Exhibit 99.1
COLOR STAR TECHNOLOGY CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| ASSETS | (Unaudited) | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Loan receivable | ||||||||
| Other receivables, net | ||||||||
| Prepayments | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use asset | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | $ | ||||||
| Other payables and accrued liabilities | ||||||||
| Other payables - related parties | ||||||||
| Lease liability - current | ||||||||
| Convertible notes payable | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Lease liability - non-current | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in-capital | ||||||||
| Deferred stock compensation | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
COLOR STAR TECHNOLOGY CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| REVENUE | $ | $ | ||||||
| COST OF REVENUE | ||||||||
| GROSS PROFIT | ||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ( | ) | ( | ) | ||||
| ALLOWANCE FOR CREDIT LOSSES | ( | ) | ( | ) | ||||
| STOCK COMPENSATION EXPENSE | ( | ) | ( | ) | ||||
| IMPAIRMENT LOSS OF INTANGIBLE ASSETS | ( | ) | ||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE), NET | ||||||||
| Other income, net | ||||||||
| Interest income | ||||||||
| Amortization of debt issuance costs | ( | ) | ( | ) | ||||
| Finance expense | ( | ) | ( | ) | ||||
| TOTAL OTHER INCOME (EXPENSE), NET | ( | ) | ||||||
| LOSS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ||||
| PROVISION FOR INCOME TAXES | ||||||||
| NET LOSS | ( | ) | ( | ) | ||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Foreign currency translation adjustment | ||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | ||
| LOSS PER CLASS A and CLASS B ORDINARY SHARE | ||||||||
| Weighted average number of shares* | ||||||||
| Basic and diluted | ||||||||
| Loss per share - basic and diluted* | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
COLOR STAR TECHNOLOGY CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’ EQUITY
| For the Six Months Ended December 31, 2024 | ||||||||||||||||||||||||||||||||||||
| Class A Ordinary shares* | Class B Ordinary shares* | Additional | Deferred | Accumulated other | ||||||||||||||||||||||||||||||||
| Number | Par | Number | Par | paid-in | share | Accumulated | comprehensive | |||||||||||||||||||||||||||||
| of shares | amount | of shares | amount | capital | compensation | deficit | income | Total | ||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Sale of ordinary shares | ||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrants into ordinary shares | ( | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable into ordinary shares | ||||||||||||||||||||||||||||||||||||
| Ordinary shares issued for compensation | ||||||||||||||||||||||||||||||||||||
| Stock compensation expense | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
Issuance of fractional shares upon the | - | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| For the Six Months Ended December 31, 2023 | ||||||||||||||||||||||||||||||||||||
| Class A Ordinary shares* | Class B Ordinary shares | Additional | Deferred | Accumulated other | ||||||||||||||||||||||||||||||||
| Number | Par | Number | Par | paid-in | share | Accumulated | comprehensive | |||||||||||||||||||||||||||||
| of shares | amount | of shares | amount | capital | compensation | deficit | income (loss) | Total | ||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Sale of ordinary shares | - | |||||||||||||||||||||||||||||||||||
| Ordinary shares issued for acquisition of intangible assets | - | |||||||||||||||||||||||||||||||||||
| Ordinary shares issued for acquisition of concert cooperation rights | - | |||||||||||||||||||||||||||||||||||
| Stock compensation expense | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2023 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
COLOR STAR TECHNOLOGY CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Allowance for credit losses | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of right of use asset | ||||||||
| Stock compensation expense | ||||||||
| Impairment loss of intangible assets | ||||||||
| Accrued interest income | ( |
) | ||||||
| Finance expense on convertible notes payable | ||||||||
| Amortization of debt issuance costs | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ||||||||
| Other receivables | ( |
) | ||||||
| Prepayments | ( |
) | ||||||
| Lease liabilities | ||||||||
| Other payables and accrued liabilities | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITY: | ||||||||
| Loan to a third party | ( |
) | ||||||
| Net cash used in investing activity | ( |
) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Borrowings from related parties | ||||||||
| Proceeds from convertible notes, net of debt issuance costs | ||||||||
| Payment for a convertible note | ( |
) | ||||||
| Proceeds from issuance of ordinary shares, net of offering costs | ||||||||
| Net cash provided by financing activities | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES | ( |
) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ||||||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest expense | $ | $ | ||||||
| Cash paid for income tax | $ | $ | ||||||
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Initial recognition of operating right of use asset and lease liability | $ | $ | ||||||
| Ordinary shares issued for prepayments on concert cooperation rights | $ | $ | ||||||
| Ordinary shares issued for acquisition of intangible assets | $ | $ | ||||||
| Debt issuance costs for convertible notes included in other payables and accrued liabilities | $ | $ | ||||||
| Conversion of convertible notes from interest payable | $ | $ | ||||||
| Cashless exercise of warrants into ordinary shares | $ | $ | ||||||
| Conversion of convertible notes payable into ordinary shares | $ | $ | ||||||
| Issuance of ordinary shares with proceeds included in other payables and accrued liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
COLOR STAR TECHNOLOGY CO., LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and description of business
Color Star Technology Co., Ltd. (the “Company” or “Color Star”) is an entertainment and education company which provides online entertainment performances and online music education services via its wholly-owned subsidiary, Color Star DMCC (“DMCC”).
The Company was founded as an unincorporated business on September 1, 2005, under the name TJS Wood Flooring, Inc., and became a C-corporation in the State of Delaware on February 15, 2007. On April 29, 2008, TJS Wood Flooring, Inc. changed its name to China Advanced Construction Materials Group, Inc. (“CADC Delaware”). On August 1, 2013, CADC Delaware consummated a reincorporation merger with its newly formed wholly-owned subsidiary, China Advanced Construction Materials Group, Inc. (“CADC Nevada”), a Nevada corporation, with CADC Delaware merging into CADC Nevada and CADC Nevada being the surviving company, for the purpose of changing CADC Delaware’s state of incorporation from Delaware to Nevada. On December 27, 2018, CADC Nevada was merged with and into China Advanced Construction Materials Group, Inc. (“CADC Cayman”), a Cayman Islands corporation, whereupon the separate existence of CADC Nevada ceased and CADC Cayman continued as the surviving entity. As a result of the reincorporation, the Company is governed by the laws of the Cayman Islands.
On November 22, 2021, Color China changed its name from “Color China Entertainment Limited” to “Color Sky Entertainment Limited.”
CACM Group NY, Inc.
On August 20, 2018, CACM Group NY, Inc. (“CACM”)
was incorporated in the State of New York and is
Color Metaverse Pte. Ltd.
On February 21, 2022, Color Metaverse Pte. Ltd. (“Color Metaverse”), a private company limited by shares, was incorporated in Singapore and is wholly established and owned by the Company. As of the date of this report, Color Metaverse has not commenced operations.
Color Star Technology Ohio Inc.
On August 11, 2022, Color Star Technology Ohio
Inc. (“Color Star Ohio”) was incorporated in the State of Ohio and is
Color Star DMCC
On January 23, 2023, Color Star DMCC (“DMCC”)
was incorporated in the United Arab Emirates with share capital of AED
Model Queen Limited
On August 9, 2023, Model Queen Limited (“Model
Queen”) was incorporated in Hong Kong Special Administrative Region and is
5
Hainan Yuhai Entertainment Co. Ltd.
On September 14, 2023, Hainan Yuhai Entertainment
Co. Ltd. (“Color Star Hainan”) was incorporated in the Hainan Province of the People’s Republic of China (PRC) with
registered capital of RMB
Note 2 – Summary of significant accounting policies
Going concern uncertainty
The Company had an accumulated deficit of approximately
$
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements include the accounts of all the directly and indirectly owned subsidiaries listed below. All intercompany transactions and balances have been eliminated in consolidation. Interim results are not necessary indicative of results of a full year. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. The information in this Form 6-K should be read in conjunction with information in the annual report for the fiscal year ended June 30, 2024, on Form 20-F filed with the SEC on October 17, 2024.
Principles of consolidation
The consolidated financial statements reflect
the activities of the following subsidiaries.
| Subsidiaries | Place incorporated | Ownership percentage | ||||
| CACM | ||||||
| Color Metaverse | ||||||
| Color Star Ohio | ||||||
| DMCC | ||||||
| Model Queen Limited | ||||||
| Color Star Hainan | ||||||
Use of estimates and assumptions
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s consolidated financial statements include the allowance for credit losses of accounts receivable and other receivables, stock-based compensation, and impairment and useful lives of property, plant and equipment and intangible assets. Actual results could be materially different from those estimates.
6
Revenue recognition
The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (ASC 606) to recognize its revenue for all period presented. The core principle underlying this ASU is that the Company recognizes its revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streams to be recognized at a point in time comprise principally of music performance performed or education services provided. The Company’s revenue streams to be recognized over a period of time comprise of its platform subscribed membership fees which is recognized over the subscription period.
The ASU requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no material differences in the pattern of revenue recognition.
The Company accounts for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable.
The Company offered the following services:
| (a) | Concerts and Entertainment Events |
Sale of concerts and entertainment events is accounted for as a single performance obligation which is satisfied at a point in time on the day of the events.
| (b) | Construction Management Consulting Services |
Sale of construction management consulting services is accounted for as a single performance obligation which is satisfied at a point in time at the time the services are performed.
As a practical expedient, the Company elects to record the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.
Information of revenues is as follows:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Concerts and entertainment events | $ | $ | ||||||
| Construction management consulting services | ||||||||
| Total revenue | $ | $ | ||||||
7
Financial instruments
US GAAP specifies a hierarchy of valuation techniques for determining the fair value of financial instruments and related fair value measurements based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In accordance with FASB ASC 820, the following summarizes the fair value hierarchy:
The three levels of inputs are defined as follows:
| Level 1 | inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; |
| Level 2 | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; |
| Level 3 | inputs to the valuation methodology are unobservable. |
Financial instruments included in current assets and current liabilities are reported in the unaudited condensed consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.
Cash and cash equivalents
The Company considers all highly liquid investments with the original maturity of three months or less at the date of purchase to be cash equivalents.
Accounts receivable, net
Accounts receivable include receivables from Color World platform subscription fees due from App payment collections agent and from entertainment event sales, net of an allowance for credit losses. Accounts receivable are recorded at subscription fees and entertainment event sales amount received from the Company’s customers, and do not bear interest. Allowance for credit losses for accounts receivable is established based on various factors including historical payments and current economic trends. The Company reviews its allowance for accounts receivable by assessing individual accounts receivable over a specific aging and amount. All other balances are pooled based on historical collection experience. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Accounts receivable are written off on a case-by-case basis after exhaustive efforts at collection are made, net of any amounts that may be collected.
Other receivables
Other receivables primarily include security deposit, receivables from sale of concert rights, and receivables from vendors upon cancellation of concerts, net of an allowance for credit losses. Allowance for credit losses for other receivables is established based on various factors including historical payments and current economic trends. The Company reviews its allowance for other receivables by assessing individual other receivables over a specific aging and amount. All other balances are pooled based on historical collection experience. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Other receivables are written off on a case-by-case basis after exhaustive efforts at collection are made, net of any amount that may be collected.
8
Prepayments
Prepayments include funds deposited or advanced to outside vendors for future performance obligations, program license fees and service fees. As a standard practice in the music performance industry, many of the Company’s vendors require a certain amount to be deposited with them as a guarantee that the Company will complete its purchases on a timely basis. The Company has legally binding contracts with its vendors, the prepayments will be used to offset performance fees, program license fees, purchase price or service fees, and the amounts are refundable and bear no interest if outside vendors breach the contracts.
Plant and equipment, net
Plant and equipment are stated at cost or at fair
value of the identifiable assets acquired on the acquisition date less accumulated depreciation and impairment loss. Expenditures for
maintenance and repairs are charged to operations as incurred while additions, renewals and improvements are capitalized. Depreciation
is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method with
The estimated useful lives of assets are as follows:
| Useful life | ||
| Office equipment |
Intangible assets, net
Intangible assets are stated at cost, less accumulated
amortization. Amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets. The Company
has obtained copyrights to use the online education academy courses for
Accounting for long-lived assets
The Company classifies its long-lived assets into: (i) office equipment and (ii) intangible assets.
Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technological or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
If the value of an asset is determined to be impaired, the impairment to be recognized is measured in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.
There were $
9
Accounts payable
Accounts payable represent royal fees payable to the Company’s vendor which were incurred from the revenues generated of its on-demand contents in the Color World Platform.
Leases
The Company accounts for leases in accordance with ASC 842 “Leases”. Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similarly owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
Leases with an initial term of 12 months or less are not recorded on the balance sheet as operating lease ROU assets and lease liabilities.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
Convertible notes
Upon adoption of ASU 2020-06 on July 1, 2021, the elimination of the beneficial conversion feature (“BCF”) and cash conversion models in ASC 470-20 that requires separate accounting for embedded conversion features in convertible instruments results in the convertible debt instruments being recorded as a single liability (i.e., there is no separation of the conversion feature, and all proceeds are allocated to the convertible debt instruments as a single unit of account). Unless conversion features are derivatives that must be bifurcated from the host contracts in accordance with ASC 815-15 or, in the case of convertible debt, if the instruments are issued with a substantial premium, in the latter case, ASC 470-20-25-13 requires the substantial premium to be attributable to the conversion feature and recorded in additional paid-in capital (APIC).
Stock-based compensation
The Company records stock-based compensation expenses for employees at fair value on the grant date and recognizes the expense over the employee’s requisite service period. The Company’s expected volatility assumption is based on the historical volatility of the Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination rate. The risk-free interest rate for the expected term of an option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s current and expected dividend policy.
The Company records stock-based compensation expenses for non-employees at fair value on the grant date and recognizes the expense over the service provider’s requisite service period.
10
Income taxes
The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires the Company to use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.
ASC 740-10, “Accounting for Uncertainty
in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step
is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of
any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets
the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is
measured at the largest amount of benefit that has a greater than
Loss per share
The Company reports earnings (loss) per share in accordance with U.S. GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings per share.
Basic loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the year using the two-class method. Using the two-class method, net loss is allocated between ordinary shares and other participating securities (i.e. preference shares) based on their participating rights.
Diluted loss per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants, options, restricted stock-based grants and convertible preferred stock, to issue ordinary shares were exercised and converted into ordinary shares. Ordinary share equivalents having an anti-dilutive effect on loss per share are excluded from the calculation of diluted loss per share.
Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase ordinary shares at the average market price during the period. When the Company has a loss, no potential dilutive items are included since they would be anti-dilutive.
Stock dividends or stock splits are accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it effective as of the beginning of the earliest period presented.
11
Segments
The Company uses the management approach in determining reportable operating segments. The management approach considers the internal reporting used by the chief operating decision maker (“CODM”), which is the Company’s Chief Executive Officer and his direct reports, for making operating decisions about the allocation of resources and the assessment of performance in determining the Company’s reportable operating segments. The Company operates as a single reportable segment. The Company’s CODM reviews financial performance and allocates resources on a consolidated basis, using the significant revenue and expense categories of the Company as the key measurement (see Note 19 – Segment Information).
Recent Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company evaluated the potential impact of adopting this new guidance on its unaudited condensed consolidated financial statements and related disclosures and believed that the adoption did not have a material effect on the Company’s unaudited condensed consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.
Note 3 – Accounts receivable, net
Accounts receivable consisted of the following:
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Color World platform subscription fees due from App payment collections agent | $ | $ | ||||||
| Entertainment event sales | ||||||||
| Subtotal | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
For the six months ended December 31, 2024, and
2023, the Company recognized $
Movements of allowance for credit losses consisted of the following as of the date indicated:
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Ending balance | $ | $ | ||||||
12
Note 4 – Loan receivable
On September 29, 2024, the Company entered into
a loan agreement with a third party, pursuant to which the Company loaned the third party $
Note 5 – Other receivables, net
Other receivables consisted of the following:
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Others | $ | $ | ||||||
| Receivables from vendors upon cancellation of concerts | ||||||||
| Receivables from sale of concert rights | ||||||||
| Other receivables | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Other receivables, net | $ | $ | ||||||
For the six months ended December 31, 2024, and
2023, the Company recognized $
Movements of allowance for credit losses consisted of the following as of the date indicated:
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Write off | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Note 6 – Prepayments
Prepayments, consisted of the following:
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Prepayment for live concert and entertainment productions | $ | $ | ||||||
| Prepayment for transportation services | ||||||||
| Prepayments | $ | $ | ||||||
13
Note 7 – Plant and equipment, net
Plant and equipment consist of the following:
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Office equipment | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Plant and equipment, net | $ | $ | ||||||
Depreciation expenses were $
Note 8 – Intangible assets, net
Intangible assets consist of the following:
December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Copyrights of online education academy courses | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ||||||
| Intangible assets, net | $ | $ | ||||||
Amortization expenses were $
Note 9 – Accounts payable
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Royal fees payable | $ | $ | ||||||
Note 10 – Other payables and accrued liabilities
Other payables and accrued liabilities of the following:
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Payroll and payroll tax payable | $ | $ | ||||||
| Accrued service fee | ||||||||
| Capital received in advance | ||||||||
| Note financing fee payable | ||||||||
| Other payables | ||||||||
| Total other payables and accrued liabilities | $ | $ | ||||||
Note 11 – Related party transactions
Other payables – related parties
Other payables – related party consisted of the following:
| Name of Related Party | Relationship | Nature | December 31, 2024 | June 30, 2024 | ||||||||
| (Unaudited) | ||||||||||||
| Wei Zhang | $ | $ | ||||||||||
| Hui Xu | ||||||||||||
| Louis Luo | ||||||||||||
| Total | $ | $ | ||||||||||
14
Note 12 – Leases
The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty.
In July 2023, the Company entered a lease agreement
for office space in Dubai, United Arab Emirates from August 4, 2023, through August 3, 2025, with a rental fee of $
The components of the lease expenses consist of the following:
| For Six Months Ended | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Operating lease cost | ||||||||
| Lease expenses | $ | $ | ||||||
| Lease expenses – short-term | ||||||||
| Total lease expenses | $ | $ | ||||||
Weighted-average remaining term and discount rate related to leases were as follows:
As of December 31, | As of June 30, 2024 | |||||||
| Weighted-average remaining term | ||||||||
| Operating lease | ||||||||
| Weighted-average discount rate | ||||||||
| Operating lease | % | % | ||||||
The Company’s commitments for minimum lease payment under these operating leases as of December 31, 2024, are as follows:
| Twelve months Ending December 31, | Operating Lease Amount | |||
| 2025 | $ | |||
| Thereafter | ||||
| Total minimum lease payments | ||||
| Less: discount | ( | ) | ||
| Present value of minimum lease payments | $ | |||
15
Note 13 – Convertible notes payable
On July 11, 2023, the Company entered into a securities
purchase agreement (the “Purchase Agreement”) with Streeterville Capital, LLC, a Utah limited liability company (the “Investor”),
pursuant to which the Company issued the Investor an unsecured promissory note on July 11, 2023 in the original principal amount of $
On January 19, 2024, the Investor redeemed $
On August 13, 2024, the Company entered into a
securities purchase agreement with the Investor, pursuant to which the Company issued the Investor an unsecured promissory note on August
13, 2024, in the original principal amount of $
On September 27, 2024, the Company and certain
institutional investors (the “Purchasers”) entered into certain securities purchase agreement (the “SPA”), pursuant
to which the Company sold to the Purchasers an initial tranche of senior secured convertible notes in the aggregate principal amount of
approximately $
The Initial Notes are convertible into the Company’s
Ordinary Shares at the holder’s option, after
16
The Company entered into a certain note exchange
agreement dated October 8, 2024 (the “October Note Exchange Agreement”) with the Purchasers that are party to the SPA dated
September 27, 2024, by and among the Company and the Purchasers. Under the October Note Exchange Agreement, the Purchasers agreed to deliver
to the Company for cancellation and termination of the Initial Notes previously issued by the Company to the Purchasers pursuant to the
SPA. In exchange, the Company will issue to the Purchasers new convertible notes (the “New Notes”) with substantially all
of the same terms of the Initial Notes, except that the New Notes shall become convertible into the Company’s Ordinary Shares at
the holder’s option, immediately from the date of issuance, in whole or in part, until the New Notes are fully converted. In October
2024, the Purchasers redeemed $
On November 25, 2024, the Company entered into
certain note exchange agreements (the “November Exchange Agreement”) with the Purchasers who are parties to the SPA dated
September 27, 2024, by and among the Company and the Purchasers. Under the November Exchange Agreement, the Purchasers agreed to deliver
to the Company for cancellation and termination of the Initial Note previously issued by the Company to the Purchasers pursuant to the
October Exchange Agreement. In exchange, the Company will issue to the Purchasers new convertible notes (the “New Notes 2”)
with substantially all of the same terms of the October Notes, except that a floor price of $
As of December 31, 2024, and June 30, 2024, the
convertible notes balance amount to $
Note 14 – Income taxes
(a) Corporate income tax
Color Star
Under the current laws of the Cayman Islands, Color Star is not subject to tax on income or capital gains. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
CACM
CACM is organized in the New York State in the
United States. CACM had taxable income for the U.S. income tax purposes for the six months ended December 31, 2024, and 2023. The applicable
tax rate is
Color Star Ohio
Color Star Ohio is organized in the Ohio State
in the United States. Color Star Ohio had taxable income for the U.S. income tax purposes for the six months ended December 31, 2024,
and 2023. The applicable tax rate is
Color Star Hainan
Color Star Hainan is incorporated in the PRC and
is subject to PRC Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant
PRC tax laws. The applicable tax rate is
17
Color Metaverse
Color Metaverse is incorporated in Singapore and
is subject to Singapore Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with
relevant Singapore tax laws. The applicable tax rate is
Color DMCC
Color DMCC is incorporated in United Arab Dirham
and is subject to United Arab Dirham Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance
with relevant United Arab Dirham tax laws. The applicable tax rate is
Model Queen
Model Queen is organized in Hong Kong and is subject
to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant
Hong Kong tax laws. The applicable tax rate is
Loss before provision for income taxes consisted of:
| For the Six Months Ended December 31, 2024 | For the Six Months ended December 31, 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cayman | $ | ( | ) | $ | ( | ) | ||
| United States | ( | ) | ||||||
| Hong Kong | ||||||||
| Dubai | ( | ) | ( | |||||
| PRC | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | $ | ( | ) | $ | ( | ) | ||
Significant components of deferred tax assets were as follows:
| December 31, 2024 | June 30, 2024 | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carryforward in the U.S. | ||||||||
| Net operating loss carryforward in the UAE | ||||||||
| Net operating loss carryforward in PRC | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total net deferred tax assets | $ | $ | ||||||
As of December 31, 2024, and June 30, 2024, CACM
and Color Star Ohio’s net operating loss carry forward for the U.S. income taxes was approximately $
18
As of December 31, 2024, and June 30, 2024, Color
Star DMCC’s net operating loss carry forward for the United Arab Emirates income taxes was approximately $
As of December 31, 2024, and June 30, 2024, Color
Sky Hainan’s net operating loss carry forward for the PRC income taxes was $
Changes in the valuation allowance for deferred
tax assets increased by $
(b) Uncertain tax positions
There were uncertain tax positions as of December 31, 2024, and June 30, 2024, and management does not anticipate any potential future adjustments which would result in a material change to its tax positions. For the six months ended December 31, 2024, and 2023, the Company did not incur any tax related interest or penalties.
Note 15 – Shareholders’ equity
Shares Reverse Split
On September 29, 2024, the Company held an annual
meeting of shareholders, pursuant to which
Issuance of Class A Ordinary Shares
On November 8, 2023, the Company entered into
a certain securities purchase agreement with Vast Ocean Inc., the largest shareholder of the Company, pursuant to which the Company agreed
to sell
19
On November 20, 2023, the Company entered into
certain securities purchase agreement (the “SPA 6”) with Vast Ocean Inc. (the “Purchaser”), the largest shareholder
of the Company, as such term is defined in Section 4(a)(2) of the Securities Act of 1933, as amended, pursuant to which the Company agreed
to sell
On December 28, 2023, the Company entered into
certain securities purchase agreement (the “SPA7”) with a certain sophisticated investor (the “Purchaser”) as
such term is defined in Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), pursuant
to which the Company agreed to sell
On August 22, 2024, the Company entered into certain
securities purchase agreement (the “SPA8”) with a certain sophisticated investor as such term is defined in Rule 506(b) of
Regulation D of the Securities Act of 1933, as amended, pursuant to which the Company agreed to sell
Restricted Stock Grants
Restricted stock grants are measured based on the market price on the grant date. The Company has granted restricted Class A ordinary shares to the members of the board of directors (the “Board”), senior management and consultants.
In February 2023, the Company granted an aggregate
of
In April 2023, the Company granted an aggregate
of
In August 2023, the Company granted an aggregate
of
In February 2024, the Company granted an aggregate
of
In April 2024, the Company granted an aggregate
of
In August 2024, the Company granted an aggregate
of
For the six months ended December 31, 2024, and
2023, the Company recognized approximately $
20
Following is a summary of the restricted stock grants:
| Restricted stock grants | Shares | Weighted Average Grant Date Fair Value Per Share | Aggregate Intrinsic Value | |||||||||
| Unvested as of June 30, 2023 | $ | $ | ||||||||||
| Forfeited | $ | |||||||||||
| Granted | $ | |||||||||||
| Vested | ( | ) | $ | |||||||||
| Unvested as of June 30, 2024 | $ | $ | ||||||||||
| Forfeited | $ | |||||||||||
| Granted | $ | |||||||||||
| Vested | ( | ) | $ | |||||||||
| Unvested as of December 31, 2024 | $ | $ | ||||||||||
Class A Ordinary Shares Issued for Compensation
In October 2024, the Board granted an aggregate
of
For the six months ended December 31, 2024, and
2023, the Company recorded approximately $
Class A Ordinary Shares Issued for Services
In December 2022, the Board granted an aggregate
of
In March 2023, the Board granted an aggregate
of
For the six months ended December 31, 2024, and
2023, the Company amortized approximately $
Class A Ordinary Shares Issued for Acquisitions
In May 2023, the Company entered into a certain
concert cooperation agreement (“Agreement”) by and among Rich America Inc., an Ohio corporation, (“Rich America”),
Color Star DMCC and the Company. Pursuant to the Agreement, Rich America agreed to have certain music artists represented by Rich America
perform at nine concert events organized by Color Star to be held between May 2023 and March 2024 (the “Concerts’) for an
aggregate consideration of US$
In December 2023, the Company issued
21
Warrants
The summary of warrant activity is as follows:
| Warrants Outstanding | Weighted Average Exercise Price | Average Remaining | ||||||||||
| June 30, 2023 | $ | |||||||||||
| Granted | $ | |||||||||||
| Forfeited | ( | ) | $ | |||||||||
| Exercised | ( | ) | $ | |||||||||
| June 30, 2024 | $ | |||||||||||
| Granted | $ | |||||||||||
| Forfeited | ( | ) | $ | |||||||||
| Exercised | ( | ) | $ | |||||||||
| December 31, 2024 | $ | |||||||||||
Conversion of convertible notes payable into Class A Ordinary Shares
During the six months ended December 31, 2024,
convertible note payable of $
Note 16 – Loss per shares
The Company computes loss per share of Class A ordinary shares and Class B ordinary shares using the two-class method. The rights, including the liquidation and dividend rights, of the holders of Class A ordinary shares and Class B ordinary shares are identical. As a result, the undistributed earnings (loss) for each year are allocated based on the contractual participation rights of Class A ordinary shares and Class B ordinary shares as if the earnings for the year had been distributed. As the liquidation and dividend rights are identical, the undistributed loss is allocated on a proportionate basis.
The following tables set forth the computation of basic and diluted loss per share of Class A ordinary shares and Class B ordinary shares:
For the Six Months Ended | For the Six Months Ended December 31, 2023 | |||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||
| Basic and diluted loss per share: | ||||||||||||||||
| Numerator | ||||||||||||||||
| Allocation of undistributed loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator | ||||||||||||||||
| Number of shares used in per share computation | ||||||||||||||||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
22
Note 17 – Commitments and contingencies
Contingencies
From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s unaudited condensed consolidated financial position, results of operations and cash flows.
Note 18 – Concentrations of risk
Credit Risk
The Company is exposed to credit risk from its cash in banks and advances on performance obligations.
As of December 31,2024, and June 30, 2024, there was no credit risk associated with deposits held at banks located in the US or PRC. In the US, the insurance coverage of each bank is USD $
Prepayments and advances are subject to credit evaluation. An allowance will be made for allowance on estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.
Customer Concentration Risk
As of December 31, 2024, and June 30, 2024, one
customer accounted for
There were no sales for the six months ended December 31, 2024. For the six months ended December 31, 2023, no customer accounted for more than 10% of the Company’s total revenue.
Vendor Concentration Risk
As of December 31, 2024, and June 30, 2024, one
vendor accounted for
There were no purchases for the six months ended
December 31, 2024. For the six months ended December 31, 2023, two vendors accounted for
Note 19 – Segment information
The Company conducts business as a operating segment which is based upon the Company’s organizational and management structure, as well as information used by the Company’s CODM to allocate resources and other factors. The accounting policies of the segment are the same as those described in Note 2.
23
The key measure of segment
profitability that the CODM uses to allocate resources and assess performance is consolidated net loss, as reported on the unaudited condensed
consolidated statements of operations.
| For The Six Months Ended | ||||||||
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Revenue | $ | $ | ||||||
| Less cost of revenue | ||||||||
| Less significant segment expenses: | ||||||||
| Amortization expenses | ||||||||
| Payroll expenses | ||||||||
| Professional expenses | ||||||||
| Travel expenses | ||||||||
| Other selling, general and administrative expenses | ||||||||
| Allowance for credit losses | ||||||||
| Stock-based compensation expenses | ||||||||
| Impairment loss of intangible assets | ||||||||
| Other segment items: | ||||||||
| Other income, net | ( | ) | ||||||
| Interest income | ( | ) | ||||||
| Amortization of debt issuance costs | ||||||||
| Finance expense | ||||||||
| Segment net loss | $ | ( | ) | $ | ( | ) | ||
Note 20 – Subsequent events
Senior Secured Convertible Notes
Pursuant to the SPA dated September 27, 2024,
the Company may sell to the investors, from time to time, up to US$
On January 16, 2025, the Company and the Purchasers
elected to consummate an additional closing, pursuant to which the Company shall issue senior secured convertible notes to the Purchasers
in the aggregate principal amount of approximately $
The New Notes 3 are convertible into the Company’s
Ordinary Shares at the holder’s option, immediately upon issuance, in whole or in part, until the New Notes 3 is fully converted,
at the lower of (i) the fixed conversion price of $
24
The Third Offering closed on January 21, 2025,
upon the satisfaction or waiver of all closing conditions, and resulted in gross proceeds to the Company of approximately $
The Company also entered into a placement agency
agreement dated September 27, 2024, with Maxim Group, LLC, as exclusive placement agent (the “Placement Agent”), pursuant
to which the Placement Agent agreed to act as the placement agent in connection with the Offering. The Company agreed to pay the Placement
Agent an aggregate fee equal to
Copyright Acquisition Agreement
The Company entered into certain copyright acquisition
agreement (“Copyright Agreement”) dated as of January 9, 2025, by and among Nine Star Parties and Entertainment LLC., an Ohio
limited liability company (“Nine Star”), the Company, and Color Star DMCC and wholly owned subsidiary of the Company. Pursuant
to the Agreement, Nine Star agreed to sell to Color Star DMCC all of Nine Star’s right, title and interests in and to 27 pieces
of music works created by Nine Star (the “Works”), for an aggregate consideration of US$
Equipment Purchase Agreement
On February 26, 2025, Model Queen entered into a certain purchase and sale agreement (“Agreement”) with BTC KZ (“BTC KZ”), pursuant to which Model Queen shall purchase certain cryptocurrency mining hardware and other equipment (“Equipment”) from BTC KZ from time to time in separate purchase orders.
The parties agreed that the purchase will be made
using a combination of US$
The parties made customary representations and warranties, including but not limited to: (i) obtaining all necessary approvals, rights and authorizations to enter into the Agreement; (ii) the execution, delivery and performance of the Agreement did not violate any applicable law, charter, regulation or other agreements; (iii) BTC KZ had good and marketable title of the Equipment free and clear of all claims and other encumbrances of every kind; (iv) the Equipment was free from defects of workmanship and materials and that the Equipment will operate in accordance with the material functions and features stated in the Order under normal use and conditions for a period of 360 days following its delivery.
The transactions contemplated by the Agreement closed on March 19, 2025, following the satisfaction or waiver of all closing conditions set forth in the Agreement, including but not limited to the delivery of the Cash Consideration and Share Consideration, and the receipt of the Equipment.
25