Acquisition of Funverse

3 Months Ended

Mar. 31, 2024

Acquisition of Funverse [Abstract]

ACQUISITION OF FUNVERSE

4. ACQUISITION OF FUNVERSE

On January 7, 2024, the Company acquired 60% of the equity interest of FunVerse at the cost of issuance of 1,500,000 ordinary shares. The fair value of the share consideration was $2,265,000 by reference to the closing price on January 7, 2024.

The Company has allocated the purchase price of FunVerse based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date. The Company estimated the fair values of the assets acquired and liabilities assumed at the acquisition date in accordance with the business combination standard issued by FASB. The Company used carrying amount of assets and liabilities as fair value, which approximate the fair value, and used cost approach to estimate the fair value of content assets which was primarily comprised software and copyrights. Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed and content assets identified as of the acquisition date and considered a number of factors including valuations from an independent appraiser firm. Acquisition-related costs incurred for the acquisitions are not material and have been expensed as incurred in other operating expenses. The following table summarizes the estimated fair values of the identifiable assets acquired at the acquisition date, which represents the net purchase price allocation at the date of the acquisition of FunVerse based on a valuation performed by an independent valuation firm engaged by the Company.

	January 7,
	2024
ASSETS
Net tangible liabilities (1)	$	(466,400	)
Copyrights (2)		581,000
Software (2)		1,048,200
Goodwill		2,889,200
Deferred tax liabilities		(277,000	)
Non-controlling interest		(1,510,000	)
Total purchase consideration	$	2,265,000

(1) The following is a reconciliation of the fair value of major classes of assets acquired and liabilities assumed which comprised of net tangible liabilities on January 7, 2024.

	January 7,
	2024
ASSETS
Cash and cash equivalents	$	118,300
Accounts receivable		323,500
Prepayments		25,200
Prepaid expenses and other assets		359,400
Content assets		165,300
Total assets	$	991,700
LIABILITIES
Accounts payable	$	43,400
Contract liabilities		395,000
Other current liabilities and accrued expenses		1,019,700
Total liabilities	$	1,458,100
Net tangible liabilities	$	(466,400	)

(2) The copyrights and software are both applied to produce short dramas. The useful lives of these content assets are 12 months.