The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
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 |
Mega Matrix Corp. (the “Company”,
formerly “AeroCentury Corp.” and “ACY”) is a Delaware corporation incorporated in 1997. Through the Company’s
emergence from bankruptcy on September 30, 2021, and new investors and management, the Company became a holding company located in Palo
Alto, California, with two subsidiaries: Mega Metaverse Corp., a California corporation (“Mega”) and JetFleet Holdings Corp.,
a California corporation (“JHC”). On January 1, 2022, JetFleet Management Corp. (“JMC”), a wholly-owned subsidiary
of JHC, was merged with and into JHC, with JHC being the surviving entity. As part of the merger, JHC changed its name to JetFleet Management
Corp.
On March 25, 2022, the Company changed its name
from “AeroCentury Corp” to “Mega Matrix Corp.” (“Name Change”) to better reflect its expansion into
Metaverse and GameFi business. In connection with the Name Change, the Company changed its ticker symbol from “ACY” to “MTMT”
on the NYSE American, effective on March 28, 2022. All references to the “Company,” or “AeroCentury” refers to
AeroCentury Corp. together with its consolidated subsidiaries prior to March 25, 2022 and renamed “Mega Matrix Corp.” commencing
on March 25, 2022. Effective on February 6, 2023, the Company changed its ticker symbol from “MTMT” to “MPU” on
the NYSE American.
On August 31, 2022, we acquired
all of the equity interest in Saving Digital Pte, Ltd., a Singapore corporation (“SDP”) with no operations and approximately
$3,800 in cash, from our chairman Yucheng Hu for a nominal consideration of $10,000. We intend to use SDP to explore other crypto related
business in Singapore. On September 19, 2022, through SDP, we purchased 37 Ethereum (ETH) for the purpose of exploring Ethereum staking opportunities
following the transition by Ethereum on September 15, 2022 from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism referred
to as the “Merge.” Prior to the Merge, Ethereum utilized a PoW validation method for digital asset transactions. Following
the Merge, Ethereum shifted to a PoS validation system where validators stake their ETH into a smart contract on Ethereum to serve as
collateral that can be destroyed if the validator behaves dishonestly or lazily. The validator (selected randomly) is then responsible
for processing the blockchain transactions, storing data and adding new blocks to the blockchain. Validators receives a transaction fee
on their staked coins in ETH as a reward for their active participation in the network. To become a validator on Ethereum, a participant
must stake 32 ETH. Till first quarter ended March 31, 2023, SDP explored Solo-Staking by staking 288 ETH to become nine (9) validators to Ethereum
to earn ETH rewards and yield. Solo-Staking enables SDP to utilize its ETH treasury to stake on the Ethereum beacon chain and to earn
ETH-denominated rewards directly from the Ethereum protocol.
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 will own 60% and Bit Digital will own 40% of MTP. Through the
MarsProtocol platform, MTP will seek to provide non-custodial staking tools whereby users’ private keys are not stored in its
database to ensure the safety of its users’ digital assets. As of the date of this report, such services will not be available
to U.S. residents. Till first quarter ended March 31, 2023, Bit Digital has staked 1056 ETH to become thirty-three (33) validators
to Ethereum to earn ETH rewards and yield through the staking technology tools provided by “MarsProtocol”.
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-month period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2023 or for any other period. All intercompany balances and transactions have been eliminated on consolidation.
Non-controlling interests
Non-controlling interests represent the equity
interests of MTP and JMC that are not attributable, either directly or indirectly, to the Company. As of March 31, 2023, non-controlling
equity holders held 40% equity interest in MTP and 45.81% equity interest in JMC. As of December 31, 2022, non-controlling equity holders
held 45.81% equity interest in JMC.
Going concern
For the three months ended March 31, 2023
and 2022, the Company reported net losses of $1.7 million and $0.7 million, respectively. In addition, the Company had accumulated
deficits of $14.9 million and $13.4 million as of March 31, 2023 and December 31, 2022 respectively. These conditions raised
substantial doubt about the Company’s ability to continue as a going concern.
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 March 31, 2023, the Company had working
capital of $11.8 million, among which the Company held cash of $8.6 million, stable coins of $2.5 million and digital assets of $0.4 million,
which were highly liquid and easily convertible into cash over the market. In addition, the Company had cash inflow of $78,800 from its
operating activities for the three months ended March 31, 2023.
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.
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) |
Digital assets
Digital assets (including Ethereum, or ETH) are
included in current assets in the accompanying unaudited condensed consolidated balance sheets. Digital assets purchased are recorded
at cost and digital assets awarded to the Company through its GameFi and Solo-Staking business are accounted for in connection with the
Company’s revenue recognition policy disclosed below.
An intangible asset with an indefinite useful
life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating
that it is more likely than not that the indefinite-lived asset is impaired. Digital assets are
measured on a first-in-first-out (“FIFO”) basis and measured for impairment whenever indicators of impairment are identified
based on the intraday low quoted price of digital assets. To the extent an impairment loss is recognized, the loss establishes the new
cost basis of the digital assets. Subsequent reversal of impairment losses is not permitted. Digital assets are classified on our balance
sheet as a current asset due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate its
digital assets to support operations when needed. Impairment of $223,000 and $nil for digital assets was recognized for the three
months ended March 31, 2023 and 2022, respectively.
Purchases of digital assets by the Company, if
any, will be included within investing activities in the accompanying unaudited condensed consolidated statements of cash flows, while
digital assets awarded to the Company through its GameFi and Solo-staking business are included within operating activities on the accompanying
unaudited condensed consolidated statements of cash flows. The sales of digital assets are included within operating activities in the
accompanying unaudited condensed consolidated statements of cash flows and any realized gains or losses from such sales are included in
“realized gain (loss) on exchange of digital assets” in the unaudited condensed consolidated statements of operations and
comprehensive loss. The Company accounts for its gains or losses in accordance with the first-in first-out method of accounting. As of
March 31, 2023 and December 31, 2022, the Company did not sell its digital assets for cash.
ASC 820 defines “principal market”
as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and,
as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The Company determines
CoinMarketCap as its principal market, as it is one of the earliest and the most trusted sources by users, institutions, and media for
comparing thousands of crypto assets and selected by the U.S. government.
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
Revenue from Solo-Staking business
The Company
generates revenue through staking rewards.
The Company has entered into network-based smart
contracts by running its own digital assets validating nodes. Through these contracts, the Company provides Ethereum (“ETH”)
to stake on a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart
contract can vary based on the rules of the respective blockchain and typically last a few weeks to months after it is canceled by the
operator and requires that the ETH staked remain locked up during the duration of the smart contract. In exchange for staking the ETH
and validating transactions on blockchain networks, the Company is entitled to all of the fixed ETH award for running the Company’s
own node, for successfully validating or adding a block to the blockchain.
The provision of validating blockchain transactions
is an output of the Company’s ordinary activities. Each separate block creation or validation under a smart contract with a network
represents a performance obligation. The transaction consideration the Company receives - the ETH awards - is a non-cash consideration,
which the Company measures at fair value on the date received. The fair value of the ETH award received is determined using the quoted
price of the related cryptocurrency at the time of receipt. The satisfaction of the performance obligation for transaction verification
services occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the
awards are available for transfer. At that point, revenue is recognized.
Revenue from provision of staking
technology tools
Commencing
in March 2023, the Company, through MTP, provides its customers with proof-of-stake technology tools for digital assets through
the staking platform “MarsProtocol”.
The Company charged its customers at a fixed fee
rate on each unit of digital assets earned from staking business. The Company identified one performance obligation from the staking services.
Because the customers simultaneously receives and consumes the services provided by the Company, the Company recognized the revenues over
period using output method as measurement.
Revenue from GameFi business
In late March 2022, the Company released its first
NFT game “Mano” in the Mega’s metaverse universe platform“alSpace”. Mano is a competitive idle role-playing
game (RPG) deploying the concept of GameFi in the innovative application of NFTs (non-fungible token) based on blockchain technology,
with a “Play-to-earn” business model that the players can earn while they play in the alSpace.
The Company earns transaction fees from players
based on a fixed number of Binance Coin (BNB) of each transaction when they want to upgrade or reset their NFT in Mano. When a player
executes a game transaction through Binance Smart Chain (“BSC”), transaction fee is recognized upon the completion of this
game transaction. Only a single performance obligation is identified for each game transaction, and the performance obligation is satisfied
on the trade date because that is when the underlying game service is identified, the pricing of transaction fee is agreed upon and the
promised services are delivered to customers. All of the Company’s revenues from contracts with customers are recognized at a point
in time. The game service could not be cancelled once it’s executed and is not refundable, so returns and allowances are not applicable.
The Company recognizes revenues on a gross basis as the Company is determined to be the primary obligor in fulfilling the trade order
initiated by the player.
The revenue is in the form of BNB, which is a
cryptocurrency that is primarily used in payment of paying transactions and trading fees through BSC. BNB is convertible to cash
or other digital assets. Due to regulatory challenges, the Company decided to suspend the
Mano game and the alSpace platform, and on November 4, 2022, the Company discontinued the Mano game and the alSpace platform.
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 (continued)
Revenue from leasing of aircraft assets
Revenue from leasing of aircraft assets pursuant
to operating leases is recognized on a straight-line basis over the terms of the applicable lease agreements. Deferred payments are recorded
as accrued rent when the cash rent received is lower than the straight-line revenue recognized. Such receivables decrease over the term
of the applicable leases. Interest income is recognized on finance leases based on the interest rate implicit in the lease and the outstanding
balance of the lease receivable.
Maintenance reserves retained by the Company at
lease-end are recognized as maintenance reserves revenue.
In instances where collectability is not reasonably
assured, the Company recognizes revenue as cash payments are received. The Company estimates and charges to income a provision for bad
debts based on its experience with each specific customer, the amount and length of payment arrearages, and its analysis of the lessee’s
overall financial condition. If the financial condition of any of the Company’s customers deteriorates, it could result in actual
losses exceeding any estimated allowances.
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 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 three-year book cumulative loss through March 31, 2023, the financial 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.
MEGA MATRIX CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except
for share data, unless otherwise stated)
Stable coins were comprised of the following:
| |
March 31, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
USDC | |
$ | 2,508,100 | | |
$ | 2,972,000 | |
USDT | |
| 2,300 | | |
| 90,100 | |
| |
$ | 2,510,400 | | |
$ | 3,062,100 | |
The following table presents additional information
about USDC for the three months ended March 31, 2023 and 2022:
| |
March 31, | | |
March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Opening balance | |
$ | 2,972,000 | | |
$ | - | |
Collection of USDC from subscription fee from investors | |
| 50,000 | | |
| - | |
Collection of USDC from exchange of BNB | |
| - | | |
| 255,000 | |
Purchase of ETH | |
| (285,700 | ) | |
| - | |
Payment of service fees | |
| (228,200 | ) | |
| - | |
| |
$ | 2,508,100 | | |
$ | 255,000 | |
The following table presents additional information
about USDT for the three months ended March 31, 2023 and 2022:
| |
March 31, | | |
March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Opening balance | |
$ | 90,100 | | |
$ | - | |
Collection of USDC from exchange of BNB | |
| - | | |
| 10,200 | |
Payment of service fees | |
| (87,800 | ) | |
| - | |
| |
$ | 2,300 | | |
$ | 10,200 | |
MEGA MATRIX CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except
for share data, unless otherwise stated)
Digital asset holdings were comprised of the following:
| |
March 31, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
ETH | |
$ | 403,300 | | |
$ | 369,200 | |
For the three months ended March 31, 2023 and
2022, the Company recognized impairment loss of $223,000 and $nil on ETH.
Additional information about digital assets
The following table presents additional information
about ETH for the three months ended March 31, 2023 and 2022:
| |
March 31, | | |
March 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Opening balance | |
$ | 369,200 | | |
$ | - | |
Addition of ETH staking reward | |
| 5,400 | | |
| - | |
Purchases of ETH in exchange of USDC | |
| 285,700 | | |
| - | |
Collection of ETH from other services | |
| 600 | | |
| - | |
Return of ETH to a third party | |
| (34,600 | ) | |
| - | |
Impairment of ETH | |
| (223,000 | ) | |
| - | |
| |
$ | 403,300 | | |
$ | - | |
As of March 31, 2023 and December 31, 2022, the
Company leases office spaces in the United States under non-cancelable operating leases, with terms ranging within
12 months. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination
of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized
on a straight-line basis over the lease term.
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 “professional fees, general and administrative and other expenses” on
the unaudited condensed consolidated statements of operations and comprehensive losses.
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 lease term within 12 months. The Company records operating lease expense in its consolidated statements of
income and comprehensive income on a straight-line basis over the lease term and record variable lease payments as incurred. For the three
months ended March 31, 2023 and 2022, the Company recorded rent expenses of $11,900 and $42,500, respectively.
MEGA MATRIX CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except
for share data, unless otherwise stated)
As of December 31, 2022, the Company authorized
40,000,000 shares of common stocks, and had 26,484,055 shares issued and outstanding.
On December 23, 2022,
the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors named
in the Purchase Agreement (collectively, the “Purchasers”), pursuant to which the Company agreed to sell up to an aggregate
of 5,280,000 shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”) at a purchase price
of $1.30 per share, or $6.9 million (the “Private Placement”).
On January 20, 2023,
the Company completed an initial sale of 4,314,615 shares of Common Stock pursuant to the Private Placement to certain Purchasers for
an aggregate purchase price of $5.6 million, or $1.30 per share.
On February 15, 2023, the Company completed the
final sale of 765,384 shares of Common Stock pursuant to the Private Placement to a Purchaser for an aggregate purchase price of $1.0
million, or $1.30 per share, for combined total issuance of 5,079,999 shares of Common Stock for gross proceeds of approximately $6.6
million to the Company under the Private Placement, before deducting estimated offering expenses payable by the Company.
As of March 31, 2023, the Company authorized 40,000,000
shares of common stocks, and had 31,564,054 shares issued and outstanding.
The Company recorded income tax benefits of $61,300 in the first
quarter of 2023, or 3.56% of pre-tax loss, compared to $1,500 income tax expense, or negative 0.22% of pre-tax loss in the first quarter
of 2022. The difference in the effective federal income tax rate from the normal statutory rate in the first quarter of 2023 was primarily
because we recognized tax benefits arising from tax refund.
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, 2023, 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.
MEGA MATRIX CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Rounded to the Nearest Hundred US Dollar, except
for share data, unless otherwise stated)
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.
Due
to regulatory challenges, the Company, on November 4, 2022, discontinued the Mano game and the alSpace platform. Accordingly as of March
31, 2023 and December 31, 2022, and for the three months ended March
31, 2023, the Company had two business segments which were comprised of 1) the newly launched ETH staking business, and 2) the leasing
of regional aircraft to foreign and domestic regional airlines.
For the three months ended March 31, 2022, the
Company had two business segments which were comprised of 1) the newly launched GameFi business, and 2) the leasing of regional aircraft
to foreign and domestic regional airlines.
The following tables present summary information
of operations by segment for the three months ended March 31, 2023 and 2022.
|
|
For the Three Months Ended
March 31, 2023 |
|
|
|
Staking |
|
|
Leasing |
|
|
|
|
|
|
Business |
|
|
Business |
|
|
Total |
|
Revenue and other income |
|
$ |
6,600 |
|
|
$ |
1,900 |
|
|
$ |
8,500 |
|
Gross (loss) profit |
|
$ |
(223,200 |
) |
|
$ |
1,900 |
|
|
$ |
(221,300 |
) |
Total operating expenses |
|
$ |
(1,114,900 |
) |
|
$ |
(386,400 |
) |
|
$ |
(1,501,300 |
) |
Loss before income tax provision |
|
$ |
(1,338,100 |
) |
|
$ |
(384,500 |
) |
|
$ |
(1,722,600 |
) |
Net loss |
|
$ |
(1,338,500 |
) |
|
$ |
(322,800 |
) |
|
$ |
(1,661,300 |
) |
| |
For the Three Months Ended March 31, 2022 | |
| |
GameFi | | |
Leasing | | |
| |
| |
Business | | |
Business | | |
Total | |
Revenue and other income | |
$ | 323,600 | | |
$ | 120,000 | | |
$ | 443,600 | |
Gross profit | |
$ | 295,800 | | |
$ | 120,000 | | |
$ | 415,800 | |
Total operating expenses | |
$ | (478,600 | ) | |
$ | (612,000 | ) | |
$ | (1,090,600 | ) |
Loss before income tax provision | |
$ | (182,800 | ) | |
$ | (492,000 | ) | |
$ | (674,800 | ) |
Net loss | |
$ | (183,200 | ) | |
$ | (493,100 | ) | |
$ | (676,300 | ) |
The following tables present total assets by segment
as of March 31, 2023 and December 31, 2022:
| |
March 31, | | |
December 31, | |
| |
2023 | | |
2022 | |
ETH Staking Business | |
$ | 11,132,300 | | |
$ | 11,120,100 | |
Lease Business | |
| 1,009,400 | | |
| 1,431,700 | |
| |
$ | 12,141,700 | | |
$ | 12,551,800 | |
| 9. | 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.
On April 14, 2023, we entered into an Amended
and Restated Agreement and Plan of Merger (the “Merger Agreement”) with MarsProtocol Inc., an exempted company incorporated
under the laws of the Cayman Islands and a wholly-owned subsidiary of the Company (“MPU Cayman”), amending and restating the
Agreement and Plan of Merger, dated December 7, 2022. The Merger Agreement provides that, upon the terms and subject to the conditions
set forth therein, the Company will merge with and into MPU Cayman (the “Redomicile Merger”), with MPU Cayman being the surviving
company in the Redomicile Merger. Upon the effectiveness of the Redomicile Merger, (i) MPU Cayman will change its name from MarsProtocol
Inc. to Mega Matrix Inc., and (ii) MPU Cayman, together with its subsidiaries, will own and continue to conduct the Company’s business
in substantially the same manner as is currently being conducted by the Company and its subsidiaries. The consent of the holders of a
majority of the outstanding shares of the Company’s common stock entitled to vote is required to approve and adopt the Merger Agreement.