Exhibit 99.1
MEGA MATRIX INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Rounded to the Nearest Hundred US Dollar, except for share and per share data, unless otherwise stated)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trading securities | ||||||||
Loans receivable - a related party | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other assets | ||||||||
| Current content assets, net | ||||||||
| Total current assets | ||||||||
| Non-current Assets: | ||||||||
| Long-term investments | ||||||||
| Goodwill | ||||||||
| Content assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Contract liabilities | ||||||||
| Income taxes payable | ||||||||
| Other current liabilities and accrued expenses | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Shareholders’ Equity: | ||||||||
| Preferred stock, $ | ||||||||
| Class A Ordinary Shares, $ | ||||||||
| Class B Ordinary Shares, $ | ||||||||
| Paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholder’s equity | ||||||||
| Total liabilities and shareholder’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-1
MEGA MATRIX INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Rounded to the Nearest Hundred US Dollar, except for share and per share data, unless otherwise stated)
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling expenses | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses): | ||||||||
| Changes in fair value of digital assets | ||||||||
| Share of equity loss in an equity method investee | ( | ) | ||||||
| Changes in fair value of trading securities | ||||||||
| Interest income (expenses), net | ( | ) | ||||||
| Other income, net | ||||||||
| Total other income, net | ||||||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax (expenses) benefits | ( | ) | ||||||
| Net loss and comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Less: Net loss and comprehensive loss attributable to non-controlling interests | ||||||||
| Net loss and comprehensive loss attributable to Mega Matrix Inc.’s shareholders | $ | ( | ) | $ | ( | ) | ||
| Loss per share: | ||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares used in loss per share computations: | ||||||||
| Basic and Diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
MEGA MATRIX INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
| Mega Matrix Inc.’s Shareholders’ Equity | ||||||||||||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Non- | ||||||||||||||||||||||||||||||
| Number of Stocks | Amount | Number of Stocks | Amount | Paid-in Capital | Accumulated Deficits | Controlling Interests | Total | |||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Issuance of ordinary shares to certain investors in a private placement | ||||||||||||||||||||||||||||||||
| Issuance of ordinary shares to an underwriter | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of ordinary shares to acquire a subsidiary | ||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Share-based compensation to employees | ||||||||||||||||||||||||||||||||
| Share-based compensation to non-employees | ||||||||||||||||||||||||||||||||
| Issuance of ordinary shares to Manager of ATM (Note 7) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
MEGA MATRIX INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Rounded to the Nearest Hundred US Dollar, unless otherwise stated)
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| Investing activities: | ||||||||
| Repayment of loans from a related party | ||||||||
| Investment in trading securities | ( | ) | ( | ) | ||||
| Purchases of digital assets | ( | ) | ||||||
| Acquisition of cash of a subsidiary | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Financing activities: | ||||||||
| Subscription fee advanced from investors | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash, cash equivalents, beginning of period | ||||||||
| Cash, cash equivalents, end of period | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Payment of interest expenses | $ | $ | ||||||
| Payment of income tax expenses | $ | $ | ||||||
| Non-cash Investing and Financing activities | ||||||||
| Subscription fee advanced from investors in the form of USDT | $ | $ | ||||||
| Issuance of common stocks to settle subscription fee advanced from investors | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Reorganization and reclassification of Class A and Class B ordinary shares
On October 8, 2024, Mega Matrix Inc. (“MPU Cayman” or the “Company”), Mega Matrix Corp. (“MPU DE”, formerly “AeroCentury Corp.” and “ACY”), a Delaware corporation, and MPU Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of MPU Cayman (“MPU Merger Sub”) effected a redomicile merger (the “Redomicile Merger”). As a result, MPU Merger Sub merged with and into MPU DE, with MPU DE surviving as a wholly-owned subsidiary of MPU Cayman, pursuant to the Third Amended and Restated Agreement and Plan of Merger, dated May 31, 2024 (the “Merger Agreement”), which Merger Agreement was approved by MPU DE stockholders on September 25, 2024. Pursuant to the Redomicile Merger (as defined below) and as approved by the NYSE American, MPU Cayman’s Class A Shares are now listed on the NYSE American under the symbol “MPU.” The CUSIP/ISIN number relating to the Class A Shares of MPU Cayman is G6005C 108/ KYG6005C1087. Prior to the Redomicile Merger, shares of MPU DE’s common stock were registered pursuant to Section 12(b) of the Exchange Act, and listed on the NYSE American under the symbol “MPU.” As a result of the Redomicile Merger, each issued and outstanding share of MPU DE’s common stock acquired prior to October 8, 2024 has been exchanged for one MPU Cayman Class A Share.
MPU Cayman is authorized to issue shares totaling
US$
Upon the completion of the Redomicile Merger,
MPU Cayman has issued approximately
The Company believed that it was appropriate to reflect the above transactions on a retroactive basis pursuant to ASC 260, Earnings Per Share. The Company has retroactively adjusted all share and per share data for all periods presented.
The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first year presented in the consolidated financial statements.
Repurchase of Class A ordinary shares and issuance of Class B ordinary shares
On December 10, 2024, the Company entered into
a share repurchase agreement (“Repurchase Agreement”) and a share subscription agreement (“Subscription Agreement”)
with Mr. Yucheng Hu, the Company’s Chairman and Chief Executive Officer, pursuant to which the Company effected a reclassification
(“Reclassification”) through an issuance of
Setup of a new subsidiary
On September 24, 2024, the Company set up Bona Box FZ LLC, a wholly owned subsidiary in Abu Dhabi. Bona Box FZ LLC is aiming to produce short dramas to customers based in Arabian area.
F-5
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
The Company is engaged in operation of FlexTV, a short drama streaming platform based in Singapore that produces English and Thai dramas through Yuder Pte. Ltd. and Bona Box FZ LLC, indirect and direct wholly owned subsidiaries of the Company, respectively.
The major subsidiaries of the Company as of March 31, 2025 are summarized as below:
| Later of date of | ||||||||||
| incorporation or | Place of | % of | Principal | |||||||
| Name of Subsidiaries | Acquisition | Incorporation | Ownership | Activities | ||||||
| Major subsidiaries: | ||||||||||
| FunVerse Holding Limited | % | |||||||||
| Yuder Pte. Ltd. | % | |||||||||
| Bona Box FZ LLC | % | |||||||||
| Saving Digital Pte. Ltd. | % | |||||||||
| Marsprotocol Technologies Pte. Ltd. | % | |||||||||
Acquisition of FunVerse Holding Limited (“FunVerse”) and its subsidiary
On January 7, 2024, MPU DE entered into and
closed a definitive Share Exchange Agreement with FunVerse, a company incorporated under the laws of the British Virgin Islands and the
sole parent company of Yuder Pte. Ltd. (“Yuder”), and the shareholders of FunVerse. Following the transaction, MPU DE owns
sixty percent (
On August 15, 2024, MPU DE closed its acquisition
of
F-6
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
Deconsolidation of staking business and leasing of regional aircraft business
On August 31, 2022, MPU DE acquired all of the
equity interest in Saving Digital Pte, Ltd., a Singapore corporation (“SDP”) from Mr. Yucheng Hu for a nominal consideration
of $
On March 1, 2023, SDP and Bit Digital Singapore
Pte. Ltd. (“Bit Digital”), entered into a shareholders’ agreement (the “Shareholders Agreement”) with Marsprotocol
Technologies Pte. Ltd. (“MTP”), to provide proof-of-stake technology tools for digital assets through the staking platform
“MarsProtocol”, an institutional grade non-custodial staking technology. Pursuant to the Shareholders Agreement, SDP invested
$
In March 2024, the Company ceased solo-staking business. SDP was intended to operate solo-staking business.
In August 2023, per the recommendation of board of JetFleet Management Corp. (“JMC”), MPU DE, as a holder of a majority of the voting stock of JMC, elected to approve the winding up and dissolution of JMC. JMC ceased providing aircraft advisory and management services upon winding up and the Company deconsolidated JMC and its subsidiaries in December 2023.
Upon the Company’s deconsolidation of its staking business operated by SDP and leasing of regional aircraft business operated by JMC, the Company focused on its short drama streaming platform business.
The management believed the deconsolidation does not represent a strategic shift, in both operating and financing aspects, because it is not changing the way it is running its business. The Company has not shifted the nature of its operations or the major geographic market area. The management believed the deconsolidation of does not represent a strategic shift that has (or will have) a major effect on the Company’s operations and financial results. The deconsolidation is not accounted as discontinued operations in accordance with ASC 205-20.
F-7
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited condensed consolidated financial statements are presented on a consolidated basis in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other period. All intercompany balances and transactions have been eliminated on consolidation.
Fair value Measurement
The Company applies ASC Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value and expands financial statement disclosure requirements for fair value measurements.
ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability.
ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is 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 assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs are valuation technique inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
Management of the Company considers the carrying amount of cash and cash equivalents, accounts receivable, loans receivable due from a related party, other receivables, accounts payable, other payables and income taxes payable based on the short-term maturity of these instruments to approximate their fair values because of their short-term nature. Warrants were measured at fair value using unobservable inputs and categorized in Level 3 of the fair value hierarchy (Note 7).
F-8
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Accounts receivable
Accounts receivable are recorded at the gross billing amount less an allowance for expected credit losses. Accounts receivable do not bear interest.
The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) to measure expected credit losses of accounts receivable.
The Company maintains an allowance for credit losses and records the allowance for credit losses as an offset to accounts receivable and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in the unaudited condensed consolidated statements of income and comprehensive income. The Company assesses collectability by reviewing accounts receivable on aging schedules because the accounts receivable were primarily consisted of online advertising service fees from certain customers. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the balances, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Delinquent account balances are written-off against the allowance for expected credit loss after management has determined that the likelihood of collection is not probable.
As of March 31, 2025 and December 31, 2024, the Company did not provide expected credit losses against accounts receivable.
Content assets, net
Content assets are classified as current content
assets and non-current content assets, based on their estimated useful lives. Content assets are stated at cost less accumulated amortization
and impairment if any. Content assets are amortized in a way which reflect the pattern in which the economic benefits of the content assets
are expected to be consumed or otherwise used up.
| Estimated Useful Life | ||
| Software | ||
| Produced contents | ||
| Copyrights |
F-9
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
Membership and top-up streaming services (“IAP”)
Membership and top-up streaming services are referred to as In-App Purchases (“IAP”). The Company offers membership streaming services to subscribing members from various countries and the features of the plan, which primarily include access to exclusive and ad-free streaming of short dramas, and accelerated downloads and others. It’s optional for users to subscribe for weekly, monthly or annual membership on the short drama streaming platform. Users can also top up their accounts to acquire in-app coins on our platform, which are then used to continue viewing the short dramas. Users can also earn in-app coins to watch short dramas by completing daily and new user tasks.
Full membership and top-up charges are prepaid before provision of membership and top-up streaming services. The collection of membership and top-up charges are initially recorded as “contract liabilities” on the unaudited condensed consolidated balance sheets and revenue is recognized ratably over the membership period and consumption of in-app coins as services are rendered.
Online advertising services (“IAA”)
Online advertising services are referred to as In-App Advertising (“IAA”). The Company sells advertising services by delivering brand advertising primarily to third-party advertising agencies. The Company provides advertisement placements on its short drama streaming platform in different formats, including but not limited to video, banners, links, logos, brand placement and buttons. The transaction prices are varied according to the scale of impressions and types of the advertisements in the contracts with customers. The contracts have one performance obligation. Revenues are recognized over time. The Company has a right to consideration from the customers in an amount that corresponds directly with the value the Company’s performance obligations completed to date. The Company adopted practical expedient under ASC 606-10-55-18, and recognizes revenues from provision of online advertising services based on amounts invoiced to the customers.
Content licensing business
The Company launched its content licensing business
for its self-produced short dramas to certain online media platform in the year ended December 31, 2024. The Company entered into license
agreements with third party platform customers, pursuant to which the Company grants license of its self-produced short-dramas to the
platforms and allow them to distribute the short dramas for an agreed period of time. The transaction price is comprised of a fixed price
and variable price which is calculated at a percentage of the revenues generated by the customers. The Company recognized revenues at
fixed price upon granting license to the customers, and will recognize the variable price once the fees are collected. For the three months
ended March 31, 2025 and 2024, the Company generated revenues of $
Contract balances
Contract liabilities are recognized if the Company receives consideration prior to satisfying the performance obligations, which include customer advances and deferred revenue under service arrangements.
As of December 31, 2024, the Company had contract
liabilities of $
F-10
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition (continued)
Disaggregation of revenue
For the three months ended March 31, 2025 and 2024, the Company disaggregate revenue into three revenue streams, consisting of In-App Purchases services, In-App Advertising services and content licensing business, as follows:
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| In-App Purchase services | $ | $ | ||||||
| In-App Advertising services | ||||||||
| Content licensing business | ||||||||
| $ | $ | |||||||
Segment reporting
The Company uses the management approach to determine operating segment. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocation of resource and assessing performance.
The Company operates and manages its business as a single operating and reportable segment. The Company’s CODM has been identified as the Chief Executive Officer who reviews the consolidated net income (loss) when making decisions about allocating resources and assessing performances of the Company. Significant segment expenses are the same as these presented under the operating costs and expenses in the consolidated statements of operations, and the difference between net revenue less the significant segment expenses and consolidated net income are the other segment items. The CODM reviews and utilizes these financial metrics together with non-financial metrics to make operation decisions, such as the determination of the fee rate at which the Company charges for its services and the allocation of budget between operating costs and expense.
F-11
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Segment reporting (continued)
The following table disaggregates the Company’s revenues by primary geographical markets based on the location of customers for the three months ended March 31, 2025 and 2024.
| For the three months ended March 31, 2025 | ||||||||||||||||||||
| United States and | Asia- | Europe, Middle East | Latin | |||||||||||||||||
| Canada | Pacific | and Africa | America | Total | ||||||||||||||||
| Membership and top-up streaming services revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Online advertising services | ||||||||||||||||||||
| Content licensing | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| For the three months ended March 31, 2024 | ||||||||||||||||||||
| United States and | Asia- | Europe, Middle East | Latin | |||||||||||||||||
| Canada | Pacific | and Africa | America | Total | ||||||||||||||||
| Membership and top-up streaming services revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Online advertising services | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
Going concern
For the three months ended March 31, 2025 and
2024, the Company reported net losses of approximately $
The Company’s liquidity is based on its ability to generate cash from operating activities and obtain financing from investors to fund its general operations and capital expansion needs. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenue while controlling operating cost and expenses to generate positive operating cash flows and obtain financing from outside sources.
Given the financial condition of the Company and its operating performance, the Company assesses current working capital is sufficient to meet its obligations for the next 12 months from the issuance date of this report. Accordingly, management continues to prepare the Company’s unaudited condensed consolidated financial statements on going concern basis.
F-12
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Concentration and credit risks
1) Credit risk
Assets that potentially subject the Company to
significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit
risk is their carrying amount as at the balance sheet dates. As of March 31, 2025, approximately $
The risk with respect to accounts receivable and amounts due from related parties is mitigated by credit evaluations the Company performs on its customers and its ongoing monitoring processes of outstanding balances.
The Company’s operations are carried out in Singapore. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in Singapore as well as by the general state of the Singapore’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, interest rates and methods of taxation among other factors.
2) Foreign currency risk
Substantially all of the Company’s operating activities that were conducted through the subsidiaries in Singapore and related assets and liabilities are denominated in SGD, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Monetary Authority of Singapore (“MAS”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the MAS or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of SGD is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the MAS market.
3) Concentration risks
Accounts receivable are typically unsecured and derived from goods sold and services rendered to customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company has a concentration of its receivables and revenues with specific customers.
As
of March 31, 2025, two customers accounted for
F-13
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Recent adopted pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic ASC 280) Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses. The enhancements under this update require disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, require disclosure of other segment items by reportable segment and a description of the composition of other segment items, require annual disclosures under ASC 280 to be provided in interim periods, clarify use of more than one measure of segment profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required by this update and required under ASC 280. The adoption of this standard did not have a material impact to our results of operations, cash flows or financial condition.
Recent accounting pronouncements
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This pronouncement introduces new disclosure requirements aimed at enhancing transparency in financial reporting by requiring disaggregation of specific income statement expense captions. Under the new guidance, entities are required to disclose a breakdown of certain expense categories, such as: employee compensation; depreciation; amortization, and other material components. The disaggregated information can be presented either on the face of the income statement or in the notes to the financial statements, often using a tabular format. The ASU is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In December 2023, the FASB issued ASU 2023-09, which is an update to Topic 740, Income Taxes. The amendments in this update related to the rate reconciliation and income taxes paid disclosures improve the transparency of income tax disclosures by requiring (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with U.S. Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General Application—General Notes to Financial Statements: Income Tax Expense, and (2) removing disclosures that no longer are considered cost beneficial or relevant. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this Update should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact from the adoption and will adopt the amendments in the first quarter of fiscal year ended December 31, 2025. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
Recently issued ASUs by the FASB, except for the ones mentioned above, have no material impact on the Company’s unaudited condensed consolidated statements of operations and comprehensive loss or unaudited condensed consolidated balance sheets.
F-14
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
3. ACQUISITION OF FUNVERSE
On January 7, 2024, the Company acquired
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. The Company engaged an independent
appraiser firm to estimate the fair value of assets acquired, liabilities assumed and content assets identified as of the acquisition
date. Acquisition-related costs incurred for the acquisitions are not material and have been expensed as incurred in other operating expenses.
| January 7, | ||||
| 2024 | ||||
| ASSETS | ||||
| Net tangible liabilities (1) | $ | ( | ) | |
| Copyrights (2) | ||||
| Software (2) | ||||
| Goodwill | ||||
| Deferred tax liabilities | ( | ) | ||
| Non-controlling interest | ( | ) | ||
| Total purchase consideration | $ | |||
| (1) |
| January 7, | ||||
| 2024 | ||||
| ASSETS | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable | ||||
| Prepayments | ||||
| Prepaid expenses and other assets | ||||
| Content assets | ||||
| Total assets | $ | |||
| LIABILITIES | ||||
| Accounts payable | $ | |||
| Contract liabilities | ||||
| Other current liabilities and accrued expenses | ||||
| Total liabilities | $ | |||
| Net tangible liabilities | $ | ( | ) | |
| (2) |
On August
15, 2024, the Company closed its acquisition of
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MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
4. LONG-TERM INVESTMENTS
Long-term investment represented investment in Quleduo Technology Co., (“Quleduo”).
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Investment in Quleduo | $ | $ | ||||||
| Less: share of equity loss in Quleduo | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Quleduo is a privately held company which is engaged
in software design and development. In May and September 2023 and January 2024, the Company made a total cash consideration of $
As of March 31, 2025 and December 31, 204, the
Company owned
As of March 31, 2025 and December 31, 204, the Company owned
5. CONTENT ASSETS, NET
Content assets were comprised current content
assets and non-current content assets. The useful lives of current content assets were below
Current content assets was comprise of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Produced contents | ||||||||
| - in development and production | $ | $ | ||||||
| - released | ||||||||
| Copyrights | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Less: accumulated impairment | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Non-current content assets was comprise of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Produced contents | $ | $ | ||||||
| Copyrights | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
F-16
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
The following is a schedule, by fiscal years, of amortization amount of content asset as of December 31, 2024:
| For the nine months ending December 31, 2025 | $ | |||
| For the year ending December 31, 2026 | ||||
| Total | $ |
For the three months ended March 31, 2025 and
2024, the Company recorded amortization expenses of $
6. OPERATING LEASES
As of March 31, 2025 and December 31, 2024, the
Company leases office spaces in the United States and Singapore under non-cancelable operating leases, with terms ranging within
The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. The Company records the straight-line lease expense and any contingent rent, if applicable, in the account of “general and administrative expenses” on the consolidated statements of operations and comprehensive loss.
The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company applied practical expedient to account
for short-term leases with a lease term within
For the three months ended March 31, 2025 and
2024, the Company recorded rent expenses of $
7. EQUITY
Ordinary Shares
As of December 31, 2024, the Company has
been authorized to issue
On January 22, 2025, the Company issued an aggregated
On February 18, 2025, the Company entered into
an At The Market Offering Agreement (the “Agreement”) with H.C. Wainwright & Co., LLC (the “Manager”) pursuant
to which the Company may offer and sell, from time to time, through the Manager, Class A Ordinary Shares, par value $
For the three months ended March 31, 2025, the
Company also issued
As of March 31, 2025, the Company had
F-17
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
7. EQUITY (CONTINUED)
Warrants
In connection with the private placement closed
on January 17, 2024, the Company issued
| As of January 17, 2024 |
||||
| Risk-free rate of return | % | |||
| Estimated volatility rate | % | |||
| Dividend yield | % | |||
| Spot price of underling ordinary share | $ | |||
| Exercise price | $ | |||
| Relative fair value of warrant | $ | |||
In connection with the private placement closed
on August 5, 2024, the Company issued (i) Series A common stock warrants to purchase an aggregate of
| August 5, 2024 | ||||||||
| Series A Warrants | Series B Warrants | |||||||
| Risk-free rate of return | % | % | ||||||
| Estimated volatility rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Spot price of underling ordinary share | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
In addition, the Company also issued pre-funded
warrants to purchase
As of March 31, 2024, the Company had outstanding
warrants to purchase up to
F-18
MEGA MATRIX INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
8. INCOME TAXES
The Company recorded income tax expenses of $
In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or availability to carryback the losses to taxable income during periods in which those temporary differences become deductible. The Company considered several factors when analyzing the need for a valuation allowance including the Company’s current three-year cumulative loss through March 31, 2025, the current year operation forecast, the Company’s recent filing for protection under Chapter 11 of the bankruptcy code, the operation uncertainty of the Company’s new business. Based on this analysis, the Company has concluded that a valuation allowance is necessary for its U.S. and foreign deferred tax assets not supported by either future taxable income or availability of future reversals of existing taxable temporary differences and has recorded a full valuation allowance on its deferred tax assets.
9. RELATED PARTIES
As of December 31, 2024, the Company had balance
of $
Among the loans of $
For the three months ended March 31, 2025, the
Company collected repayment of $
As of March 31, 2025, the Company had balance
of $
For the three months ended March 31, 2024, the Company did not enter into any related party transactions.
10. COMMITMENTS AND CONTINGENCIES
In the ordinary course of the Company’s business, the Company may be subject to lawsuits, arbitrations and administrative proceedings from time to time. The Company believes that the outcome of any existing or known threatened proceedings, even if determined adversely, should not have a material adverse effect on the Company’s business, financial condition, liquidity or results of operations.
11. SUBSEQUENT EVENTS
In April 2025, the Company set up AIFLIX LLC (“AIFLIX”), a joint venture established in collaboration with Wardour Studios Inc. (“Wardour Studios”), a leading Hollywood production and digital-effects studio specializing in next-generation content creation, for AI-generated short drama production. Using proprietary AI tools, created by Wardour Studios, the partnership aims to drive the seamless integration of artificial intelligence (AI) into short-form narrative production, co-developing AI-generated short drama series for global audiences.
In May 2025, the Board of Directors approved the purchase of Bitcoin and/or Ethereum to hold as a treasury reserve asset.
F-19