v3.26.1
Business Acquisition and Goodwill
 12 Months Ended
Dec. 31, 2025
Business Acquisition and Goodwill [Abstract]  
Business Acquisition and Goodwill

Note 3 – Business Acquisition and Goodwill

 

Impairment of goodwill and intangible assets related to entity acquired in 2022

 

As a result of the assessment over the operating results of Ebonfx Australia acquired in 2022, the Company recognized impairment loss on goodwill of US$2,299,628 and the license of US$3,708,247 during the year ended December 31, 2023. The Company used the income approach with the discounted cash flow valuation method to estimate the fair value of Ebonfx Australia, and used the multi-period excess earnings method to estimate the fair value of the license with the assistance of a third-party valuation specialist. The determination of fair value requires management to make significant estimates and assumptions related to forecasted revenues and cash flows and the discount rate.

 

Acquisitions in 2024

 

Redback Technologies Holdings Pty Ltd (“Redback Technologies”)

 

On November 8, 2024, the Company acquired 100% equity interests of Redback Technologies for a total consideration of approximately US$2.9 million, consisting of cash consideration of AUD 750,000 (approximately US$0.5 million) and the effective settlement of preexisting loans the Company lent to Redback Technologies prior to the acquisition of approximately AUD 3.7 million (approximately US$2.4 million). Upon the acquisition, Redback Technologies became a consolidated subsidiary of the Company. The assets and liabilities of Redback Technologies were recorded at their respective estimated fair value as of the acquisition date.

 

The Company selected a convenience date of October 31, 2024 to account for the allocation of the purchase price, which was based on the fair value of assets and liabilities as of November 8, 2024. The Company evaluated the events between October 31, 2024 and November 8, 2024 and concluded the use of an accounting convenience date of October 31, 2024 did not have material impact on the results of operations or financial position.

The following table summarizes the purchase price allocation of the assets acquired, liabilities assumed and related deferred income tax assumed at the date of acquisition. The dollar amount presented in the table was based on the exchange rate of AUD 1.00 to US$0.6571 on October 31, 2024.

 

   Amount in US$ 
     
Cash and cash equivalents   175,410 
Current assets   1,171,940 
Operating lease right-of-use assets   113,858 
Property, plant and equipment, net   23,049 
Intangible assets   41,334 
Identified intangible asset - technology   1,260,924 
Identified intangible asset - long-term contracts   5,257 
Total assets acquired   2,791,772 
Current liabilities   (869,756)
Deferred tax liabilities   (316,545)
Total liabilities assumed   (1,186,301)
Net identifiable assets acquired   1,605,471 
Cash consideration   492,805 
Effective settlement of preexisting loans   2,465,767 
Goodwill   1,353,101 

 

Goodwill, which is not tax deductible, is primarily attributable to the excess of the purchase consideration over the fair value of the net identifiable assets of the acquiree and is related to synergies expected to be achieved from the acquisition.

 

The determination of fair values involves the use of significant judgments and estimates. The judgments used to estimate the fair value assigned to assets acquired and liabilities assumed, as well as the significant assumptions, can materially impact the Company’s consolidated financial statements. Significant assumptions used for the model include the forecasted operating cash flows and discount rate. The Company utilized the assistance of a third-party valuation firm to determine the fair value as of the date of acquisition.

 

The revenue and net loss since the acquisition date included in the consolidated statements of operations and comprehensive loss for the period ended December 31, 2024 were US$417,623 and US$713,231, respectively.

 

The following pro forma information summarizes the results of operations of the Company for the years ended December 31, 2024 and 2023, as if the acquisition had been completed on January 1, 2023. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the acquisition actually taken place on the date indicated and may not be indicative of future operating results. The pro forma information is adjusted for the elimination of internal transactions between the Company and Redback Technologies for the period ended December 31, 2024.

 

   Years ended December 31, 
   2024   2023 
   Unaudited   Unaudited 
Pro forma revenues  $9,397,779   $17,278,368 
Pro forma net loss  $20,149,854   $40,586,990 

 

Impairment of goodwill and intangible assets related to entity acquired

 

As a result of the assessment over the operating results of Redback Technologies, the Company fully impaired goodwill and technology in the amount of US$1,327,457 and US$1,096,816 during the year ended December 31, 2025.