Acquisition of Xcite Interactive, Inc. |
9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 |
Dec. 31, 2022 |
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| Acquisition of Xcite Interactive, Inc. [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACQUISITION OF XCITE INTERACTIVE, INC. |
9. ACQUISITION OF XCITE INTERACTIVE, INC. A) Summary of the Acquisition On June 3, 2021, the Company closed its acquisition of all the issued and outstanding common shares of Xcite Interactive Inc. (Xcite) in exchange for common shares of the Company. Pursuant to the terms of the acquisition, the Company acquired all the issued and outstanding Xcite common shares in consideration for the issuance of 0.0015 of a common shares of the Company for each Xcite common share. The Company issued a total of 6,279 common shares with a fair value of $10.7 million, based on the June 3, 2021 closing share price of $1,622.40. The Company issued an additional 182 shares on July 26, 2021, related to the Payment Protection Program (PPP) loan escrow account that was included in the Xcite debt at the time of the acquisition. In addition, $109,360 of cash was awarded to non-accredited investors of Xcite on June 3, 2021, and additional $2,865 on July 26, 2021. The acquisition was accounted for using the acquisition method pursuant to ASC 805, “Business Combinations”. Under the acquisition method, assets and liabilities are measured at their estimated fair value on the date of acquisition. — The total consideration was allocated to the tangible and intangible assets acquired and liabilities assumed. The following table summarizes the details of the consideration and the recognized amounts of assets acquired and liabilities assumed at the date of the acquisition. B) Consideration
Goodwill recognized was attributable to the synergies expected to be achieved. Goodwill was not deductible for tax purposes. C) Impairment of Goodwill and Intangible Assets The Company conducts an annual impairment analysis in accordance with ASC 350 and ASC 360. A number of factors influenced the performance of Xcite Interactive in 2022 and beyond, including reduced revenue projections, the time and cost involved in creating custom games, the departure of key Xcite employees, and the competitive landscape of the fan engagement industry. As a result, the Company engaged a third-party to conduct an impairment analysis as of December 31, 2022. The analysis determined that the recoverable amount was $3,760,000 resulting in an impairment of $8,919,002. The goodwill balance of $6,580,660 was written down to $0. The additional impairment of $2,673,342 was attributed on a pro-rata basis to the intangible assets related the Xcite acquisition. These assets include customer relationships, tradename, and developed technology. D) Revenue and Profit Contribution The acquired business contributed revenues of $216,296 and $770,251 for the nine month period ended September 30, 2023 and 2022, respectively. |
9. ACQUISITION OF XCITE INTERACTIVE, INC. A) Summary of the Acquisition On June 3, 2021, the Company closed its acquisition of all the issued and outstanding common shares of Xcite Interactive Inc. (Xcite) in exchange for common shares of the Company. Pursuant to the terms of the acquisition, the Company acquired all the issued and outstanding Xcite common shares in consideration for the issuance of 0.0015 of a common shares of the Company for each Xcite common share. The Company issued a total of 6,279 common shares with a fair value of $10.7 million, based on the June 3, 2021 closing share price of $1,622.40. The Company issued an additional 182 shares on July 26, 2021, related to the Payment Protection Program (PPP) loan escrow account that was included in the Xcite debt at the time of the acquisition. In addition, $109,360 of cash was awarded to non-accredited investors of Xcite on June 3, 2021, and additional $2,865 on July 26, 2021. The acquisition was accounted for using the acquisition method pursuant to ASC 805, “Business Combinations”. Under the acquisition method, assets and liabilities are measured at their estimated fair value on the date of acquisition. The total consideration was allocated to the tangible and intangible assets acquired and liabilities assumed. The following table summarizes the details of the consideration and the recognized amounts of assets acquired and liabilities assumed at the date of the acquisition. B) Consideration
Goodwill recognized is attributable to the synergies expected to be achieved. Goodwill is not deductible for tax purposes. C) Impairment of Goodwill and Intangible Assets The Company conducts an annual impairment analysis in accordance with ASC 350 and ASC 360. A number of factors influenced the performance of Xcite Interactive in 2022 and beyond, including reduced revenue projections, the time and cost involved in creating custom games, the departure of key Xcite employees, and the competitive landscape of the fan engagement industry. As a result, the Company engaged a third-party to conduct an impairment analysis as of December 31, 2022. The analysis determined that the fair value was $3,760,000 resulting in an impairment of $8,919,002. The goodwill balance of $6,580,660 was written down to $0. The additional impairment of $2,673,342 was attributed on a pro-rata basis to the intangible assets related the Xcite acquisition. These assets include customer relationships, tradename, and developed technology. D) Revenue and Profit Contribution The acquired business contributed revenues of $988,436 for the year ended December 31, 2022. |