Exhibit 99.1
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Rounded to the Nearest Hundred US Dollar, except for share and per share data, unless otherwise stated)
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Audited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Stable coins | ||||||||
| Digital assets | ||||||||
| 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 SHAREOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Contract liabilities | ||||||||
| Income taxes payable | ||||||||
| Other current liabilities and accrued expenses | ||||||||
| Subscription advanced from the stockholders | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Shareholders’ Equity: | ||||||||
| Preferred stock, $ | ||||||||
| Class A Ordinary Shares, $ | ||||||||
| Class B Ordinary Shares, $ | ||||||||
| Paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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 September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (revised) | (revised) | |||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expenses) income: | ||||||||||||||||
| Changes in fair value of digital assets | ( | ) | ( | ) | ||||||||||||
| Share of equity loss | ( | ) | ( | ) | ||||||||||||
| Impairment of long-term investments | ( | ) | ( | ) | ||||||||||||
| Interest income, net | ||||||||||||||||
| Other (expenses) income, net | ( | ) | ||||||||||||||
| Total other (expenses) income, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from operations 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 stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares used in loss per Class A Ordinary Share computations*: | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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. Shareholders’ Equity | ||||||||||||||||||||||||
| Class A Ordinary Share* | Non- | |||||||||||||||||||||||
| Number of Stocks | Amount | Paid-in Capital | Accumulated Deficits | Controlling Interests | Total | |||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Cumulative-effect adjustment of opening balance due to adoption of fair value measurement of digital assets | - | |||||||||||||||||||||||
| Issuance of common stocks pursuant to private placement | ||||||||||||||||||||||||
| Net loss (revised) | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of common stocks to a service provider | ||||||||||||||||||||||||
| Capital injection from non-controlling shareholder | - | |||||||||||||||||||||||
| Net loss (revised) | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Withdrawal of capital by a non-controlling shareholder | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss (revised) | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Issuance of common stocks to certain investors in a private placement | ||||||||||||||||||||||||
| Issuance of common stocks to an underwriter | ( | ) | ||||||||||||||||||||||
| Issuance of common stocks to acquire a subsidiary | ||||||||||||||||||||||||
| Share-based compensation to employees | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Issuance of common stocks to certain investors in a private placement | ||||||||||||||||||||||||
| Issuance of common stocks to an underwriter | ( | ) | ||||||||||||||||||||||
| Share-based compensation to employees | ||||||||||||||||||||||||
| Share-based compensation to non-employees | ** | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Issuance of common stocks to certain investors in a private placement | ||||||||||||||||||||||||
| Share-based compensation to employees | ||||||||||||||||||||||||
| Issuance of common stocks to acquire noncontrolling interest of a subsidiary (Note 4) | ( | ) | ||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| * |
| ** |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Rounded to the Nearest Hundred US Dollar, unless otherwise stated)
| For the Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Investing activities: | ||||||||
| Purchases of stable coins | ( | ) | ( | ) | ||||
| Purchases of digital assets | ( | ) | ||||||
| Investment in equity investees | ( | ) | ( | ) | ||||
| Loans made to a related party | ( | ) | ||||||
| Acquisition of cash of a subsidiary | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Subscription fee from investors | ||||||||
| Proceeds from issuance of common stocks pursuant to private placements | ||||||||
| Capital injection from non-controlling shareholders | ||||||||
| Capital withdrawal by a non-controlling shareholder | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Payment of interest expenses | $ | $ | ||||||
| Payment of income tax expenses | $ | $ | ||||||
| Refund of income tax expenses | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Collection of USDC from issuance of common stocks pursuant to private placements | $ | $ | ||||||
| Subscription fee from investors in the form of USDT | $ | $ | ||||||
| Investment in equity investees in USDC | ||||||||
| Issuance of common stocks to settle advance from subscription fee from investors | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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. (the “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 unaudited condensed 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 unaudited condensed consolidated financial statements.
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.
5
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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.
| 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, the Company 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, the Company
owns sixty percent (
On August
15, 2024, the Company closed its acquisition of
6
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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 and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other period. All intercompany balances and transactions have been eliminated on consolidation.
Business combinations
Business combinations are recorded using the acquisition method of accounting. The Company uses a screen test to evaluate whether a transaction should be accounted for as an acquisition and/or disposal of a business versus assets. In order for a purchase to be considered an acquisition of a business, and receive business combination accounting treatment, the set of transferred assets and activities must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business.
The purchase price of business acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and noncontrolling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred.
Where the consideration in an acquisition includes contingent consideration and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and if recorded as a liability, it is subsequently carried at fair value with changes in fair value reflected in earnings.
Changes in the ownership interest that do not result in a change in control of the subsidiary that is a business are accounted for as equity transactions (i.e., no gain or loss is recognized in earnings) and are accounted for in accordance with ASC 810-10-45-22 through ASC 810-10-45-24. The carrying amount of the noncontrolling interest will be adjusted to reflect the change in the noncontrolling interest’s ownership interest in the subsidiary. Any difference between the amount by which the noncontrolling interest is adjusted and the fair value of the consideration paid or received is recognized in equity/additional paid-in capital and attributed to the equity holders of the parent in accordance with ASC 810-10-45-23.
7
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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 any uncollectible accounts due from the customers. 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 September 30, 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 |
8
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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)
Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
The Company assesses goodwill for impairment on annual basis as of December 31 or if indicators were noted for goodwill impairment. In accordance with ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) issued by the Financial Accounting Standards Board (“FASB”) guidance on testing of goodwill for impairment, the Company will first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test. If this is the case, the quantitative goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the quantitative goodwill impairment test is not required.
Quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss, comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired. If the fair value of the reporting unit is less than its carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
In January 2024, the Company recognized goodwill
of $
Impairment of long-lived assets
In accordance with ASC Topic 360, the Company reviews long-lived assets or asset group for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be fully recoverable. If circumstances require a long-lived asset or asset group 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 amount. If the carrying amount 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 amount 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. Any impairment write-downs would be treated as permanent reductions in the carrying amounts of the assets and a charge to operations would be recognized.
For the three and nine months ended September
30, 2024, the Company provided impairment of $
9
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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
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
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 three
months ended September 30, 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 and nine months ended September 30, 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 September 30, 2024, the Company had contract
liabilities of $
Disaggregation of revenue
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (revised) | (revised) | |||||||||||||||
| Membership and top-up streaming services | $ | $ | $ | $ | ||||||||||||
| Online advertising services | ||||||||||||||||
| Content licensing business | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
10
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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)
Cost of revenues
For the three months ended September 30, 2024, the cost of revenues was primarily comprised of platform service fees charged by third party payment processors, amortization of produced contents, software and copyrights which were applied to produce short dramas and other expenses which were directly attributable to producing short dramas. Cost of revenues are recorded in the unaudited condensed consolidated statements of operations and comprehensive loss as incurred.
Taxes
As part of the process of preparing the Company’s consolidated financial statements, management estimates income taxes in each of the jurisdictions in which the Company operates. This process involves estimating the Company’s current tax exposure under the most recent tax laws and assessing both permanent and temporary differences resulting from differing treatment of items for tax and US GAAP purposes. The temporary differences result in deferred tax assets and liabilities, which are included in the balance sheet. 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 carry back 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 three-year book cumulative loss through September 30, 2024, the financial forecast, the Company’s recent filing for protection under Chapter 11 of the bankruptcy code and 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.
Warrant
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter with changes in fair value recognized in the statements of operations in the period of change.
Reclassification
Certain items in the financial statements of the comparative period have been reclassified to conform to the financial statements for the current period (Note 3). The reclassification has no impact on the total assets and total liabilities as of December 31, 2023 or on the statements of operations for the three and nine months ended September 30, 2023.
11
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
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)
Going concern
For the three months ended September 30, 2024
and 2023, 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.
As of September 30, 2024, the Company had working
capital of approximately $
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 consolidated financial statements on going concern basis.
Recent accounting pronouncements
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.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The Company assesses that the adoption of these ASUs will not have a material impact on the Company’s consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — codification amendments in response to SEC’s disclosure Update and Simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows—Overall, 250-10 Accounting Changes and Error Corrections— Overall, 260-10 Earnings Per Share— Overall, 270-10 Interim Reporting— Overall, 440-10 Commitments—Overall, 470-10 Debt—Overall, 505-10 Equity—Overall, 815-10 Derivatives and Hedging—Overall, 860-30 Transfers and Servicing—Secured Borrowing and Collateral, 932-235 Extractive Activities— Oil and Gas—Notes to Financial Statements, 946-20 Financial Services— Investment Companies— Investment Company Activities, and 974-10 Real Estate—Real Estate Investment Trusts—Overall. The amendments represent changes to clarify or improve disclosure and presentation requirements of above subtopics. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations. For entities subject to existing SEC disclosure requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all other entities, the amendments will be effective two years later from the date of the SEC’s removal. The Company assesses that the adoption of these ASUs will not have a material impact on the Company’s consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows.
In March 2023, the FASB issued new accounting guidance, ASU 2023-01, for leasehold improvements associated with common control leases, which is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. The new guidance introduced two issues: terms and conditions to be considered with leases between related parties under common control and accounting for leasehold improvements. The goals for the new issues are to reduce the cost associated with implementing and applying Topic 842 and to promote diversity in practice by entities within the scope when applying lease accounting requirements.
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 consolidated balance sheets.
12
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
3. REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company has noted the following matters in relation to its unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 that had been filed on November 13, 2023. The matter related to the adoption of fair value to measure digital assets, reclassification digital assets and stable coins, and reclassification of other income.
| a. | Adoption of fair value method to measure digital assets |
The Company measures the fair value of digital assets
on a daily basis, and refers to the daily closing prices published by Matrixport Cactus Custody as the fair value. As of January 1, 2023,
the Company recorded a cumulative-effect adjustment of $
| b. | Reclassification of revenue and cost of revenues |
The Company ceased solo-staking business in March 2024, and accordingly the Company reclassified revenues from solo-staking business to other income, net, and cost of revenues to general and administrative expenses. For comparison purpose, the Company reclassified revenues to other income, net, and reclassified cost of revenues to general and administrative expenses for the three and nine months ended September 30, 2023.
| September 30, 2023 | ||||||||||||
| Consolidated balance sheet | As previously reported | Adjustments | As Revised | |||||||||
| Digital assets | ||||||||||||
| Total current assets | ||||||||||||
| Total assets | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||
| Total Mega Matrix Corp. Stockholders’ Equity | ||||||||||||
| Total equity | ||||||||||||
| Total liabilities and equity | ||||||||||||
| For the Three Months Ended September 30, 2023 | ||||||||||||
| Consolidated statements of operations | As previously reported | Adjustments | As Revised | |||||||||
| Revenues | ( | ) | ||||||||||
| Cost of revenues | ( | ) | ||||||||||
| Gross loss | ( | ) | ||||||||||
| General and administrative expenses | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ||||||||
| Other expenses, net | ( | ) | ( | ) | ||||||||
| Loss from operations before income tax expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| For the Nine Months Ended September 30, 2023 | ||||||||||||
| Consolidated statements of operations | As previously reported | Adjustments | As Revised | |||||||||
| Revenues | ( | ) | ||||||||||
| Cost of revenues | ( | ) | ||||||||||
| Gross loss | ( | ) | ||||||||||
| General and administrative expenses | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ||||||||
| Other expenses, net | ( | ) | ( | ) | ( | ) | ||||||
| Loss from operations before income tax expenses | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ||||||||
13
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
4. 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. Management of the Company
is responsible for determining the fair value of assets acquired, liabilities assumed and content assets identified as of the acquisition
date and considered a number of factors including valuations from an independent appraiser firm. Acquisition-related costs incurred for
the acquisitions are not material and have been expensed as incurred in other operating expenses.
| 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
14
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
5. STABLE COINS
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| USDC | $ | $ | ||||||
As of September 30, 2024 and December 31, 2023,
the Company held and
| For the Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Opening balance | $ | $ | ||||||
| Collection of USDC from subscription fee from investors | ||||||||
| Collection of USDC from provision of staking technology tools | ||||||||
| Purchases of USDC | ||||||||
| Collection of USDC from exchange of ETH | ||||||||
| Investment in an equity-method investee in USDC | ( | ) | ||||||
| Exchange of USDC into ETH and USDT | ( | ) | ( | ) | ||||
| Exchange of USDC into cash | ( | ) | ||||||
| Payment of service fees and other expenses | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
6. DIGITAL ASSETS
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ETH | $ | $ | ||||||
| USDT | ||||||||
| $ | $ | |||||||
As of September 30, 2024, the Company did not hold
ETH. For the three months ended September 30, 2024, the Company did not recognize changes in fair value of ETH or investment income from
sales of ETH. For the nine months ended September 30, 2024, the Company recognized an increase in fair value of ETH of $
As of September 30, 2024 and December 31, 2023,
the Company held and
15
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
6. DIGITAL ASSETS (CONTINUED)
Additional information about digital assets
| For the Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Opening balance | $ | $ | ||||||
| Cumulative-effect adjustment of opening balance due to adoption of fair value measurement | ||||||||
| Addition of ETH staking reward and other services | ||||||||
| Purchases of ETH from exchange of USDT | ||||||||
| Purchases of ETH from exchange of USDC | ||||||||
| Exchange of ETH into USDT | ( | ) | ||||||
| Exchange of ETH into USDC | ( | ) | ||||||
| Return of ETH to a third party | ( | ) | ||||||
| Payment of ETH for other expenses | ( | ) | ( | ) | ||||
| Investment income from sales of ETH | ||||||||
| Changes in fair value of ETH | ( | |||||||
| $ | $ | |||||||
| For the Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Opening balance | $ | $ | ||||||
| Purchases of USDT from exchange of digital assets | ||||||||
| Purchases of USDT from exchange of USDC | ||||||||
| Collection of USDT from subscription advance from investors | ||||||||
| Exchange of USDT into ETH | ( | ) | ||||||
| Exchange of USDT into USD | ( | ) | ||||||
| Payment of service fees | ( | ) | ( | ) | ||||
| $ | $ | |||||||
16
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
7. LONG-TERM INVESTMENTS
September 30, 2024 | December 31, 2023 | |||||||
| Investment in MarsLand Global Limited (“MarsLand”) (a) | $ | $ | ||||||
| Less: impairment against investment in Marsland | ( | ) | ||||||
| Investment in Quleduo Technology Co., (“Quleduo”) (b) | ||||||||
| Investment in DaoMax Technology Co., Ltd, (“DaoMax”) (c) | ||||||||
| Less: impairment against investment in DaoMax | ( | ) | ||||||
| $ | $ | |||||||
(a) Investment in MarsLand
MarsLand is a privately held company. In May 2023,
the Company, through Saving Digital Pte. Ltd. (“Saving Digital”), its wholly owned subsidiary, invested consideration of $
(b) Investment 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 $
Quleduo just commenced its operations in July 2023 and incurred minimal losses through September 30, 2024. For the three and nine months ended September 30, 2024, the Company did not record upward adjustments or downward adjustments on the investment. The Company’s impairment analysis considered both qualitative and quantitative factors that may have a significant effect on the fair value of the equity security. As of September 30, 2024 and December 31, 2023, the Company did not recognize impairment against the investment security.
(c) Investment in DaoMax
In June 2023, October 2023 and December 2023,
the Company, through Saving Digital, invested an aggregated cash consideration of $
DaoMax
just commenced its operations in October 2023, and incurred minimal losses through September 30, 2024. For the three and nine months ended
September 30, 2024, the Company did not record upward adjustments or downward adjustments on the investment. In September 2024, DaoMax
was closed as DaoMax assessed that it could generate profits from operations.
For the nine months ended September 30, 2024, the Company provided full impairment of $
17
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
8. CONTENT ASSETS, NET
Content assets were comprised current content
assets and noncurrent content assets. The useful lives of current content assets were below
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Produced contents | - | |||||||
| - in development and production | $ | |||||||
| - released | ||||||||
| Copyrights | ||||||||
| Less: accumulated amortization | ( | ) | ||||||
| Total | $ | $ | ||||||
Non current content assets was comprise of the following:
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Software | $ | $ | ||||||
| Copyrights | ||||||||
| Less: accumulated amortization | ( | ) | ||||||
| Total | $ | $ | ||||||
| For the three months ending December 31, 2024 | $ | |||
| For the year ending December 31, 2025 | ||||
| For the year ending December 31, 2026 | ||||
| Total | $ |
For
the three and nine months ended September 30, 2024, the Company recorded amortization expenses of $
9. OPERATING LEASES
As of September 30, 2024 and December 31, 2023,
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 unaudited condensed 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 12 months. The Company records operating lease expense in its unaudited condensed consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term and record variable lease payments as incurred.
For the three months ended September 30, 2024
and 2023, the Company recorded rent expenses of $
18
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
10. EQUITY
Common Stock
As of December 31, 2023, the Company has been
authorized to issue
On December 1, 2023, we entered into a Consulting
Agreement with Honor Related LLC, a British Virgin Islands corporation (“Honor”), pursuant to which the Company has agreed
to issue
On January 12, 2024, the Company entered into
a Unit Subscription Agreement (the “Agreement”) with certain investors, pursuant to which the investors agreed to purchase
an aggregate of
On January
7, 2024, the Company closed acquisition of FunVerse at share consideration of
On May 9,
2024 the Company entered into various Subscription Agreements (the “Agreements”) with certain investors (collectively, the
“Subscribers”), pursuant to which the Subscribers agreed, subject to certain terms and conditions of the Agreement, to purchase
an aggregate of
On August 5, 2024, the Company closed a private
placement with two accredited investors relating to the issuance and sale of (i)
On September 10, 2024, the two investors exercised
the Pre-Funded Warrants and the Company issued
19
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
10. EQUITY (CONTINUED)
Common Stock (continued)
As of the
date of the report,
For the nine months ended September 30, 2024,
the Company issued an aggregated
On October 8, 2024, the Company, MPU DE, and MPU Merger Sub, Inc., effected 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.” 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.
As of September 30, 2024, the Company has been
authorized to issue
20
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
10. 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
21
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
11. 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 September 30, 2024, 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.
12. OPERATING SEGMENTS
ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different services.
Upon acquisition of FunVerse in January 2024,
the Company commenced its short drama streaming platform business, and ceased its solo-staking activities
in March 2024. During the three and nine months ended September 30, 2024, the Company classified solo-staking activities as non-operating
activities. Accordingly, for the three and nine months ended September 30, 2024, the Company had
22
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
12. OPERATING SEGMENTS (CONTINUED)
| For the Three Months Ended September 30, 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 | ||||||||||||||||||||
| Content licensing | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| For the Nine months ended September 30, 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 | ||||||||||||||||||||
| Content licensing | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
For
the three and nine months ended September 30, 2023, the Company had
23
MEGA MATRIX INC.
(Successor of Mega Matrix Corp.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)
13. 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.
14. SUBSEQUENT EVENTS
As mentioned in Note 1, on
October 8, 2024, Mega Matrix Inc. (“MPU Cayman” or the “Company”), MPU DE, 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
MPU Cayman
is authorized to issue shares totaling US$
Upon the
completion of the Redomicile Merger, MPU Cayman has issued approximately
24