, on a monthly basis, the reported price range (which are not necessarily the closing prices) and the aggregate volume of trading of the Common Shares on the TSXV and the NASDAQ, respectively, for the most recently completed financial year ended August 31, 2021 as well as the periods up to the date of this AIF.

	TSXV (prices in Canadian dollars)			NASDAQ (prices in U.S. dollars)
Date	Price Range (high - low)	Total Volume		Price Range (high - low)	Total Volume
November 1 – 23, 2021	$5.15 – $3.81		242,980	$4.18 – $2.90		3,598,700
October 2021	$5.98 - $4.49		401,125	$4.79 – $3.65		2,361,116
September 2021	$8.82 - $4.80		643,831	$7.00 – $3.78		5,696,274
August 2021	$9.25 - $6.57		402,470	$7.36 – $5.21		3,635,158
July 2021	$15.83 - $7.55		595,264	$12.74 – $6.07		15,222,528
June 2021⁽¹⁾	$16.50 - $9.90		1,926,805	$13.40 – $8.52		5,211,631
May 2021	$12.48 - $9.35		348,078	N/A		N/A
April 2021	$14.38 - $10.00		469,615	N/A		N/A
March 2021	$14.24 - $11.00		684,613	N/A		N/A
February 2021	$14.84 - $8.90		1,417,221	N/A		N/A
January 2021	$10.90 - $9.01		311,914	N/A		N/A
December 2020	$11.00 - $8.17		406,204	N/A		N/A
November 2020	$10.35 - $7.21		403,501	N/A		N/A
October 2020	$11.76 - $9.00		496,703	N/A		N/A
September 2020	$11.74 - $8.70		378,890	N/A		N/A

Notes:

(1) The Common Shares of the Company began trading on the NASDAQ on June 17, 2021. The information presented in the table for NASDAQ for June 2021 reflects the period from June 17 – June 30, 2021.

The closing price of the Common Shares on the TSXV on November 23, 2021 was CDN$4.07. The closing price of the Common Shares on the NASDAQ on November 23, 2021 was US$3.18.

7.2

Prior Sales

During the most recently completed financial year, and as of the date of this AIF, the Company has issued the following securities that were not listed on an exchange or marketplace:

Types of Security	Date of Issue	Number of Securities/ Principal Amount		Exercise Price	Expiry Date
Convertible Debentures⁽¹⁾	August 19, 2020 – September 15, 2020	$	7,651,393	N/A	August 19, 2022 – September 15, 2022
RSUs⁽²⁾	August 13, 2020		352,335	N/A	N/A
Convertible Debentures⁽³⁾	August 25, 2020	$	3,000,000	N/A	August 25, 2022
Convertible Debentures⁽⁴⁾	October 16, 2020	$	1,050,000	N/A	October 16, 2022
Convertible Debentures⁽⁵⁾	October 16, 2020	$	1,000,000	N/A	October 16, 2022
Common Share⁽⁶⁾	October 29, 2020		2,500	N/A	N/A
RSUs⁽⁷⁾	November 3, 2020		75,944	N/A	N/A
RSUs⁽⁸⁾	November 4, 2020		241,103	N/A	N/A
Convertible Debentures⁽⁹⁾	November 20, 2020	$	950,000	N/A	November 20, 2022
Warrants⁽¹⁰⁾	November 20, 2020		224,719	US$15	November 20, 2024
Common Shares⁽¹¹⁾	November 25, 2020		66,666	N/A	N/A
Common Shares⁽¹²⁾	December 2, 2020		40,000	N/A	N/A
Common Shares⁽¹³⁾	December 3, 2020		75,944	N/A	N/A
Convertible Debentures⁽¹⁴⁾	December 2, 2020	$	1,000,000	N/A	January 5, 2022
Common Shares⁽¹⁴⁾	December 30, 2020		6,666	N/A	N/A
Common Shares⁽¹⁵⁾	January 8, 2021		1,430,186	N/A	N/A
Warrants⁽¹⁵⁾	January 8, 2021		1,072,639	US$15	August 19, 2023
Common Shares⁽¹⁶⁾	January 8, 2021		1,442,399	N/A	N/A
Warrants⁽¹⁶⁾	January 8, 2021		796,147	US$15	January 8, 2024
Common Shares⁽¹⁷⁾	January 22, 2021		979,048	N/A	N/A
Warrants⁽¹⁷⁾	January 22, 2021		522,898	US$15	January 22, 2024
Common Shares⁽¹⁸⁾	February 24, 2021		2,013,966	N/A	N/A
Warrants⁽¹⁸⁾	February 24, 2021		1,058,227	US$15	February 24, 2024
Warrants⁽¹⁹⁾	February – March, 2021		49,999	US$15	August 19, 2023
Warrants⁽¹⁹⁾	March 18, 2021		11,666	US$15	September 15, 2023
Common Shares⁽²⁰⁾	August 13, 2021		117,321	N/A	N/A

Notes:

(1) On August 19, 2020, Engine closed a first tranche of a non-brokered private placement of convertible debentures in the amount of US$5,750,000. The 2020 Convertible Debentures will mature 24 months from the date of issuance and bear interest at a rate of 5% per annum (subject to the following adjustments), payable on maturity. At the Company’s option, interest under the 2020 Convertible Debentures is payable in kind in Engine 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 Convertible 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 Convertible Debentures holders may convert all or a portion of the principal amount of the 2020 Convertible Debentures into units of the Company at a price equal to the lesser of (a) US$11.25 per unit, and (b) if such conversion occurs after a public offering of securities by the Company, a 15% discount to the public offering price, provided that such conversion price shall not be less than US$7.50 per 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 of the Company and the exercise of warrants of the Company to be issued pursuant to the conversion of the 2020 Convertible Debentures, holders of 2020 Convertible Debentures may convert such convertible debentures into units at US$7.50 per unit. Each unit is comprised of one Common Shares and one-half of one warrant, with each warrant exercisable into one Common Shares of the Company at an exercise price of US$15.00 per share for a period of three years from the issuance of the 2020 Convertible Debentures. Under certain circumstances, the Company shall be entitled to call for the exercise of any outstanding warrants in the event. On September 15, 2020, Engine closed the final tranche of 2020 Convertible Debentures in the amount of US$1,901,393.

(2) On August 13, 2020, the Company granted RSUs pursuant to the Company’s Omnibus Equity Incentive Plan to the following directors and officers in the following amounts: Tom Rogers (113,095 RSUs), Lou Schwartz (147,619 RSUs), Peter Liabotis (16,384 RSUs) Steve Zenz (14,764 RSUs), Bryan Reyhani (16,773 RSUs), Hank Ratner (11,954 RSUs), and Mike Munoz (31,746 RSUs).

(3) On August 25, 2020, Engine announced it completed the acquisition of a 20.48% interest in mobile gaming company One Up. The purchase price was satisfied with the issuance of principal amount US$3 million convertible debentures, having the same terms as the 2020 Convertible Debentures, except that references therein to US$7.50 have been changed to US$9.50.

(4) On October 16, 2020, the Company announced that it closed a first tranche of principal amount US$1,050,000 of the first US$2,000,000 draw of a US$8,000,000 stand-by convertible debenture facility. The Standby Debentures have substantially similar terms as the 2020 Convertible Debentures, as described under Note 15 above, except the following: (i) the references therein to a minimum US$7.50 conversion price have been changed to US$8.90; and (ii) the Standby Debentures are only convertible into common shares of the Company, not units.

(5) On October 16, 2020, the Company announced that it closed a principal US$1 million convertible debenture financing which as similar terms to the 2020 Convertible Debentures, as described under Note 15 above, except the references therein to US$7.50 have been changed to US$7.80.

(6) Common Shares issued on exercise of 2,500 warrants at an exercise price of CDN$9.75, issued in connection with the Frankly transaction, as described under Note (11), above.

(7) On November 3, 2020, the Company granted 75,944 RSUs to Darren Cox which will vest 30 days following the grant thereof.

(8) On November 4, 2020, the Company granted 241,103 RSUs to management of the Company which will vest over a three year period.

(9) On November 20, 2020, the Company closed a second tranche of Standby Debentures in the amount of US$950,000.

(10) Common Share purchase warrants issued in connection with the Standby Debentures (“Standby Warrants”). Each Standby Warrant is exercisable into a Common Share at an exercise price of US$15 until November 20, 2024.

(11) Common Shares issued pursuant to the vesting of RSUs.

(12) On December 2, 2020, the Company agreed to settle outstanding debt of CDN294,000 with two arm’s length creditors by issuing 40,000 Common Shares at a deemed price of CDN$7.35 per Common Share. The Common Shares are subject to a four-month hold period which will expire on April 5, 2021.

(13) Common Shares issued pursuant to the vesting of RSUs.

(14) On December 2, 2020, the Company announced that its wholly-owned subsidiaries Frankly Media LLC and Frankly have amended the existing secured credit facility with arm’s length lender EB Lender, in connection with the advance of an additional $1,000,000 under the EB Loan, which is convertible at the option of the EB Lender, at a conversion price per share of $11.25. The credit limit under the EB Loan of $5 million is now fully drawn. In connection with the amendment, the maturity date of the EB Loan has been extended from January 5, 2021 until January 5, 2022. Additionally, the Company has guaranteed the obligations under the EB Loan and has granted a security interest in favour of the EB Lender over the assets of the Company. In consideration of the extension of the maturity date, the Company has agreed to issue to the EB Lender an aggregate of 6,666 Common Shares and an amendment fee of $100,000 which forms part of the outstanding principal under the EB Loan. The Common Shares issuable will be subject to a hold period expiring four months and a day following the date of issuance, as well as restrictions on transfer under applicable securities laws.

(15) On January 8, 2021 the Company completed the Debt Settlements through the issuance of 1,430,186 units at a deemed price of US$7.50 per unit, with each unit consisting of a common share and three-quarters of a warrant, with each whole warrant exercisable into a common share at an exercise price of US$15 per share for a period of three years.

(16) On January 8, 2021 the Company closed the first tranche of the December 2020 Private Placement for aggregate gross proceeds of US$7,247,222.50 and 1,405,451 units were issued. The Company paid cash commissions to eligible finders totalling $284,989 and also issued the following securities as partial payment of commissions to finders: 36,948 units; and, 74,947 finders warrants, with each finder warrant exercisable into a common share at an exercise price of US$15.00 per share for a period of 3 years provided that: (i) if the Common Shares are listed for trading on NASDAQ, (ii) the Company completes an offering of securities under a short form prospectus for an aggregate amount of at least US$30,000,000, and (iii) the closing price of the common shares on NASDAQ is US$30.00 or greater for a period of 15 consecutive trading days, then the Company may accelerate the expiry date of the warrants to the 30^thday after the date written notice is provided to the holders.

(17) On January 22, 2021 the Company closed the second tranche of the December 2020 Private Placement for aggregate gross proceeds of US$10,540,883 and 966,296 units were issued. The Company paid cash commissions to eligible finders totalling $205,652.05 and also issued the following securities as partial payment of commissions to finders: 12,752 units; and, 40,040 finders warrants, with each finder warrant exercisable into a common share at an exercise price of US$15.00 per share for 3 years subject to the same acceleration terms described above.

(18) On February 24, 2021 the Company closed the final tranche of the December 2020 Private Placement for aggregate gross proceeds of US$15,000,000 and 2,000,000 units were issued. The Company paid cash commissions to eligible finders totalling $229,506.08 and also issued the following securities as partial payment of commissions to finders: 13,966 units; and, 44,567 finders warrants, with each finder warrant exercisable into a common share at an exercise price of US$15.00 per share for 3 years subject to the same acceleration terms described above.

(19) Warrants issued in connection with the conversion of the 2020 Convertible Debentures described under note (1), above.

(20) Common Shares issued pursuant to the vesting of RSUs.

(21) The figures in this table and in the notes thereto are presented on a post-consolidation basis (after the QT Consolidation, June 2019 Consolidation, October 2019 Consolidation, and August 2020 Consolidation) unless otherwise specified.

Item 8.

Securities subject to contractual restriction on transfer

As at the date of this AIF, the following are the securities of the Company subject to contractual restrictions on transfer:

Type of Security		Number of Common Shares Subject to Restrictions				Percentage of issued and outstanding Common Shares (Non-Diluted)
Common Shares⁽¹⁾			386,584				2.5	%

Notes:

(1) On July 2, 2021, the Company issued 386,584 Common Shares in connection with the acquisition of SideQik. The Common Shares issued for the acquisition of SideQik were subject to lock-up restrictions to be discharged 16 2/3% at 180 days from the closing date, and thereafter another 16 2/3% on the 15^th of each subsequent month with the restriction being fully liquidated at the end of the 12^thmonth.

Item 9.

DIRECTORS AND executive OFFICERS

9.1

Name, Occupation and Security Holding

At present, the directors of the Company are elected at each annual general meeting and hold office until the next annual general meeting or until his or her successor is appointed, unless his or her office is earlier vacated in accordance with the BCBCA and the articles and by-laws of the Company.

The following table and the notes thereto state the names of all directors and executive officers, all other positions or offices with the Company and its subsidiaries now held by them, their principal occupations or employment, the year in which they became directors and/or executive officers of the Company, the approximate number of Common Shares beneficially owned, directly or indirectly, by each of them, or over which they exert control or direction, and the number of options to acquire Common Shares held as of the date hereof.

Name Province/State Country of Residence and Position(s) with the Company⁽¹⁾	Principal Occupation Business or Employment for Last Five Years⁽¹⁾	Periods Served as a Director or Officer ⁽¹⁾	Number of Common Shares owned, directly or indirectly or controlled or directed⁽¹⁾⁽²⁾
Tom Rogers New York, USA Chairman and Director	Executive Chairman and Director of the Company since May 2020. Chairman and CEO of TRget Media, LLC, a media investment and operations advisory firm since June 2003.	May 2020		221,837
Louis Schwartz⁽⁶⁾ Georgia, USA Chief Executive Officer and Director	Co-CEO of the Company from May 2020 to November 2020, CEO of the Company since November 2020. Director of the Company since July 2020.	July 2020		223,443
Hank Ratner^(3)(4)(5) New York, USA Director	Director of the Company. CEO of investment firm and strategic consulting practice Ratner Ventures. Director of GF Sports and Entertainment, GF Events.	July 2020		114,193
Michael Munoz, New Jersey, USA Chief Financial Officer	Chief Financial Officer of the Company from May 2020 to present; Chief Financial Officer of Frankly from April 2018 to May 2020; Controller of Frankly from January 2016 to April 2018; Assistant Controller of Frankly from September 2015 to January 2016.	May 2020		18,558
Lawrence Rutkowski^(3)(4)(5)(6) California, USA Director	Director of the Company. President & owner of L&S Investments, L.L.C. Director of Stanley M. Proctor Co.	January 2021		10,048
Lori Conkling⁽⁴⁾⁽⁶⁾ New York, New York, USA	Director of the Company. Global Head of TV & Film Partnerships at YouTube. Fuqua School of Business Alumni Council at Duke University. Board of the T. Howard Foundation and Teach for America.	July 2021		523
Rudolph Cline-Thomas⁽³⁾ New York, New York, USA	Director of the Company. Founder and Managing Partner of venture fund MASTRY. Founder of commercial real estate investment firm Mastry Properties. Serves on Salesforce Global Advisory Board (NYSE: CRM). Strategic advisor to Gucci. Board advisor for Jumia Technologies (NYSE: JMIA) and Zuora (NYSE: ZUO).	July 2021		562

Notes:

(1)

Information has been furnished by the directors and executive officers individually or from www.sedi.ca.

(2)

The information as to shares beneficially owned, directly or indirectly, or over which control or direction is exercised, is based upon information furnished to the Company by the respective directors and executive officers as at the date hereof and does not include any convertible securities held by such person.

(3)

Member of the Audit Committee.

(4)

Member of the Nominating and Governance Committee.

(5)

Member of the Compensation Committee.

(6)

Member of the Patent Committee.

The directors and executive officers of the Company listed above, as a group, beneficially owned, control or direct, directly or indirectly, 589,164 Common Shares as of the date hereof.

9.2

Orders, Penalties and Bankruptcies

To the knowledge of the Company, except as disclosed hereinafter, as of the date hereof:

(a)

no director or executive officer of the Company is, or has been, within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company) that:

(i)

was subject to an order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer, or

(ii)

was subject to an order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;

(b)

no director or executive officer of the Company or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:

(i)

is, or has been, within 10 years before the date hereof, a director or executive officer of any company (including the Company) that, while such director or executive officer was acting in that capacity, or within a year of such director or executive officer ceased to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(ii)

has, within ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such director, executive officer or shareholder.

For the purposes of the above section (a), the term “order” means

(a)

a cease trade order;

(b)

an order similar to a cease trade order; or

(c)

an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days.

To the knowledge of the Company, as of the date hereof, no director, executive officer or shareholder holding a sufficient number of securities of the Company to materially affect the control of the Company has been subject to:

(a)

any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b)

any other penalties or sanctions imposed by a court or regulatory body.

June 2020 Cease Trade Order

On June 22, 2020, the OSC issued a temporary cease trade order against the Company for failure to file its second quarter interim financial statements for the six-month period ended February 29, 2020, the related management’s discussion and analysis and certificates of its CEO and CFO (the “Q2 Filings”). On July 8, 2020, the Company filed the Q2 Filings. The OSC lifted the cease trade order on July 10, 2020. The Company was reinstated for trading on the TSXV and the Common Shares resumed trading on July 27, 2020. At the time, Bryan Reyhani, Steven Zenz, Louis Schwartz, Tom Rogers and Michael Munoz were directors or officers of the Company.

9.3

Audit Committee Disclosure

National Instrument 52-110 of the Canadian Securities Administrators (“NI 52-110”) requires the Company to disclose annually in its AIF certain information concerning the constitution of its Audit Committee and its relationship with its independent auditor.

The Audit Committee Charter

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

The Audit Committee has the general responsibility to review and make recommendations to the Board on the approval of the Company’s annual and interim financial statements, the Management Discussion and Analysis and the other financial information or disclosure of the Company. More particularly, it has the mandate to:

(i)	oversee all the aspects pertaining to the process of reporting and divulging financial information, the internal controls and the insurance coverage of the Company;

(ii)	oversee the implementation of the Company’s rules and policies pertaining to financial information and internal controls and management of financial risks and to ensure that the certifications process of annual and interim financial statements is conformed with the applicable regulations; and

(iii)	evaluate and supervise the risk control program and review all related party transactions.

The Audit Committee ensures that the external auditors are independent from management. The Audit Committee reviews the work of outside auditors, evaluates their performance, evaluates their remuneration and makes recommendations to the Board. The Audit Committee also authorizes non-related audit work. A copy of the Charter of the Audit Committee is appended hereto as Schedule “A”.

Composition of the Audit Committee

The Audit Committee is currently comprised of the following members of the Board:

Name	Position	Independent⁽¹⁾	Financial Literacy⁽¹⁾
Lawrence Rutkowski⁽²⁾	Director	Yes	Financially literate
Hank Ratner	Director	Yes	Financially literate
Rudolph Cline-Thomas	Director	Yes	Financially literate

Notes:

(1)	Terms have their respective meanings ascribed in NI 52-110.
(2)	Effective January 8, 2021, Peter Liabotis resigned as a director of the Company and was replaced by Lawrence Rutkowski, who also joined the Company’s Audit Committee. Effective February 26, 2021, Steven Zenz resigned as a director of the Company and was replaced by Lawrence Rutkowski as chairman of the Audit Committee.

Relevant Education and Experience

The following table describes the education and experience of each Audit Committee member that is relevant to the performance of his responsibilities as an Audit Committee member:

Lawrence Rutkowski

Lawrence R. Rutkowski, is an accomplished senior executive of major corporations with more than 30 years of experience spanning finance, media, retail, private equity, online publishing, and technology. Leveraging extensive experience identifying strategic global opportunities and implementing international expansions, Mr. Rutkowski is a valuable asset for a company requiring advisory related to international operations, accounting, forecasting, internal controls, or financial analysis. His broad areas of expertise include strategic planning, managerial finance, debt financing, private equity, M&A, and investor relations. Mr. Rutkowski is a chief financial officer who leads management information system strategies, navigates U.S. Securities and Exchange Commission (“SEC”) filings, and drives M&A activities (a leader on over 100 business transactions). Currently, Mr. Rutkowski is an esteemed corporate advisor and board member of several corporations. Since December 2013, Mr. Rutkowski has served a member of the board of the Stanley M. Proctor Company in Twinsburg, OH. He has also been a key corporate advisor to the chief executive officers of boards of directors of Goal Structured Solutions in San Diego, CA and Logic Source in Norwalk, CT.

Throughout his executive career, Mr. Rutkowski has held leadership positions with PETCO Animal Supplies, Inc., Warnaco, Inc., Primedia, NBC/General Electric, The Walt Disney Company, and NCR. At each of these companies, he was instrumental in enhancing their strategic planning and process accountability. He has been responsible for implementing turnaround plans that resulted in significant revenue growth, leveraging digital internet platforms to drive sales and market share, and leading a major company from bankruptcy to profitability.

Mr. Rutkowski has directed turnarounds resulting in increased stock price by more than 700% and a doubling of employees, in addition to over 100 strategic deal and business transactions. In addition, Mr. Rutkowski has been a chief financial officer to public companies listed on the NASDAQ and the New York Stock Exchange (“NYSE”). He is well-versed in managing SEC reporting matters, along with working with major investment banks and other banking institutions. He also has worked closely with the largest U.S. private equity firms. Along with extensive experience with various consumer-facing channels, such as media, digital content, publishing, consumer packaged goods, and retail, his background also includes e-commerce and omni-channel expertise.

An industry leader, Mr. Rutkowski specializes in leading enterprises through international expansions and developing new sales opportunities. At Warnaco, he led the expansion of a domestic company to a global company.

As a result of these business transactions, new revenues increased significantly and facilitated the increase in international sales to over 35% of the business. While at the Walt Disney Company, Mr. Rutkowski was instrumental in the launch/acquisition of animation studios around the world, developed international media distribution channels, and led expansions throughout Asia. At PETCO Animal Supplies, Inc., he developed an austerity program reducing fixed expenses by more than USD$60 million per year, led an acquisition of a USD$225 million e-commerce platform, and facilitated expansion plans in Mexico. Mr. Rutkowski attained his master in business administration degree from Michigan State University and his literature, science and arts/education degrees from the University of Michigan.

Hank Ratner

Mr. Ratner has been a director of the Board since July 2020. Mr. Ratner has more than three decades of experience holding top executive positions at leading sports, entertainment, media and technology companies. He currently serves as CEO of investment firm and strategic consulting practice Ratner Ventures. He has ownership interests in a portfolio of early stage and established businesses. Mr. Ratner was a member of the board of directors of MSG Networks (NYSE: MSGN) until its acquisition in July 2021 by Madison Square Garden Entertainment Corp. He is a current member of the board of directors of GF Sports and Entertainment, GF Events, and was Co-Chairman of WinView prior to the Transaction.

Mr. Ratner spent nearly 30 years at Cablevision Systems Corporation (“Cablevision”) and its affiliated companies until the sale of Cablevision to Altice in 2016. During that time, Mr. Ratner served as Vice Chairman of Cablevision, President and CEO of The Madison Square Garden Company (“MSG”) and Chief Operating Officer of AMC Networks (formerly Rainbow Media) where he helped lead each company through unprecedented periods of dynamic and enduring growth. From 2016 to 2018, Mr. Ratner served as President and CEO of Independent Sports and Entertainment, overseeing its transition from Relatively Sports into an integrated sports, media, entertainment and management company representing more than 300 NBA, NFL and MLB athletes.

Mr. Ratner was with MSG from 2003 to 2015 serving as President and CEO from 2009 to 2014 and Vice Chairman the rest of his tenure. While at MSG, Mr. Ratner managed some of the world’s most iconic venues and brands. The portfolio of properties included the legendary Madison Square Garden arena, The Theater at Madison Square Garden, Radio City Music Hall, The Radio City Rockettes, the Radio City Christmas Spectacular, the Chicago Theater, the Wang Theater in Boston and professional sports teams the New York Knicks, New York Rangers, and New York Liberty. Mr. Ratner spearheaded MSG’s strategic initiatives and acquisitions, including bringing multiple venues such as the Beacon Theatre in New York City and The Forum in Inglewood under MSG management, and securing a ground-breaking marketing partnership with JPMorgan Chase as the company’s first-ever Marquee Partner. In addition, Mr. Ratner oversaw the historic $1 billion transformation of the iconic Madison Square Garden arena, served as alternate governor to the NBA and NHL on behalf of the Knicks and Rangers from 2003 to 2015 and helped create the Billy Joel franchise, a record setting residency at Madison Square Garden. Mr. Ratner also managed the company’s media portfolio, including MSG Network and MSG Plus, two of the nation’s largest and most award-winning regional sports and entertainment networks, and national music network Fuse.

As Vice Chairman for Cablevision from 2002 until 2016, Mr. Ratner worked closely with the executive team to help set corporate direction, and oversee major business partnerships and negotiations. Mr. Ratner helped guide the company through several strategic transactions, including the acquisition of MSG, securing significant partnerships in various cable networks with Liberty Media, NBC, Fox and MGM, and the spin-offs of MSG in 2010 and AMC Networks in 2011, both now standalone, public companies. Prior to serving as Vice Chairman of Cablevision, Mr. Ratner spent 15 years at AMC Networks in various positions including as Chief Operating Officer overseeing the operations of AMC, IFC, Bravo, WE tv, 10 Fox regional sports networks, two national sports networks, five News 12 regional news networks, Rainbow Advertising Sales Corporation, and IFC Films, among others.

Mr. Ratner was the founder of the Garden of Dreams Foundation, the non-profit that works closely with all areas of MSG and MSG Networks to positively impact the lives of children facing obstacles. Since its inception in 2006, the Foundation has provided unforgettable experiences for over 350,000 children and their families, with access and interaction with events and celebrities at MSG and its properties. Mr. Ratner was Chairman from the Foundation’s inception in 2006 until 2014 and remains a Board Member. Mr. Ratner is currently a member of the Board of Advisors of North Shore University Hospital, the flagship hospital of the Northwell Health System, and is also an Executive in Residence at The Zarb School of Business at Hofstra University. Mr. Ratner began his career as a corporate lawyer with the law firm Sullivan & Cromwell.

Rudolph Cline-Thomas

Mr. Cline-Thomas has served as director of the Board since July 2021. He is the Founder and Managing Partner of Mastry, a multistage venture fund, which counts world-class athletes, top CEOs, and influencers as limited partners to assist in creating top-tier platform-building opportunities. Mastry has made early investments in more than 80 companies including Robinhood, Marqeta, Grab, Dapper Labs, Allbirds, Uber, PagerDuty, Zoom, Cloudflare, Jumia, Qualtrics, Zuora, Hippo, HIMS, Datadog, GOAT, and Klarna.

In 2021, Mr. Cline-Thomas launched commercial real estate investment firm Mastry Properties, a division of Mastry, to invest in developments that seek to empower the communities in which they are located. The first portfolio investment is a $1 billion joint venture with Tishman Speyer to develop the first phase of the Harvard Enterprise Research Campus (ERC), located in Allston, Massachusetts. Harvard ERC is a 900,000-square-foot future hub of innovation comprising a science lab, apartment units, hotel, and a conference center.

Leveraging his deep relationships in the worlds of sports and entertainment, Mr. Cline-Thomas was the mastermind and Executive Producer of the 2021 Sports Emmy-nominated “The Scheme,” HBO’s riveting look at the underbelly of college basketball. The revealing and no-holds-barred documentary focused on the federal government’s three-year investigation into college basketball corruption.

In 2017, Mr. Cline-Thomas founded The Players Technology Summit, which brings together leaders in the technology, venture capital, and sports communities to discuss tech investing, trends, partnerships, and future sports/tech initiatives.

Mr. Cline-Thomas serves on the Salesforce Global Advisory Board (NYSE: CRM). Mr. Cline-Thomas is a strategic advisor to Gucci, and a board advisor for Jumia Technologies (NYSE: JMIA) and Zuora (NYSE: ZUO). He also sits on the advisory board of Global Communities and is a member of the board of trustees for Providence College, where he earned his college degree.

Audit Committee Oversight

At no time since the commencement of the financial year ended August 31, 2021 was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.

Pre-Approval Policies and Procedures

The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services.

External Auditor Service Fees

Aggregate fees paid to the Auditor during the financial years ended August 31, 2021 and 2020 were as follows:

	2021 Fee Amount ($)		2020 Fee Amount ($)
Audit Fees⁽¹⁾	$	552,091	$	621,552
Audit-Related Fees⁽²⁾		Nil		Nil
Tax Fees⁽³⁾		Nil		Nil
All Other Fees⁽⁴⁾		Nil		Nil
Total:	$	552,091	$	621,552

Notes:

(1)	“Audit fees” include fees rendered by the Company’s external auditor for professional services necessary to perform the annual audit and any quarterly reviews of the Company’s financial statements. This includes fees for the review of tax provisions and for accounting consultations on matters reflected in the financial statements.

(2)	“Audit-related fees” include fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and that are not included in the “Audit Fees” category.

(3)	“Tax fees” include fees for professional services rendered by the Company’s external auditor for tax compliance, tax advice and tax planning.

(4)	“All other fees” include fees for products and services provided by the Company’s external auditor, other than services reported under the table headings “Audit Fees”, “Audit-Related Fees” or “Tax Fees”.

9.4

Conflicts of Interest

In the event conflicts of interest arise at a meeting of the Board, a director who has such a conflict will declare the conflict and abstain from voting. In appropriate cases, the Company will establish a special committee of independent non-executive directors (drawn from the majority of its members who must at all times be “independent” within the meaning of NI 52-110) to review a matter in which one or more directors or management may have a conflict.

Except as disclosed in this AIF, to the best of the Company’s knowledge, there are no known existing or potential material conflicts of interest between the Company or any subsidiary of the Company and any director or officer of the Company or any subsidiary of the Company, except that certain of the directors of the Company serve as directors and officers of other companies and it is therefore possible that a conflict may arise between their duties as a director or officer of the Company and their duties as a director or officer of such other companies. Where such conflicts arise, they will be addressed as indicated above.

Item 10.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

10.1

Interest of Management and Others in Material Transactions

No director or executive officer of the Company, or a person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10 percent of the Common Shares, or any associate or affiliate of any of the aforementioned persons or companies, has any material interest, direct or indirect, in any transaction which has occurred within the financial years ended August 31, 2021, 2020 and 2019 or during the current year that has materially affected or is reasonably expected to materially affect the Company or any of its subsidiaries.

Item 11.

TRANSFER AGENT AND REGISTRAR

11.1

Transfer Agents and Registrar

The Company’s current transfer agent and registrar is Computershare Trust Company of Canada, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1.

Item 12.

MATERIAL CONTRACTS

12.1

Material Contracts

Except as disclosed herein and other than contracts entered into in the ordinary course of business, there have been no material contracts entered into by the Company within the most recently completed financial year, or before the most recently completed financial year that are still in effect.

Item 13.

Interests of Experts

13.1

Interests of Experts

There is no person or company whose profession or business gives authority to a statement made by such person or company and who is named as having prepared or certified a statement, report or valuation described or included in a filing, or referred to in a filing, made under National Instrument 51-102 by the Company during, or related to, the Company’s most recently completed financial year other than Baker Tilly WM LLP, the Company’s auditors for the most recently completed financial year. Baker Tilly WM LLP are independent in accordance with the ethical requirements that are relevant to audits of financial statements in Canada. Effective July 17, 2020, McGovern LLP resigned as the auditors of the Company, and the directors of the Company appointed Baker Tilly WM LLP as successor auditors in their place. McGovern Hurley LLP was independent in accordance with the auditor’s code of professional conduct of the Chartered Professional Accountants of Ontario up to the date of the Notice of Change of Auditor on July 17, 2020.

In addition, none of the aforementioned persons or companies, nor any director, officer or employee of any of the aforementioned persons or companies, is or is expected to be elected, appointed or employed as a director, officer or employee of the Company or of any associate or affiliate of the Company. Neither Baker Tilly WM LLP nor its partners or associates beneficially own, directly or indirectly, any of the outstanding Common Shares of the Company.

Item 14.

ADDITIONAL INFORMATION

14.1

Additional Information

Additional financial information is provided in the Company’s consolidated financial statements and management discussion and analysis for the financial years ended August 31, 2021 and 2020, and additional information relating to the Company is on SEDAR at www.sedar.com.

SCHEDULE “A”

ENGINE GAMING AND MEDIA, INC.
AUDIT COMMITTEE CHARTER

June 11, 2020

NAME

There shall be a committee of the board of directors (the “Board”) of Engine Gaming and Media, Inc. (the “Company”) known as the “Audit Committee”.

PURPOSE OF AUDIT COMMITTEE

The Audit Committee has been established to assist the Board in fulfilling its oversight responsibilities with respect to the following principal areas:

	(a)	the Company’s external audit function; including the qualifications, independence, appointment and oversight of the work of the external auditors;

	(b)	the Company’s accounting and financial reporting requirements;

	(c)	the Company’s reporting of financial information to the public;

	(d)	the Company’s compliance with law and regulatory requirements;

	(e)	the Company’s risks and risk management policies;

	(f)	the Company’s system of internal controls and management information systems; and

	(g)	such other functions as are delegated to it by the Board.

Specifically, with respect to the Company’s external audit function, the Audit Committee assists the Board in fulfilling its oversight responsibilities relating to: the quality and integrity of the Company’s financial statements; the independent auditors’ qualifications; and the performance of the Company’s independent auditors.

MEMBERSHIP

The Audit Committee shall consist of as many members as the Board shall determine but, in any event not fewer than three directors appointed by the Board. Each member of the Audit Committee shall be “independent” (as such term is defined under applicable laws and in the rules and regulations of all exchanges on which the securities of the Company are listed for trading) and continue to be a member until a successor is appointed, unless the member resigns, is removed or ceases to be a director of the Company. The Board may fill a vacancy that occurs in the Audit Committee at any time.

Members of the Audit Committee shall be selected based upon the following and in accordance with applicable laws, rules and regulations:

(a)

Financially Literate. Each member shall be financially literate. For these purposes, an individual is “financially literate” if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. At least one member of the Audit Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.

(b)

No Participation in Preparation of Financial Statements. No member can have participated in the preparation of the Company’s, or any of its subsidiaries’, financial statements at any time during the past three years.

A - 1

CHAIR AND SECRETARY

The Chair of the Audit Committee shall be designated by the Board. If the Chair is not present at a meeting of the Audit Committee, the members of the Audit Committee may designate an interim Chair for the meeting by majority vote of the members present. The Secretary of the Company shall be the Secretary of the Audit Committee, provided that if the Secretary is not present, the Chair of the meeting may appoint a secretary for the meeting with the consent of the Audit Committee members who are present. A member of the Audit Committee may be designated as the liaison member to report on the deliberations of the audit committees of affiliated companies (if applicable).

MEETINGS

The Chair of the Audit Committee, in consultation with the Audit Committee members, shall determine the schedule and frequency of the Audit Committee meetings provided that the Audit Committee will meet at least four times in each fiscal year and at least once in every fiscal quarter. The Audit Committee shall have the authority to convene additional meetings as circumstances require.

Notice of every meeting shall be given to the external and internal auditors of the Company, and meetings shall be convened whenever requested by the external auditors or any member of the Audit Committee in accordance with applicable law. The Audit Committee shall meet separately and periodically with management, legal counsel and the external auditors.

MEETING AGENDAS

Agendas for meetings of the Audit Committee shall be developed by the Chair of the Audit Committee in consultation with the management and the corporate secretary, and shall be circulated to Audit Committee members as far in advance of each Audit Committee meeting as is reasonable.

RESOURCES AND AUTHORITY

The Audit Committee shall have the resources and the authority to discharge its responsibilities, including the authority, in its sole discretion, to engage, at the expense of the Company, outside consultants, independent legal counsel and other advisors and experts as it determines necessary to carry out its duties, without seeking approval of the Board or management. The Audit Committee shall have the authority, without seeking approval of the Board or management, to set and pay the compensation for any such outside consultants, independent legal counsel and other advisors and experts employed by the Audit Committee in connection with carrying out its duties.

The Audit Committee shall have the authority to conduct any investigation necessary and appropriate to fulfilling its responsibilities, including investigations relating to complaints with respect to accounting, internal accounting controls and/or auditing matters. The Audit Committee shall have direct access to and the authority to communicate directly with the internal and external auditors, the counsel of the Company and other officers and employees of the Company.

The members of the Audit Committee shall have the right for the purpose of performing their duties to inspect all the books and records of the Company and its subsidiaries and to discuss such accounts and records and any matters relating to the financial position, risk management and internal controls of the Company with the officers and external and internal auditors of the Company and its subsidiaries. Any member of the Audit Committee may require the external or internal auditors to attend any or every meeting of the Audit Committee.

A - 2

RESPONSIBILITIES

The Company’s management is responsible for preparing the Company’s financial statements and the external auditors are responsible for auditing those financial statements. The Audit Committee is responsible for overseeing the conduct of those activities by the Company’s management and external auditors, and overseeing the activities of the internal auditors (as applicable).

The specific responsibilities of the Audit Committee shall include those listed below. The enumerated responsibilities are not meant to restrict the Audit Committee from examining any matters related to its purpose.

1.	Financial Reporting Process and Financial Statements

The Audit Committee shall:

	(a)	in consultation with the external auditors and the internal auditors, review the integrity of the Company’s financial reporting process, both internal and external, and any major issues as to the adequacy of the internal controls and any special audit steps adopted in light of material control deficiencies;

	(b)	review and oversee on an ongoing basis (i) all material transactions and material contracts entered into between (A) the Company or any subsidiary of the Company, and (B) any subsidiary, director, officer, insider or related party of the Company, other than transactions in the ordinary course of business; (ii) potential conflict of interest situations; and (iii) all “related party transactions” (as such term or similar term is defined under all applicable laws) for potential conflict of interest situations;

	(c)	review and discuss with management and the external auditors: (i) the preparation of the Company’s annual audited consolidated financial statements and its interim unaudited consolidated financial statements; (ii) whether the financial statements present fairly (in accordance with accounting principles generally accepted in the United States of America, or, if applicable, IFRS) in all material respects the financial condition, results of operations and cash flows of the Company as of and for the periods presented; (iii) any matters required to be discussed with the external auditors; (iv) an annual report from the external auditors of the matters required to be discussed under Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16 including: (A) all critical accounting policies and practices used by the Company; (B) all material alternative accounting treatments of financial information within generally accepted accounting principles that have been discussed with management of the Company, including the ramifications of the use of such alternative treatments and disclosures and the treatment preferred by the external auditors; and (C) other material written communications between the external auditors and management;

	(d)	following completion of the annual audit, review with each of: (i) management; (ii) the external auditors; and (iii) the internal auditors, any significant issues, concerns or difficulties encountered during the course of the audit;

	(e)	resolve disagreements between management and the external auditors regarding financial reporting;

	(f)	review the interim quarterly and annual financial statements, Management’s Discussion and Analysis and annual and interim profit or loss press releases prior to the public disclosure of such information; and

	(g)	review and be satisfied that adequate procedures are in place for the review of the public disclosure of financial information by the Company extracted or derived from the Company’s financial statements, other than the disclosure referred to in (f) above, and periodically assess the adequacy of those procedures.

A - 3

2.	External auditors

The Audit Committee shall:

	(a)	require the external auditors to report directly to the Audit Committee;

	(b)	be directly responsible for the selection, nomination, compensation, retention, termination and oversight of the work of the Company’s external auditors engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Company, and in such regard recommend to the Board the external auditors to be nominated for approval by the shareholders;

	(c)	approve all audit engagements and must pre-approve the provision by the external auditors of all non-audit services, including fees and terms for all audit engagements and non-audit engagements, and in such regard the Audit Committee may establish the types of non-audit services the external auditors shall be prohibited from providing and shall establish the types of audits, audit related and non-audit services for which the Audit Committee will retain the external auditors. The Audit Committee may delegate to one or more of its independent members the authority to pre-approve non-audit services, provided that any such delegated pre-approval shall be exercised in accordance with the types of particular non-audit services authorized by the Audit Committee to be provided by the external auditor and the exercise of such delegated pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting following such pre-approval;

	(d)	review and approve the Company’s policies for the hiring of partners and employees and former partners and employees of the present and former external auditors;

	(e)	receive written communications from the external auditor, consistent with PCAOB Rule 3526, on all relationships between the external auditor and the Company or persons in financial oversight reporting roles at the Company that may be thought to bear on the external auditor’s independence and the written affirmation of the external auditor of their independence as of the date of the communication. Actively engage in a dialogue with the external auditor regarding any relationship or services that may impact the objectivity or independence of the external auditor. Evaluate the qualifications, performance and independence of the auditor, including considering whether the provision of permitted non-audit services is compatible with maintaining the auditor’s independence. Confirm with the independent auditor that the rotation of the audit partner, lead partner and concurring partner of the external auditor is occurring as required by law. Obtain from the independent auditor assurance that the audit was conducted in a manner consistent with Section 10A(b) of the Exchange Act regarding the detection and reporting of any illegal acts;

	(f)	request and review the audit plan of the external auditors as well as a report by the external auditors to be submitted at least annually regarding: (i) the external auditing firm’s internal quality-control procedures; (ii) any material issues raised by the external auditor’s own most recent internal quality-control review or peer review of the auditing firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the external auditors, and any steps taken to deal with any such issues; and (iii) all relationships between independent auditor and the Company to enable assessment of the auditor’s independence; and

	(g)	review any problems experienced by the external auditors in performing the audit, including any restrictions imposed by management or significant accounting issues on which there was a disagreement with management.

A - 4

3.	Accounting Systems and Internal Controls

The Audit Committee shall:

	(a)	oversee management’s design and implementation of and reporting on internal controls. The Audit Committee shall also receive and review reports from management, the internal auditors and the external auditors on an annual basis with regard to the reliability and effective operation of the Company’s accounting system and internal controls; and

	(b)	review annually the activities, organization and qualifications of the internal auditors and discuss with the external auditors the responsibilities, budget and staffing of the internal audit function.

4.	Legal and Regulatory Requirements

The Audit Committee shall:

	(a)	receive and review timely analysis by management of significant issues relating to public disclosure and reporting;

	(b)	review, prior to finalization, periodic public disclosure documents containing financial information, including the Management’s Discussion and Analysis and Annual Information Form, if required;

	(c)	prepare the report of the Audit Committee required to be included in the Company’s periodic filings;

	(d)	review with the Company’s counsel legal compliance matters, significant litigation and other legal matters that could have a significant impact on the Company’s financial statements; and

	(e)	assist the Board in the oversight of compliance with legal and regulatory requirements and review with legal counsel the adequacy and effectiveness of the Company’s procedures to ensure compliance with legal and regulatory responsibilities.

5.	Additional Responsibilities

The Audit Committee shall:

	(a)	discuss policies with the external auditor, internal auditor and management with respect to risk assessment and risk management, including discussing with management the Company’s major risk exposures and the steps that have been taken to monitor and control such exposures;

	(b)	establish procedures and policies for the following:

	(i)	the receipt, retention, treatment and resolution of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and

	(ii)	the confidential, anonymous submission by directors or employees of the Company of concerns regarding questionable accounting or auditing matters or any potential violations of legal or regulatory provisions;

	(c)	prepare and review with the Board an annual performance evaluation of the Audit Committee;

	(d)	report regularly to the Board, including with regard to matters such as the quality or integrity of the Company’s financial statements, compliance with legal or regulatory requirements, the performance of the internal audit function, and the performance and independence of the external auditors; and

	(e)	review and reassess the adequacy of the Audit Committee’s Charter on an annual basis.

6.	Limitation on the Oversight Role of the Audit Committee

Nothing in this Charter is intended, or may be construed, to impose on any member of the Audit Committee a standard of care or diligence that is in any way more onerous or extensive than the standard to which all members of the Board are subject.

Each member of the Audit Committee shall be entitled, to the fullest extent permitted by law, to rely on the integrity of those persons and organizations within and outside the Company from whom he or she receives financial and other information, and the accuracy of the information provided to the Company by such persons or organizations.

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and in accordance with applicable accounting principles and standards and applicable rules and regulations. These are the responsibility of management and the external auditors.

A - 5

Exhibit 99.2

LOGO

DESCRIPTION AUTOMATICALLY GENERATED WITH MEDIUM CONFIDENCE

ENGINE GAMING AND MEDIA, INC.

(formerly Engine Media Holdings, Inc.)

Consolidated Financial Statements

For the years ended

August 31, 2021 and 2020

(Expressed in United States Dollars)

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Table of Contents

Independent Auditor’s Report	3

Consolidated Statements of Financial Position	5-6

Consolidated Statements of Loss and Comprehensive Loss	7

Consolidated Statements of Shareholders’ Equity (Deficiency)	8

Consolidated Statements of Cash Flows	9

Notes to the Consolidated Financial Statements	10-68

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

Page 2 of 68

Baker Tilly WM LLP
1500 - 401 Bay Street
Toronto, Ontario
Canada M5H 2Y4
T: +1 416.368.7990
F: +1 416.368.0886

toronto@bakertilly.ca
www.bakertilly.ca

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Engine Gaming and Media, Inc. (formerly, Engine Media Holdings, Inc.):

Opinion

We have audited the consolidated financial statements of Engine Gaming and Media, Inc. (formerly, Engine Media Holdings, Inc.) and its subsidiaries (together the “Company”), which comprise the consolidated statements of financial position as at August 31, 2021 and 2020 and the consolidated statements of loss and comprehensive loss, consolidated statements of changes in shareholders’ equity (deficiency) and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at August 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1(b) in the consolidated financial statements, which describes the conditions indicating that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises the information included in:

	●	Management’s Discussion and Analysis filed with the relevant Canadian securities commissions; and
	●	Form 40-F filed with the United States Securities and Exchange Commission

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits and remain alert for indications that the other information appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

●

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

●	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

●	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

●

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

●	Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

●

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is John C. Sinclair.

/s/ Baker Tilly WM LLP
Chartered Professional Accountants
Licensed Public Accountants

Toronto, Ontario

November 26, 2021

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Consolidated Statements of Financial Position

August 31, 2021 and 2020

(Expressed in United States Dollars)

	Note		Aug 31, 2021		Aug 31, 2020
			$		$
ASSETS
Current
Cash				15,305,996		5,243,278
Restricted cash		17		331,528		388,587
Accounts and other receivables		9		8,646,807		3,845,890
Government remittances				1,070,216		1,125,912
Publisher advance, current		9		3,197,102		-
Prepaid expenses and other				3,006,033		1,571,806
Total current assets				31,557,682		12,175,473
Non-Current
Publisher advance, non-current		9		1,337,116		-
Investment in associate		10		-		2,052,008
Investment at FVTPL		10		2,629,851		-
Property and equipment		11		403,811		409,389
Goodwill		12		18,495,121		18,785,807
Intangible assets		13		12,482,244		19,442,322
Right-of-use assets		14		557,022		550,478
Total Non-Current				35,905,165		41,240,004
Total assets				67,462,847		53,415,477

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

Page 5 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Consolidated Statements of Financial Position

August 31, 2021 and 2020

(Expressed in United States Dollars)

	Note		Aug 31, 2021			Aug 31, 2020
			$			$
LIABILITIES
Current
Accounts payable				10,403,665			12,455,215
Accrued liabilities				5,722,470			4,689,131
Players liability account		17		331,528			388,587
Deferred revenue				2,644,948			553,395
Lease obligation, current		16		222,583			185,671
Line of credit		18		-			4,919,507
Long-term debt, current		20		96,664			97,702
Promissory notes payable		18		821,948			3,818,920
Deferred purchase consideration				-			333,503
Warrant liability		21		4,868,703			14,135,321
Convertible debt, current		19		914,427			-
Arbitration reserve		26		6,468,330			-
Contingent performance share obligation, current		27		-			262,067
Total current liabilities				32,495,266			41,839,019

Convertible debt, non-current		19		9,037,069			10,793,459
Lease obligation, non-current		16		364,968			386,477
Long-term debt, non-current		20		-			133,230
Non-current liabilities				9,402,037			11,313,166
Total liabilities				41,897,303			53,152,185

SHAREHOLDERS’ EQUITY (DEFICIENCY)
Share capital		22		122,741,230			69,380,807
Shares to be issued		27		-			1,059,214
Contributed surplus				17,819,933			4,034,323
Foreign currency translation reserve				(2,324,025	)		(2,334,275	)
Deficit				(112,814,973	)		(72,094,162	)
Attributable to shareholders				25,422,165			45,907
Non-controlling interest				143,379			217,385
Total equity				25,565,544			263,292
Total liabilities and equity				67,462,847			53,415,477
Going concern		1
Commitments and contingencies		26
Subsequent events		31

Approved on Behalf of Board:		“Larry Rutkowski”		“Lou Schwartz”
		Director		Director

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

Page 6 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Consolidated Statements of Loss and Comprehensive Loss

August 31, 2021 and 2020

(Expressed in United States Dollars)

	Note		August 31, 2021			August 31, 2020
CONTINUING OPERATIONS				$			$
REVENUE
Games development		7		3,422,202			2,732,846
Direct to consumer		7		453,400			363,554
Software-as-a-service		7		6,360,361			2,571,672
Advertising		7		26,656,446			4,491,356
Professional services		7		328,461			386,415
Net revenue				37,220,870			10,545,843
EXPENSES
Salaries and wages				18,020,053			6,254,017
Consulting				3,714,490			2,753,235
Professional fees				2,608,486			2,634,599
Revenue sharing expense				22,853,680			3,380,017
Sponsorships and tournaments				435,670			585,186
Advertising and promotion				1,387,370			2,513,687
Office and general				3,529,520			1,771,888
Technology expenses				2,487,569			1,062,807
Amortization and depreciation		11,13,14, 27		4,891,097			3,549,374
Share-based payments		23, 24		3,702,705			1,409,569
Interest expense				1,399,721			908,766
Loss on foreign exchange				939,235			578,900
Change in fair value of contingent consideration				-			87,702
Loss on extinguishment of debt		19		2,428,900			-
Gain on retained interest in former associate		10		(99,961	)		-
Transaction costs		22		341,702			-
Non-operational professional fees				846,475			-
Arbitration settlement reserve		26		6,468,330			-
Impairment of investment in associate and advances				-			3,652,199
Impairment of goodwill and intangibles		12		3,885,001			-
Change in fair value of investment at FVTPL		10		(581,812	)		-
Change in fair value of warrant liability		21		(9,037,108	)		6,189,921
Change in fair value of convertible debt		19		6,066,594			(230,127	)
Total				76,287,717			37,101,740
ASSOCIATES
Share of net loss of associate		10		103,930			-
Net loss for the year before taxes				(39,170,777	)		(26,555,897	)
Income tax expense		15		-			-
Net loss after taxes				(39,170,777	)		(26,555,897	)
DISCONTINUED OPERATIONS
Loss on disposal of Motorsports		27		(678,931	)		-
Loss from discontinued operations		27		(945,109	)		(5,860,211	)
Net loss for the year				(40,794,817	)		(32,416,108	)

Net loss attributable to non-controlling interest				74,006			76,066
Net loss attributable to owners of the Company				(40,720,811	)		(32,340,042	)

OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences				10,250			(1,001,103	)
Comprehensive loss for the year				(40,710,561	)		(33,341,145	)
LOSS PER SHARE
Basic loss per share - continuing operations		8		(3.29	)		(8.98	)
Basic loss per share - discontinued operations		8		(0.14	)		(1.99	)
Basic and diluted loss per share		8		(3.43	)		(10.96	)
Weighted average number of shares outstanding - Basic		8		11,874,775			2,949,511

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

Page 7 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Consolidated Statements of Shareholders’ Equity (Deficiency)

Years ended August 31, 2021 and 2020

(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, 2019		156,438			29,613,406		760,216			2,753,037			(1,333,172	)		(39,754,120	)		(7,960,633	)		293,451			(7,667,182	)
Impact of share consolidation		(114	)		-		-			-			-			-			-			-			-
Share-based payments		-			-		-			1,409,569			-			-			1,409,569			-			1,409,569
Shares issued on vesting of RSUs		26,666			159,895		-			(159,895	)		-			-			-			-			-
Convertible debt conversion		1,739,615			5,152,023		-			-			-			-			5,152,023			-			5,152,023
Private placements, net of costs		502,562			2,694,076		-			-			-			-			2,694,076			-			2,694,076
Shares issued for debt conversion		59,654			724,231		-			-			-			-			724,231			-			724,231
Shares issued on acquisition of UMG		288,560			3,804,344		-			41,879			-			-			3,846,223			-			3,846,223
Shares issued on acquisition of Frankly		2,258,215			12,155,000		-			-			-			-			12,155,000			-			12,155,000
Shares issued on acquisition of Winview		1,759,997			7,579,000		-			-			-			-			7,579,000			-			7,579,000
Shares issued on acquisition of Driver Database		100,000			859,745		-			-			-			-			859,745			-			859,745
Shares issued on acquisition of Lets Go Racing		200,000			1,719,491		-			-			-			-			1,719,491			-			1,719,491
Common shares issued on exercise of warrants		654,543			4,919,596		-			-			-			-			4,919,596			-			4,919,596
Shares to be issued		-			-		298,998												298,998						298,998
Non-controlling interest in subsidiary		-			-		-			(10,267	)		-			-			(10,267	)		-			(10,267	)
Net loss for the period		-			-		-			-			-			(32,340,042	)		(32,340,042	)		(76,066	)		(32,416,108	)
Foreign currency translation differences		-			-		-			-			(1,001,103	)		-			(1,001,103	)		-			(1,001,103	)
Balance, as at August 31, 2020		7,746,136			69,380,807		1,059,214			4,034,323			(2,334,275	)		(72,094,162	)		45,907			217,385			263,292
Share-based payments		-			-		-			3,702,705			-			-			3,702,705			-			3,702,705
Shares issued on vesting of RSUs		277,749			1,895,891		-			(1,715,891	)		-			-			180,000			-			180,000
Common shares issued on exercise of options		20,833			290,558		-			(104,303	)		-			-			186,255						186,255
Convertible debt conversion		1,728,848			13,704,605		-			4,256,114			-			-			17,960,719			-			17,960,719
Common shares issued on private placement, net of costs		4,435,433			24,225,901		-			6,791,473			-			-			31,017,374			-			31,017,374
Warrants issued in private placement of convertible debt		-			-		-			618,916			-			-			618,916			-			618,916
EB bonus shares		6,666			54,061		-			-			-			-			54,061			-			54,061
Shares for debt		40,000			226,556		-			-			-			-			226,556			-			226,556
Common shares issued on exercise of warrants		901,060			9,000,851		-			-			-			-			9,000,851			-			9,000,851
Disposal of Motorsports		-			-		(1,059,214	)		-			-			-			(1,059,214	)		-			(1,059,214	)
Shares issued on acquisition of SideQik		386,584			3,962,000		-			245,000			-			-			4,207,000			-			4,207,000
Non-controlling interest in subsidiary		-			-		-			(8,404	)		-			-			(8,404	)		-			(8,404	)
Net loss for the period		-			-		-			-			-			(40,720,811	)		(40,720,811	)		(74,006	)		(40,794,817	)
Foreign currency translation differences		-			-		-			-			10,250			-			10,250			-			10,250
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

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

Page 8 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Consolidated Statements of Cash Flows

August 31, 2021 and 2020

(Expressed in United States Dollars)

	Note	August 31, 2021			August 31, 2020
		For the year ended
	Note	August 31, 2021			August 31, 2020
			$			$
OPERATING ACTIVITIES
Net loss for the period before non-controlling interest			(40,794,817	)		(32,416,108	)
Items not affecting cash:
Amortization and depreciation	11, 13, 14		5,092,432			3,891,042
Forgiveness of government grants			-			(1,589,559	)
Legal proceedings provision			6,468,330
Loss on disposal of Motorsports	27		678,931			-
Loss on disposal of P&E			9,767			-
Loss on extinguishment of debt	19		2,428,900			-
Gain on retained interest in former associate			(99,961	)		-
Share of net loss of associate			103,930			-
Change in fair value of investment at FVTPL			(581,812	)		-
Change in fair value of warrant liability	21		(9,037,108	)		6,189,921
Change in fair value of convertible debt	19		6,066,594			(230,127	)
Change in fair value of contingent consideration			-			87,702
Impairment of investment in associate and advances			-			3,652,199
Impairment of goodwill and intangibles	12		3,885,001
Accretion of debt			108,616			96,733
Share-based payments	23, 24		3,702,705			1,409,569
Total Adjustments			(21,968,492	)		(18,908,628	)
Changes in non-cash working capital:
Restricted cash			57,059			(65,876	)
Accounts and other receivables			(4,008,628	)		2,115,952
Government remittances			30,601			(414,634	)
Publisher advance	9		(4,534,218	)		-
Prepaid expenses and other			(1,388,709	)		(163,517	)
Accounts payable			(1,030,542	)		3,451,614
Accrued liabilities			953,086			607,229
Players liability account			(57,059	)		65,875
Deferred revenue			1,607,553			221,142
Changes in non-cash working capital			(8,370,857	)		5,817,785
Net cash used in operating activities			(30,339,349	)		(13,090,843	)
INVESTING ACTIVITIES
Purchase of property and equipment			(188,170	)		(110,380	)
Cash acquired, net of cash paid in business combinations			255,852			1,458,920
Advances			-			(1,155,657	)
Acquisition of intangible assets			-			(557,709	)
Cash from disposal of Motorsports			24,348			-
Net cash used in investing activities			92,030			(364,826	)
FINANCING ACTIVITIES
Proceeds from government grants			-			1,414,764
Proceeds from line of credit			-			1,000,000
Proceeds from private placement unit offerings	22		31,017,374			3,685,785
Proceeds from convertible debentures	19		4,901,393			5,750,000
Net (payments) proceeds from promissory notes payable	18		(2,996,972	)		1,111,553
Proceeds from exercise of warrants	21		6,866,735			3,574,023
Proceeds from exercise of options	23		186,255			-
Payments on lease financing	16		(228,328	)		(139,937	)
Payments on long-term debt	20		(162,040	)		(53,736	)
			39,584,417			16,342,452
Impact of foreign exchange on cash			725,620			(462,249	)
Change in cash			10,062,718			2,424,534

Cash, beginning of year			5,243,278			2,818,744
Cash, end of year			15,305,996			5,243,278

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

Page 9 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

1. Corporate information and going concern

(a)	Corporate information

Engine Gaming and Media, Inc. (formerly Engine Media Holdings, Inc.) (“Engine”, “Engine Media” or the “Company”) was incorporated under the Business Corporations Act (Ontario) on April 8, 2011. The registered head office of the Company is 77 King St. West, Suite 3000, PO Box 95, TD Centre – North Tower, Toronto, Ontario, M5K 1G8, Canada.

With the acquisitions of Frankly Inc. (“Frankly”) and WinView, Inc. (“WinView”), on May 8, 2020, and Sideqik, Inc. on July 2, 2021 (Note 6), 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.

On August 13, 2020, the Company consolidated its shares on the basis of 15 pre-consolidation shares for every 1 post-consolidation share.

Pursuant to shareholder approval at the October 6, 2021, shareholders’ meeting, effective October 19, 2021, the Company changed its name to Engine Gaming and Media, Inc. The Company’s common shares trade on the TSX Venture Exchange under the trading symbol GAME.V and NASDAQ under the trading symbol GAME.

Pursuant to shareholder approval at the July 15, 2020, shareholders’ meeting, effective August 13, 2020, the Company changed its name to Engine Media Holdings, Inc.

(b)	Going concern

These 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 profitable levels of operations.

The Company has not yet realized profitable operations and has incurred significant losses to date resulting in a cumulative deficit of $112,814,973 as of August 31, 2021 (August 31, 2020 – $72,094,162). 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 on its business strategy or be successful in future financing activities. As of August 31, 2021, the Company had a working capital deficiency of $937,584 (August 31, 2020 – working capital deficiency of $$29,663,546) which is comprised of current assets less current liabilities. The Company also faced uncertain future impacts from COVID-19 (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.

Page 10 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

2. Basis of preparation

(a)	Statement of compliance

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The consolidated financial statements for the year ended August 31, 2021 (including comparatives) were approved and authorized for issue by the board of directors on November 26, 2021.

(b)	Basis of consolidation

The consolidated financial statements comprise the accounts of the Company and its controlled subsidiaries. The financial statements of subsidiaries are included in the 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.

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if and only if the Company has all the following:

(a) power over the investee.

(b) exposure, or rights, to variable returns from its involvement with the investee; and

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 at August 31, 2021 are as follows:

Schedule of Material Subsidiaries

Name of Subsidiary	Country of Incorporation	Ownership Percentage	Functional Currency
Frankly Inc.	Canada	100%	Canadian Dollar
UMG Media Ltd.	Canada	100%	Canadian Dollar
Eden Games S.A.	France	96%	Euro
Stream Hatchet S.L.	Spain	100%	Euro
SideQik, Inc.	USA	100%	US Dollar
WinView, 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.

Entities over which the Company exercises significant influence are associates and are accounted for by the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee. Significant influence is assumed to exist where the Company holds, directly or indirectly, at least a 20% voting interest in an entity, unless it can be clearly demonstrated that this is not the case.

Page 11 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Investments in associates are accounted for using the equity method, where the investment is initially recognized at cost and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss, other comprehensive income and equity movements of the investee after the date of acquisition. Any goodwill or fair value adjustment attributable to the Company’s share in the equity accounted investee is included in the amount recognized as investment. When the Company’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Company has an obligation or has made payments on behalf of the investee.

Business combinations are accounted for using the acquisition method under IFRS 3 Business Combinations.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the fair value of the consideration transferred including the recognized amount of any non-controlling interest in the acquiree, over the fair value of the Company’s share of the identifiable net assets acquired is recorded as goodwill. When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.

The measurement period is the period from the date of acquisition to the date the Company obtains complete information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum of one year. The Company elects on a transaction-by-transaction basis whether to measure non-controlling interest at its fair value, or at its proportionate share of the recognized amount of the identifiable net assets, at the acquisition date.

Acquisition costs are expensed as incurred, unless they qualify to be treated as debt issue costs, or as cost of issuing equity securities.

(c)	Basis of presentation

These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments which are measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

(d)	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 consolidated financial statements is the US Dollar (“USD”).

3. Significant judgments, estimates and assumptions

The preparation of these 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 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 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 consolidated financial statements are outlined below.

Page 12 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

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.

(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 consolidated financial statements is included in the following notes:

Note 1	Going concern
Note 30	Expected credit losses
Note 21	Valuation of warrant liability
Note 6	Business acquisitions
Note 12 and 13	Goodwill and intangible assets
Note 23 and 24	Valuation of share-based payments
Note 19	Convertible debt
Note 26	Contingencies

(b)	Uncertainty about the effects of COVID-19

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged and has since extensively impacted global health and the economic environment. To contain the spread of COVID-19, domestic and international governments around the world enacted various measures, including orders to close all businesses not deemed “essential,” quarantine orders for individuals to stay in their homes or places of residence, and to practice social distancing when engaging in essential activities. The Company anticipates that these actions and the global health crisis caused by COVID-19 will continue to negatively impact many business activities and financial markets across the globe.

In an effort to protect the health and safety of our employees, much of the Company’s workforce is currently working from home. The Company has implemented business continuity plans and has increased support and resources to enable employees to work remotely and thus far has been able to operate with minimal disruption.

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 37 – Onerous Contracts – Cost of Fulfilling a Contract;

Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before Intended Use

Amendments to IFRS 3 – Reference to the Conceptual Framework

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 13 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

5. Significant accounting policies

(a)	Foreign currency translation

The functional currency of the Company and its subsidiaries is disclosed in Note 2. The presentation currency of the consolidated financial statements is the US Dollar (“USD”).

The financial statements of entities that have a functional currency different from the presentation currency are translated into US dollars as follows: assets and liabilities at the closing rate at the date of the Company’s consolidated statement of financial position and income and expenses at the average rate of the year (as this is considered a reasonable approximation of the actual rates prevailing at the transaction dates). All resulting changes are recognized in other comprehensive income (loss) as foreign currency translation adjustments, except to the extent that the translation difference is allocated to non-controlling interest.

Foreign currency transactions are translated into the functional currency of each entity using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in currencies other than an entity’s functional currency are recognized in the consolidated statements of loss.

(b)	Revenue recognition

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it transfers control of its services to a customer.

The following provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms and related revenue recognition policies:

Games development

Game development income is derived from the development and sale of gaming applications. Revenue from game development is recognized by reference to the stage of completion. Stage of completion is measured by reference to actual costs incurred to date as a percentage of total estimated costs for each contract.

ii)

Direct to Consumer

Sponsorship, tournament and event income is income directly associated with an e-sport or sporting event or tournament. Sponsorship, tournament and event income is recognized upon completion of the underlying event.

Page 14 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements 

August 31, 2021 and 2020

(Expressed in United States Dollars)

iii)

Software-as-a-service

The Company enters into license agreements with customers for its content management system, video software, and mobile applications (Frankly), e-sports data platform (Stream Hatchet) and an influencer marketing platform (SideQik). These license agreements, generally non-cancellable, without paying a termination penalty, and multiyear, provide the customer with the right to use the Company’s application solely on a Company-hosted platform or, in certain instances, on purchased encoders. The license agreements also entitle the customer to technical support.

Revenue from these license agreements is recognized ratably over the license term. Early termination fees are recognized when customer ceases use of agreed upon services prior to the expiration of their contract. These fees are recognized in full on the date the customer has completed their migration of the Company’s solutions and there is no continuing service obligation to the customer.

The Company charges its customers for the optional use of its content delivery network to stream and store videos. The revenue is recognized as earned based on the actual usage because it has stand-alone value and delivery is in control of the customer. The Company also charges its customers for the use of its ad serving platform to serve ads under local advertising campaigns. The Company reports revenue as earned based on the actual usage.

iv)

Advertising

Under national advertising agreements with advertisers, the Company sources, creates, and places advertising campaigns that run across the Company’s network of publisher sites. National advertising revenue, net of third-party costs, is shared with publishers based on their respective contractual agreements. The Company invoices national advertising amounts due from advertisers and remits payments to publishers for their share. Depending on the agreement with the publisher, the obligation to remit payment to the publisher is based on either billing to the advertiser or the collection of cash from the advertiser.

National advertising revenue is recognized in the period during which the ad impressions are delivered. The Company reports revenue earned through national advertising agreements either on a net or gross basis.

Under national advertising agreements wherein the Company does not bear inventory risk and only has credit risk on its portion of the revenue, national advertising revenues are accounted for on a net basis and the publisher is identified as the customer.

In select national advertising agreements with its publishers, the Company takes on inventory risk and additional credit risk. Under these agreements, the Company either a) provides the publisher with a guaranteed minimum gross selling price per advertising unit delivered, wherein the greater of the actual selling price or guaranteed minimum selling price is used in determining the publisher’s share or b) provides the publisher with a fixed rate per advertising unit delivered, wherein the publisher is paid the fixed rate per advertising unit delivered irrespective of the actual selling price. Under these national advertising agreements, national advertising revenues are accounted for on a gross basis with the advertiser identified as the customer and the publisher identified as a supplier, with amounts billed to the advertiser reported as revenue and amounts due to the publisher reported as a revenue sharing expense, within expenses.

Also included in advertising revenue is advertising revenue generated by the Company’s various owned and operated properties.

Page 15 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements 

August 31, 2021 and 2020

(Expressed in United States Dollars)

Professional services

Professional services consist primarily of installation and website design services (Frankly) and data analysis report delivery (Steam Hatchet). Installation fees are contracted on a fixed-fee basis. The Company recognizes revenue as services are performed. Such services are readily available from other vendors and are not considered essential to the functionality of the service. Website design services are also not considered essential to the functionality of the product and have historically been insignificant; the fee allocable to website design is recognized as revenue as the Company performs the services.

The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. When the Company acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognized is the net amount of commission made by the Company.

Deferred revenue consists of customer advances for Company services to be rendered that will be recognized as income in future periods.

(c)	Cash and equivalents, and restricted cash

The “cash and cash equivalents” category consists of cash in banks, call deposits and other highly liquid investments with initial maturities of three months or less. Any investments in securities, investments with initial maturities greater than three months without early redemption feature and bank accounts subject to restrictions, other than restrictions due to regulations specific to a country or activity sector (exchange controls, etc.) are not presented as cash equivalents but as financial assets. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Restricted cash is presented as a separate category on the statement of financial position and consists of cash in a bank account restricted for use in the UMG Media Ltd. and WinView Inc. businesses (Note 17).

(d)	Accounts and other receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost less provision for impairment of trade accounts receivable. A provision for impairment of trade accounts receivable is established based on a forward-looking “expected loss” impairment model. The carrying amount of the trade receivables is reduced using the provision for impairment account, and the amount of any increase in the provision for impairment is recognized in the consolidated statement of loss and comprehensive loss. When a trade receivable is uncollectible, it is written off against the provision for impairment account for trade accounts receivable. Subsequent recoveries of amounts previously written off are credited to the consolidated statement of loss and comprehensive loss.

(e)	Property and equipment

Property and equipment are carried at historical cost less any accumulated depreciation and impairment losses. Historical cost includes the acquisition cost or production cost as well as the costs directly attributable to bringing the asset to the location and condition necessary for its use in operations. When property and equipment include significant components with different useful lives, they are recorded and depreciated separately. Depreciation is computed using the straight-line and declining balance methods based on the estimated useful life of the assets. Useful life is reviewed at the end of each reporting period.

After initial recognition, the cost model is applied to property and equipment. Where parts of an item of property and equipment have different useful lives, they are accounted for as separate items of property and equipment.

Page 16 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements 

August 31, 2021 and 2020

(Expressed in United States Dollars)

The Company recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Company and the cost of the item can be measured reliably. All other costs are recognized in the consolidated statement of loss and comprehensive loss as an expense as incurred. Depreciation is provided at rates calculated to write off the cost of property, plant and equipment less their estimated residual value on the straight-line and declining balance methods, over the estimated useful lives, as follows.

Computer equipment	3 years, straight-line
Furniture and fixtures	5 years, straight-line
Leasehold improvements	Term of the lease, plus one renewal

(f)

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

(g)	Intangible assets

Intangible assets include acquired software used in production or administration and brand names and customer relationships that qualify for recognition as an intangible asset in a business combination. They are accounted for using the cost model whereby capitalized costs are amortized on a straight-line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date.

The useful lives of the intangibles are as follows:

Schedule of Useful Lives of Intangibles

Software	3-5 years
Brands	1-20 years
Customer relationships	1-10 years
Patents	5 years
Application platforms	3 years

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and install the specific software. Subsequent expenditure on brands is expensed as incurred. Costs associated with maintaining computer software (expenditure relating to patches and other minor updates as well as their installation), are expensed as incurred.

Patents and Application platforms with a finite useful life that are acquired in an asset acquisition are initially recognized on the basis of their relative fair value at the acquisition date. These assets are amortized on a straight-line basis over their useful life, which is generally up to 5 years. Amortization is calculated over the cost of the asset less its residual value. Amortization expense is recognized on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

Other intangible assets, such as brands, that are acquired by the Company are stated at cost less accumulated amortization and impairment losses. Expenditures on internally generated brands, mastheads or editorial pages, publishing titles, customer lists and items similar in substance is recognized in the consolidated statement of loss and comprehensive loss as an expense as incurred.

Research costs are expensed when incurred. Development costs are capitalized when the feasibility and profitability of the project can be reasonably considered certain. Expenditure on development activities, whereby research findings are applied to a plan or design to produce new or substantially improved products and processes, is capitalized if the product or process is technically and commercially feasible and the Company has sufficient resources to complete development. The expenditure capitalized includes the cost of materials, direct labor and an appropriate proportion of overheads. Other development expenditure is recognized in the consolidated statement of loss and comprehensive loss as an expense as incurred. Capitalized development expenditure is stated at cost less accumulated amortization and impairment losses.

Page 17 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements 

August 31, 2021 and 2020

(Expressed in United States Dollars)

(h)	Impairment of property and equipment, intangible assets and goodwill

Timing of impairment testing

The carrying values of property and equipment and finite life intangible assets are assessed at the reporting date as to whether there is any indication that the assets may be impaired. Goodwill and indefinite life intangible assets are tested for impairment annually or when there is an indication that the asset may be impaired.

ii)

Impairment testing

If any indication of impairment exists or when the annual impairment testing for an asset is required, the Company estimates the recoverable amount of the asset or cash generating unit (“CGU”) to which the asset relates to determine the extent of any impairment loss. The recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use (“VIU”) to the Company. In assessing VIU, estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less costs of disposal, recent market transactions are considered, if available. If the recoverable amount of an asset or a CGU is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognized immediately in the consolidated statement of loss and comprehensive loss.

For impaired assets, excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of loss and comprehensive loss. Impairment losses relating to goodwill cannot be reversed.

(i)

Leases

The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Page 18 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements 

August 31, 2021 and 2020

(Expressed in United States Dollars)

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

	●	Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
	●	Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
	●	The amount expected to be payable by the lessee under any residual value guarantees;
	●	The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
	●	Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

The lease liability is presented as a separate line in the consolidated statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)

whenever:

	●	The lease term has changed or there is a significant event or change in circumstances resulting in a change the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
	●	The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
	●	A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Company did not make any such adjustments during the periods presented.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the

underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use assets are presented as a separate line in the consolidated statement of financial position.

The Company applies IAS 36 Impairment to determine whether a right-of-use asset is impaired and accounts for any identified

impairment loss as described in the ‘property and equipment’ policy.

Page 19 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Variable rents that do not depend on an index or rate are not included in the measurement the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line “other expenses” in profit or loss.

As a practical expedient, IFRS 16 Leases permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient. For contracts that contain a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

(j)	Financial instruments

Financial assets

Recognition and Initial Measurement

The Company recognizes financial assets when it becomes party to the contractual provisions of the instrument. Financial assets are measured initially at their fair value plus, in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Transaction costs attributable to the acquisition of financial assets subsequently measured at fair value through profit or loss are expensed in profit or loss when incurred.

Classification and Subsequent Measurement

On initial recognition, financial assets and liabilities are classified as subsequently measured at amortized cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss (“FVTPL”). The Company determines the classification of its financial assets, together with any embedded derivatives, based on the business model for managing the financial assets and their contractual cash flow characteristics.

Financial assets are classified as follows:

	●	Amortized cost - Assets that are held for collection of contractual cash flows where those cash flows are solely payments of principal and interest are measured at amortized cost. Interest revenue is calculated using the effective interest method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in profit or loss. Financial assets measured at amortized cost are comprised of cash, restricted cash, accounts and other receivables and advances.

	●	Fair value through other comprehensive income - Assets that are held for collection of contractual cash flows and for selling the financial assets, and for which the contractual cash flows are solely payments of principal and interest, are measured at fair value through other comprehensive income. Interest income calculated using the effective interest method and gains or losses arising from impairment and foreign exchange are recognized in profit or loss. All other changes in the carrying amount of the financial assets are recognized in other comprehensive income. Upon derecognition, the cumulative gain or loss previously recognized in other comprehensive income is reclassified to profit or loss. The Company does not hold any financial assets measured at fair value through other comprehensive income.

Page 20 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

	●	Mandatorily at fair value through profit or loss - Assets that do not meet the criteria to be measured at amortized cost, or fair value through other comprehensive income, are measured at fair value through profit or loss. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss. None of the Company’s assets fall under this category.

	●	Designated at fair value through profit or loss – On initial recognition, the Company may irrevocably designate a financial asset to be measured at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch that would otherwise arise from measuring assets or liabilities, or recognizing the gains and losses on them, on different bases. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss.

Business Model Assessment

The Company assesses the objective of its business model for holding a financial asset at a level of aggregation which best reflects the way the business is managed, and the way information is provided to management. Information considered in this assessment includes stated policies and objectives.

Contractual Cash Flow Assessment

The cash flows of financial assets are assessed as to whether they are solely payments of principal and interest on the basis of their contractual terms. For this purpose, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money, the credit risk associated with the principal amount outstanding, and other basic lending risks and costs. In performing this assessment, the Company considers factors that would alter the timing and amount of cash flows such as prepayment and extension features, terms that might limit the Company’s claim to cash flows, and any features that modify consideration for the time value of money.

Impairment

The Company recognizes a loss allowance for the expected credit losses associated with its financial assets, other than financial assets measured at fair value through profit or loss. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past events, current conditions, and forecasts of future economic conditions.

The Company applies the simplified approach for accounts receivable. Using the simplified approach, the Company records a loss allowance equal to the expected credit losses resulting from all possible default events over the assets’ contractual lifetime.

The Company assesses whether a financial asset is credit-impaired at the reporting date. Regular indicators that a financial instrument is credit-impaired include significant financial difficulties as evidenced through borrowing patterns or observed balances in other accounts and breaches of borrowing contracts such as default events or breaches of borrowing covenants. For financial assets assessed as credit-impaired at the reporting date, the Company continues to recognize a loss allowance equal to lifetime expected credit losses.

For financial assets measured at amortized cost, loss allowances for expected credit losses are presented in the statement of financial position as a deduction from the gross carrying amount of the financial asset.

Financial assets are written off when the Company has no reasonable expectations of recovering all or any portion thereof.

Page 21 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Derecognition of Financial Assets

The Company derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire.

Financial Liabilities

Recognition and Initial Measurement

The Company recognizes a financial liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, except for financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss.

Financial liabilities are classified as either financial liabilities at FVTPL or at amortized cost. The Company determines the classification of its financial liabilities at initial recognition.

	●	Amortized cost - Financial liabilities are classified as measured at amortized cost unless they fall into one of the following categories: financial liabilities at FVTPL, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition, financial guarantee contracts, or commitments to provide a loan at a below-market interest rate, or contingent consideration recognized by an acquirer in a business combination.

		The Company’s accounts payable, accrued liabilities, players liability account, lease obligation, line of credit, long-term debt, promissory notes payable and deferred purchase consideration do not fall into any of the exemptions and are therefore classified as measured at amortized cost.

	●	Financial liabilities recorded at FVTPL - Financial liabilities are classified as FVTPL if they fall into one of the five exemptions detailed above, or they are derivatives or they are designated as such on initial recognition. The Company’s warrants that are not issued in exchange for goods or services and have characteristics of derivative financial liabilities as a result of the warrants having an exercise price in a currency different from the functional currency of the Company, are measured as financial liabilities at FVTPL. The Company’s convertible debt is designated as financial liabilities at FVTPL.

Transaction costs

Transaction costs associated with financial instruments, carried at FVTPL, are expensed as incurred, while transaction costs associated with all other financial instruments are included or deducted from the initial carrying amount of the asset or the liability.

Page 22 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Subsequent measurement

Instruments classified as FVTPL are measured at fair value with unrealized gains and losses recognized in profit or loss. Instruments classified as amortized cost are measured at amortized cost using the effective interest rate method. Instruments classified as FVTOCI are measured at fair value with unrealized gains and losses recognized in other comprehensive income.

Derecognition of financial liabilities

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled, or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any noncash assets transferred or liabilities assumed, is recognized in profit or loss.

Fair value measurement

The Company categorizes its financial assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs used in the measurement.

	Level 1:	This level includes assets and liabilities measured at fair value based on unadjusted quoted prices for identical assets and liabilities in active markets that are accessible at the measurement date.
	Level 2:	This level includes valuations determined using directly or indirectly observable inputs other than quoted prices included within Level 1.
	Level 3:	This level includes valuations based on inputs which are unobservable.

Offsetting

Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

(k)	Short-term employee benefits

Short-term employee benefits include wages, salaries, compensated absences, profit-sharing and bonuses. Short-term employee benefit obligations are measured on an undiscounted basis and are recognized in salaries and wages expense as the related service is provided or capitalized if the service rendered is in connection with the creation of an asset. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Page 23 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

(l)	Income taxes

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit; and differences relating to investments in subsidiaries, associates, and jointly controlled entities to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date applicable to the period of expected realization or settlement.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(m)	Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares, share purchase options, and equity classified warrants are recognized as a deduction from equity, net of any tax effects. When share capital recognized as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from total equity.

Preference share capital is classified as equity if it is non-redeemable, or redeemable only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognized as distributions within equity upon approval by the Company’s shareholders. Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders, or if dividend payments are not discretionary. Dividends thereon are recognized as interest expense in profit or loss as accrued.

The Company’s warrants having an exercise price in the functional currency of the Company that are not issued in exchange for good and services are equity measured and the fair value at grant date for these warrants is classified within contributed surplus.

(n)	Share-based payment

The share-based payment plan allows Company employees and consultants to acquire shares of the Company. The fair value of share-based payment awards granted is recognized within share-based payments expense with a corresponding increase in equity.

Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. The fair value is measured at grant date and each tranche is recognized on a straight-line basis over the period during which the share purchase options vest. The fair value of the share-based payment awards granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the awards were granted such as stock price, term, and stock volatility. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of awards, for which the related service and non-market vesting conditions are expected to be met.

Page 24 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

For each Restricted Share Units (“RSU”) granted, the Company recognizes an expense equal to the market value of a common share at the date of grant and for each common share option granted, the Company recognizes an expense equal to the fair value of the option estimated using a Black Scholes model at grant date, based on the number of RSUs/options expected to vest, recognized over the term of the vesting period, with a corresponding increase to contributed surplus. Share based payments expense is adjusted for subsequent changes in management’s estimate of the number of RSUs/options that are expected to vest. The effect of these changes is recognized in the period of the change.

For equity-settled share-based payment transactions, including share options and RSUs granted to officers and directors of the Company and warrants granted to advisors in a financing transaction, the Company measures the goods or services received, and the corresponding increase in contributed surplus, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably, in which cases, the Company measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted.

(o)	Discontinued operations and assets held for sale

A non-current asset or a group of assets and liabilities is a disposal group when the carrying amount will be recovered principally through its divestiture and not by continuing utilization. To meet this definition, the asset must be available for immediate sale, and divestiture must be highly probable. Non-current assets or disposal groups classified as held for sale are measured at the lower of carrying amounts and fair value less costs to sell.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

Discontinued operations are presented on a single line of the consolidated statements of loss and comprehensive loss for the periods reported, comprising the earnings after tax of discontinued operations until divestiture and the gain or loss after tax on sale or fair value measurement, less costs to sell the assets and liabilities making up the discontinued operations. In addition, the cash flows generated by the discontinued operations are presented on one separate line of the statement of consolidated cash flows for the periods presented.

(p)	Segment reporting

A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

(q)	Government grants

Government grants are recognized when it is probable that the grant will be received, and all conditions of the grant are complied with. When the grant is in the form of a forgivable loan, the loan is initially recognized as a deferred income liability. The Company then relieves the deferred income liability on a systematic and rational basis in those periods over which the entity recognizes the expenses that the grant is intended to offset. The Company recognizes the impact of the loan forgiveness as an offset against related expense.

Assistance for operating expenses is recorded as a reduction of expenses when the assistance is receivable.

Page 25 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

A forgivable loan from government is treated as government assistance when there is reasonable assurance that the Company will meet the terms for forgiveness of the loan. If there is no reasonable assurance that the entity will meet the terms for forgiveness of the loan, the loan is recognized as a liability in accordance with IFRS 9 Financial Instruments. The liability would become a government grant (forgivable loan) when there is reasonable assurance that the entity will meet the terms for forgiveness.

6. Acquisitions

(a)	UMG Media Ltd.

On December 31, 2019, the Company acquired all issued and outstanding shares of UMG Media Ltd. (“UMG”) which was carried out by way of a plan of arrangement under the Business Corporations Act (Alberta). UMG shareholders received, on an exchange ratio of 0.0643205, common shares of the Company. In total, the Company issued 288,560 shares (the “Consideration Shares”) in exchange for the UMG securities exchanged pursuant to the transaction, including the securities issued pursuant to the UMG Private Placement (defined below) (a total of 54,157 of these Engine Media Shares were issued to the UMG Private Placement shareholders and the remainder were issued to the former UMG Shareholders). In addition, each outstanding option and warrant to purchase a UMG Share was exchanged for an option or warrant, as applicable, to purchase an Engine Media share, based upon the exchange ratio.

All transaction costs associated with this acquisition have been expensed. If the acquisition of UMG had occurred at the beginning of the Company’s fiscal year (September 1, 2019), the loss attributed to UMG’s operations for the year ended August 31, 2020, would have been $3,519,046, with revenue of $491,323. The loss attributed to UMG’s operations from the acquisition date of December 31, 2019, to August 31, 2020, was $1,875,539, with revenue of $314,948.

The purchase price allocation is as follows:

Consideration paid	# Issued		Amount
Common shares		288,560	$	3,804,344
Options and warrants exchanged		26,553		41,879
		-		-
				-
			$	3,846,223

Fair value of identifiable assets acquired
Cash			$	(82,528	)
Restricted cash				112,901
Accounts and other receivables				76,052
Prepaid and other current assets				88,877
Property and equipment				313,622
Right-of-use asset				388,996
Intangible assets - Application platforms (Useful life - 5 years)				560,000
Intangible assets - Brand (Useful life - 6 years)				510,000
Intangible assets - Customer lists (Useful life - 3 years)				460,000
Goodwill				3,209,045
Accounts payable and accrued liabilities				(761,766	)
Lease liabilities				(420,863	)
Players liability account				(112,902	)
Promissory notes				(430,745	)
Intangible assets - Software				-
Line of credit				-
Intangible assets - Patents				-
Government grants - PPP Loan				-
Accounts payable				-
Accrued liabilities				-
Deferred revenue				(64,466	)
			$	3,846,223

Page 26 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The Engine Media common shares issued were valued based on the closing price on the TSX Venture exchange on December 31, 2019.

Significant judgments and assumptions related to the valuation and useful lives of certain classes of assets acquired are as follows:

Intangible assets, application platforms

UMG had certain proprietary technology used in its platform, which the Company expects will contribute to future cash flow. The fair value of the software intangible asset was determined based on the relief from royalty method under the income approach. The software intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) revenue projections; (ii) royalty rate of 7%; (iii) technology replacement rate of 5 years; and (iv) discount rate of 17.5%. This asset is amortized on a straight-line basis over the estimated useful life of five years.

ii)

Intangible assets, brand

UMG had established itself as a recognized brand in its industry and is well known amongst gaming enthusiasts and the esports community. The Company expects the brand will contribute to future cash flow. The fair value of the brand intangible asset was determined based on the relief from royalty method under the income approach. The brand intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) revenue projections with long term growth rate of 3%; (ii) royalty rate of 2%; and (iv) discount rate of 18.5%. This asset is amortized on a straight-line basis over the estimated useful life of six years.

iii)

Intangible assets, customer lists

UMG had an established customer list which is expected to result in future sales. The fair value of the customer list intangible asset was determined based on the cost approach. The customer list intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) number of active users; (ii) user acquisition cost; (iii) time to recreate of 1.5 years; (iv) obsolescence rate of 10% and (v) discount rate of 16.5%. This asset is amortized on a straight-line basis over the estimated useful life of three years.

iv)

Goodwill

The difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed represents goodwill of $3,209,045. The goodwill is not expected to be deductible for tax purposes.

The goodwill recorded represents the following:

	●	Cost savings and operating synergies expected to result from combining the operations of UMG with those of the Company
	●	Intangible assets that do not qualify for separate recognition such as the assembled workforce

Page 27 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

(b)	Frankly Inc.

On May 8, 2020, the Company acquired all issued and outstanding shares of Frankly Inc. (“Frankly”) which was carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). Frankly shareholders received one share of the Company’s common shares for each share of Frankly. In total, the Company issued 2,258,215 shares in exchange for the Frankly securities exchanged pursuant to the transaction. In addition, each outstanding option, RSU and warrant to purchase a Frankly share was exchanged for an option, RSU or warrant, as applicable, to purchase a Company share, based upon the exchange ratio.

All transaction costs associated with this acquisition were expensed. If the acquisition of Frankly had occurred at the beginning of the Company’s fiscal year (September 1, 2019), the loss attributed to Frankly’s operations for the year ended August 31, 2020, would have been $8,350,289, with revenue of $23,165,702. The loss attributed to Frankly’s operations from the acquisition date of May 8, 2020, to August 31, 2020, was $2,266,289, with revenue of $6,404,736.

The acquisition was accounted for using the acquisition method of accounting under IFRS 3, Business Combinations, which requires that the Company recognize the identifiable assets acquired and the liabilities assumed at their fair values on the date of acquisition. The estimated fair values were preliminary and based on the information that was available as of that date. The Company has since finalized the purchase price allocation with no change to the preliminary amounts.

The purchase price allocation is as follows:

Consideration paid	# Issued		Amount
Common shares		2,258,215	$	12,155,000
Warrants exchanged		1,055,036		2,157,000
Settlement of a pre-existing relationship				(1,099,999	)
			$	13,212,001

Fair value of identifiable assets acquired
Cash				1,241,511
Accounts and other receivables				5,368,562
Prepaid and other current assets				444,690
Property and equipment				40,152
Intangible assets - Software (Useful life - 3 years)				2,000,000
Intangible assets - Brand (Useful life - 1 year)				100,000
Intangible assets - Customer contracts (Useful life - 10 years)				2,700,000
Goodwill				14,895,595
Accounts payable and accrued liabilities				(9,590,547	)
Deferred revenue				(148,949	)
Line of credit				(3,839,013	)
			$	13,212,001

Page 28 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The Engine Media common shares issued were valued based on the closing price on the TSX Venture exchange on May 8, 2020. The warrants were valued using the Black Scholes method.

Significant judgments and assumptions related to the valuation and useful lives of certain classes of assets acquired are as follows:

Intangible assets, software

Frankly had certain proprietary technology used in its products, which the Company expects will contribute to future cash flow. The fair value of the software intangible asset was determined based on the relief from royalty method under the income approach. The software intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) revenue projections; (ii) royalty rate of 3%; (iii) technology replacement rate of 5 years; and (iv) discount rate of 18%. This asset is amortized on a straight-line basis over the estimated useful life of three years.

ii)

Intangible assets, customer contracts

Frankly had established relationships with media companies which are expected to result in future sales. The fair value of the customer relationships intangible asset was determined based on the excess earnings method under the income approach. The customer relationships intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) cash flow projections with long term growth rate of 3%; (ii) customer attrition rate of 10%; (iii) charges for use of assets; and (iv) discount rate of 21.5%. This asset is amortized on a straight-line basis over the estimated useful life of ten years.

iii) Goodwill

The difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed represents goodwill of $14,895,595. The goodwill is not expected to be deductible for tax purposes.

The goodwill recorded represents the following:

	●	Cost savings and operating synergies expected to result from combining the operations of Frankly with those of the Company
	●	Intangible assets that do not qualify for separate recognition such as the assembled workforce

(c)	WinView, Inc.

On May 8, 2020, the Company acquired all issued and outstanding shares of WinView, Inc. (“WinView”) which was carried out pursuant to a statutory merger. The Company issued 1,759,997 shares in exchange for the WinView securities exchanged pursuant to the transaction. In addition, WinView shareholders are entitled to contingent consideration based on a portion of any future licensing revenue from its patent portfolio.

If the acquisition of WinView had occurred at the beginning of the Company’s fiscal year (September 1, 2019), the loss attributed to WinView’s operations for the year ended August 31, 2020, would have been $6,034,836, with revenue of $68,813. The loss attributed to WinView’s operations from the acquisition date of May 8, 2020, to August 31, 2020, was $1,557,248, with revenue of $51,422.

IFRS 3 – Business Combinations (“IFRS 3”) was amended in October 2018 to clarify the definition of a business and added an optional concentration test to assess when a company has acquired a group of assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets. The Company concluded that the value of the WinView assets acquired is substantially concentrated in the patent portfolio, and therefore the acquisition of WinView was accounted for as an asset acquisition.

Page 29 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

For an asset acquisition, the Company’s accounting policy is to recognize a liability for contingent consideration when the related activity occurs. Accordingly, a liability was not recorded for the contingent consideration as at August 30, 2020.

The purchase price allocation is as follows:

Consideration paid	# Issued		Amount
Common shares		1,759,997	$	7,579,000
			$	7,579,000

Fair value of identifiable assets acquired
Cash			$	359,190
Restricted cash				201,540
Prepaid and other current assets				174,313
Intangible assets - Patents (Useful life - 5 years)				9,430,265
Accounts payable and accrued liabilities				(699,053	)
Players liability account				(201,540	)
Government grants - PPP Loan				(174,795	)
Promissory notes				(1,423,738	)
Deferred revenue				(87,182	)
			$	7,579,000

The Company common shares issued for the acquisition of Winview were subject to lock-up restrictions to be discharged 10% at 120 days, another 15% at 180 days, another 15% at 270 days, another 20% at 360 days and the remaining 40% at 390 days, in each case following the closing date. The Company common shares issued were valued based on the closing price on TSX Venture exchange on May 8, 2020, reduced by a discount for lack of marketability of twenty percent.

(d)	Acquisitions of WTF1, Lets Go Racing and DriverDB

During the year ended August 31, 2020, the Company completed three acquisitions in its motorsports division that were disposed on November 3, 2020, as a result of a strategic business review that began in October 2020 .

The Company acquired certain assets of WTF1 on April 2, 2020, for a purchase price of $557,709. The acquisition was accounted for as an asset acquisition. The purchase price was allocated to the assets acquired on a relative fair value basis. The amount allocated to software is being amortized over three years.

On June 3, 2020, the Company completed the acquisition of Lets Go Racing pursuant to a share purchase agreement dated June 2, 2020. Purchase consideration comprised of £50,000 ($63,274) in cash, 200,000 common shares of the Company and deferred cash consideration of £265,000 ($333,503). Of the deferred cash consideration, £100,000 ($125,850) is due 120 days following closing and £165,000 ($207,653) is due 240 days following closing. Total purchase consideration discussed above amounted to $2,116,267. The acquisition was accounted for as an asset acquisition. The purchase price was allocated to software and is being amortized over three years.

On June 3, 2020, the Company completed the acquisition of DriverDB in exchange for the issuance of 100,000 common shares of the Company pursuant to a share purchase agreement dated June 1, 2020. The common shares were valued at $859,745. The acquisition was accounted for as an asset acquisition. The purchase price was allocated to the assets acquired on a relative fair value basis. The amount allocated to software is being amortized over three years.

Page 30 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

(e)	Acquisition of SideQik, Inc

On July 2, 2021, the Company acquired all issued and outstanding shares of SideQik, Inc. (“SideQik”) which was carried out pursuant to a statutory reverse-triangular merger. The Company issued 386,584 shares and 23,939 RSUs in exchange for the SideQik securities exchanged pursuant to the transaction.

The acquisition of Sideqik (combined with a prior acquisition of Stream Hatchet) brings technology and customers that are expected to expand Engine’s advertising and media offerings.

All transaction costs associated with this acquisition were expensed. If the acquisition of SideQik had occurred at the beginning of the Company’s fiscal year (September 1, 2020), the loss attributed to SideQik’s operations for the year ended August 31, 2021, would have been $1,130,080, with revenue of $2,148,987. The loss attributed to SideQik’s operations from the acquisition date to August 31, 2021, was $383,167, with revenue of $412,981.

The acquisition was accounted for using the acquisition method of accounting under IFRS 3, Business Combinations, which requires that the Company recognize the identifiable assets acquired and the liabilities assumed at their fair values on the date of acquisition. The estimated fair values are preliminary and based on the information that was available as of that date.

The purchase price allocation is as follows:

Consideration paid	# Issued		Amount
Common shares		386,584	$	3,962,000
RSUs		23,939	$	245,000
			$	4,207,000

Fair value of identifiable assets acquired
Cash			$	255,852
Accounts and other receivables				817,557
Prepaid and other current assets				69,631
Property and equipment				12,730
Intangible assets - Software (Useful life - 5 years)				910,000
Intangible assets - Brand (Useful life - 10 years)				210,000
Intangible assets - Customer relationships (Useful life - 10 years)				310,000
Goodwill				2,900,193
Accounts payable				(292,571	)
Accrued liabilities				(502,392	)
Deferred revenue				(484,000	)
			$	4,207,000

The Company common shares issued for the acquisition of SideQik were subject to lock-up restrictions to be discharged 16 2/3% at 180 days from the closing date, and thereafter another 16 2/3% on the 15^th of each subsequent month with the restriction being fully liquidated at the end of the 12^th month. The Company’s common shares issued were valued based on the closing price on TSX Venture exchange on July 2, 2021, reduced by a discount for lack of marketability of fifteen percent.

Page 31 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Significant judgments and assumptions related to the valuation and useful lives of certain classes of assets acquired are as follows:

Intangible assets, software

The fair value of the software intangible asset was determined based on the relief from royalty method under the income approach. The software intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) revenue projections; (ii) royalty rate of 7.5%; (iii) tax rate of 25.5% (iv) discount rate of 20%. This asset is amortized on a straight-line basis over the estimated useful life of five years.

ii)

Intangible assets, brand

The fair value of the brand intangible asset was determined based on the relief from royalty method under the income approach. The brand intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) cash flow projections with long term growth rate of 3%; (ii) royalty rate of 0.5%; (iii) tax rate of 25.5%; and (iv) discount rate of 20.0%. This asset is amortized on a straight-line basis over the estimated useful life of ten years.

iii)

Intangible assets, customer relationships

SideQik has created custom partnerships with clients to build out integrations with proprietary brand tools which are expected to result in future sales. The fair value of the customer relationships intangible asset was determined based on the excess earnings method under the income approach. The customer relationships intangible asset was valued using Level 3 inputs which consisted of the following key inputs: (i) cash flow projections with long term growth rate of 3%; (ii) customer attrition rate of 15%; and (iii) discount rate of 22.0%; (iv) tax rate of 25.5%. This asset is amortized on a straight-line basis over the estimated useful life of ten years.

iv)

Goodwill

The difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed represents goodwill of $2,900,193. The goodwill is not expected to be deductible for tax purposes.

The goodwill recorded represents the following:

	●	Cost savings and operating synergies expected to result from combining the operations of SideQik with those of the Company.
	●	Intangible assets that do not qualify for separate recognition such as the assembled workforce.

Page 32 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

7. Revenue

Revenue streams and disaggregation of revenue from contracts with customers

In the following table, revenue from contracts with customers is disaggregated by service lines.

For the year ended August 31,
	2021		2020
	$		$

Games development		3,422,202		2,732,846
Direct to consumer		453,400		363,554
Software-as-a-service		6,360,361		2,571,672
Advertising		26,656,446		4,491,356
Professional services		328,461		386,415
Revenue		37,220,870		10,545,843

8. 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 considered to be 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 incurred during the years ended August 31, 2021, and 2020, all outstanding options, RSU’s and warrants were excluded from diluted weighted-average common shares outstanding as their effect was anti-dilutive. Weighted average common shares outstanding for the years ended August 31, 2021, and 2020 were 11,874,775 and 2,949,511, respectively.

9. Accounts and other receivables and publisher advances

(a)	Accounts and other receivables

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

	August 31, 2021			August 31, 2020
	$			$

Trade accounts receivable		9,677,725			4,690,922
Other receivables		53,387			29,406
Allowance for doubtful accounts		(1,084,305	)		(874,438	)
Total accounts and other receivables		8,646,807			3,845,890

Page 33 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

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

	August 31, 2021			August 31, 2020
	$			$

Allowance for doubtful accounts, beginning of year		(874,438	)		-
Acquisition of Frankly		-			(887,763	)
Acquisition of SideQik		(140,896	)		-
Provision, bad debt expense		(72,636	)		-
Writeoffs		3,665			13,325
Allowance for doubtful accounts, end of year		(1,084,305	)		(874,438	)

(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. One of the key terms of the amended agreement required the Company to advance $6 million of revenue sharing payments to the publisher under the following schedule:

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

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 August 31, 2021, $6 million had been advanced to the publisher and $1,465,782 had been recouped through the process explained above. As of August 31, 2021, a net amount of $4,534,218 was outstanding on the advance and the current portion of the advance was $3,197,102.

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.

10. Investment in associate and investment at FVTPL

	Investment in associate			Investment at FVTPL
		$			$

Balance, August 31, 2020		2,052,008			-
Share of loss in One Up		(103,930	)		-
Discontinue use of equity method on retained interest in former associate		(1,948,078	)		2,048,039
Change in fair value of investment at FVTPL		-			581,812
Balance, August 31, 2021		-			2,629,851

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.

Page 34 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The Company accounted for this investment as an investment in associate under the equity method from acquisition through January 5, 2021. The Company’s share in the loss of One Up for the period from September 1, 2020, to January 5, 2021, amounted to $103,930.

On January 5, 2021, the Company’s interest in One Up was reduced to 18.62% as a result of One Up closing a financing round. In accordance with IAS 28, the Company discontinued the use of the equity method on January 5, 2021, the date at which its investment ceased being an associate. The difference between the fair value of the Company’s retained interest in One Up and it’s carrying value on January 5, 2021, amounted to $99,961, which is recognized as a gain on retained interest in former associate on the Company’s statement of loss and comprehensive loss.

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 (Note 30).

Page 35 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

11. Property and equipment

Cost	Leasehold improvements			Computer equipment			Furniture and fixtures			Total
	$			$			$			$

August 31, 2019		54,465			209,126			123,298			386,889
Acquisition of UMG		166,193			116,668			30,761			313,622
Acquisition of Frankly		-			34,461			5,691			40,152
Additions		-			116,028			8,762			124,790
Disposals		-			(14,410	)		-			(14,410	)
Effect of foreign exchange		995			24,467			4,579			30,041
August 31, 2020		221,653			486,340			173,091			881,084


August 31, 2020		221,653			486,340			173,091			881,084
Acquisition of SideQik		-			11,399			1,331			12,730
Additions		-			170,305			17,865			188,170
Disposals		-			(14,244	)		-			(14,244	)
Disposal of Motorsports		(2,631	)		(47,645	)		(18,118	)		(68,394	)
Foreign exchange		(171	)		(2,548	)		(1,125	)		(3,844	)
August 31, 2021		218,851			603,607			173,044			995,502

Accumulated depreciation	Leasehold improvements			Computer equipment			Furniture and fixtures			Total
	$			$			$			$

August 31, 2019		51,847			181,089			68,700			301,636
Depreciation		4,998			102,241			34,066			141,305
Foreign exchange		672			24,178			3,904			28,754
August 31, 2020		57,517			307,508			106,670			471,695


August 31, 2020		57,517			307,508			106,670			471,695
Depreciation		5,949			117,092			26,150			149,191
Disposals		-			(4,477	)		-			(4,477	)
Disposal of Motorsports		-			(11,068	)		(9,910	)		(20,978	)
Foreign exchange		(99	)		(2,824	)		(817	)		(3,740	)
August 31, 2021		63,367			406,231			122,093			591,691

Net book value	Leasehold improvements		Computer equipment		Furniture and fixtures		Total
	$		$		$		$

August 31, 2020		164,136		178,832		66,421		409,389
August 31, 2021		155,484		197,376		50,951		403,811

Page 36 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

12. Goodwill

Disclosure of Goodwill

	Aug 31, 2021			Aug 31, 2020
	$			$

Balance, beginning of year		18,785,807			651,354
Acquisition of UMG		-			3,209,045
Acquisition of Frankly		-			14,895,595
Acquisition of SideQik		2,900,193			-
Impairment of goodwill associated with UMG		(3,209,045	)		-
Effect of foreign exchange		18,166			29,813
Balance, end of year		18,495,121			18,785,807

Frankly

The Company tested the Frankly CGU goodwill balance of $14,895,595 (2020 - $14,895,595) as of August 31, 2021, for impairment. When assessing whether or not there is an impairment, the recoverable amount of the CGU was determined based on a value in use calculation. The calculation used a ten-year projected and discounted cash flow model using a discount rate of 20.5% and a long-term growth rate of 3%. The recoverable value was concluded after making adjustments to the discounted cash flow model for cash or any other non-operating assets or liabilities as of the measurement date. The concluded recoverable value was then compared to carrying value of the CGU. No impairment charge was determined to be necessary.

The recoverable amounts for the Stream Hatchet, and Eden Games CGUs below were based on fair value less costs of disposal, estimated using a guideline public company method which is a market-based approach. The fair value measurement was categorized as a Level 3 fair value based on inputs in the valuation technique used.

Revenue multiples from publicly traded companies operating within the same industry and location and having similar business activities to the Company were utilized, after adjusting for differences in size, margins and growth rates when compared to the Company and its CGUs. These adjusted multiples of 3x for Stream Hatchet and 3.5x for Eden Games were applied to the financial metrics of the CGU to determine indicative enterprise values. Recoverable amounts were determined after an adjustment for costs of disposal, estimated at 5% of indicative enterprise values. No impairment charge was determined to be necessary for the Stream Hatchet and Eden Games CGUs.

UMG

The Company tested the UMG CGU goodwill balance of $3,209,045 (2020 - $3,209,045) as of August 31, 2021, for impairment. When assessing whether there is an impairment, the recoverable amount of the CGU was determined based on a value in use calculation. The value in use calculation used a ten-year projected and terminal period debt-free cash flow model discounted to present value using a discount rate of 21.0% and a long-term growth rate of 3%. The recoverable value is concluded after making adjustments to the discounted cash flow model for cash or any other non-operating assets or liabilities as of the measurement date. The concluded recoverable value is then compared to carrying value of the CGU. Based on this impairment assessment, the Company determined that an impairment charge was necessary and recorded a full goodwill impairment charge of $3,209,045 to impairment expense on the Company’s consolidated statement of loss and comprehensive loss. Additionally, resulting from this impairment assessment the Company recorded $675,956 impairment charge to impairment expense in connection with the intangibles within the UMG CGU (Note 13). The results for UMG are reflected in the Company’s Gaming segment.

Page 37 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

13. Intangible assets

Cost	Patents		Application Platforms			Software			Brand			Customer Lists and Contracts			Total
		$		$			$			$			$			$

August 31, 2019		-		760,323			5,055,798			1,662,993			477,592			7,956,706
Acquisition of UMG		-		560,000			-			510,000			460,000			1,530,000
Acquisition of Frankly		-		-			2,000,000			100,000			2,700,000			4,800,000
Acquisition of WinView		9,430,265		-			-			-			-			9,430,265
Acquisition of WTF1		-		-			557,709			-			-			557,709
Acquisition of Driver DB		-		-			854,158			-			-			854,158
Acquisition of Lets Go Racing		-		-			2,116,267			-			-			2,116,267
Foreign exchange		-		2,479			180,043			37,482			34,362			254,366
August 31, 2020		9,430,265		1,322,802			10,763,975			2,310,475			3,671,954			27,499,471
Disposal of Motorsports		-		-			(3,598,869	)		(201,627	)		(222,650	)		(4,023,146	)
Acquisition of SideQik		-		-			910,000			210,000			310,000			1,430,000
Impairment of UMG		-		(266,731	)		-			(263,158	)		(146,067	)		(675,956	)
Foreign exchange		-		16,974			255,577			81,759			11,063			365,373
August 31, 2021		9,430,265		1,073,045			8,330,683			2,137,449			3,624,300			24,595,742

Accumulated amortization	Patents		Application Platforms		Software			Brand			Customer Lists and Contracts			Total
		$		$		$			$			$			$

August 31, 2019		-		628,277		2,634,338			673,302			296,061			4,231,978
Amortization		628,684		162,804		2,205,781			375,514			228,267			3,601,050
Foreign exchange		-		1,960		68,881			28,675			124,605			224,121
August 31, 2020		628,684		793,041		4,909,000			1,077,491			648,933			8,057,149
Amortization		1,886,053		159,843		1,734,064			465,398			494,825			4,740,183
Disposal of Motorsports		-		-		(532,412	)		(201,627	)		(222,650	)		(956,689	)
Foreign exchange		-		13,560		229,650			34,385			(4,740	)		272,855
August 31, 2021		2,514,737		966,444		6,340,302			1,375,647			916,368			12,113,498

Net book value	Patents	Application Platforms	Software	Brand	Customer Lists and Contracts	Total
	$	$	$	$	$	$

August 31, 2020	8,801,581	529,761	5,854,975	1,232,984	3,023,021	19,442,322
August 31, 2021	6,915,528	106,601	1,990,381	761,802	2,707,932	12,482,244

Page 38 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

14. Right-of-use assets

	August 31, 2021			August 31, 2020
	$			$

Balance, beginning of year		550,478			-
Additions to right-of-use assets on adoption of IFRS 16, September 1, 2019		-			258,756
Acquisition of UMG		-			388,996
Acquired		210,178			36,375
Depreciation		(203,058	)		(148,687	)
Effect of foreign exchange		(576	)		15,038
Balance, end of year		557,022			550,478

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

15. Income taxes

The Company had no income tax expense or benefit for the year ended August 31, 2021.

(a)	Reconciliation of the effective tax rate

The reconciliation of the combined federal and provincial statutory income tax rate of 26.5% (2020 - 26.5%) to the effective tax rate is as follows:

	2021			2020
		$			$

Income (loss) before income taxes		(40,794,817	)		(32,416,108	)
Statutory income tax rate		26.5	%		26.5	%
Expected income tax (benefit)		(10,810,627	)		(8,590,269	)

Reconciling items:
Foreign rate differential		(243,335	)		443,749
Stock-based compensation and other non-deductible expenses		1,318,852			484,247
True up of prior period balances		1,323,876			-
Deferred tax assets not recognized		8,411,234			7,662,273
Income tax expense		-			-

Page 39 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

(b)	Deferred income taxes

The Company had the following temporary differences that would ordinarily give rise to deferred taxes:

	2021			2020
		$			$
Deferred tax assets
Net operating losses		1,664,801			1,340,296

Deferred tax liabilities
Intangible assets		(1,391,070	)		(919,340	)
Other - Canada		-			(14,052	)
Other - United States		(273,731	)		(318,712	)
Convertible Debt		-			(88,192	)
Net deferred tax asset		-			-

Deferred tax assets and liabilities have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent to offset.

Unrecognized Deductible Temporary Differences

Deferred taxes are provided as a result of temporary differences that arise due to the difference between the income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following deductible temporary differences:

	2021		2020
	$		$

Intangible assets		28,362,021		25,826,171
Net operating losses		153,954,414		133,010,627
Net capital losses		2,156,922		-
Property and equipment		483,175		552,680
Share issuance costs		206,655		67,250
Convertible debt		2,385,606		-
Other		8,802,009		8,998,673
		196,350,802		168,455,401

The Company’s net operating losses expire in the manner discussed below. The remaining deductible temporary differences may be carried forward indefinitely. Deferred tax assets have not been recognized in respect to these items because it cannot be determined as probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.

As of August 31, 2021, the Company has net operating loss carryforwards related to its domestic and international operations of approximately $159.8 million; $114.2 million of which have expiration periods ranging between 10 to 20 years, and $45.6 million have an indefinite carryforward period. Certain of these foreign, federal and state net operating loss carryforwards may be subject to Internal Revenue Code Section 382 or similar provisions, which impose limitations on their utilization. Net-capital losses were incurred in the year on the disposal of Motorsports group in the amount of $2,156,922. These losses can be carried forward indefinitely.

Page 40 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

16. Lease liabilities

Lease liabilities are measured at the present value of the lease payments that were not paid at that 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, 2019	-			-			-
Additions to right-of-use assets on adoption of IFRS 16, September 1, 2019	-			258,756			258,756
Acquisition of UMG	-			401,441			401,441
Acquired	36,375			-			36,375
Interest expense	(918		)	(139,019		)	(139,937		)
Payments	-			15,513			15,513
Balance, August 31, 2020		35,457			536,691			572,148
Acquired		-			210,178			210,178
Interest expense		1,971			32,226			34,197
Payments		(13,380	)		(214,948	)		(228,328	)
Effect of foreign exchange		-			(644	)		(644	)
Balance, August 31, 2021		24,048			563,503			587,551

	Equipment		Office lease		Total
	$		$		$
As of August 31, 2020:
Less than one year		11,409		174,262		185,671
Greater than one year		24,048		362,429		386,477
Total lease obligation		35,457		536,691		572,148

	Equipment		Office lease		Total
	$		$		$
As of August 31, 2021:
Less than one year		12,174		210,409		222,583
Greater than one year		11,874		353,094		364,968
Total lease obligation		24,048		563,503		587,551

The future minimum undiscounted lease payments as of August 31, 2021, are presented below:

	Total
	$
Current		250,216
2 years		176,513
3 years		160,696
4 years		52,089
Total undiscounted lease obligation		639,514

17. 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 August 31, 2021, and 2020, the players liability account balance is the total amount payable if all players were to request closure of their accounts.

18. Promissory notes payable and other borrowings

(a)	Promissory notes

The Company has promissory notes with a balance of $200,000 (August 31, 2020 – $200,000) that are unsecured, due on demand, and bear interest at 18%. As of August 31, 2021, interest of $139,644 has been accrued (August 31, 2020 – $83,435).

Page 41 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

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 August 31, 2021, $482,304 was due under the note (August 31, 2020 – $1,527,582). The note is secured by the assets of WinView, bears interest at 8%, and is currently due. As of August 31, 2021, no interest is accrued on this note (August 31, 2020 – $63,612).

(b)	Paycheck Protection Program (the “PPP”) loans

In April and May 2020, the Company entered into promissory notes (the “Notes”) with three banks. The Notes evidence loans to the Company of $1,589,559 pursuant 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.

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 $1,589,559 from 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 August 31, 2020, the Company had incurred greater than $1,589,559 of 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 loss and comprehensive loss for the year ended August 31, 2020.

(c)	Frankly line of credit

On January 7, 2020, the Company’s Frankly Media LLC subsidiary (“Frankly Media”) entered an agreement with an arm’s length lender, EB Acquisition Company, LLC (the “Lender”), whereby the Lender agreed, subject to the terms and conditions thereof, to provide Frankly Media with a revolving term line of credit in the principal amount of up to $5 million (the “EB Loan”).

The EB Loan had a one-year term, extendable for a second year upon the mutual agreement of Lender and Frankly Media; and was secured by a security interest in Frankly Media’s assets, as well as a guarantee by the Company, secured against the Company’s assets.

On December 1, 2020, the EB Loan was amended (the “Amended EB Loan”). The amendment extended the maturity date by one year and added a conversion feature to $1 million of the $5 million principal outstanding. The conversion feature allowed the holder to convert $1 million into common shares of the Company at a conversion price of $11.25 per common share. On February 24, 2021, the Company extinguished the Amended EB Loan and issued the Lender a convertible debenture in the principal amount of $5 million (the “EB CD”). The EB CD is convertible into units of the Company at a conversion price of $10.25 per 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 $15.00 per share for a period of three years from the issuance of the EB CD. The EB CD has a term of three years.

Page 42 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The Company determined the EB Loan was substantially modified on December 1, 2020 and the Amended EB Loan was substantially modified on February 24, 2021 (Note 19).

The carrying value of the line of credit as of August 31, 2021, was $0 (August 31, 2020 – $4,919,507).

19. Convertible debt

The continuity of convertible debt for the year ended August 31, 2021, is as follows:

	2019 Series			2020 Series			Amended EB Loan		EB CD		Total
	$			$							$

Balance, August 31, 2019		12,532,723			-			-		-		12,532,723
Issuances		-			8,828,550			-		-		8,828,550
Conversion - common shares issued		(5,152,023	)		-			-		-		(5,152,023	)
Conversion - warrants issued		(5,037,535	)		-			-		-		(5,037,535	)
Interest expense		358,123			-			-		-		358,123
Accrued interest on conversion		(317,508	)		11,917			-		-		(305,591	)
Effect of foreign exchange		(200,661	)		-			-		-		(200,661	)
Change in fair value		(61,250	)		(168,877	)		-		-		(230,127	)
Balance, August 31, 2020		2,121,869			8,671,590			-		-		10,793,459

	2019 Series			2020 Series			Amended EB Loan			EB CD			Total
	$			$									$

Balance, August 31, 2020		2,121,869			8,671,590			-			-			10,793,459
Issuances		-			4,282,477			-			-			4,282,477
Exchange of EB Loan for Amended EB Loan		-			-			5,043,103			-			5,043,103
Exchange of Amended EB Loan for EB CD		-			-			(4,931,813	)		7,394,022			2,462,209
Conversion - common shares issued		(1,500,214	)		(12,204,391	)		-			-			(13,704,605	)
Conversion - warrants issued		(1,103,661	)		(4,256,114	)		-			-			(5,359,775	)
Interest expense		54,126			398,183			138,710			250,000			841,019
Accrued interest on conversion / interest payments		(101,247	)		(256,300	)		(250,000	)		-			(607,547	)
Effect of foreign exchange		134,562			-			-			-			134,562
Change in fair value		1,308,993			5,461,682			-			(704,081	)		6,066,594
Balance, August 31, 2021		914,428			2,097,127			-			6,939,941			9,951,496

Page 43 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

	2019 Series		2020 Series		Amended EB Loan		EB CD		Total
	$		$		$		$		$
As of August 31, 2021:
Less than one year		914,428		-		-		-		914,428
Greater than one year		-		2,097,127		-		6,939,941		9,037,068
Total convertible debt obligation		914,428		2,097,127		-		6,939,941		9,951,496

(a)	Conversions during the years ended August 31, 2021, and 2020

2019 Series

During the year ended August 31, 2021, 2019 Series convertible debentures with a principal amount of CAD$1,315,000 (2020 – CAD$13,047,122) were converted into 175,331 units (2020 – 1,739,615), and as a result, the Company issued 175,331 common shares and 175,331 warrants (2020 – 1,739,615 common shares and 1,739,615 warrants). The fair value of the convertible debentures at the time of conversion was estimated using the binomial lattice model with the below assumptions:

Share price of CAD$11.65 – $14.15 (2020 – CAD$7.05 – $18,00); term of 1.36 – 1.90 years (2020 – 1.85 and 2.52); conversion price and warrant exercise price of CAD$7.50 (2020 – CAD$7.50); interest rate of 6% (2020 – 6%); expected volatility of 98.5% – 179% (2020 – 168.65% – 181.93%); risk-free interest rate of 0.21% - 0.27% (2020 – 0.26% – 0.96%); exchange rate of 0.7651 – 0.8286 (2020 – 0.6899 – 0.7651); and an expected dividend yield of 0% for both years. The fair value assigned to these convertible debentures was $2,603,875 (2020 – $10,189,558).

This value was split between common shares and liability measured warrants as $1,500,214 (2020 – $5,152,023) and $1,103,661 (2020 – $5,037,535), respectively.

2020 Series

During the year ended August 31, 2021, 2020 Series convertible debentures with a principal amount of $11,651,393 (2020 – nil) were converted or settled into 1,553,518 units, and as a result, the Company issued 1,553,518 common shares and 1,134,305 warrants. The fair value of the convertible debentures at the time of conversion or settlement was estimated using the binomial lattice model with the below assumptions:

Share price of $7.79 – $9.92; term of 1.44 – 1.77 years; conversion price of $7.50; warrant exercise price of $15.00, interest rate of 10%; expected volatility of 95% – 98.5%; risk-free interest rate of 0.09% - 0.13%; and an expected dividend yield of 0%. The fair value assigned to these convertible debentures was $16,460,505.

This value was split between common shares and equity measured warrants as $12,204,391 and $4,256,114, respectively.

(b)	Issuances during the year ended August 31, 2021

During the year ended August 31, 2021, 2020 Series convertible debentures with a principal amount of $2,901,393 were issued for gross proceeds of $2,901,393. In addition, in November 2020, $2,000,000 of convertible debentures from the Company’s standby convertible debenture facility were issued along with 224,719 warrants for gross proceeds of $2,000,000 (Note 19(f)). Of the gross proceeds of $2,000,000, $1,381,084 was allocated to the convertible debt and $618,916 was allocated to the 224,719 warrants issued (Note 19(f)). The total fair value recorded to convertible debt for issuances above amounted to $4,282,477.

Page 44 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

On December 1, 2020, the EB Loan was amended (Note 18(c)). The amendment extended the maturity date by one year and added a conversion feature to $1,000,000 of the $5,000,000 principal outstanding. The conversion feature allowed the holder to convert $1,000,000 into common shares of the Company at a conversion price of $11.25 per common share. On February 24, 2021, the Company extinguished the Amended EB Loan and issued the Lender a convertible debenture in the principal amount of $5,000,000. The EB CD is convertible into units of the Company at a conversion price of $10.25 per 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 $15.00 per share for a period of three years from the issuance of the EB CD. The EB CD has a term of three years.

The fair value of the Amended EB Loan on December 1, 2020, was $5,043,103. The carrying value of the former EB Loan on December 1, 2020, consisted of $5,000,000 in principal and $76,412 in accrued interest, for total carrying value on the amendment date of $5,076,412. As a result, a gain on extinguishment of debt of $33,309 was recognized. The fair value of the EB CD on the date of issuance of February 24, 2021, was $7,394,022. The fair value of the Amended EB Loan on February 24, 2021, was $4,931,813. As a result, a loss on extinguishment of debt of $2,462,209 was recognized. The above two transactions resulted in a loss on extinguishment of debt of $2,428,900.

(c)	2019 Series

As of August 31, 2021, the fair value of the 2019 Series convertible debentures was estimated using the binomial lattice model with the below assumptions:

2019 Series	August 31, 2021 (CA$)			August 31, 2020 (CA$)

Share price		8.42			11.65
Conversion price		7.50			7.50
Warrant exercise price		7.50			7.50

Term, in years		.85 - .94			1.85 - 1.94
Interest rate		6	%		6	%
Expected volatility		90.00	%		179.00	%
Risk-free interest rate		0.25% - 0.26	%		0.25	%
Exchange rate		0.7947			0.7651
Expected dividend yield		0	%		0	%

(d)	2020 Series

The 2020 Series debentures will mature twenty-four (24) months from 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.

Page 45 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

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) $11.25 per 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 $7.50 per 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 $7.50 per Unit. As of December 19, 2020, the Company had not obtained registration rights in the United States. As such, the conversion price is $7.50 per Unit and the interest rate increased to 10% on December 19, 2020.

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 $15.00 per 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 $30.00 per 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.

(e)	2020 Series - One Up

These convertible debentures (the “2020 Series One Up” debentures) have identical terms as the 2020 Series debentures except that the minimum conversion price of $7.50 per Unit (as described above) will be US$9.50 per Unit. The 2020 Series One Up convertible debentures had a fair value at issuance of $3,078,550.

(f)	2020 Series – Standby

In September 2020, the Company entered into an $8,000,000 stand-by convertible debenture facility (the “2020 Series Standby” debentures). The 2020 Series Standby Debenture has substantially similar terms as the 2020 Series debentures, except (i) the references to a minimum $7.50 conversion 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 224,719 warrants in connection with this first draw of $2,000,000 of the Standby Debentures, with each warrant exercisable into one common share the Company at an exercise price of $15.00 per share for a period of two years, subject to the same acceleration clause as the warrants underlying the 2020 Series debentures.

The remaining $6,000,000 of 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.

Page 46 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

As of August 31, 2021, the fair value of the 2020 Series convertible debentures was estimated using the binomial lattice model with the below assumptions:

2020 Series	August 31, 2021 (US$)			August 31, 2020 (US$)

Share price		6.66			8.92
Conversion price		8.90			7.50 - 9.50
Warrant exercise price		-			15.00

Term, in years		1.26			1.97 - 1.98
Interest rate		10	%		5% and 10	%
Expected volatility		90.00	%		200.00	%
Risk-free interest rate		0.10	%		0.14	%
Expected dividend yield		0	%		0	%

(g)

EB CD

On February 24, 2021, the Company extinguished the Amended EB Loan and issued the Lender a convertible debenture in the principal amount of $5 million (the “EB CD”). The EB CD is convertible into units of the Company at a conversion price of $10.25 per 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 $15.00 per share for a period of three years from the issuance of the EB CD. The EB CD has a term of three years.

As of August 31, 2021, the fair value of the EB CD convertible debenture was estimated using the binomial lattice model with the below assumptions:

EB CD	August 31, 2021 (US$)			August 31, 2020 (US$)

Share price		6.66			-
Conversion price		10.25			-
Warrant exercise price		15.00			-

Term, in years		1.26			-
Interest rate		10	%		-
Expected volatility		90.00	%		-
Risk-free interest rate		0.30	%		-
Expected dividend yield		0	%		-

Financial assets / financial liabilities	Valuation technique	Key Inputs	Relationship and sensitivity of unobservable inputs to fair value to fair value

Convertible debt	The fair value of the convertible debentures as of August 31, 2021 has been calculated using a binomial lattice methodology.	Key observable inputs	The estimated fair value would increase (decrease) if:
		Share price CAD$8.42 (USD $6.66)	The share price was higher (lower)
		Risk-free interest rate (0.10% to 0.30%)	The risk-free interest rate was higher (lower)
		Dividend yield (0%)	The dividend yield was lower (higher)
		Key unobservable inputs
		Credit spread (1.14% to 8.45%)	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, 2020 has been calculated using a binomial lattice methodology.	Key observable inputs	The estimated fair value would increase (decrease) if:
		Share price (USD $8.92)	The share price was higher (lower)
		Risk-free interest rate (0.14%)	The risk-free interest rate was higher (lower)
		Dividend yield (0%)	The dividend yield was lower (higher)
		Key unobservable inputs
		Credit spread (18.35%)	The credit spread was lower (higher)
		Discount for lack of marketability (47%)	The discount for lack of marketability was lower (higher)

20. Long-term debt

The Company has an unsecured, non-interest bearing loan that matures on June 30, 2022. The loan bears interest at 0% per annum. As of August 31, 2021, the present value of the loan was $96,664 (2020 – $230,932), with accretion of $28,123 (2020 – $16,239) having been charged to interest expense on the Company’s consolidated statements of loss and comprehensive loss for the years then ended. A discount rate of 10% was used for both years.

Scheduled repayments are: €90,000 ($106,330) as of August 31, 2021, all of which is current.

Page 47 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

21. Warrants

Liability measured warrants having CAD exercise price

The following table reflects the continuity of the Company’s liability measured warrants for the years ended August 31, 2021, and 2020:

Schedule of Measured Warrants

	Amount
	$

Balance at August 31, 2020		14,135,321
Issued on conversion of convertible debt		1,103,661
Exercised		(2,134,116	)
Change in fair value		(9,037,108	)
Foreign exchange		800,945
Balance, August 31, 2021		4,868,703

	Amount
	$

Balance at August 31, 2019		296,795
Issued in acquisition of Frankly		2,157,000
Issued on conversion of convertible debt		5,037,535
Issued in private placement of units		991,709
Exercised		(1,345,573	)
Change in fair value		6,189,921
Foreign exchange		807,934
Balance, August 31, 2020		14,135,321

Page 48 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The following table reflects the continuity of the Company’s outstanding liability measured warrants for the years ended August 31, 2021, and 2020:

Schedule of Outstanding Warrants

				Weighted-average
	Number of			exercise price
	warrants			CAD
	#			$

Outstanding, August 31, 2020		2,405,369			9.60
Issued on conversion of convertible debt		175,331			7.50
Exercised		(901,060	)		9.27
Expired		(226,797	)		13.43
Oustanding as at August 31, 2021		1,452,843			8.96

	Number of			Weighted-average
				exercise price
	warrants			CAD
	#			$

Outstanding, August 31, 2019		29,318			448.50
Issued		1,990,890			8.45
Issued on acquisition of UMG		9,943			174.18
Issued in acquisition of Frankly		1,055,036			9.69
Exercised		(654,543	)		7.50
Expired		(25,275	)		551.26
Oustanding as at August 31, 2020		2,405,369			9.60

The following table reflects the liability measured warrants issued and outstanding as of August 31, 2021:

			Warrants outstanding
Expiry date	Number outstanding		Average exercise price CAD		Average remaining contractual life (years)
March 13, 2022		123,159		10.50		0.53
December 20, 2022		29,066		27.00		1.30
March 20, 2023		27,777		13.50		1.55
March 30, 2023		46,909		13.50		1.58
March 31, 2023		17,222		13.50		1.58
May 27, 2023		130,304		13.50		1.74
July 8, 2024		445,982		7.50		2.85
July 25, 2024		401,624		7.50		2.90
August 8, 2024		230,800		7.50		2.94
		1,452,843	$	8.96		2.47

Page 49 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

As of August 31, 2021, the fair value of the 1,452,843 liability measured warrants outstanding (August 31, 2020 – 2,405,369) was determined to be $4,868,703 (August 31, 2020 – $14,135,321) as calculated using the Black Scholes option pricing model with the following range of assumptions: 0.53 – 2.94 years (August 31, 2020 – 0.23 – 3.94) as expected average life; share price of CAD$8.42 (August 31, 2020 – CAD$11.65); exercise price of CAD$7.50 – CAD$27.00 (August 31, 2020 – CAD$7.50 – CAD$205.20); 70% - 90% expected volatility (August 31, 2020 – 115% - 136%); risk free interest rate of 0.28% - 0.63% (August 31, 2020 – 0.23% - 0.32%); and an expected dividend yield of 0%.

If all liability measured warrants outstanding and exercisable as of August 31, 2021, were exercised, the Company would receive cash from exercise of approximately CAD$13.0 million.

(a)	Liability measured warrants exercised during the year ended August 31, 2021

During the year ended August 31, 2021, the holders of 901,060 warrants exercised their right to convert the warrants into the Company’s common shares at an exercise price of CAD$7.50 - $9.75. As a result of the underlying exercise of warrants, the Company received $6,866,735 in cash proceeds and the intrinsic value of the underlying warrants at the date of exercise of $2,134,116 was transferred to share capital, for a total addition to share capital of $9,000,851.

(b)	Liability measured warrants issued during the year ended August 31, 2021

During the year ended August 31, 2021, the Company issued 175,331 warrants (August 31, 2020 – 1,739,613) in connection with conversion of convertible debt (Note 19(a) – 2019 Series), and nil warrants (August 31, 2020 – 251,277) in connection with the private placement of units (Note 22(c)), for a total number of 175,331 warrants issued (August 31, 2020 – 1,990,890 warrants issued, excluding warrants issued in connection with acquisitions as highlighted in the continuity above).

(c)	Liability measured warrants issued on conversion of convertible debt

2019 Series

During the year ended August 31, 2021, the Company issued 175,331 warrants (August 31, 2020 – 1,739,613) in conjunction with the conversion of convertible debt. The fair value of the 175,331 warrants (August 31, 2020 – 1,739,613) issued was determined to be $1,103,661 (August 31, 2020 – $5,037,535) as calculated using the Black Scholes option pricing model with the following assumptions:

A 3.36 – 3.90 years as expected average life (August 31, 2020 – 3.92 to 4.91); share price of CAD$9.50 – $12.33 (August 31, 2020 – CAD$7.05 – $25.65); exercise price of CAD$7.50 (August 31, 2020 – CAD$7.50); 98.5% - 136% expected volatility (August 31, 2020 – 136%); risk free interest rate of 0.25% - 0.54% (August 31, 2020 – 0.28% and 1.71%); and an expected dividend yield of 0% for both years.

Volatility is calculated using a weighted approach based on the changes in the Company’s historical stock price. The final fair value allocated to the warrants on conversion of convertible debt is based on a relative fair value allocation between the common shares issued and warrants issued on conversion.

Page 50 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Equity measured warrants having USD exercise price

The following table reflects the continuity of the Company’s equity measured warrants for the year ended August 31, 2021. There were no equity measured warrants outstanding as of August 31, 2020:

Schedule of Measured Warrants

	Amount
	$

Balance at August 31, 2020		-
Issued on conversion of convertible debt		4,256,114
Issued in private placement of convertible debt		618,916
Issued in private placement of units		7,373,806
Issued in private placement of units - transaction costs		(582,333	)
Balance, August 31, 2021		11,666,503

The following table reflects the continuity of the Company’s outstanding equity measured warrants for the year ended August 31, 2021:

Schedule of Outstanding Warrants

			Weighted-average
	Number of		exercise price
	warrants		USD
	#		$

Outstanding, August 31, 2020		-		-
Issued on conversion of convertible debt		1,134,305		15.00
Issued in private placement of convertible debt		224,719		15.00
Issued in private placement of units		2,377,272		15.00
Oustanding as at August 31, 2021		3,736,296		15.00

Page 51 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The following table reflects the equity measured warrants issued and outstanding as of August 31, 2021:

			Warrants outstanding
Expiry date	Number outstanding		Average exercise price USD		Average remaining contractual life (years)
November 20, 2022		224,719		15.00		1.22
January 8, 2024		1,868,787		15.00		2.36
January 22, 2024		522,898		15.00		2.39
February 24, 2024		1,058,227		15.00		2.48
August 19, 2024		49,999		15.00		2.97
September 15, 2024		11,666		15.00		3.04
		3,736,296	$	15.00		2.34

If all equity measured warrants outstanding and exercisable as of August 31, 2021, were exercised, the Company would receive cash from exercise of approximately $56.0 million.

(a)	Equity measured warrants issued during the year ended August 31, 2021

During the year ended August 31, 2021, the Company issued 1,134,305 warrants (August 31, 2020 – nil) in connection with conversion of convertible debt (Note 19(a) – 2020 Series), 224,719 warrants (August 31, 2020 – nil) in connection with the private placement of convertible debentures (Note 19(f)) and 2,377,272 warrants (August 31, 2020 – nil) in connection with the private placement of units (Note 22(c)), for a total number of 3,736,296 warrants issued (August 31, 2020 – nil).

(b)	Equity measured warrants issued on conversion of convertible debt

2020 Series

During the year ended August 31, 2021, the Company issued 1,134,305 warrants (August 31, 2020 – nil) in conjunction with the conversion of convertible debt. The fair value of the 1,134,305 warrants issued was determined to be $4,256,114 as calculated using the Black Scholes option pricing model with the following assumptions:

A 3.00 – 3.50 years expected average life; share price of $7.79 – $11.17; exercise price of $15.00; 98.5% expected volatility; risk free interest rate of 0.29% - 0.57%; and an expected dividend yield of 0%.

(c)	Equity measured warrants issued on private placement of standby convertible debentures

During the year ended August 31, 2021, the Company issued 224,719 warrants in connection with the private placement of convertible debentures under its standby convertible debenture facility (Note 19(f)). The fair value of the 224,719 warrants issued was determined to be $618,916 as calculated using the Black Scholes option pricing model with the following assumptions:

A 2 years expected average life; share price of $5.63; exercise price of $15.00; 200% expected volatility; risk free interest rate of 0.16%; and an expected dividend yield of 0%.

Page 52 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

(d)	Equity measured warrants issued on private placement of units

During the year ended August 31, 2021, the Company issued 2,377,272 warrants (August 31, 2020 – nil) in conjunction with the private placement of units. Of the 2,377,272 warrants issued, 191,387 were issued to finders as fees for services. The fair value of the 2,377,272 warrants issued (August 31, 2020 – nil) was determined to be $7,373,806 (August 31, 2020 – $nil) as calculated using the Black Scholes option pricing model with the following assumptions:

A 3.00 year expected average life (August 31, 2020 – nil); share price of $7.79 – $10.00 (August 31, 2020 – nil); exercise price of $15.00 (August 31, 2020 – nil); 98.5% expected volatility (August 31, 2021 – nil); risk free interest rate of 0.29% - 0.43% (August 31, 2020 – nil); and an expected dividend yield of 0%.

Of the $7,373,806 total fair value, $6,603,243 was the fair value of the 2,185,885 warrants issued for proceeds, with $770,563 being the fair value of the 191,387 warrants issued to finders. The amount recorded in contributed surplus of $6,791,473 represents the fair value of warrants issued of $7,373,806 less $582,333 for transaction costs allocated to the warrants issued.

Volatility is calculated using a weighted approach based on the changes in the Company’s historical stock price. The final fair value allocated to the warrants on the issuance of the units is based on a relative fair value allocation between the common shares issued and warrants issued.

22. 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, 2019		156,438			29,613,406
Impact of share consolidation		(114	)		-
Shares issued on vesting of RSUs		26,666			159,895
Convertible debt conversion		1,739,615			5,152,023
Private placements, net of costs		502,562			2,694,076
Shares issued for debt conversion		59,654			724,231
Shares issued on acquisition of UMG		288,560			3,804,344
Shares issued on acquisition of Frankly		2,258,215			12,155,000
Shares issued on acquisition of Winview		1,759,997			7,579,000
Shares issued on acquisition of Driver Database (Note 6)		100,000			859,745
Shares issued on acquisition of Lets Go Racing (Note 6)		200,000			1,719,491
Common shares issued on exercise of warrants		654,543			4,919,596
Balance, August 31, 2020		7,746,136			69,380,807

	Shares		Consideration
	#		$

Balance, August 31, 2020		7,746,136		69,380,807
Shares issued on vesting of RSUs		277,749		1,895,891
Common shares issued on exercise of options		20,833		290,558
Convertible debt conversion		1,728,848		13,704,605
Common shares issued on private placement, net of costs		4,435,433		24,225,901
EB bonus shares		6,666		54,061
Shares for debt		40,000		226,556
Common shares issued on exercise of warrants		901,060		9,000,851
Shares issued on acquisiton of SideQik		386,584		3,962,000
Balance, August 31, 2021		15,543,309		122,741,230

Page 53 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

(c)	Activity for the year ended August 31, 2021

Private Placement of units

In January and February 2021, the Company closed on the issuance of 4,371,767 units (the “Units”) for gross proceeds of $32,788,253 of non-brokered private placements. Each Unit consists of one common share of the Company and one-half of one common share purchase warrant (a “Warrant”). Each whole Warrant entitles the holder to acquire one additional share of the Company at a price of $15.00 per share for a period of 3 years provided that: (i) if the common shares are listed for trading on NASDAQ, (ii) the Company completes an offering of securities under a short form prospectus for an aggregate amount of at least $30,000,000, and (iii) the closing price of the common shares on NASDAQ is $30.00 or greater for a period of 15 consecutive trading days, then the Company may accelerate the expiry date of the Warrants to the 30th day after the date written notice is provided to the holders.

The Company paid cash commissions to eligible finders under the offering of $1,681,477 and regulatory and legal fees of $89,402. Net cash proceeds from the offering amounted to $31,017,374.

In addition to the cash finder’s fees discussed above, the Company issued the following securities as partial payment of commissions to finders: 63,666 Units; and 159,554 finders warrants, with each finder warrant exercisable into a common share at an exercise price of US$15.00 per share for 3 years subject to the same acceleration terms described above.

The total number of common shares issued as a result of the private placements totaled 4,435,433, which was comprised of 4,371,767 Units issued for proceeds and 63,666 Units issued as partial payment to finders. The total number of warrants issued totaled 2,377,272, which was comprised of warrants issued as part of the Units issued of 2,217,718 (50% of Units issued) and 159,554 finders warrants issued.

A summary of amounts recorded in connection with private placement and their effect on financial statement line items is noted below:

	Proceeds			Shares		Impact on share capital			Warrants		Impact on contributed surplus
	$			#		$			#		$
Units issued in private placement		32,788,253			4,371,767		26,185,009			2,185,885		6,603,244
Cash commissions		(1,681,477	)		-		(1,345,736	)		-		(335,741	)
Regulatory and legal fees		(89,402	)		-		(71,522	)		-		(17,880	)
Finders’ units issued		-			63,666		383,720			31,833		93,775
Finders’ units considered as transaction costs		-			-		(383,720	)		-		(93,775	)
Finders’ warrants issued		-			-		-			159,554		676,787
Finders’ warrants considered as transaction costs		-			-		(541,850	)		-		(134,937	)
		31,017,374			4,435,433		24,225,901			2,377,272		6,791,473

The fair value allocated between the common shares and warrants on the issuance of the Units is based on a relative fair value allocation between the common shares issued and warrants issued. Refer to equity measured warrants note for discussion of the key assumptions used in valuation of the warrants as part of the relative fair value allocation.

Page 54 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Other activity

During the year ended August 31, 2021, the Company had the following additional activity to share capital: (i) issued 277,749 common shares upon vesting of an equal number of RSUs (Note 24); (ii) issued 20,833 common shares upon the exercise of vested stock options, (iii) issued 1,728,848 common shares in connection with conversion of convertible debt (Note 19(a)), (iv) issued 901,060 common shares in connection with the exercise of warrants (Note 21(a)); (v) issued 40,000 common shares for cancelation of $226,556 of debt (shares for debt); and (vi) issued 6,666 common shares valued at $54,061 as an amendment fee to the lender in connection with the Amended EB Loan (the “EB Bonus Shares”). In addition to the EB Bonus Shares, the Company paid the lender a cash fee of $100,000. The amendment fees were recorded within interest expense as the Amended EB Loan and the subsequently the EB CD is being accounted for at FVTPL; (vii) issued 386,584 common shares with a fair value of $4,136,000 in connection with the acquisition of SideQik, Inc (Note 6).

Activity for the year ended August 31, 2020

During the year ended August 31, 2020, the Company issued 26,666 common shares upon vesting of an equal number of RSUs (Note 24), issued 1,739,615 common shares in connection with conversion of convertible debt (Note 19), and issued 502,562 common shares in connection with a series of non-brokered private placements as follows:

On December 18, 2019, the Company closed a non-brokered private placement at a price of CAD$18.75 ($14.25) per unit. The Company issued 58,133 units for gross proceeds of CAD$1,090,000 ($830,907). Each unit is comprised of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share of the Company for a period of 36 months from the date of issuance of the warrant, at an exercise price of CAD$27.00 per share. The proceeds were allocated to the common shares and warrants using the relative fair value method, with $612,745 being allocated to the 58,133 common shares issued and the remaining $218,162 allocated to the 29,067 warrants issued (Note 21).

During the third quarter of 2020 the Company closed a non-brokered private placement at a price of CAD$9.00 per unit in four tranches. The Company issued a total of 444,429 units for gross proceeds of CAD$3,999,860 ($2,875,593). Each unit is comprised of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share of the Company for a period of 36 months from the date of issuance of the warrant, at an exercise price of CAD$13.50 per share. The proceeds were allocated to the common shares and warrants using the relative fair value method, with $2,102,047 being allocated to the 444,429 common shares issued and the remaining $773,546 allocated to the 222,214 warrants issued (Note 21).

On March 20, 2020, the Company issued 46,300 common shares in settlement of select trade payables through a shares for debt placement amounting to CAD$900,003 ($632,522). The fair value of the shares issued were based on market price on the date of settlement. In addition, on June 13, 2020, the Company issued 13,354 common shares in settlement of select trade payables through a shares for debt placement amounting to CAD$125,000 ($91,709).

Page 55 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

On December 31, 2019, the Company issued 288,560 common shares with a fair value of $3,804,344 in connection with the acquisition of UMG (Note 6). On May 8, 2020, the Company issued 2,258,215 common shares with a fair value of $12,155,000 in connection with the acquisition of Frankly (Note 6). On May 8, 2020, the Company issued 1,759,997 common shares with a fair value of $7,579,000 in connection with the acquisition of Winview (Note 6).

On June 3, 2020, the Company issued 100,000 common shares with a fair value of $859,745 in connection with the acquisition of DriverDB (Note 6). On June 3, 2020, the Company issued 200,000 common shares with a fair value of $1,719,491 in connection with the acquisition of Lets Go Racing (Note 6).

During the year ended August 31, 2020, the Company issued 654,543 common shares in connection with the exercise of warrants. In connection with these exercises, amounts recorded to share capital of $4,919,596 are comprised of exercise proceeds of $3,574,023 and intrinsic value of warrants on exercise of $1,345,573 (Note 21).

23. 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 10 years 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. The following table reflects the continuity of stock options for the years ended August 31, 2021, and 2020:

				Weighted-average
	Number of stock options			Exercise price		Grant-date fair value		Remaining contractual term
	#			$		$		(yrs.)

Balance, Aug. 31, 2019		6,971			166.20		49.86		5.84
Issued on acquisition of UMG		16,606			63.30		2.32
Issued on acquisition of Frankly		64,659			9.22		5.07
Granted		169,995			7.91		4.38
Expired/Cancelled		(5,110	)		185.97		55.79
Balance, Aug 31, 2020		253,121			12.73		4.39		4.31


Balance, August 31, 2020		253,121			12.73		4.39		4.31
Granted		487,466			11.77		8.16
Issued on exercise of options		(20,833	)		7.91		4.38
Expired/Cancelled		(26,816	)		27.20		6.51
Balance, Aug 31, 2021		692,938			11.64		7.06		4.46

Exerciseable as at Aug 31, 2021		209,950			13.01		4.30		2.35

Page 56 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The following tables reflect the stock options issued and outstanding as of August 31, 2021:

Expiry date	Outstanding options		CAD		Weighted average exercise price USD		Weighted average remaining contractual term (Years)
December 10, 2021		1,564		93.30		71.84		0.28
June 30, 2022		4,428		153.45		118.15		0.83
April 1, 2023		84,165		11.25		7.91		1.58
October 31, 2023		64,997		11.25		7.91		2.17
January 29, 2025		46		106.50		76.43		3.42
August 25, 2025		340		106.50		76.43		3.99
September 23, 2025		11		106.50		76.43		4.07
February 10, 2026		1,443		106.50		76.43		4.45
May 19, 2026		4		106.50		76.43		4.72
May 23, 2026		9		106.50		76.43		4.73
June 24, 2026		375,188		15.04		12.21		4.82
July 1, 2026		10,000		14.87		12.00		4.84
July 2, 2026		57,762		15.08		12.21		4.84
August 20, 2026		32,500		7.78		6.05		4.97
March 3, 2027		1,256		106.50		76.43		5.51
July 31, 2027		159		106.50		76.43		5.92
November 3, 2027		133		106.50		76.43		6.18
November 7, 2029		46,251		7.50		5.38		8.19
April 20, 2030		666		7.05		5.06		8.64
December 2, 2030		1,333		9.50		7.38		9.26
June 14, 2031		10,683		14.20		11.69		9.79
		692,938		14.86		11.64		4.46

Of the 692,938 options outstanding as of August 31, 2021 (2020 – 253,121), 209,950 are exercisable as of August 31, 2021 (2020 – 191,730).

24. 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.

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 1,548,174 common shares.

Page 57 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The Company’s outstanding RSUs are as follows:

	Number
	#

Balance, August 31, 2019		-
Issued on acquisition of Frankly		50,037
Granted		379,001
Vested		(26,666	)
Cancelled		-
Balance, August 31, 2020		402,372

Balance, August 31, 2020		402,372
Issued on acquisition of SideQik		23,939
Granted		353,467
Vested		(277,749	)
Cancelled		(11,855	)
Balance, August 31, 2021		490,174

Activity for the year ended August 31, 2021

During the year ended August 31, 2021, the Company granted 353,467 RSUs pursuant to the Company’s incentive plan to a former officer and key management employees. The fair value of these RSUs was estimated based on the closing price of CAD$7.94 – CAD$14.61 for a total fair value on date of grant of CAD$3,547,104. Of the 377,406 RSUs granted, 75,944 were severance compensation to a former officer. As these RSUs were issued as severance compensation, the grant date fair value of CAD$713,874 ($550,896) was recognized on the grant date. The Company issued 23,939 RSUs as purchase consideration related to the SideQik, Inc. acquisition with a fair value of $245,000 The remaining RSUs will be recognized as share-based compensation expense over the vesting period, which is generally three years.

Activity for the year ended August 31, 2020

On April 1, 2020, the Company granted 26,666 RSUs to compensate directors, officers and key employees, which vested immediately. On August 13, 2020, the Company granted 352,335 RSUs to compensate directors and officers. The director RSUs vest at the end of one year, and the officer RSUs vest over three years. The remaining 50,037 RSUs were granted on May 8, 2020, in connection with the acquisition of Frankly. These RSUs have a vesting period of three years from the original date of the grant.

The fair value of RSUs granted on April 1, 2020, was estimated based on a closing price of CAD$8.55 (US$6.01) for a total fair value on date of grant of CAD$228,000 ($159,895). As these RSUs had immediate vesting, the fair value was recognized in full on the date of grant as stock-based compensation expense and 26,666 common shares were issued. The fair value of RSUs granted on August 13, 2020, was estimated based on a closing price of CAD$8.40 (US$6.34) for a total fair value on date of grant of CAD$2,959,614 ($2,232,997). The fair value of these RSUs will be recognized as stock-based compensation expense over the vesting period. The fair value of the RSUs granted on May 8, 2020, in connection with the acquisition of Frankly will be recognized as stock-based compensation expense over the vesting period.

During the year ended August 31, 2021, share-based compensation expense for the Company’s RSUs was $3,037,366 (2020 – $479,663).

Page 58 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

25. Capital management

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

As of August 31, 2021, the Company had shareholders’ equity before non-controlling interests of $25,422,165 (2020 – $45,907). 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, through the use of lower cost capital, including raising share capital or debt when required to fund opportunities as they arise.

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 years ended August 31, 2021, and 2020.

26. 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 966,667 common shares of the Company and other consideration, including payments of $1,200,000 as 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 966,667 common shares of the Company to those shareholders. As alternative relief, the shareholders of Allinsports sought up to US$20,000,000 in 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 966,667 common 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 $6,468,330, which represents the fair value of the common shares directed to be delivered as of August 31, 2021. 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.

Separately, in April of 2021, the Company received a copy of a complaint filed by 3CI Holdings, LLP in the Circuit Court for the 11th Judicial Circuit for Miami-Dade naming Allinsports, A1 Simulation LLC (an entity purported to be a subsidiary of Allinsports), and the Company, seeking to hold the parties, including Company, responsible for unpaid rent under a lease agreement between 3CI’s predecessors in interest and A1 Simulation, and seeking damages of at least $2,890,000. On July 6, 2021, the Company filed motion to dismiss the complaint in this matter.

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 Engine. The relief sought includes rescission of the sale of Winview to Engine and compensatory damages. The defendants have filed a motion to dismiss the claims in this matter. 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.

On July 15, 2021, a complaint was filed against Winview Inc. by Bleacher League Entertainment, Inc. in the United States District Court for the District of Delaware, alleging that Winview had violated two of Bleacher’s patents covering an interactive themed baseball game and seeking damages and other relief. The parties have entered into an agreement resolving this matter and in connection therewith, on November 8, 2021, the plaintiff terminated the pending action by filing a notice of voluntary dismissal with prejudice.

Page 59 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

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. FanDuel filed a partial motion to dismiss two of the claims alleged in Winview’s complaint. Winview has responded and the motion is pending. DraftKings filed a motion to dismiss Winview’s complaint, which was withdrawn without prejudice after Winview filed an amended complaint. While potential damages may be significant if these lawsuits are wholly or partially successful, at this time the Company cannot predict the outcome of the suits or determine the extent of potential damages if they are successful in whole or in part.

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.

27. Discontinued operations

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 is eliminating 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 have been presented as a discontinued operation.

Consideration transferred for the Motorsport Group was as follows:

	Amount
	$
Consideration received or receivable:
Accounts payable assumed		101,322
Deferred purchase consideration of LGR		333,503
Fair value of contingent consideration		1,321,281
Total disposal consideration		1,756,106
Carrying amount of net assets sold		(2,334,303	)
Loss on disposal before income tax and reclassification of foreign currency translation reserve		(578,197	)

Reclassification of foreign currency translation reserve		(100,734	)
Loss on disposal of Motorsports		(678,931	)

Page 60 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The net assets of the Motorsport Group as of the date of sale were as follows:

	Amount
	$
Carrying amounts of assets as at the date of sale:
Cash and cash equivalents		(24,348	)
Restricted cash		-
Accounts and other receivables		126,590
Government remittances		25,095
Prepaid expenses and other		24,113
Property and equipment		47,416
Intangible assets		3,066,457
Total assets of disposal group		3,265,323

Carrying amount of liabilities directly associated with assets as at the date of sale:
Accounts payable		508,881
Accrued liabilities		422,139
Total liabilities of disposal group		931,020

Net assets of disposal group		2,334,303

The operating results of the Motorsports Group and PGL Nevada, (together, the “discontinued operations”) for the years ended August 31, 2021, and 2020 are presented as follows:

	For the year ended
	Aug 31, 2021			Aug 31, 2020
	$			$
Revenues
Advertising revenue		90,934			562,534

Operating expenses
Salaries and wages		212,546			815,304
Consulting		267,933			1,014,940
Professional fees		24,781			219,369
Sponsorships and tournaments		203,637			3,697,046
Advertising and promotion		1,740			30,808
Office and general		7,374			155,464
Technology expenses		86,590			163,534
Amortization and depreciation		201,335			341,668
Share-based payments		-			-
Interest expense		572			1,162
(Gain) loss on foreign exchange		29,535			(16,550	)
Net loss from discontinued operations		(945,109	)		(5,860,211	)

Page 61 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The net cash flows from discontinued operations for the years ended August 31, 2021, and 2020 are as follows:

	For the year months ended
	Aug 31, 2021			Aug 31, 2020
	$			$

Net cash provided by (used in) operating activities		(92,652	)		(96,942	)
Disposal of Motorsports		24,348			-
Change in cash		(68,304	)		(96,942	)
Cash, beginning of period		68,304			79,553
Cash, end of period		-			(17,389	)

28.	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, and Corporate and Other. 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.

The following is an analysis of the Company’s revenue and results by reportable segment in fiscal 2021:

	Gaming			Media			Corporate and Other			Total
	$			$			$			$
Revenue
External sales		5,277,583			31,943,287			-			37,220,870

Results
Segment loss		(9,064,847	)		(7,611,679	)		-			(16,676,526	)

Central administration costs		-			-			9,733,244			9,733,244
Other gains and losses		4,720,312			(39,258	)		6,576,302			11,257,356
Finance costs		124,663			512,937			762,121			1,399,721
Loss before tax		(13,909,822	)		(8,085,358	)		(17,071,667	)		(39,066,847	)
Income tax		-			-			-			-
Gain (Loss) for the year from:
Share of net loss of associate		-			-			(103,930	)		(103,930	)
Discontinued operations		(945,109	)		-			(678,931	)		(1,624,040	)
Non-controlling interest in net loss		-			-			74,006			74,006
Net loss		(14,854,931	)		(8,085,358	)		(17,780,522	)		(40,720,811	)

Page 62 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

The following is an analysis of the Company’s revenue and results by reportable segment in fiscal 2020:

	Gaming			Media			Corporate and Other			Total
	$			$			$			$
Revenue
External sales		4,140,731			6,404,736			376			10,545,843

Results
Segment loss		(4,842,557	)		(833,891	)		376			(5,676,072	)

Central administration costs								9,692,464			9,692,464
Other gains and losses		16,565			(14,011	)		10,276,041			10,278,595
Finance costs		102,596			241,520			564,650			908,766
Loss before tax		(4,961,718	)		(1,061,400	)		(20,532,779	)		(26,555,897	)
Income tax		-			-			-			-
Gain (Loss) for the year from:
Discontinued operations		(5,860,211	)		-			-			(5,860,211	)
Non-controlling interest in net loss		-			-			76,066			76,066
Net loss		(10,821,929	)		(1,061,400	)		(20,456,713	)		(32,340,042	)

Geographical breakdown

	North America		United Kingdom		European Union		Total
	$		$		$		$
August 31, 2020
Assets		48,230,804		2,896,582		2,288,091		53,415,477
Long-term assets		37,664,748		2,507,761		1,067,495		41,240,004


August 31, 2021
Assets		64,943,049		-		2,519,798		67,462,847
Long-term assets		35,796,241		-		108,924		35,905,165

29. 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 includes the following:

	Aug 31, 2021		Aug 31, 2020
	For the year ended
	Aug 31, 2021		Aug 31, 2020
	$		$

Total compensation paid to key management		2,231,871		929,958
Share based payments		1,897,855		1,409,569

Page 63 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

Total compensation paid to key management is recorded in consulting fees and salaries and wages in the consolidated statement of loss and comprehensive loss for the years ended August 31, 2021, and 2020.

Amounts due to related parties as at August 31, 2021 with respect to the above fees were $33,349 (2020 – $275,502). The amounts due to related parties are recorded within accounts payable and accrued liabilities on the consolidated statements of loss and comprehensive loss. These amounts are unsecured, non-interest bearing and due on demand.

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. Certain directors of the Company are among the pool of Stubholders.

30. 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, and liquidity 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.

(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 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 to 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. The allowance for doubtful accounts was $1,084,305 and $874,438 as of August 31, 2021, and 2020, respectively.

Page 64 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

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.

As of August 31, 2021, one customer (2020 - one) accounted for greater than 10% of the Company’s accounts receivable balance. In total, this one customer (2020 - one) accounted for 13% of the Company’s accounts and other receivables balance as of August 31, 2021, and 2020. During the year ended August 31, 2021, one (2020 - three) customer represented 60% (2020 - 50%) 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 August 31, 2021:

	0 - 30			31 - 60			61 - 90			91+			Total

Trade accounts receivable		7,376,270			210,815			265,377			1,825,263			9,677,725
Allowance for doubtful accounts		3,000			1,500			1,500			1,078,305			1,084,305
% Allowance		0	%		1	%		1	%		59	%		11	%

(c)	Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. 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		1-2 years		2-5 years
	$		$		$

Accounts payable		10,403,665		-		-
Accrued liabilities		5,722,470		-		-
Players liability account		331,528		-		-
Lease obligation		222,583		364,968		-
Long-term debt		96,664		-		-
Promissory notes payable		821,948		-		-
Convertible debt		914,428		2,097,127		6,939,941

(d)	Interest rate risk

Interest rate risk is the risk that the fair value of 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.

Page 65 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

(e)	Foreign exchange rates

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 and GBP, as well as debt denominated in Canadian dollars.

(f)	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 value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable.

For the year ended August 31, 2021:

Carrying value at August 31, 2021	FVTPL - mandatorily measured		FVOCI - mandatorily measured		FVOCI - designated		Amortized cost
	$		$		$		$

Financial assets:
Cash and cash equivalents		-		-		-		15,305,996
Restricted cash		-		-		-		331,528
Accounts and other receivables		-		-		-		8,646,807
Government remittances		-		-		-		1,070,216
Publisher advance		-		-		-		4,534,218
Investment at FVTPL		2,629,851		-		-		-
Assets		2,629,851		-		-		29,888,765

Carrying value at August 31, 2021	FVTPL - mandatorily measured		FVTPL - designated		Amortized cost
		$		$		$

Financial liabilities:
Accounts payable		-		-		10,403,665
Accrued liabilities		-		-		5,722,470
Players liability account		-		-		331,528
Line of credit		-		-		-
Long-term debt		-		-		96,664
Promissory notes payable		-		-		821,948
Deferred purchase consideration		-		-		-
Warrant liability		4,868,703		-		-
Convertible debt		-		9,951,496		-
Liabilities		4,868,703		9,951,496		17,376,275

Page 66 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

For the year ended August 31, 2020:

Carrying value at August 31, 2020	FVTPL - mandatorily measured		FVOCI - mandatorily measured		FVOCI - designated		Amortized cost
	$		$		$		$

Financial assets:
Cash and cash equivalents		-		-		-		5,243,278
Restricted cash		-		-		-		388,587
Accounts and other receivables		-		-		-		3,845,890
Government remittances		-		-		-		1,125,912
Publisher advance		-		-		-		-
Investment at FVTPL		-		-		-		-
Financial assets		-		-		-		10,603,667

Carrying value at August 31, 2020	FVTPL - mandatorily measured		FVTPL - designated		Amortized cost
		$		$		$

Financial liabilities:
Accounts payable		-		-		12,455,215
Accrued liabilities		-		-		4,689,131
Players liability account		-		-		388,587
Line of credit		-		-		4,919,507
Long-term debt		-		-		230,932
Promissory notes payable		-		-		3,818,920
Deferred purchase consideration		-		-		333,503
Warrant liability		14,135,321		-		-
Convertible debt		-		10,793,459		-
Financial liabilities		14,135,321		10,793,459		26,835,795

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 August 31, 2021
		$		$		$		$

Warrant liability		-		4,868,703		-		4,868,703
Convertible debt		-		-		9,951,496		9,951,496
Investment at FVTPL		-				2,629,851		2,629,851

	Level 1		Level 2		Level 3		Fair value as of August 31, 2020
		$		$		$		$

Warrant liability		-		14,135,321		-		14,135,321
Convertible debt		-		-		10,793,459		10,793,459

Page 67 of 68

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2021 and 2020

(Expressed in United States Dollars)

31. Subsequent events

The Company has evaluated subsequent events from the balance sheet date through November 26, 2021, the date at which the consolidated financial statements were available to be issued and determined there were no additional items to be disclosed.

Page 68 of 68

Exhibit 99.3

ENGINE GAMING AND MEDIA, INC.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

For the years ended

August 31, 2021 and 2020

(Expressed in United States Dollars)

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Introduction

The following Management’s Discussion and Analysis (“MD&A”) is provided to enable a reader to assess the results of operations and financial condition of Engine Gaming and Media, Inc. for the years ended August 31, 2021, and 2020 and should be read in conjunction with the Company’s Fiscal 2021 Consolidated Financial Statements and accompanying notes. The words “we”, “our”, “us”, “Company”, and “Engine” refer to Engine Gaming and Media, Inc., and its subsidiaries and/or the management and employees of the Company (as the context may require). This MD&A has taken into account information available up to and including November 26, 2021.

Cautionary Note Regarding Forward-Looking Statements

This MD&A contains certain “forward-looking information” and “forward-looking statements” as defined under applicable Canadian and U.S. securities laws (collectively, “forward-looking statements”) which are based upon the Company’s current internal expectations, estimates, projections, assumptions and beliefs. Such statements can be identified by the use of forward-looking terminology such as “expect”, “likely”, “may”, “will”, “should”, “intend”, or “anticipate”, “potential”, “proposed”, “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Such forward-looking statements are made as of the date of this MD&A. Forward-looking statements in this MD&A include, but are not limited to, statements with respect to:

	●	financial, operational and other projections and outlooks as well as statements or information concerning future operation plans, objectives, performance, revenues, growth, acquisition strategy, profits or operating expenses;
	●	our ability to successfully execute our business plan;
	●	to complete a private placement of our common shares and common share purchase warrants, and to have a substantial portion of its convertible debt converted to common shares;
	●	any expectation of regulatory approval and receipt of certifications with respect to the Company’s current and proposed business transactions;
	●	expectations regarding existing products and plans to develop, implement, or adopt new technology or products;
	●	expectations regarding the successful integration of recent acquisitions of WinView, Inc. (“WinView”) Frankly Inc. (“Frankly”) and SideQik, Inc. (“SideQik”);
	●	the expectation of obtaining new customers for the Company’s products and services, as well as expectations regarding expansion and acceptance of the Company’s brand and products to new markets;
	●	estimates and projections regarding the industry in which the Company operates and adoption of technologies, including expectations regarding the growth and impact of esports;
	●	requirements for additional capital and future financing options;
	●	the risks inherent in international operations;
	●	marketing plans;
	●	our ability to compete with our competitors and their technologies;
	●	our reliance on key executives and the ability to attract and retain qualified personnel;
	●	the availability of intellectual property protection for the Company’s products, and our ability to expand and exploit our intellectual property;
	●	statements related to the expected or potential impact of the novel coronavirus (“COVID-19”) pandemic;
	●	the completion of and our use of the proceeds of any offering; and other expectations of the Company.

Forward-looking statements contained in this MD&A are based on the assumptions described in this MD&A. Although management believes the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are based on the opinions, assumptions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors, both known and unknown, that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to:

Page 2 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Cautionary Note Regarding Forward-Looking Statements (cont’d)

	●	our ability to obtain additional financing to fund near term operating cash flow deficits and to continue as a going concern;
	●	that the projections relating to growth and trends in the industry of the Company and adoption of the technologies underlying the Company’s products are accurate;
	●	execution of business plan;
	●	the integration of recent acquisitions;
	●	the management of growth;
	●	reduced cash reserves from future operating losses;
	●	failure to compete successfully in various markets;
	●	the development of high-quality products;
	●	rapid technological changes;
	●	proprietary protection and intellectual property disputes;
	●	transmission of user data;
	●	data collection risk;
	●	mobile gaming and the free-to-play business model;
	●	the condition of the global economy;
	●	risks inherent in foreign/international operations;
	●	changing governmental regulations;
	●	COVID-19 related risks;
	●	volatility in the market price of the Common Shares;
	●	those risks discussed in this MD&A under the heading “Risk Factors”.

These factors are not intended to represent a complete list of the factors that could affect the Company. A more detailed assessment of the risks that could cause actual events or results to materially differ from our current expectations can be found under the heading “Risks and Uncertainties” in this MD&A.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated, or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Although the Company has attempted to identify important factors that could cause actual results to differ materially from forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated, described or intended.

A number of factors could cause actual events, performance, or results to differ materially from what is projected in forward- looking statements. The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose. You should not place undue reliance on forward-looking statements contained in this MD&A or in any document incorporated by reference herein.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. We undertake no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

We qualify all the forward-looking statements contained in this MD&A by the foregoing cautionary statements.

Page 3 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Corporate Structure

Engine was formed during the year ended August 31, 2020, with the merger of Torque Esports, Frankly Media and WinView Games, and the acquisition of UMG Media Ltd.(“UMG”). Engine sold its Motorsport Assets in November 2020. Engine acquired SideQik in July 2021. The following is a summary of the inter-corporate relationships between the Company and its subsidiaries, which together comprise the consolidated Company as at the date hereof:

Page 4 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Corporate Profile

Engine Gaming and Media, Inc. is addressing massive market opportunities in esports, gaming, data, and streaming content distribution. The three-way merger of Torque Esports, Frankly Media and WinView Games which closed on May 8, 2020 brings together a unique combination of technology assets that include (i) a market leading video gaming competition platform – UMG; (ii) a skills-based mobile engagement platform for traditional sports and esports – WinView; (iii) a data intelligence platform – Stream Hatchet; (iv) a content management and streaming video platform that supports over 1,200 news sites and engages over 100 million monthly active users across some of the top media companies in world - Frankly; (v) a development studio that’s dedicated to making the best racing games for mobile – Eden Games and (vi) a social media influencer marketing platform – SideQik. The Company is a publicly traded company listed on the TSX Venture Exchange (“TSXV”) under the symbol “GAME.V”. It is also dual listed in the United States on the NASDAQ market under the symbol “GAME”. The registered head office of the Company is 3000-77 King Street, West, P.O. Box 95, TD Centre North Tower, Toronto, Ontario, Canada M5K 1G8.

Market Opportunity

Video gaming is one of the largest and fastest growing markets in the entertainment sector, with an estimated 2.6 billion gamers globally with esports being the major source of growth. Esports is a term that comprises a diverse offering of competitive electronic games that gamers play against each other. One of the biggest differences between esports and video games of old is the community and spectator nature of esports, whereby competitive play against another person, either one-on-one or in teams, is a central feature of esports. Since players play against each other online, a global network of players and viewers has developed as these players compete against each other worldwide. Additionally, game developers have greatly increased the entertainment value of games, which has made the spectator aspect of gaming much more prevalent and further drives expansion of the gaming market.

Strategy for Growth

Engine generates revenue through a combination of (i) direct-to-consumer fees (subscription, rake, advertising and sponsorship, and merchandise sales); (ii) business-to-business software-as-a-service (“SaaS”) subscription and professional service fees; and (iii) programmatic advertising sales and brand sponsorships. The Company is uniquely positioned with a base of predictable business-to-business revenues and an extensive network of media and gaming publisher relationships. These media and gaming publishers engage over one hundred (100) million monthly active users. Leveraging these relationships to efficiently create awareness for our gaming competition platform, where players and fans can play, watch and engage with other members of the esports community, is key to our long-term growth strategy.

Page 5 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Our Brands

Frankly Media

Frankly Media provides a complete suite of content management, video streaming and engagement solutions that give broadcasters and publishers a unified workflow for the creation, management, publishing and monetization of digital content to any device, while maximizing audience value and revenue. Frankly delivers publishers and their audiences the solutions and services to meet the dynamic challenges of a multi-screen content distribution world. Frankly Media’s products include a groundbreaking online video platform for Live, VOD and Live-to-VOD workflows, a full-featured CMS with rich storytelling capabilities, as well as native apps for iOS, Android, Apple TV, Fire TV and Roku. Additionally, Frankly’s in-house team of digital advertising sales and operations experts monetize billions of monthly display and video advertising impressions through programmatic and direct brand sales across client and owned and operated media properties. Frankly has over 1,200 radio, TV and print media brands, including CNN, Newsweek and Vice Media; TV affiliates of NBC, CBS, FOX and ABC, and radio station groups such as Cumulus.

Eden Games

Eden has produced the following video game titles: V-Rally (1998); V-Rally 2 (1999); Need for Speed: Porsche (2000); V- Rally 3 (2002); KYA: Dark Lineage (2003); TITEUF: Mega Compet’ (2004); Test Drive Unlimited (2006); Alone in the Dark (2008); Test Drive Unlimited 2 (2011); TDU2 Casino Online (2011); Gear.Club Mobile (2016 – 2020); Gear.Club Unlimited (2017); F1 Mobile (2018 – 2020); and Gear.Club Unlimited 2 (2018 – 2020).

Page 6 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Stream Hatchet

Stream Hatchet, through a SaaS offering, also generates significant independent revenue for the Company as a standalone unit without infringing upon its strategic value to the Company. Stream Hatchet provides holistic data to its users, which include streamers, esports organizations and video game producers. Stream Hatchet provides a clearly delineated product offering with a high degree of automation, and a strong pipeline of clients and brands looking for intelligence in the esports & gaming landscape. Stream Hatchet’s innovative reporting and data analytics are unique in the industry, with services and reporting having been sold to major brands in the technology space. Stream Hatchet’s customers include industry leaders such as Microsoft, Allied Esports, Activision and Twitch.

UMG

UMG is a diversified esports company that has operations involved in:

● Live tournaments

● Online contests

● Creation and distribution of original content

● Esports tournament operations through its proprietary tournament management app

UMG TV by UMG Gaming is a live 24/7 linear and on-demand streaming video channel dedicated to gaming, esports and entertainment audiences. UMG TV is distributed across a broad range of media platforms including Twitch, YouTube, Apple TV, Roku, Amazon Fire, VIZIO and more. Some of the featured programming on UMG TV includes the following: UMG Rewind, The Race, Collegiate Clash, Emergence Days, Valorant, and UMG Classic.

Sideqik

Sideqik is an influencer marketing platform that offers brands, direct marketers, and agencies tools to discover, connect and execute marketing campaigns with content creators. Sideqik’s end-to-end solutions offer marketers advanced capabilities to discover influencers with demographic and content filtering; connect and message influencers; share marketing collateral such as campaign briefs, photos, logos, videos; measure reach, sentiment, and engagement across all major social media platforms; and evaluate earned media value and return on investment across the entire campaign.

Page 7 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

WinView Games

Disposition of Motorsport Assets

In November 2020, following a detailed strategic review in connection with the merger of Torque Esports, Frankly Media and WinView Games, the Company sold IDEAS+CARS, The Race Media, WTF1 and Driver DataBase (collectively the “Motorsport Assets”) to Ideas + Cars Holdings Limited, a third-party investment group based in the UK. As a result, Engine is eliminating its funding obligations related to the cost of maintaining and growing these auto media businesses and certain accrued liabilities. These auto-related businesses sold are not focused on gaming but instead, are developing esport and traditional sport racing audiences with the creation and production of auto racing content. While reducing its cost base, Engine will maintain the ability to work with the Motorsports Assets. Engine will continue to support racing as a category through its competitive gaming platform, UMG, as it expands relationships across the entire esports sector as the leading destination for tournament play. For the year ended August 31, 2020, the Motorsport Assets had revenue of approximately $0.56 million and an operating loss of $5.86 million.

As part of the disposition of the Motorsport Assets, Darren Cox resigned as co-CEO of the Company, which enabled Engine to reorganize its leadership team by moving to a single CEO role under Lou Schwartz, with Tom Rogers remaining Executive Chairman.

Page 8 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Capital Allocation & Investment

WinView Games - The company is building numerous product enhancements to drive increased player economics. The company plans to release new gaming experiences such as social cash entry gaming for friends and family competitions, enhanced loyalty programs, and curated fan competitions. The business recently released a substantial product update enabling players to compete in numerous contests at one time, both before and during a live game. Lastly, the organization continues to invest in technology that will enable integration in third-party ecosystems to further scale the platform, such as a Winview Twitch extension.

UMG - The business is investing in solutions to expand operations beyond its presently served gaming communities, as well as remove numerous friction points in the player journey. Such solutions include skill-based competition between players to remove shark-vs-minnow issues in competitive play, as well as enhanced player data to support player development to help players become better competitors.

Stream Hatchet - The business continues to invest in developing best in class measurement and analytical tools to serve the gaming live-streaming industry. The business plans to release a series of media valuation and activation solutions, removing major barriers for brands looking to enter the gaming sector and to market behind gaming influencers.

Sideqik - The company continues to invest in integration with Stream Hatchet, including offering the market a best in class, and first of its kind, one-stop-shop solution for influencer marketing activations and measurement across the combination of all major live streaming and social platforms. In addition, the company continues to invest in social commerce technology, enabling additional modes of monetization including campaign performance.

Eden Games - The business is investing in moving further towards developing its own intellectual property to enhance its direct-to-consumer offerings and drive revenue beyond partner developer projects.

Senior Management Team

Engine has a deep and cohesive executive management team with diverse skillsets and unparalleled understanding of the gaming industry. This experience provides a powerful competitive edge against our competitors, as it enables our team to anticipate patterns before they become trends, to identify influential shifts as they develop and to adjust strategy accordingly.

Tom Rogers

Executive Chairman & Director

Mr. Tom Rogers is a media/technology executive who has shaped the communications industry over the past 40 years. He was the former chairman of Frankly Media, executive chairman of WinView Games and the previous president and CEO of Tivo. Rogers was the founder of CNBC and established MSNBC. He was inducted into the Broadcasting Hall of Fame & the Cable Hall of Fame and an Emmy Award winner for the development of advanced TV.

Lou Schwartz

Chief Executive Officer & Director

Mr. Lou Schwartz is a seasoned technology and digital media executive and pioneer in internet video management and over-the-top (“OTT”) video delivery. At WWE, he oversaw all digital platforms and helped lead the development of the WWE Network. He was also CEO of UUX, where he successfully led the merger of Totalmovie, a leading Latin American retail OTT service, with OTT Networks. Previously, Schwartz was CEO of the Americas and General Counsel for Piksel and he co-founded Multicast Media Technologies, one of the first Internet video platform companies, which sold to Piksel in 2010.

Page 9 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Mike Munoz

Chief Financial Officer

Mr. Mike Munoz has served as the Chief Financial Officer of the Company from May 2020 to present; Chief Financial Officer of Frankly from April 2018 to May 2020; Controller of Frankly from January 2016 to April 2018; Assistant Controller of Frankly from September 2015 to January 2016.

Impact of the Global COVID-19 Pandemic

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged and has since extensively impacted global health and the economic environment. To contain the spread of COVID-19, domestic and international governments around the world enacted various measures, including orders to close all businesses not deemed “essential,” quarantine orders for individuals to stay in their homes or places of residence, and to practice social distancing when engaging in essential activities. We anticipate that these actions and the global health crisis caused by COVID-19 will continue to negatively impact many business activities and financial markets across the globe.

In an effort to protect the health and safety of our employees, the majority of our workforce is currently working from home, and we have placed restrictions on non-essential business travel. We have implemented business continuity plans and have increased support and resources to enable employees to work remotely and thus far have been able to operate with minimal disruption.

The global COVID-19 pandemic remains a rapidly evolving situation. We will continue to actively monitor the developments of the pandemic and may take further actions that could alter our business operations as may be required by federal, state, local, or foreign authorities, or that we determine 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 our business, including the effects on our employees, players and consumers, customers, partners, development and content pipelines, our reputation, financial condition, results of operations, revenue, cash flows, liquidity or stock price.

Presentation of financial information

Unless otherwise specified within, financial results, including historical comparatives, contained in this MD&A are based on Engine’s audited consolidated financial statements which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Unless otherwise specified, amounts are in U.S. dollars and percentage changes are calculated using whole numbers.

Page 10 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Results from operations

Selected Annual Information

	For the year ended
	Aug 31, 2021			Aug 31, 2020

Operating results
Total revenues	$	37,220,870		$	10,545,843
Total expenses		76,287,717			37,101,740
Total net income (loss) from continuing operations		(39,096,771	)		(26,479,831	)
Total net loss from discontinued operations		(1,624,040	)		(5,860,211	)
Total net income (loss) attributable to owners of the Company		(40,720,811	)		(32,340,042	)
Comprehensive income (loss)		(40,710,561	)		(33,341,145	)

Loss per share – Continuing operations
Basic and diluted loss per share	$	(3.29	)	$	(8.98	)
Loss per share – Discontinued operations
Basic and diluted loss per share	$	(0.14	)	$	(1.99	)

The total expenses above for the year ended August 31, 2021, include a non-cash decrease in the fair value of warrant liability of $9.0 million, discussed in more detail below.

	Aug 31, 2021			Aug 31, 2020

Financial position
Total assets	$	67,462,847		$	53,415,477
Total liabilities		41,897,303			53,152,185
Working capital deficiency		(937,584	)		(29,663,546	)
Total debt		11,457,659			20,334,966

Other metrics
Debt to total assets		17	%		38	%

(i)	Working capital deficiency is defined as total current assets less total current liabilities.
(ii)	Total debt is defined as the aggregate total of convertible debt, line of credit, promissory notes, long-term debt and lease obligations.
(iii)	Debt to total assets is calculated as total debt divided by total assets.

Revenue

					Increase
For the year ended August 31,	2021		2020		(decrease)
		$		$		$

Games development		3,422,202		2,732,846		689,356
Direct to consumer		453,400		363,554		89,846
Software-as-a-service		6,360,361		2,571,672		3,788,689
Advertising		26,656,446		4,491,356		22,165,090
Professional services		328,461		386,415		(57,954	)
		37,220,870		10,545,843		26,675,027

Page 11 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

●	Games development for the year ended August 31, 2021, was $3,422,202 in comparison to $2,732,846 for the year ended August 31, 2020, the increase of $689,356 was due to Eden Games normalizing allocation of resources following the divestiture of Ideas and Cars.

●	Direct to consumer income for the year ended August 31, 2021, was $453,400 which is comparable to $363,554 for the year ended August 31, 2020.

●

Software-as-a-service revenue for the year ended August 31, 2021, was $6,360,261 in comparison to $2,571,672 for the year ended August 31, 2020. The increase of $3,788,689 was primarily due to an increase of approximately $3 million from having a full year of Frankly revenues and to a lesser extent higher platform revenue recognized at Stream Hatchet and inclusion of two months of revenue from the SideQik acquisition.

●	Advertising revenue for the year ended August 31, 2021, was $26,656,446 in comparison to $4,491,356 for the year ended August 31, 2020. The increase was primarily due to the benefit of a full year of post-acquisition revenue from Frankly.

●	Professional services revenue for the year ended August 31, 2021, was $328,461, a slight decline in comparison to $386,390 for the year ended August 31, 2020.

Page 12 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Expenses

							Increase
For the year ended August 31,	2021			2020			(decrease)
		$			$			$

Salaries and wages		18,020,053			6,254,017			11,766,036
Consulting		3,714,490			2,753,235			961,255
Professional fees		2,608,486			2,634,599			(26,113	)
Revenue sharing expense		22,853,680			3,380,017			19,473,663
Sponsorships and tournaments		435,670			585,186			(149,516	)
Advertising and promotion		1,387,370			2,513,687			(1,126,317	)
Office and general		3,529,520			1,771,888			1,757,632
Technology expenses		2,487,569			1,062,807			1,424,762
Amortization and depreciation		4,891,097			3,549,374			1,341,723
Share-based payments		3,702,705			1,409,569			2,293,136
Interest expense		1,399,721			908,766			490,955
Loss on foreign exchange		939,235			578,900			360,335
Change in fair value of contingent consideration		-			87,702			(87,702	)
Loss on extinguishment of debt		2,428,900			-			2,428,900
Gain on retained interest in former associate		(99,961	)		-			(99,961	)
Transaction costs		341,702			-			341,702
Non-operational professional fees		846,475			-			846,475
Arbitration settlement reserve		6,468,330			-			6,468,330
Impairment of investment in associate and advances		-			3,652,199			(3,652,199	)
Impairment of goodwill and intangibles		3,885,001			-			3,885,001
Change in fair value of investment at FVTPL		(581,812	)		-			(581,812	)
Change in fair value of warrant liability		(9,037,108	)		6,189,921			(15,227,029	)
Change in fair value of convertible debt		6,066,594			(230,127	)		6,296,721
		76,287,717			37,101,740			39,185,977

●

Salaries and wages for the year ended August 31, 2021, was $18,020,053 in comparison to $6,254,017 for the year ended August 31, 2020. The increase of $11,766,036 was due to a full year of salaries and wages of Frankly, WinView and UMG as well as two months of SideQik salaries and wages. As discussed in the Financing section, the Company received forgivable loans under the Paycheck Protection Program and under government grant accounting recognized the impact of the loan forgiveness of $1,589,559 as an offset against salaries and wages in the consolidated statement of loss and comprehensive loss for the year ended August 31, 2020.

●

Consulting for the year ended August 31, 2021, was $3,714,490 in comparison to $2,753,235 for the year ended August 31, 2020. The increase of $961,255 was due to costs relating to the acquisition activities of the group and taking up the post-acquisition costs of Frankly, WinView and UMG and somewhat offset by lower consulting costs for the year at corporate.

●	Revenue sharing for the year ended August 31, 2021, was $22,853,680 in comparison to $3,380,017 for the year ended August 31, 2020. These costs are the full year share of our gross advertising revenue paid to Frankly’s customers.

●	Advertising and promotion for the year ended August 31, 2021, was $1,387,370 in comparison to $2,513,687 for the year ended August 31, 2020. The decrease of $1,126,317 was due to promotion costs relating to The World’s Fastest Gamer season 2, the All-Star racing series which did not recur in 2021.

Page 13 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

●	Office and general for the year ended August 31, 2021, was $3,529,520 in comparison to $1,771,888 for the year ended August 31, 2020. The increase of $1,757,632 was due to a full year of office and general expenses for Frankly, WinView and UMG.

●	Technology for the year ended August 31, 2021, was $2,487,569 in comparison to $1,062,807 for the year ended August 31, 2020. The increase of $1,424,762 was primarily due to a full year of Frankly technology expenses.

●	Amortization and depreciation for the year ended August 31, 2021, was $4,891,097 in comparison to $3,549,374 for the year ended August 31, 2020. The increase of $1,341,723 was primarily due to a full year of amortization relating to the intangible assets of Frankly, WinView and UMG.

●

Share-based payments expense for the year ended August 31, 2021, was $3,702,705 in comparison to $1,409,569 for the year ended August 31, 2020. The increase of $2,293,136 was due to stock options and restricted stock units granted to officers and directors, during the year, as well as a full year of share-based payment expense assumed in the acquisitions of Frankly, WinView and UMG.

●

Interest expense for the year ended August 31, 2021, was $1,399,721 in comparison to $908,766 for the year ended August 31, 2020. The increase of $ 490,955 was primarily due to higher average principal balance of convertible debt outstanding during fiscal 2021 than 2020 debt assumed in the Frankly and Winview acquisitions outstanding for full year in fiscal 2021 and approximately four months in fiscal 2020.

●

Loss on foreign exchange for the year ended August 31, 2021, was $939,235 in comparison to of $578,900 for the year ended August 31, 2020. The increase of $360,335 was due to the strengthening of the Canadian dollar against USD during fiscal 2021 compared to 2020. Engine has significant liabilities denominated in Canadian dollars. Therefore, the strengthening of the Canadian dollar against the USD results in a foreign exchange loss for the period.

●	Loss on extinguishment of debt was $2,428,900 for the year ended August 31, 2021, compared to $0 for the year ended August 31, 2020 as there was no debt extinguishments in fiscal 2020.

●	Transaction costs for the year ended August 31, 2021, was $341,702, in comparison to $0 for the year ended August 31, 2020. The increase of $341,702 was due to the acquisition of SideQik in July 2021 and NASDAQ uplisting fees.

●	Non-operational professional fees for the year ended August 31, 2021, was $846,475, in comparison to $0 for the year ended August 31, 2020. The increase of $846,475 was driven by costs incurred on litigation costs.

●

Arbitration settlement reserve for the year ended August 31, 2021, was $6,468,330, in comparison to $0 for the year ended August 31, 2020. We recognized a liability for an arbitration ruling, relating to AIS of $6,468,330, which represents the fair value of the common shares directed to be delivered as of August 31, 2021. This liability will be adjusted to fair value at the end of each reporting period.

●

Impairment of investments and advances for the year ended August 31, 2021, was $0 in comparison to $3,652,199 for the year ended August 31, 2020. The decrease was due to the following activity not repeated in the year ended August 31, 2021: (i) Full reserve of $2,625,657 in advances to AIS for purchase consideration and working capital; and (ii) a $1,026,542 impairment of our investment in One-Up.

●

Impairment of goodwill and intangibles for the year ended August 31, 2021, was $3,885,001 which consisted of $3,209,045, a full impairment of the goodwill, and $675,956, allocated across the application platform, brand and customer list intangibles related to the acquisition of UMG, in comparison to $0 for the year ended August 31, 2020. The increase was due to no impairment being recognized in the 2020 period. The fiscal 2021 impairment relates to our UMG business and was primarily driven by a delay in future forecasted revenue growth.

Page 14 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

●	The change in fair value of investment at FVTPL was due to a gain of $581,812 recognized in the fair value of One Up as observed by financing transactions.

●

Change in fair value of warrant liability for the year ended August 31, 2021, gain of $9,037,108 in comparison to loss of $6,189,921 for the year ended August 31, 2020. The change of $15,227,029 is a result of the revaluation of the Company’s warrant obligation at each period end impacted by exercise and expiration of a large number of in-the-money warrants in May 2021 and the decrease in the Company’s share price from August 31, 2020 to August 31, 2021.

●

Change in fair value of convertible debt for the year ended August 31, 2021, increased expense by $6,066,594 in comparison to a decrease in expense of $230,127 for the year ended August 31, 2020. The change of $6,296,721 was primarily driven by large convertible debt settlement which occurred in the second quarter of FY 2021 on January 8, 2021. The convertible debt settlement was on more favorable terms than the underlying terms of the outstanding convertible debt. As such, the difference in fair value of the instruments at August 31, 2020 and the fair value of the instruments under revised settlement terms at the settlement date was recognized as a change in fair value loss.

Other items

							Increase
For the year ended August 31,	2021			2020			(decrease)
	$			$			$
Share of net loss of associate		103,930			-			103,930
Discontinued Operations - Loss on disposal of Motorsports		(678,931	)		-			(678,931	)
Discontinued Operations		(945,109	)		(5,860,211	)		4,915,102
Net loss attributable to non-controlling interest		74,006			76,066			(2,060	)
Foreign currency translation differences		10,250			(1,001,103	)		1,011,353

●	The discontinued operations-loss on disposal of Motorsports was a fiscal 2021 event.

●	The loss from discontinued operations of $945,109 for the year ended August 31, 2021, decreased from the loss of $5,860,211 for the year ended August 31, 2020. The decrease of $4,915,102 was due to the disposal of the Motorsports Group on November 3, 2020.

●

Foreign currency translation differences for the year ended August 31, 2021, was a gain of $10,250 in comparison to a loss of $1,001,103 for the year ended August 31, 2020. The increase of $1,011,353 was due to fluctuations in trading foreign currencies against the US dollar. Primarily the Euro as our Stream Hatchet and Eden businesses have Euro functional currencies. As such, when translating into US dollars, any changes resulting from change in foreign currency exchange rates is recorded within the foreign currency translation reserve.

Page 15 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Segmented analysis

For the year ended August 31, 2021

	Gaming			Media			Corporate and Other			Total
		$			$			$			$
Revenue
External sales		5,277,583			31,943,287			-			37,220,870

Results
Segment loss		(9,064,847	)		(7,611,679	)		-			(16,676,526	)

Central administration costs		-			-			9,733,244			9,733,244
Other gains and losses		4,720,312			(39,258	)		6,576,302			11,257,356
Finance costs		124,663			512,937			762,121			1,399,721
Loss before tax		(13,909,822	)		(8,085,358	)		(17,071,667	)		(39,066,847	)
Income tax		-			-			-			-
Gain (Loss) for the year from:
Share of net loss of associate		-			-			(103,930	)		(103,930	)
Discontinued operations		(945,109	)		-			(678,931	)		(1,624,040	)
Non-controlling interest in net loss		-			-			74,006			74,006
Net loss		(14,854,931	)		(8,085,358	)		(17,780,522	)		(40,720,811	)

For the year ended August 31, 2020

	Gaming			Media			Corporate and Other			Total
		$			$			$			$
Revenue
External sales		4,140,731			6,404,736			376			10,545,843

Results
Segment loss		(4,842,557	)		(833,891	)		376			(5,676,072	)

Central administration costs								9,692,464			9,692,464
Other gains and losses		16,565			(14,011	)		10,276,041			10,278,595
Finance costs		102,596			241,520			564,650			908,766
Loss before tax		(4,961,718	)		(1,061,400	)		(20,532,779	)		(26,555,897	)
Income tax		-			-			-			-
Gain (Loss) for the year from:
Discontinued operations		(5,860,211	)		-			-			(5,860,211	)
Non-controlling interest in net loss		-			-			76,066			76,066
Net loss		(10,821,929	)		(1,061,400	)		(20,456,713	)		(32,340,042	)

Page 16 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

●

Gaming net loss for the year ended August 31, 2021, was $14,854,931 in comparison to $10,821,926 for the year ended August 31, 2020. The increase of $4,033,002 was due to the impairments charges at UMG noted above and the full year impact of operations for WinView and UMG, including significant investment in development of the WinView and UMG platforms.

●	Media net loss for the year ended August 31, 2021, was $8,085,358 in comparison to $1,061,400 for the year ended August 31, 2020. This was due to a full year of operating the Frankly business and acquisition of Sideqik in FY 2021.

●

Corporate and Other net loss for the year ended August 31, 2021, was $17,780,522 in comparison to $20,456,716 for the year ended August 31, 2020. The decrease of $2,676,191 was primarily due to the change in fair value of warrant liability that decreased the loss by approximately by $15.2 million in fiscal 2021, $0.6 million gain from the increase in fair value of an investment, and the impairment of investment of associate of $3.7 million in the prior year. This was somewhat offset by approximately $6.4 million reserve related to arbitration, $6.3 million increase in the fair value of convertible debt, $2.4 million loss on extinguishment of debt as well an increase in share-based compensation expense of $2.3 million.

			From continuing operations
Three-month period ended	Total revenue		Total loss			Basic income (loss) per share			Total assets
		$		$			$			$
August 31, 2021		11,756,766		(13,557,725	)		(0.89	)		67,462,847
May 31, 2021		9,609,833		6,207,783			0.43			71,339,843
February 28, 2021		8,387,880		(27,376,542	)		(2.69	)		70,344,899
November 30, 2020		7,466,391		(4,370,287	)		(0.57	)		47,362,028
August 31, 2020		7,024,238		(8,661,786	)		(1.15	)		53,415,477
May 31, 2020		2,089,323		(10,380,228	)		(3.22	)		42,747,189
February 29, 2020		623,994		(1,413,392	)		(2.91	)		12,664,332
November 30, 2019		808,248		(6,024,427	)		(36.59	)		8,555,893

Quarterly revenues increased from the quarter ended February 29, 2020, compared to the quarter ended May 31, 2020, and increased further in the quarter ended August 31, 2020, primarily due to inclusion of the revenues of Frankly for one month after the May 8, 2020 acquisition and for the full quarter for the quarters ended August 31, 2020, November 30, 2020, February 28, 2021 and May 31, 2021.

In the quarter ended November 30, 2019, the change in value of the warrant and convertible debt added $2.4 million to the loss and promotion for the World’s Fastest Gamer and other advertising was a $2.8 million increase. For the quarter ended May 31, 2020, the change in fair value of warrant liability added $7.0 million to the loss. For the quarter ended August 31, 2020, an impairment on investments and advances of $2.6 million and changes in the fair value of warrant liability and convertible debt of $1.3 million added to the quarterly loss. For the quarter ended February 28, 2021, the loss much was larger due to the change in fair value of the warrant liability and convertible debt which increased the quarter loss by approximately $20.5 million as compared to the quarter ended November 30, 2020. For the quarter ended May 31, 2021, the profit was much larger due to the change in fair value of the warrant liability as compared to the quarter ended February 28, 2021. For the quarter ended August 31, 2021, the loss was significantly higher due to changes in the fair value of warrant liability, an accrual for the AIS related arbitration liability and a full impairment of UMG goodwill and partial impairment of UMG intangible assets.

Page 17 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Liquidity and cash management

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or as a result of conditions specific to the Company.

The Company regularly evaluates its cash position to ensure preservation and security of capital as well as maintenance of liquidity. As the Company does not presently generate sufficient revenue to cover its costs, managing liquidity risk is dependent upon the ability to reduce its monthly operating cash outflow and secure additional financing. The recoverability of the carrying value of the assets and the Company’s continued existence is dependent upon the ability of the Company to raise financing in the near term, and ultimately the achievement of profitable operations.

As of August 31, 2021, the Company had current assets of $31,557,682 (August 31, 2020: $12,175,473) and current liabilities of $32,495,266 (August 31, 2020: $41,839,019). This represents a working capital deficiency of $937,584 (August 31, 2020: deficiency of $29,663,546) which is comprised of current assets less current liabilities. The working capital deficiency at August 31, 2021 includes a warrant liability of $4,868,703 which will not be settled in cash. The Company has not yet realized profitable operations and has incurred significant losses to date resulting in a cumulative deficit of $112,814,973 as of August 31, 2021 (August 31, 2020: $72,094,162).

Following the acquisitions of Frankly and WinView on May 8, 2020, the Company undertook a strategic review of the business. As a result of this review, on November 3, 2020, the Company divested its Motorsports Group. This divestiture reduced accounts payable and accrued liabilities by $0.9 million and substantially reduced the Company’s monthly cash outflow. The Company also made targeted spending cuts to further reduce the monthly cash outflow. In January 2021, the Company completed convertible debenture settlements of an aggregate principal amount of $10,726,393 of its convertible debentures in exchange for the issuance of 1,430,186 units at a deemed price of $7.50 per unit, with each such unit consisting of a common share and three-quarters (3/4) of a warrant, with each whole warrant exercisable into a common share at an exercise price of $15 per share for a period of three years.

In January and February 2021, the Company closed on the issuance of 4,371,767 units (the “Units”) for gross proceeds of $32,788,253 of non-brokered private placements. Each Unit consists of one common share of the Company and one-half of one common share purchase warrant (a “Warrant”). Each whole Warrant entitles the holder to acquire one additional share of the Company at a price of $15.00 per share for a period of 3 years. The proceeds of the offering were allocated to marketing and advertising of the Company’s product offerings, product development initiatives for UMG, WinView and Stream Hatchet, and general working capital purposes.

The Company has plans to raise additional funds. While management has been historically successful in raising the necessary capital, it cannot provide assurance that it will be able to execute on its business strategy or be successful in future financing activities.

Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties including, but not limited to, our ability to raise additional funds through financing, those related to consumer demand and acceptance of our products and services, our ability to collect payments as they become due, achieving our internal forecasts and objectives, the economic conditions of the United States and abroad. These risk factors are described in Risks and uncertainties section of this MD&A.

Page 18 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Share consolidations

Two share consolidations occurred during the period from September 1, 2019, to the date of this MD&A:

●	On August 13, 2020, the Company consolidated its common shares on a 15 to 1 basis
●	On October 18, 2019, the Company consolidated its common shares on a 5 to 1 basis

Capital management framework

The Company considers its capital to be its shareholders’ equity. As at August 31, 2021, the Company had shareholders’ equity of $25,422,165 (August 31, 2020: shareholders’ equity of $45,907).

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, using lower cost capital, including raising share capital or debt when required to fund opportunities as they arise.

There have been no changes to management’s approach to managing its capital for the year ended August 31, 2021.

Financing

The proceeds of the financings disclosed below were intended to be used primarily for working capital and future operating needs. The proceeds received have been used primarily for those purposes.

Equity

Activity for the year ended August 31, 2021

The Company paid cash commissions to eligible finders under the offering of $1,681,477 and regulatory and legal fees of $89,402. Net cash proceeds from the offering amounted to $31,017,374.

Page 19 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

During the year ended August 31, 2021, the Company had the following additional activity to share capital: (i) issued 277,749 common shares upon vesting of an equal number of RSUs; (ii) issued 20,833 common shares upon the exercise of vested stock options, (iii) issued 1,728,848 common shares in connection with conversion of convertible debt, (iv) issued 901,060 common shares in connection with the exercise of warrants ; (v) issued 40,000 common shares for cancelation of $226,556 of debt (shares for debt); and (vi) issued 6,666 common shares valued at $54,061 as an amendment fee to the lender in connection with the Amended EB Loan (the “EB Bonus Shares”). In addition to the EB Bonus Shares, the Company paid the lender a cash fee of $100,000. The amendment fees were recorded within interest expense as the Amended EB Loan and the subsequently the EB CD is being accounted for at FVTPL.

Activity for the year ended August 31, 2020

During the year ended August 31, 2020, the Company issued 26,666 common shares upon vesting of an equal number of RSUs, issued 1,739,615 common shares in connection with conversion of convertible debt, and issued 502,562 common shares in connection with a series of non-brokered private placements as follows:

On December 18, 2019, the Company closed a non-brokered private placement at a price of CAD$18.75 ($14.25) per unit. The Company issued 58,133 units for gross proceeds of CAD$1,090,000 ($830,907). Each unit is comprised of one common share of the Company and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share of the Company for a period of 36 months from the date of issuance of the warrant, at an exercise price of CAD$27.00 per share. The proceeds were allocated to the common shares and warrants using the relative fair value method, with $612,745 being allocated to the 58,133 common shares issued and the remaining $218,162 allocated to the 29,067 warrants issued.

During the third quarter of 2020 the Company closed a non-brokered private placement at a price of CAD$9.00 per unit in four tranches. The Company issued a total of 444,429 units for gross proceeds of CAD$3,999,860 ($2,875,593). Each unit is comprised of one common share of the Company and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share of the Company for a period of 36 months from the date of issuance of the warrant, at an exercise price of CAD$13.50 per share. The proceeds were allocated to the common shares and warrants using the relative fair value method, with $2,102,047 being allocated to the 444,429 common shares issued and the remaining $773,546 allocated to the 222,214 warrants issued.

On December 31, 2019, the Company issued 288,560 common shares with a fair value of $3,804,344 in connection with the acquisition of UMG. On May 8, 2020, the Company issued 2,258,215 common shares with a fair value of $12,155,000 in connection with the acquisition of Frankly. On May 8, 2020, the Company issued 1,759,997 common shares with a fair value of $7,579,000 in connection with the acquisition of Winview. On June 3, 2020, the Company issued 100,000 common shares with a fair value of $859,745 in connection with the acquisition of DriverDB. On June 3, 2020, the Company issued 200,000 common shares with a fair value of $1,719,491 in connection with the acquisition of Lets Go Racing. On July 2, 2021, the Company issued 386,584 common shares with a fair value of $4,136,000 in connection with the acquisition of SideQik, Inc.

Page 20 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Debt

Promissory Notes

Frankly line of credit

As of the date of Amended EB Loan, December 1, 2020, the Company has accounted for the loan as convertible debt at FVTPL. As such, the Amended EB Loan was recognized within convertible debt (Note 19).

The carrying value of the line of credit as of August 31, 2021, was $0 (August 31, 2020 – $4,919,507).

Paycheck Protection Program (“PPP”) loans

Page 21 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Convertible debt

(a)	Conversions during the years ended August 31, 2021, and 2020

2019 Series

Share price of CAD$11.65 – $14.15 (2020 – CAD$7.05 – $18,00); term of 1.36 – 1.90 years (2020 – 1.85 and 2.52); conversion price and warrant exercise price of CAD$7.50 (2020 – CAD$7.50); interest rate of 6% (2020 – 6%); expected volatility of 98.5% – 179% (2020 – 168.65% – 181.93%); risk-free interest rate of 0.21% - 0.27% (2020 – 0.26% – 0.96%); exchange rate of 0.7651 – 0.8286 (2020 – 0.6899 – 0.7651); and an expected dividend yield of 0% for both years.. The fair value assigned to these convertible debentures was $2,603,875 (2020 – $10,189,558).

This value was split between common shares and warrants as $1,500,214 (2020 – $5,152,023) and $1,103,661 (2020 – $5,037,535), respectively.

2020 Series

Page 22 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

This value was split between common shares and warrants as $12,204,391 and $4,256,114, respectively.

(b)	Issuances during the year ended August 31, 2021

During the year ended August 31, 2021, 2020 Series convertible debentures with a principal amount of $2,901,393 were issued for gross proceeds of $2,901,393. In addition, in November 2020, $2,000,000 of convertible debentures from the Company’s standby convertible debenture facility were issued along with 224,719 warrants for gross proceeds of $2,000,000. Of the gross proceeds of $2,000,000, $1,381,084 was allocated to the convertible debt and $618,916 was allocated to the 224,719 warrants issued. The total fair value recorded to convertible debt for issuances above amounted to $4,282,477.

On December 1, 2020, the EB Loan was amended. The amendment extended the maturity date by one year and added a conversion feature to $1,000,000 of the $5,000,000 million principal outstanding. The conversion feature allowed the holder to convert $1,000,000 into common shares of the Company at a conversion price of $11.25 per common share. On February 24, 2021, the Company extinguished the Amended EB Loan and issued the Lender a convertible debenture in the principal amount of $5,000,000. The EB CD is convertible into units of the Company at a conversion price of $10.25 per 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 $15.00 per share for a period of three years from the issuance of the EB CD. The EB CD has a term of three years.

(c)	2020 Series

Page 23 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

(d)	2020 Series - One Up

(e)	2020 Series – Standby

$6,000,000 of 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.

(f)

EB CD

Page 24 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Long-term debt

Scheduled repayments are: €90,000 ($106,330) as of August 31, 2021, all of which is current.

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 966,667 common shares of the Company and other consideration, including payment of $1,200,0000 as 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 966,667 common shares of the Company to those shareholders. As alternative relief, the shareholders of Allinsports sought up to US$20,000,000 in damages. As of August 31, 2020 we had recorded an impairment against the entire balance of advances to Allinsports, amounting to $2,625,627. 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 966,667 common shares. The Company is pursuing regulatory approval to issue the shares and is also pursuing counterclaims against the Allinsports shareholders for various alleged breaches of the share purchase agreement. The Company recognized a liability for the arbitration ruling of $6,468,330, which represents the fair value of the common shares directed to be delivered as of August 31, 2021. The liability is recorded in Legal proceedings provision on the Company’s Consolidated Statements of Financial Position. This liability will be adjusted to fair value at the end of each reporting period.

Separately, in April of 2021, the Company received a copy of a complaint filed by 3CI Holdings, LLP in the Circuit Court for the 11^th Judicial Circuit for Miami-Dade naming Allinsports, A1 Simulation LLC (an entity purported to be a subsidiary of Allinsports), and the Company, seeking to hold the parties, including Company, responsible for unpaid rent under a lease agreement between 3CI’s predecessors in interest and A1 Simulation, and seeking damages of at least $2,890,000. On July 6, 2021, the Company filed motion to dismiss the complaint in this matter.

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 Engine. The relief sought includes rescission of the sale of Winview to Engine and compensatory damages. The defendants have filed a motion to dismiss the claims in this matter. 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 (US Patent Nos. 9,878,243 and 9,993,730 both entitled “Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming;” 10,721,543 entitled “Method Of and System For Managing Client Resources and Assets for Activities On Computing Devices; and 10,806,988 entitled “Method Of and System For Conducting Multiple Contests of Skill with a Single Performance.”). These actions seek the recovery of damages and other appropriate relief. FanDuel filed a partial motion to dismiss two of the claims alleged in Winview’s complaint (under the ‘243 and ‘988 patents). Winview has responded and the motion is pending. DraftKings filed a motion to dismiss Winview’s complaint, which was withdrawn without prejudice after Winview filed an amended complaint. While potential damages may be significant if these lawsuits are wholly or partially successful, at this time the Company cannot predict the outcome of the suits or determine the extent of potential damages if they are successful in whole or in part.

Page 25 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

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.

Financial instruments and risk management

(a)	Financial risk management objectives and policies

(b)	Credit risk

Credit risk arises from cash with banks as well as credit exposure to outstanding receivables. The carrying amounts represent the Company’s maximum exposure to credit risk.

Page 26 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

evaluations of its major customers, maintains reserves for expected credit losses, and does not require any collateral deposits.

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 August 31, 2021:

	0 - 30			31 - 60			61 - 90			91+			Total

Trade accounts receivable		7,376,270			210,815			265,377			1,825,263			9,677,725
Allowance for doubtful accounts		3,000			1,500			1,500			1,078,305			1,084,305
% Allowance		0	%		1	%		1	%		59	%		11	%

(c)	Liquidity risk

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		1-2 years		2-5 years
	$		$		$

Accounts payable		10,403,665		-		-
Accrued liabilities		5,722,470		-		-
Players liability account		331,528		-		-
Lease obligation		222,583		364,968		-
Long-term debt		96,664		-		-
Promissory notes payable		821,948		-		-
Convertible debt		914,428		2,097,127		6,939,941

(d)	Interest rate risk

Page 27 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

(e)	Foreign exchange rates

(f)	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 value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable.

For the year ended August 31, 2021:

Carrying value at August 31, 2021	FVTPL - mandatorily measured		FVOCI - mandatorily measured		FVOCI - designated		Amortized cost
	$		$		$		$

Financial assets:
Cash and cash equivalents		-		-		-		15,305,996
Restricted cash		-		-		-		331,528
Accounts and other receivables		-		-		-		8,646,807
Government remittances		-		-		-		1,070,216
Publisher advance		-		-		-		4,534,218
Investment at FVTPL		2,629,851		-		-		-
		2,629,851		-		-		29,888,765

Carrying value at August 31, 2021	FVTPL - mandatorily measured		FVTPL - designated		Amortized cost
		$		$		$

Financial liabilities:
Accounts payable		-		-		10,403,665
Accrued liabilities		-		-		5,722,470
Players liability account		-		-		331,528
Line of credit		-		-		-
Long-term debt		-		-		96,664
Promissory notes payable		-		-		821,948
Deferred purchase consideration		-		-		-
Warrant liability		4,868,703		-		-
Convertible debt		-		9,951,496		-
		4,868,703		9,951,496		17,376,275

Page 28 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

For the year ended August 31, 2020:

Carrying value at August 31, 2020	FVTPL - mandatorily measured		FVOCI - mandatorily measured		FVOCI - designated		Amortized cost
	$		$		$		$

Financial assets:
Cash and cash equivalents		-		-		-		5,243,278
Restricted cash		-		-		-		388,587
Accounts and other receivables		-		-		-		3,845,890
Government remittances		-		-		-		1,125,912
Publisher advance		-		-		-		-
Investment at FVTPL		-		-		-		-
		-		-		-		10,603,667

Carrying value at August 31, 2020	FVTPL - mandatorily measured		FVTPL - designated		Amortized cost
	$		$		$

Financial liabilities:
Accounts payable		-		-		12,455,215
Accrued liabilities		-		-		4,689,131
Players liability account		-		-		388,587
Line of credit		-		-		4,919,507
Long-term debt		-		-		230,932
Promissory notes payable		-		-		3,818,920
Deferred purchase consideration		-		-		333,503
Warrant liability		14,135,321		-		-
Convertible debt		-		10,793,459		-
		14,135,321		10,793,459		26,835,795

Page 29 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(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 August 31, 2021
		$		$		$		$

Warrant liability		-		4,868,703		-		4,868,703
Convertible debt		-		-		9,951,496		9,951,496
Investment at FVTPL		-				2,629,851		2,629,851

	Level 1		Level 2		Level 3		Fair value as of August 31, 2020
	$		$		$		$

Warrant liability		-		14,135,321		-		14,135,321
Convertible debt		-		-		10,793,459		10,793,459

Page 30 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Financial assets / financial liabilities	Valuation technique	Key Inputs	Relationship and sensitivity of unobservable inputs to fair value to fair value
Convertible debt	The fair value of the convertible debentures as of August 31, 2021 has been calculated using a binomial lattice methodology.	Key observable inputs	The estimated fair value would increase (decrease) if:
		Share price CAD$8.42 (USD $6.66)	The share price was higher (lower)
		Risk-free interest rate (0.10% to 0.30%)	The risk-free interest rate was higher (lower)
		Dividend yield (0%)	The dividend yield was lower (higher)
		Key unobservable inputs
		Credit spread (1.14% to 8.45%)	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, 2020 has been calculated using a binomial lattice methodology.	Key observable inputs	The estimated fair value would increase (decrease) if:
		Share price (USD $8.92)	The share price was higher (lower)
		Risk-free interest rate (0.14%)	The risk-free interest rate was higher (lower)
		Dividend yield (0%)	The dividend yield was lower (higher)
		Key unobservable inputs
		Credit spread (18.35%)	The credit spread was lower (higher)
		Discount for lack of marketability (47%)	The discount for lack of marketability was lower (higher)

Page 31 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Off-balance sheet arrangements

As of the date of this MD&A, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the results of operations or financial condition of the Company including, without limitation, such considerations as liquidity and capital resources.

Related party transactions and balances

Related party transactions policy

Our Board of Directors has adopted a policy that describes the procedures used to process, evaluate, and if necessary, disclose transactions between the Company and its directors, officers, or greater than 5% beneficial owners. We review any transaction or series of transactions in which any related parson has a direct or indirect interest. Once a transaction has been identified, senior management and the audit committee will review the transaction and ensure appropriate disclosure in the Company’s financial statements and management’s discussion and analysis

Key management compensation

Compensation awarded to key management includes the following:

	For the year ended
	Aug 31, 2021		Aug 31, 2020
	$		$

Total compensation paid to key management		2,231,871		929,958
Share based payments		1,897,855		1,409,569

Total compensation paid to key management is recorded in consulting fees and salaries and wages in the statement of loss and comprehensive loss for the years ended August 31, 2021 and 2020.

Related party balances

Amounts due to related parties as at August 31, 2021 with respect to the above fees were $33,439 (2020 - $275,502). These amounts are unsecured, non-interest bearing and due on demand.

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. Company directors, Tom Rogers and Hank Ratner, are among the pool of Stubholders.

While the Company does not believe that the interests of Messrs. Rogers and Ratner, as Stubholders, are sufficiently material or adverse to the Company’s interests to create an actual or potential conflict of interest with respect to the management of the Winview Patent Portfolio, the Company nevertheless has formed a Patent Committee, that excludes Messrs. Rogers and Ratner, to make recommendations to the Company’s Board regarding matters involving the Winview Patent Portfolio. In addition, Messrs. Rogers and Ratner recuse themselves from any board decisions concerning the Winview Patent Portfolio.

Changes in 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 37 – Onerous Contracts – Cost of Fulfilling a Contract;

Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before intended Use

Amendments to IFRS 3 – Reference to the Conceptual Framework

Page 32 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Current global financial conditions and trends

Securities of gaming and technology companies have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macroeconomic developments globally and market perceptions of the attractiveness of particular industries.

The price of the securities of companies is also significantly affected by short-term currency exchange fluctuation and the political environment in the countries in which the Company does business. As of August 31, 2021, the global economy continues to be in a period of significant economic volatility, in large part due to the COVID-19 pandemic discussed previously, as well US and European economic and political concerns which have impacted global economic growth.

Risks and uncertainties

Liquidity concerns and future financings

Although we have been successful in the past in financing our activities, there can be no assurance that we will be able to obtain additional financing as and when needed in the future to execute our business plan and future operations. Our ability to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as our business performance. It may be difficult or impossible for us to obtain financing on commercially acceptable terms. This may be further complicated by the limited market liquidity for shares of smaller companies such as us, restricting access to some institutional investors. There is a risk that interest rates will increase given the current historical low level of interest rates. An increase in interest rates could result in a significant increase in the amount that we pay to service future debt incurred by us and affect our ability to fund ongoing operations.

Failure to obtain additional financing on a timely basis could also result in delay or indefinite postponement of further development of its products. Such delay would have a material and adverse effect on our business, financial condition and results of operations.

Page 33 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

We may not be able to successfully execute our business plan

The execution of our business plan poses many challenges and is based on a number of assumptions. We may not be able to successfully execute our business plan. If our business plan is more costly than we anticipate or we have significant cost overruns, certain products and development activities may be delayed or eliminated or we may be compelled to secure additional funding (which may or may not be available) to execute our business plan. We cannot predict with certainty our future revenues or results from our operations. If the assumptions on which our revenue or expenditure forecasts are based change, the benefits of our business plan may change as well. In addition, we may consider expanding our business beyond what is currently contemplated in our business plan. Depending on the financing requirements of a potential acquisition or new product opportunity, we may be required to raise additional capital through the issuance of equity or debt. If we are unable to raise additional capital on acceptable terms, we may be unable to pursue a potential acquisition or new product opportunity.

Difficulties integrating acquisitions and strategic investments

We have acquired businesses, personnel, and technologies in the past and we expect to continue to pursue acquisitions, such as the completed acquisitions of Frankly, WinView, UMG, Eden Games, Stream Hatchet and other investments that are complementary to our existing business and expanding our employee base and the breadth of our offerings. Our ability to grow through future acquisitions will depend on the availability of suitable acquisition and investment candidates at an acceptable cost, the ability to compete effectively to attract these candidates and the availability of financing to complete larger acquisitions. Since we expect the esports industry to consolidate in the future, we may face significant competition in executing our growth strategy. Future acquisitions or investments could result in potential dilutive issuances of equity securities, use of significant cash balances or incurrence of debt, and contingent liabilities or amortization expenses related to goodwill and other intangible assets, any of which could adversely affect our financial condition and results of operations. The benefits of an acquisition or investment may also take considerable time to develop, and we cannot be certain that any particular acquisition or investment will produce the intended benefits.

The above risks and difficulties, if they materialize, could disrupt our ongoing business, distract management, result in the loss of key personnel, increase expenses and otherwise have a material adverse effect on our business, results of operations and financial performance.

Management of growth

We have grown rapidly since our inception, and we plan to continue to grow at a rapid pace. This growth has put significant demands on our processes, systems, and personnel.

We may be subject to growth-related risks including capacity constraints and pressure on our internal systems and controls. Our ability to manage growth effectively will require us to continue to implement and improve our operational and financial systems and to expand, train and manage our employee base. Managing our growth will require significant expenditures and allocation of valuable management resources. Our inability to deal with this growth may have a material adverse effect on our business, financial condition, results of operations and prospects.

We may continue to have reduced cash reserves

We expect our cash reserves will be reduced due to future operating losses, working capital requirements, capital expenditures, and potential acquisitions and other investments by our business, and we cannot provide certainty as to how long our cash reserves will last or that we will be able to access additional capital when necessary.

Page 34 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

We expect to incur continued losses and generate negative cash flow until we can produce sufficient revenues to cover our costs. We may never become profitable. Even if we do achieve profitability, we may be unable to sustain or increase our profitability in the future. For the reasons discussed in more detail below, there are substantial uncertainties associated with our achieving and sustaining profitability. We expect our cash reserves will be reduced due to future operating losses, and working capital requirements, and we cannot provide certainty as to how long our cash reserves will last or that we will be able to access additional capital if and when necessary.

Competition

Our potential failure to compete successfully in the various markets we participate in could have a material adverse effect on our business, financial condition, and results of operations. The market for the various types of product and service offerings we provide is very competitive and rapidly changing. We face competition from other esports businesses, many of which are larger and better funded than us. There can be no guarantee that our current and future competitors will not develop similar or superior services to our products and services which may render us uncompetitive. Increasing competition could result in fewer future customers, reduced revenue, reduced sales margins and loss of market share, any one of which could harm our business.

Players in the current market face a vast array of entertainment choices. Other forms of entertainment, such as offline, traditional online, personal computer and console games, television, movies, sports and the internet are much larger and more well- established markets and may be perceived by our customers to offer greater variety, affordability, interactivity and enjoyment. These other forms of entertainment compete for the discretionary time and income of our customers. If we are unable to sustain sufficient interest in our games in comparison to other forms of entertainment, including new forms, our business model may no longer be viable.

The development of high-quality products requires substantial up-front expenditures

Consumer preferences for games are usually cyclical and difficult to predict, and even the most successful titles remain popular for only limited periods of time, unless refreshed with new content or otherwise enhanced. In order to remain competitive, we must continuously develop new products or enhancements to existing products. The amount of lead time and cost involved in the development of high-quality products is increasing, and the longer the lead time involved in developing a product and the greater the allocation of financial resources to such product, the more critical it is that we accurately predict consumer demand for such product. If its future products do not achieve expected consumer acceptance or generate sufficient revenues upon introduction, we may not be able to recover the substantial development and marketing costs associated with those products.

Rapid technological changes

Rapid technological changes may increase competition and render our technologies, products or services obsolete or cause us to lose market share. The online gaming software industry is subject to rapid and significant changes in technology, frequent new service introductions and evolving industry standards. Such changes may adversely affect our revenue. There can be no assurance that we can improve the features, functionality, reliability, and responsiveness of infrastructure. Similarly, the technologies that we employ may become obsolete or subject to intense competition from new technologies in the future. If we fail to develop, or obtain timely access to, new technologies, or if we fail to obtain the necessary licenses for the provision of services using these new technologies, we may lose market share, and our results of operations would be adversely affected.

Page 35 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Proprietary protection and intellectual property disputes

Protection of our trade secrets, copyrights, trademarks, domain names and other product rights are important to our success. We protect our intellectual property rights by relying on trademark protection, common law rights as well as contractual restrictions. However, many of our proprietary technologies are currently unpatented nor have we made any applications for such intellectual property registrations, and we have no present intention to do so in the near future. As such, the current steps that it takes to protect our intellectual property, including contractual arrangements, may not be sufficient to prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others.

Should we decide to register our intellectual property in one or more jurisdictions, it will be an expensive and time consuming process and there is no assurance that we will be successful in any or all of such jurisdictions. The absence of registered intellectual property rights, or the failure to obtain such registrations in the future, may result in us being unable to successfully prevent our competitors from imitating our solutions or using some or all of our processes. Even if patents and other registered intellectual property rights were to be issued to us, our intellectual property rights may not be sufficiently comprehensive to prevent our competitors from developing similar competitive products and technologies.

With our acquisition of WinView, we acquired WinView’s intellectual property portfolio. WinView’s patent portfolio is an important asset to us, and we intend to further develop and protect it and our technologies. Litigation may be necessary to enforce our intellectual property rights. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity or diversion of management and technical resources, any of which could adversely affect our business and operating results. Moreover, due to the differences in foreign patent, trademark, copyright and other laws concerning proprietary rights, our intellectual property may not receive the same degree of protection in foreign countries as it would in Canada or the United States. Our failure to possess, obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition.

We may also face allegations that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including from our competitors and former employers of our personnel. Whether a product infringes a patent or other intellectual property right involves complex legal and factual issues, the determination of which is often uncertain. As the result of any court judgment or settlement, we may be obligated to cancel the launch of a new game or product offering, cease offering a game or certain features of a game, pay royalties or significant settlement costs, purchase licenses or modify our software and features, or develop substitutes. We have already had communication from trademark trolls in this respect. At this time these actions are a nuisance rather than a quantifiable business risk.

In addition, we use open-source software in our games, and we expect to continue to use open-source software in the future. From time to time, we may face claims from companies that incorporate open-source software into their products, claiming ownership of, or demanding release of, the source code, the open-source software and/or derivative works that were developed using such software, or otherwise seeking to enforce the terms of the applicable open-source license. These claims could also result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our games, any of which would have a negative effect on our business and operating results.

Transmission of User Data

In connection with our operations, we transmit and store data. We are subject to legislation and regulations on the collection, storage, retention, transmission and use of user-data that we collect. Our efforts to protect the personal information of our users, partners and clients may be unsuccessful due to the actions of third parties, software bugs or technical malfunctions, employee error or malfeasance, or other factors.

Page 36 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

In addition, third parties may attempt to fraudulently induce employees or users to disclose information in order to gain access to our data, our users’ data, our partners’ data or our clients’ data. If any of these events occur, users’, partners’ or clients’ information could be accessed or disclosed improperly. Any incidents involving the unauthorized access to or improper use of the information of users or incidents involving violation of our terms of service or policies could damage our reputation and brands and diminish our competitive position.

Moreover, affected users, clients or governmental authorities could initiate legal or regulatory action against us in connection with such incidents, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices and remediate the effects of any such incidents of unauthorized access or use. Any of these events could have a material adverse effect on our prospects, businesses, financial condition or results of operations.

Data collection risks

We partially rely on data captured by Stream Hatchet for our revenues and for assessing the performance of some of our brands. Capturing accurate data is subject to various limitations. For example, Stream Hatchet may need to collect certain data from mobile carriers or other third parties such as various viewing platforms, which limits its ability to verify the reliability of such data. Further, Stream Hatchet may not be able to collect any data from third parties at all. Failure to capture accurate data or an incorrect assessment of this data may materially harm business and operating results.

Mobile gaming and the free-to-play business model

Eden Games is partially reliant on the free-to-play business model where monetization is through in-app purchases. The risks of that business model include the dependence on a relatively small number of consumers for a significant portion of revenues and profits from any given game, including the current title, Gear.Club. If we increase our reliance on the free-to-play model, we may be exposed to increased risk. For example, we may invest in the development of new free-to-play interactive entertainment products that do not achieve significant commercial success, in which case our revenues from those products likely will be lower than anticipated and we may not recover our development costs. Further, if: (1) we fail to offer monetization features that appeal to our consumers; (2) these consumers do not continue to play our free-to-play games or purchase virtual items at the same rate; (3) our platform providers make it more difficult or expensive for players to purchase our virtual currency; or (4) we cannot encourage significant additional consumers to purchase virtual items in our free-to-play games, our business may be negatively impacted.

Retention and acquisition of new CMS platform customers

Our financial performance and operations are dependent in part on retaining our current CMS platform customers and acquiring new CMS platform customers. We currently serve a large number of customers with our CMS platform and a typical customer contract runs for multiple years. However, we compete with the other technology providers in the market and increasing competition may affect our ability to retain current and acquire new customers. Any number of factors could potentially negatively affect our customer retention or acquisition. For example, a current customer may request products or services that we currently do not provide and may be unwilling to wait until we can develop or source such additional features. Other factors that affect our ability to retain or acquire new CMS platform customers include:

	●	customers increasingly use competing products or services;
	●	we fail to introduce new and improved products or if we introduce new products or services that are not favorably received;
	●	we are unable to continue to develop new products and services that work with a variety of mobile operating systems and networks and/or that have a high level of market acceptance;
	●	there are changes in customer preference;
	●	there is consolidation or vertical integration of our customers;

Page 37 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

	●	there are changes in customer sentiment about the quality or usefulness of our products and services;
	●	there are adverse changes in our products that are mandated by legislation, regulatory authorities, or litigation, including settlements or consent decrees;
	●	technical or other problems prevent us from delivering our products in a rapid and reliable manner;
	●	we fail to provide adequate customer service to our customers; or
	●	we, our software developers, or other companies in our industry are the subject of adverse media reports or other negative publicity.

Exposure to advertising marketplace

A significant portion of our projected revenue is generated from the sale of national and local online advertising inventory, which is dependent on available advertising inventory and market demand and prices for such inventory. A decline in available supply of advertising inventory, general demand for advertising inventory and general economic conditions may materially and adversely affect our advertising revenue.

A significant portion of our projected revenue is generated from the sale of national and local online advertising inventory, the majority of which we sell on an automated basis through real-time bidding. We also sell a small portion of our inventory to premium direct advertising customers to whom we provide guaranteed advertisement inventory. Our advertising revenue is dependent on the amount of advertising inventory that is available to us to sell and market demand and prices for such inventory.

The amount of advertising inventory available for us to sell is affected by many variables including but not limited to:

	●	the negotiated amount of inventory we receive from our current CMS customers;
	●	the amount of additional inventory our current CMS customers permit us to sell on their behalf;
	●	our ability to acquire inventory to sell on behalf of parties that are not customers of our CMS;
	●	the amount of inventory available on our owned and operated properties;
	●	the amount of end-user traffic to our customers’ and our online properties; and
	●	the specific type of advertising to be sold, such as display, video or mobile advertising.

While we endeavor to maximize the amount of inventory, we are able to sell, some of the foregoing variables, and by extension the amount of inventory we may sell, are affected by market forces and other contingencies that we do not control.

The other principal component of gross advertising revenue is the price at which advertising inventory may be sold. To a large extent, the prices we are able to achieve for our advertising inventory are a product of the market supply and demand, which may vary based on several factors including ad size, ad type, geographic region and time of year. At a macro level, advertising spending is also sensitive to overall economic conditions, and our advertising revenues will be adversely affected if advertisers respond to weak and uncertain economic conditions, for example as a result of disruptions from COVID-19, by reducing their budgets or changing their spending patterns. There are limitations on the amount that we can compensate for fluctuations in the prevailing market prices for advertising inventory. Any reduction in spending by existing or potential advertisers and a decline in available advertising inventory or demand for such inventory would negatively affect our advertising revenue and could affect our ability to grow our advertising customer base.

Page 38 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Global economy

Our business is subject to general economic conditions. Adverse changes in general economic and market conditions could adversely impact demand for our products, prices, revenue, operating costs, results of financing efforts, and the timing and extent of capital expenditures.

Foreign operational risks

A significant portion of our business and operations is conducted in foreign jurisdictions, including the United States, Spain and France. As such, our business and operations may be adversely affected by changes in foreign government policies and legislation or social instability and other factors which are not within our control, including, but not limited to, renegotiation or nullification of existing contracts or licenses, changes in policies, regulatory requirements or the personnel administering them, economic sanctions, risk of terrorist activities, revolution, border disputes, implementation of tariffs and other trade barriers and protectionist practices, volatility of financial markets, labor disputes and other risks arising out of foreign governmental sovereignty over the areas in which our business is conducted. Our operations may also be adversely affected by laws and policies of such foreign jurisdictions affecting foreign trade, taxation and investment.

If our operations are disrupted and/or the economic integrity of our contracts is threatened for unexpected reasons, our business may be harmed. In the event of a dispute arising in connection with our operations in a foreign jurisdiction where we conduct or will conduct our business, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of Canada or enforcing Canadian judgments in such other jurisdictions. We may also be hindered or prevented from enforcing our rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. Accordingly, our activities in foreign jurisdictions could be substantially affected by factors beyond our control, any of which could have a material adverse effect on our business. We believe that our management is sufficiently experienced to manage these risks.

Regulation

We are subject to general business regulations and laws as well as regulations and laws specifically governing the internet, gaming, e-commerce and electronic devices. Existing and future laws and regulations may impede our growth or strategy. These regulations and laws cover taxation, privacy, data protection, pricing, content, copyrights, distribution, mobile communications, consumer protection, web services, wagering, the provision of online payment services, websites and the characteristics and quality or products and services. Unfavorable changes in regulations and laws could decrease demand for our events, online offering, and merchandise, increase our cost of doing business or otherwise have a material adverse effect on our reputation, popularity, results of operations and financial condition.

Share price fluctuations

The market price of our shares may be subject to wide fluctuations in response to many factors, including variations in the operating results of our and our subsidiaries, divergence in financial results from analysts’ expectations, changes in earnings estimates by stock market analysts, changes in the business prospects of our and our subsidiaries, trading activities of market participants, including short sellers, general economic conditions, legislative changes, and other events and factors outside of our control. In addition, stock markets have from time-to-time experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could adversely affect the market price for our shares.

Limited market for Securities

There can be no assurance that an active and liquid market for our shares will be maintained, and an investor may find it difficult to resell our shares.

Page 39 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Volatility of Revenues and Expenses

We may experience wide fluctuations in reported revenue and earnings from one period to another due to seasonality in revenue streams, short-term nature of some customer agreements and engagements, gain or loss of customer agreements, one-time other non-recurring revenues and expenses. Additionally, we may experience wide-fluctuations in revenues and expenses due to required accounting treatment of certain non-cash items, including the accounting treatment of the liability for our outstanding warrants and convertible debt. Because of the nascent nature and stage of some of our assets, investments, and intangibles, and difficulty in assessing their valuation, we may be required from time to time to impair, write down or otherwise adjust the carrying value of these assets, investments and intangibles, and such impairments and write-downs may have a material impact on our reported earnings.

Emerging diseases, like COVID-19, may adversely affect our operations, our suppliers, or our customers

Emerging diseases, like COVID-19, and government actions to address them, may adversely affect our operations, our suppliers, or our customers. The COVID-19 pandemic continues to evolve rapidly and, as a result, it is difficult to assess its continued magnitude, outcome and duration accurately, but it could:

●	worsen economic conditions, which could negatively impact access to capital;
●	reduce consumer spending;

Emerging diseases, like COVID-19, may adversely affect our operations, our suppliers, or our customers (cont’d)

●	limit our employees from travelling which could affect the execution of our business plan given the Company is multi- jurisdictional; or
●	result in governmental regulation adversely impacting our business

all of which could have a material adverse effect on our business, financial condition and results of operations, which could be rapid and unexpected.

Cybersecurity threats

A cyber incident is an intentional or unintentional event that could threatens the integrity, confidentiality or availability of the Company’s information resources. These events include, but are not limited to, unauthorized access to information systems, a disruption to our information systems, or loss of confidential information. Real’s primary risks that could result directly from the occurrence of a cyber incident include operational interruption, damage to our public image and reputation, and/or potentially impact the relationships with our customers.

We have implemented processes, procedures and controls to mitigate these risks, including, but not limited to, firewalls and antivirus programs and training and awareness programs on the risks of cyber incidents. These procedures and controls do not guarantee that the financial results may not be negatively impacted by such an incident.

Subsequent events

The Company has evaluated subsequent events from the balance sheet date through November 26, 2021, the date of this MD&A, and determined there were no additional items to be disclosed.

Page 40 of 41

Engine Gaming and Media, Inc.

(formerly Engine Media Holdings, Inc.)

Management’s Discussion and Analysis

(Expressed in United States Dollars)

Management’s Responsibility for Financial Information

The Company’s financial statements and the other financial information included in this management report are the responsibility of the Company’s management and have been examined and approved by the Company’s audit committee and Board of Directors. The accompanying financial statements are prepared by management in accordance with IFRS and include certain amounts based on management’s best estimates using careful judgment. The selection of accounting principles and methods is management’s responsibility.

Management recognizes its responsibility for conducting the Company’s affairs in a manner to comply with the requirements of applicable laws and established financial standards and principles, and for maintaining proper standards of conduct in its activities. The Board of Directors supervises the financial statements and other financial information through its audit committee, which is comprised of four non-management directors.

This committee’s role is to examine the financial statements and recommend that the Board of Directors approve them, to examine the internal control and information protection systems and all other matters relating to the Company’s accounting and finances. In order to do so, the audit committee meets annually with the external auditors, with or without the Company’s management, to review their respective audit plans and discuss the results of their examination. This committee is responsible for recommending the appointment of the external auditors or the renewal of their engagement.

Additional information

This MD&A, as well as additional information regarding Engine, have been filed electronically with the Canadian securities regulators through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and may be accessed through SEDAR’s website at www.sedar.com and the Securities Exchange Commission (“SEC”) and may be accessed through the SEC’s website EDGAR at www.sec.gov.

Page 41 of 41

Exhibit 99.4

CERTIFICATION

I, Louis Schwartz, certify that:

1. I have reviewed this annual report on Form 40-F of Engine Gaming and Media, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditor and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: November 26, 2021	By:	/s/ Louis Schwartz
		Louis Schwartz
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 99.5

CERTIFICATION

I, Michael Munoz, certify that:

1. I have reviewed this annual report on Form 40-F of Engine Gaming and Media, Inc.;

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: November 26, 2021	By:	/s/ Michael Munoz
		Michael Munoz
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 99.6

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Engine Media and Gaming, Inc. (the “Company”) on Form 40-F for the period ended August 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Louis Schwartz, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 26, 2021	/s/ Louis Schwartz
	Louis Schwartz
	Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to Engine Media and Gaming, Inc. and will be retained by Engine Media and Gaming, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 99.7

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Engine Media and Gaming, Inc. (the “Company”) on Form 40-F for the period ended August 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Munoz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 26, 2021	/s/ Michael Munooz
	Michael Munoz
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

Exhibit 99.8

Baker Tilly WM LLP

1500 – 401 Bay Street

Toronto, Ontario

Canada M5H 2Y4

T: +1 416.368.7990

F: +1 416.368.0886

toronto@bakertilly.ca

www.bakertilly.ca

Consent of Independent Auditor

We hereby consent to the incorporation by reference in this Annual Report on Form 40-F of Engine Gaming and Media, Inc. (formerly, Engine Media Holdings, Inc.) (the “Company”) of our report dated November 26, 2021, relating to the consolidated financial statements of the Company as at and for the years ended August 31, 2021 and 2020, which appears in Exhibit 99.2 incorporated by reference in this Annual Report.

/s/ Baker Tilly WM LLP
Chartered Professional Accountants, Licensed Public Accountants

Toronto, Canada
November 26, 2021

Baker Tilly WM LLP

1500 – 401 Bay Street

Toronto, Ontario

Canada M5H 2Y4

T: +1 416.368.7990

F: +1 416.368.0886

toronto@bakertilly.ca

www.bakertilly.ca

Consent of Independent Auditor

We hereby consent to the incorporation by reference into Amendment No. 1 to the Registration Statement on Form F-10 of Engine Gaming and Media, Inc. (formerly, Engine Media Holdings, Inc.) (the “Company”) of our report dated November 26, 2021, relating to the consolidated financial statements of the Company as at and for the years ended August 31, 2021 and 2020, which appears in the Company’s Annual Report on Form 40-F for the fiscal year ended August 31, 2021.

/s/ Baker Tilly WM LLP
Chartered Professional Accountants, Licensed Public Accountants

Toronto, Canada
November 26, 2021