# EDGAR Filing Document

**Accession Number:** 0001953021
**File Stem:** 0001213900-25-057254
**Filing Date:** 2025-6
**Character Count:** 152088
**Document Hash:** 10e29695da55942071a70720ba5e9518
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-057254.hdr.sgml**: 20250624

**ACCESSION NUMBER**: 0001213900-25-057254

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 60

**CONFORMED PERIOD OF REPORT**: 20250331

**FILED AS OF DATE**: 20250624

**DATE AS OF CHANGE**: 20250624

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Mega Matrix Inc
- **CENTRAL INDEX KEY:** 0001953021
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42370
- **FILM NUMBER:** 251069622

**BUSINESS ADDRESS:**
- **STREET 1:** 89 NEXUS WAY, CAMANA BAY
- **CITY:** GRAND CAYMAN
- **STATE:** E9
- **ZIP:** KY1-9009
- **BUSINESS PHONE:** 929-841-4670

**MAIL ADDRESS:**
- **STREET 1:** 89 NEXUS WAY, CAMANA BAY
- **CITY:** GRAND CAYMAN
- **STATE:** E9
- **ZIP:** KY1-9009

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MarsProtocol Inc.
- **DATE OF NAME CHANGE:** 20221101

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

**For the month of June 2025**

**Commission File Number: 001-42370**

**MEGA MATRIX INC.**

**Level 21, 88 Market Street** 

**CapitaSpring** 

**Singapore 048948**

**(Address of principal executive office)**

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form 40-F ☐

**Explanatory Note**

Mega Matrix Inc. (the "Company") is furnishing this Form 6-K to provide its financial statements for the quarter ended March 31, 2025, and related management's discussion and analysis, and to update its risk factors discussion, and to incorporate such financial statements, management's discussion and analysis, risk factors and other information into the Company's registration statements referenced below.

**Incorporation by Reference**

This report and exhibits attached hereto shall be deemed to be incorporated by reference in the registration statements of the Company on Form S-8 (File No. [333-277227](https://www.sec.gov/Archives/edgar/data/1036848/000121390024015811/ea0200362-s8_megamatrix.htm)) and on Form F-3 (File No. [333-283739](https://www.sec.gov/Archives/edgar/data/1953021/000121390024107949/ea0223995-f3_megamatrix.htm)), each as filed with the Securities and Exchange Commission, to the extent not superseded by documents or reports subsequently filed.

**Exhibit Index**

---

| | |
|:---|:---|
| **Exhibit No.** | **Exhibit Description** |
| 99.1 | [Unaudited Interim Consolidated Financial Statements for the Three Months Ended March 31, 2025 and 2024.](ea024479301ex99-1_mega.htm) |
| 99.2 | [Management's Discussion and Analysis of Financial Condition and Results of Operations in connection with the Unaudited Interim Consolidated Financial Statements for the Three Months Ended March 31, 2025 and 2024.](ea024479301ex99-2_mega.htm) |
| 99.3 | [Updates to Risk Factors](ea024479301ex99-3_mega.htm) |
| 101.INS | Inline XBRL Instance Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **Mega Matrix Inc.** | **Mega Matrix Inc.** |
|  | By: | /s/ Yucheng Hu |
|  |  | Yucheng Hu |
|  |  | Chief Executive Officer |
| Dated: June 24, 2025 |  |  |

---

## Exhibit 99.1

?xml version='1.0' encoding='ASCII'?

**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,**<br>**2025** | **December 31,**<br>**2024** |
| **ASSETS** |  |  |
| **Current Assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $6756500 | $8870800 |
| &nbsp;&nbsp;&nbsp;Trading securities | 7000 | 7000 |
| &nbsp;&nbsp;&nbsp;Loans receivable - a related party | 758800 | 866000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 509800 | 422800 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 2850100 | 3175100 |
| &nbsp;&nbsp;&nbsp;Current content assets, net | 1856000 | 1566800 |
| **Total current assets** | **12738200** | **14908500** |
| **Non-current Assets:** |  |  |
| Long-term investments | 1479400 | 1480800 |
| Goodwill | 2889200 | 2889200 |
| Content assets, net | 196700 | 183800 |
| **Total non-current assets** | **4565300** | **4553800** |
| **Total assets** | $**17303500** | $**19462300** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $444900 | $1000500 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 2347100 | 2095500 |
| &nbsp;&nbsp;&nbsp;Income taxes payable | 3100 | 2700 |
| &nbsp;&nbsp;&nbsp;Other current liabilities and accrued expenses | 2587600 | 2255300 |
| **Total liabilities** | **5382700** | **5354000** |
| Commitments and contingencies (Note 10) |  |  |
| **Shareholders' Equity:** |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares issued and outstanding | - | - |
| &nbsp;&nbsp;&nbsp;Class A Ordinary Shares, $0.001 par value, 100,000,000 and 100,000,000 shares authorized, 34,789,611 and 34,536,384 shares outstanding as of March 31, 2025 and December 31, 2024, respectively | 34800 | 34600 |
| &nbsp;&nbsp;&nbsp;Class B Ordinary Shares, $0.001 par value, 10,000,000 and 10,000,000 shares authorized, 5,933,700 and 5,933,700 shares outstanding as of March 31, 2025 and December 31, 2024, respectively | 5900 | 5900 |
| &nbsp;&nbsp;&nbsp;Paid-in capital | 40695600 | 40405400 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (28815500) | (26337600) |
| **Total shareholder's equity** | **11920800** | **14108300** |
| **Total liabilities and shareholder' equity** | $**17303500** | $**19462300** |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**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 <br> March 31,** | **For the Three Months Ended <br> March 31,** |
|  | **2025** | **2024** |
| Revenues | $7736200 | $8691600 |
| Cost of revenues | (3421800) | (3500200) |
| Gross profit | **4314400** | **5191400** |
| **Operating expenses:** |  |  |
| Selling expenses | (4401600) | (7718400) |
| General and administrative expenses | (2450400) | (2238400) |
| **Total operating expenses** | **(6852000)** | **(9956800)** |
| **Loss from operations** | **(2537600)** | **(4765400)** |
| **Other income (expenses):** |  |  |
| Changes in fair value of digital assets | - | 2540700 |
| Share of equity loss in an equity method investee | (1400) | - |
| Changes in fair value of trading securities | 800 | - |
| Interest income (expenses), net | 58200 | (2500) |
| Other income, net | 2500 | 14900 |
| **Total other income, net** | **60100** | **2553100** |
| **Loss before income tax** | **(2477500)** | **(2212300)** |
| Income tax (expenses) benefits | (400) | 276600 |
| **Net loss and comprehensive loss** | $**(2477900)** | $**(1935700)** |
| Less: Net loss and comprehensive loss attributable to non-controlling interests | - | 1068900 |
| Net loss and comprehensive loss attributable to Mega Matrix Inc.'s shareholders | $(2477900) | $(866800) |
| **Loss per share:** |  |  |
| &nbsp;&nbsp;&nbsp;Basic and Diluted | $(0.07) | $(0.05) |
| **Weighted average shares used in loss per share computations:** |  |  |
| &nbsp;&nbsp;&nbsp;Basic and Diluted | 34747402 | 35271740 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**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** | **Mega Matrix Inc.'s Shareholders' Equity** | **Mega Matrix Inc.'s Shareholders' Equity** | **Mega Matrix Inc.'s Shareholders' Equity** | **Mega Matrix Inc.'s Shareholders' Equity** | **Mega Matrix Inc.'s Shareholders' Equity** | | |
|  | **Class A Ordinary Shares** | **Class A Ordinary Shares** | **Class B Ordinary Shares** | **Class B Ordinary Shares** | | | | |
|  | **Number of<br> Stocks** | **Amount** | **Number of<br> Stocks** | **Amount** |<br>**Paid-in<br> Capital** |<br>**Accumulated<br> Deficits** |<br>**Non-**<br>**Controlling<br> Interests** |<br>**Total** |
| **Balance, December 31, 2023** | **31724631** | $**31800** | **-**  | $**-**  | $**27822200** | $**(17454200)** | $**-**  | $**10399800** |
| Issuance of ordinary shares to certain investors in a private placement | 2490000 | 2500 | - | - | 3732500 | - | - | 3735000 |
| Issuance of ordinary shares to an underwriter | 124000 | 100 | - | - | (100) | - | - | - |
| Issuance of ordinary shares to acquire a subsidiary | 1500000 | 1500 | - | - | 2263500 | - | 1510000 | 3775000 |
| Share-based compensation | 102000 | 100 | - | - | 361000 | - | - | 361100 |
| Net loss | - | - | - | - | - | (866800) | (1068900) | (1935700) |
| **Balance, March 31, 2024** | **35940631** | $**36000** | **-**  | $**-**  | $**34179100** | $**(18321000)** | $**441100** | $**16335200** |
| **Balance, December 31, 2024** | **34536384** | $**34600** | **5933700** | $**5900** | $**40405400** | $**(26337600)** | $**-**  | $**14108300** |
| Share-based compensation to employees | 132050 | 100 | - | - | 111100 | - | - | 111200 |
| Share-based compensation to non-employees | 115377 | 100 | - | - | 175700 | - | - | 175800 |
| Issuance of ordinary shares to Manager of ATM (Note 7) | 5800 | \* | - | - | 3400 | - | - | 3400 |
| Net loss | - | - | - | - | - | (2477900) | - | (2477900) |
| **Balance, March 31, 2025** | **34789611** | $**34800** | **5933700** | $**5900** | $**40695600** | $**(28815500)** | $**-**  | $**11920800** |

---

\* The amount of Class A Ordinary Shares issued for share-based compensation to non-employees was below 100.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**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<br> March 31,** | **For the Three Months Ended<br> March 31,** |
|  | **2025** | **2024** |
| **Net cash used in operating activities** | $**(2210500)** | $**(96900)** |
| **Investing activities:** |  |  |
| Repayment of loans from a related party | 111900 | - |
| Investment in trading securities | (19100) | (500000) |
| Purchases of digital assets | - | (610000) |
| Acquisition of cash of a subsidiary | - | 118300 |
| **Net cash provided by (used in) investing activities** | **92800** | **(991700)** |
| **Financing activities:** |  |  |
| Subscription fee advanced from investors | 3400 | 809900 |
| **Net cash provided by financing activities** | **3400** | **809900** |
| Net decrease in cash and cash equivalents | (2114300) | (278700) |
| Cash, cash equivalents, beginning of period | 8870800 | 3129800 |
| **Cash, cash equivalents, end of period** | $**6756500** | $**2851100** |
| **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 | $- | $75000 |
| Issuance of common stocks to settle subscription fee advanced from investors | $- | $2755100 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**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$120,000, divided into (i) 100,000,000 Class A Shares of par value US$0.001 each, (ii) 10,000,000 Class B Shares of par value US$0.001 each and (iii) 10,000,000 Preferred Shares of par value US$0.001 each. The board of directors of MPU Cayman is authorized to issue these shares in different classes and series and, with respect to each class or series, to determine the designations, powers, preferences, privileges and other rights, including dividend rights, conversion rights, terms of redemption and liquidation preferences, any or all of which may be greater than the powers and rights associated with the Ordinary Shares, at such times and on such other terms as they think proper.

Upon the completion of the Redomicile Merger, MPU Cayman has issued approximately 40,470,084 Class A Shares in the Redomicile Merger and the one Class A Share issued and outstanding prior to the Redomicile Merger has been cancelled. There are no Class B Share or Preferred Shares outstanding.

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 5,933,700 Class B ordinary shares, par value $0.001 ("Class B Shares") to Mr. Hu at par value concurrent with the repurchase of 5,933,700 Class A ordinary shares, par value $0.001 ("Class A Shares") held by Mr. Hu at par value in accordance with the Companies Act (As Revised) of the Cayman Islands and the applicable memorandum and articles of association. The repurchased Class A Shares shall be cancelled and available for future issuance, without affecting the Company's authorized share capital. The closing of the Repurchase occurred on December 10, 2024.

*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.

**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:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Name of Subsidiaries** | **Later of date of**<br>**incorporation or**<br>**Acquisition** | <br>**Place of**<br>**Incorporation** |<br>**% of**<br>**Ownership** | <br>**Principal**<br>**Activities** |
| ***Major subsidiaries:*** |  |  | |  |
| FunVerse Holding Limited | January 7, 2024 | BVI | 100% | Investment holding |
| Yuder Pte. Ltd. | January 7, 2024 | Singapore | 100% | Short drama streaming platform |
| Bona Box FZ LLC | September 24, 2024 | Abu Dhabi | 100% | Short drama streaming platform |
| Saving Digital Pte. Ltd. | August 31, 2022 | Singapore | 100% | Investment holding |
| Marsprotocol Technologies Pte. Ltd. | March 1, 2023 | Singapore | 100% | Investment holding |

---

*<u>Acquisition of FunVerse Holding Limited ("FunVerse") and its subsidiary</u>*

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 (60%) of equity interest of FunVerse. FunVerse, through Yuder, operates FlexTV, a short drama streaming platform based in Singapore that produces English and Thai dramas that are also translated into different languages for the users that are spread across various parts of the world. In addition to creating original dramas, Yuder also acquires third party content copyrights which it then translates and distributes on its FlexTV platform.

On August 15, 2024, MPU DE closed its acquisition of 40% equity interest in FunVerse Holding Limited ("FunVerse") and its wholly owned subsidiary, Yuder Pte. Ltd. ("Yuder"), at share consideration of 1,500,000 Class A Ordinary Shares of the Company. Upon the acquisition, the Company, through MPU DE, indirectly owns 100% equity interest in FunVerse and Yuder.

**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 $10,000. SDP was intended to operate solo-staking business.

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 $300,000 and owned 60% equity inteterest of MTP. Through the MarsProtocol platform, MTP planned to provide non-custodial staking tools. In June 2023, the Company ceased provision of non-custodial staking tools to third party customers. In August 2023, Bit Digital exited its investment in MTP and withdrew its capital contribution of SGD$120,000 from MTP. As a result of the transaction, SDP owns all outstanding ordinary shares of MTP.

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.

**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).

**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. When assets are retired or disposed of, the costs and accumulated amortization are removed from the accounts, and any resulting gains or losses are included in income/loss in the year of disposition. Estimated useful lives are as follows:

---

| | |
|:---|:---|
|  | **Estimated Useful<br> Life** |
| Software | 12 months |
| Produced contents | 6 – 12 months |
| Copyrights | 12 – 36 months |

---

**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 $511,100 and $nil, respectively, from its content licensing business.

*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 $2,095,500, which were recognized as revenues in the three months ended March 31, 2025

**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<br> March 31,** | **For the Three Months Ended<br> March 31,** |
|  | **2025** | **2024** |
| In-App Purchase services | $6590400 | $8048200 |
| In-App Advertising services | 634700 | 643400 |
| Content licensing business | 511100 | - |
|  | $**7736200** | $**8691600** |

---

***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.

**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** | **For the three months ended March 31, 2025** | **For the three months ended March 31, 2025** | **For the three months ended March 31, 2025** | **For the three months ended March 31, 2025** |
|  | **United<br> States and**<br>**Canada** | **Asia-**<br>**Pacific** | **Europe, Middle East**<br>**and Africa** | **Latin**<br>**America** |<br>**Total** |
| Membership and top-up streaming services revenue | $2890200 | $2103000 | $1281800 | $315400 | $6590400 |
| Online advertising services | - | 634700 | - | - | 634700 |
| Content licensing | - | 511100 | - | - | 511100 |
| **Total** | $**2890200** | $**3258800** | $**1281800** | $**315400** | $**7736200** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended March 31, 2024** | **For the three months ended March 31, 2024** | **For the three months ended March 31, 2024** | **For the three months ended March 31, 2024** | **For the three months ended March 31, 2024** |
|  | **United<br> States and**<br>**Canada** | **Asia-**<br>**Pacific** | **Europe, Middle East**<br>**and Africa** | **Latin**<br>**America** |<br>**Total** |
| Membership and top-up streaming services revenue | $4654900 | $1586700 | $1136800 | $669800 | $8048200 |
| Online advertising services | - | 643400 | - | - | 643400 |
| **Total** | $**4654900** | $**2230100** | $**1136800** | $**669800** | $**8691600** |

---

 ****

***Going concern***

For the three months ended March 31, 2025 and 2024, the Company reported net losses of approximately $2.5 million and $1.9 million, respectively. In addition, the Company had accumulated deficits of approximately $28.8 million and $26.3 million as of March 31, 2025 and December 31, 2024, respectively, but the Company had working capital of approximately $7.4 million among which the Company held cash of approximately $6.8 million as of March 31, 2025, which is expected to support our operating and investing activities for the next 12 months.

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.

**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 $6.8 million were deposited in financial institutions in Singapore, and each bank accounts is insured by the government authority with the maximum limit of S$100,000. To limit exposure to credit risk relating to deposits, the Company primarily place cash and cash equivalent deposits with large financial institutions in Singapore which management believes are of high credit quality and the Company also continually monitors their credit worthiness.

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 24.9% and 10.6% of accounts receivable, respectively. As of December 31, 2024, two customers accounted for 38.3% and 15.7% of accounts receivable, respectively.

**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.

**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 60% of the equity interest of FunVerse at the cost of issuance of 1,500,000 ordinary shares. The fair value of the share consideration was $2,265,000 by reference to the closing price on January 7, 2024.

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. The following table summarizes the estimated fair values of the identifiable assets acquired at the acquisition date, which represents the net purchase price allocation at the date of the acquisition of FunVerse based on a valuation performed by an independent valuation firm engaged by the Company.

---

| | |
|:---|:---|
|  | **January 7,**<br>**2024** |
| **ASSETS** |  |
| &nbsp;&nbsp;&nbsp;Net tangible liabilities (1) | $(466400) |
| &nbsp;&nbsp;&nbsp;Copyrights (2) | 581000 |
| &nbsp;&nbsp;&nbsp;Software (2) | 1048200 |
| &nbsp;&nbsp;&nbsp;Goodwill | 2889200 |
| &nbsp;&nbsp;&nbsp;Deferred tax liabilities | (277000) |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | (1510000) |
| **Total purchase consideration** | $**2265000** |

---

(1) The following is a reconciliation of the fair value of major classes of assets acquired and liabilities assumed which comprised of net tangible liabilities on January 7, 2024.

---

| | |
|:---|:---|
|  | **January 7,**<br>**2024** |
| **ASSETS** |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $118300 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 323500 |
| &nbsp;&nbsp;&nbsp;Prepayments | 25200 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 359400 |
| &nbsp;&nbsp;&nbsp;Content assets | 165300 |
| **Total assets** | $**991700** |
| **LIABILITIES** |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $43400 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 395000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities and accrued expenses | 1019700 |
| **Total liabilities** | $**1458100** |
| **Net tangible liabilities** | $**(466400)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(2) The copyrights and software, collectively known as content assets, are both applied to produce short dramas. The useful lives of these content assets ranged between 6 and 12 months.

On August 15, 2024, the Company closed its acquisition of 40% equity interest in FunVerse and Yuder, at share consideration of 1,500,000 Class A Ordinary Shares of the Company, at per share price of $1.51. Upon the acquisition, the Company owned 100% equity interest in FunVerse and Yuder. The acquisition of 40% equity interest in FunVerse does not result in a change in control of FunVerse and Yuder, which was accounted for as equity transactions. The difference between the carrying amount of the noncontrolling interest as of August 15, 2024 and the fair value of 1,500,000 share consideration was recognized in additional paid-in capital.

**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,**<br>**2025** | **December 31,**<br>**2024** |
| Investment in Quleduo | $1500000 | $1500000 |
| Less: share of equity loss in Quleduo | (20600) | (19200) |
|  | $**1479400** | $**1480800** |

---

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 $1,500,000 in three instalments to acquire 25% of equity interest in Quleduo. The Company used equity method to measure the investment in Quleduo. For the three months ended March 31, 2025, Quleduo incurred net loss of approximately $5,600 and the Company recorded share of equity loss of $1,400. The Company assessed indicators reflecting an other-than-temporary decline in fair value below the carrying value and did not provide impairment against the investment in Quleduo.

As of March 31, 2025 and December 31, 204, the Company owned 30% equity interest in MarsLand Global Limited ("MarsLand"), over which the Company exercised significant influence. The Company used equity method to measure the investment in MarsLand. During the year ended December 31, 2024, Marsland reported an underperformance and a majority of the employees resigned from Marsland. The Company assessed indicators reflecting an other-than-temporary decline in fair value below the carrying value. As of December 31, 2024, the Company provided full impairment against the investment in Marsland. As of March 31, 2025 and December 31, 2024, the Company had investment of $nil in Marsland.

As of March 31, 2025 and December 31, 204, the Company owned 7.6% equity interest in DaoMax Technology Co., Ltd, ("DaoMax"), over which the Company neither had control nor significant influence through investment in ordinary shares. The Company accounted for the investment in DaoMax using the measurement alternative at cost, less impairment, with subsequent adjustments for observable price changes resulting from orderly transactions for identical or similar investments of the same issuer. In September 2024, DaoMax was closed as DaoMax assessed that it could generate profits from operations. For the year ended December 31, 2024, the Company provided full impairment of $546,000 against investment in DaoMax. As of March 31, 2025 and December 31, 2024, the Company had investment of $nil in DaoMax.

**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 12 months, while the useful lives of non-current content assets were ranged between 18 months and 36 months.

Current content assets was comprise of the following:

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2025** | **December 31,**<br>**2024** |
| Produced contents |  |  |
| - in development and production | $547900 | $321600 |
| - released | 4292100 | 3449400 |
| Copyrights | 2236900 | 1691700 |
|  | 7076900 | 5462700 |
| Less: accumulated amortization | (5217900) | (3892900) |
| Less: accumulated impairment | (3000) | (3000) |
| **Total** | $**1856000** | $**1566800** |

---

Non-current content assets was comprise of the following:

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2025** | **December 31,**<br>**2024** |
| Produced contents | $581000 | $581000 |
| Copyrights | 373000 | 313000 |
|  | 954000 | 894000 |
| Less: accumulated amortization | (757300) | (710200) |
| **Total** | $**196700** | $**183800** |

---

**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 | $1901500 |
| For the year ending December 31, 2026 | 151200 |
| **Total** | $**2052700** |

---

For the three months ended March 31, 2025 and 2024, the Company recorded amortization expenses of $1,372,200 and $550,600 on content assets, respectively.

**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 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 "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 12 months. The Company records operating lease expense in its 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 March 31, 2025 and 2024, the Company recorded rent expenses of $6,800 and $9,800, respectively.

**7. EQUITY**

<u>Ordinary Shares</u>

As of December 31, 2024, the Company has been authorized to issue 100,000,000 shares of Class A Ordinary Shares and 10,000,000 Class B Ordinary Shares. As of December 31, 2024, the Company had 34,536,384 shares of Class A Ordinary Shares and 5,933,700 shares of Class B Ordinary Shares issued and outstanding.

On January 22, 2025, the Company issued an aggregated 115,377 shares of Class A Ordinary Shares stocks to two service providers, and recognized services expenses of $175,800 in the account of general and administrative expenses.

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 $0.001 per share (the "Shares"), having an aggregate offering price of up to $20,000,000. On March 10, 2025, the Company sold 5,800 shares of Class A Ordinary Share to the Manager as reimbursement for Manager's counsel's fees in connection with each due diligence update session.

For the three months ended March 31, 2025, the Company also issued 132,050 restricted stock units to the Company's management and staff under the Amended and Restated 2021 Equity Incentive Plan, all of which have vested. For the three months ended March 31, 2025, the Company recognized share-based compensation expenses of $111,200.

As of March 31, 2025, the Company had 34,789,611 shares of Class A Ordinary Shares and 5,933,700 shares of Class B Ordinary Shares issued and outstanding.

**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 2,490,000 warrants to certain investors. Each warrant entitling the holder to purchase one share of common stock at an exercise price of $1.50 per share at any time for a period of up to five (5) years starting six (6) months from the issuance date at which time the warrants will expire. No fractional shares of warrants will be issued in connection with any exercise. The number of warrants and the price of warrant may be subject to adjustment in the event of (i) recapitalization, reorganization, reclassification, consolidation, merger or sale, or (ii) stock dividends, subdivisions and combinations, As the warrants meet the criteria for equity classification under ASC 480 and ASC 815, therefore, the warrants are classified as equity. On January 17, 2024, the relative fair value of the warrants was $1,867,400, calculated using the Black-Scholes pricing model with the following assumptions:

---

| | |
|:---|:---|
|  | **As of<br> January 17,<br> 2024** |
| Risk-free rate of return | 4.02% |
| Estimated volatility rate | 99.86% |
| Dividend yield | 0% |
| Spot price of underling ordinary share | $2.8 |
| Exercise price | $1.5 |
| Relative fair value of warrant | $1867400 |

---

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 681,818 shares of Common Stock at an exercise price of $2.20 per share; and (iv) Series B common stock warrants to purchase an aggregate of 681,818 shares of Common Stock at an exercise price of $2.20 per share. The Series A common stock warrants will expire twenty-four months following the issuance date and the Series B common stock warrants will expire five and one-half years following the issuance date. No fractional shares of warrants will be issued in connection with any exercise. The number of both series of warrants and the price of warrants may be subject to adjustment in the event of (i) recapitalization, reorganization, reclassification, consolidation, merger or sale, or (ii) stock dividends, subdivisions and combinations. As both series of warrants meet the criteria for equity classification under ASC 480 and ASC 815, therefore, the warrants are classified as equity. On August 5, 2024, the relative fair value of the Series A common stock warrants and Series B common stock warrants were $26,720 and $88,766, respectively, calculated using the Black-Scholes pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **August 5, 2024** | **August 5, 2024** |
|  | **Series A Warrants** | **Series B Warrants** |
| Risk-free rate of return | 3.89% | 3.62% |
| Estimated volatility rate | 136.12% | 166.01% |
| Dividend yield | 0% | 0% |
| Spot price of underling ordinary share | $2.07 | $2.07 |
| Exercise price | $2.20 | $2.20 |

---

In addition, the Company also issued pre-funded warrants to purchase 340,909 shares at an exercise price of $0.001 per pre-funded warrant. The investors exercised the pre-funded warrants in September 2024 and the Company issued 340,909 shares of common stocks.

As of March 31, 2024, the Company had outstanding warrants to purchase up to 3,853,636 Class A Ordinary Shares.

**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 $400 in the three months ended March 31, 2025, or 0.0% of pre-tax loss, compared to income tax benefits of $276,600 income tax benefits, or 12.5% of pre-tax loss in the three months ended March 31, 2024. The difference in the effective federal income tax rate from the normal statutory rate in the first quarter of 2024 was primarily because we recognized tax benefits arising from the reduction of valuation allowance on its deferred tax assets from FunVerse.

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 $866,000 due from Quleduo, which is an equity investee of the Company (Note 4). The balance due from Quleduo was comprised of loan principal of $850,000 and interest receivable of $16,000.

Among the loans of $850,000, $300,000 of the loans bore interest rate of 8% per annum and remaining $550,000 of the loans were interest free. The loans were repayable in 12 months from the lending. The loans were made to support the operating activities of the equity investee.

For the three months ended March 31, 2025, the Company collected repayment of $111,900 from Quleduo, and recognized interest income of $4,700.

As of March 31, 2025, the Company had balance of $758,800 due from Quleduo, which was comprised of loan principal of $756,100 and interest receivable of $2,700.

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 May 2025, the Board of Directors approved the purchase of Bitcoin and/or Ethereum to hold as a treasury reserve asset.

## Exhibit 99.2

**Exhibit 99.2**

**MEGA MATRIX INC.**

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF**

**FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

***You should read the following discussion in conjunction with our unaudited condensed consolidated financial statements and the related notes included in Exhibit 99.1, submitted on the Form 6-K filed with the Securities and Exchange Commission (SEC") on June 24, 2025 ("Form 6-K"). We urge you to carefully review and consider the various disclosures made by us in this Exhibit 99.2 and in our other SEC filings, including our annual report on Form 20-F for our fiscal year ended December 31, 2024. Some of the statements in the following discussion are forward-looking statements. See "Special note regarding forward-looking statements."***

Unless otherwise stated herein, and except where the context otherwise requires and for the purposes of this Exhibit 99.2 only:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "Company," "we," "MPU Cayman," "us," and "our" refer to the combined business of Mega Matrix Inc., formerly known as Marsprotocol Inc., an exempted company incorporated under the laws of the Cayman Islands, and its consolidated subsidiaries, except where expressly noted otherwise or the context otherwise requires;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "Digital Asset" refers to any computer-generated math-based and/or cryptographic protocol that may, among other things, be used to buy and sell goods or pay for services. Cryptocurrency represent one type of digital asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "Exchange Act" refers the Securities Exchange Act of 1934, as amended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "FunVerse" refers to the MPU DE's wholly-owned subsidiary FunVerse Holding Limited, a company incorporated under the laws of British Virgin Islands company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "MPU DE" refers to Mega Matrix Corp., a Delaware corporation and wholly-owned subsidiary of MPU Cayman after the Redomicile Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "MPU Merger Sub" refers to MPU Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of MPU Cayman before the Redomicile Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "MTP" refers to the MPU DE's wholly-owned subsidiary Marsprotocol Technologies Pte. Ltd., a Singapore exempt private company limited by shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "Ordinary Shares" means Class A Shares and Class B Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "Redomicile Merger" means the redomicile merger consummated on October 8, 2024, pursuant to which MPU Merger Sub merged with and into MPU DE, with MPU DE surviving as a wholly owned subsidiary of MPU Cayman. The merger was conducted in accordance with the Third Amended and Restated Agreement and Plan of Merger, dated May 31, 2024, which was approved by MPU DE stockholders on September 25, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "SEC" refers to the Securities and Exchange Commission;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "Securities Act" refers to the Securities Act of 1933, as amended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "SDP" refers to the MPU DE's wholly-owned subsidiary Saving Digital Pte. Ltd., a Singapore exempt private company limited by shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "StaaS" refers to staking as a service; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● "Yuder" refers to FunVerse's wholly-owned subsidiary, Yuder Ptd, Ltd., a Company incorporated under the laws of Singapore.

In this Exhibit 99.2, discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This Exhibit 99.2 and the information incorporated by reference herein and therein may contain "forward-looking statements" within the meaning of, and intended to qualify for the safe harbor from liability established by, the United States Private Securities Litigation Reform Act of 1995. These statements are based on our management's beliefs and assumptions and on information currently available to us. These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Important factors, among others, are: the ability to manage growth; ability to identify and integrate future acquisitions; ability to grow and expand our FlexTV business; ability to purchase Bitcoin or Ethereum at the price that we want; ability to obtain additional financing in the future to fund capital expenditures and our Bitcoin/Ethereum treasury reserve strategy and ability to create value; fluctuations in general economic and business conditions; costs or other factors adversely affecting the Company's profitability; litigation involving patents, intellectual property, and other matters; potential changes in the legislative and regulatory environment; a pandemic or epidemic; the possibility that the Company may not succeed in developing its new lines of businesses due to, among other things, changes in the business environment, competition, changes in regulation, or other economic and policy factors; and the possibility that the Company's new lines of business may be adversely affected by other economic, business, and/or competitive factors. In some cases, you can identify these forward-looking statements by words or phrases such as "aim," "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "should," "will," "would," or similar expressions, including their negatives. We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● future operating or financial results;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● future payments of dividends, if any, and the availability of cash for payment of dividends, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● future acquisitions, business strategy and expected capital spending;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● assumptions regarding interest rates and inflation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● ability to attract and retain senior management and other key employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● ability to manage our growth;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● ability to manage risks associated with our Bitcoin and/or Ethereum treasury reserve strategy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● fluctuations in general economic and business conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● financial condition and liquidity, including our ability to obtain additional financing in the future (from warrant exercises or outside services) to fund capital expenditures, acquisitions and other general corporate activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● estimated future capital expenditures needed to preserve our capital base;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the ability to meet the NYSE American continuing listing standards, and the potential delisting of our securities from Nasdaq;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● potential changes in the legislative and regulatory environments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● a lower return on investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● potential volatility in the market price of our securities.

These and other factors are more fully discussed in our other filings with the SEC, including in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in our annual report on Form 20-F for our fiscal year ended December 31, 2024. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans, objectives or projected financial results referred to in any of the forward-looking statements. Except as required by law, we do not undertake to release revisions of any of these forward-looking statements to reflect future events or circumstances.

***Overview***

We are a holding company incorporated in Cayman Islands and headquartered in Singapore. The Company wholly owns MPU DE which wholly-owns FunVerse Holding Limited, a British Virgin Islands company ("FunVerse"). FunVerse directly owns Yuder Pte, Ltd., a Singapore corporation ("Yuder"). Yuder operates FlexTV, a short drama streaming platform based in Singapore that produces English, Japanese and Thai dramas that are also translated into different languages for our users that are spread across various parts of the world such as Europe, America, and Southeast Asia. In addition to creating original dramas, Yuder also acquires third party content licenses which it then translates and distributes on its FlexTV platform. To deliver diverse and international content to our users, Yuder's production team has filmed in various parts of the world, including, but not limited to, the United States, Mexico, Australia, Thailand, and Philippines.

***Recent Corporate Developments***

 ****

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 $0.001 per share (the "Shares"), having an aggregate offering price of up to $20,000,000. Under the Agreement, the Manager may sell the Shares by any method deemed to be an "at-the-market" offering as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, including sales made directly on or through NYSE American, the existing trading market for our Shares, sales made to or through a market maker other than on an exchange or otherwise, directly to the sales the Manager as principal, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or in any other method permitted by law. Capitalized terms used but not defined herein shall have the same meanings as ascribed to them in the Agreement. The Company intends to use the net proceeds of the offering to fund its growth plans, for working capital, and for other general corporate purposes.

*Bitcoin and Ethereum as Treasury Reserve Asset*

On May 28, 2025, Company's Board of Directors approved the purchase of Bitcoin and/or Ethereum to hold as a treasury reserve asset.

**Key Components of Results of Operations**

***Revenues***

 **

We generated revenue primarily from (i) membership and top-up streaming services, (ii) online advertising services, and (iii) content licensing business of our short dramas. For the three months ended March 31, 2025 and 2024, our revenues were comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |
|  | **2025** | **2024** |
| Membership and top-up streaming services | $6590400 | $8048200 |
| Online advertising services | 634700 | 643400 |
| Content licensing business | 511100 | - |
|  | $**7736200** | $**8691600** |

---

 

*Membership and top-up streaming services ("IAP")*

 ****

Membership and top-up streaming services are referred to as In-App Purchases ("IAP"). We offer membership services to subscribers in various countries and provide the plans that primarily include access to exclusive and ad-free streaming of short dramas, accelerated downloads and more. Users can choose to become weekly, monthly or annual members on our 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 by completing daily and new user tasks.

For the three months ended March 31, 2025 and 2024, we collected recharge amount of approximately $6.8 million and $9.3 million from In-App Purchases services, respectively. We recognize revenues ratably over the membership period and consumption of in-app coins as services are rendered.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended March 31, 2025** | **For the three months ended March 31, 2025** | **For the three months ended March 31, 2025** | **For the three months ended March 31, 2025** | **For the three months ended March 31, 2025** |
|  | **United <br> States and**<br>**Canada** | **Asia-**<br>**Pacific** | **Europe, <br> Middle East**<br>**and Africa** | **Latin**<br>**America** |<br>**Total** |
| Revenues from In-App Purchases services | $2890200 | $2103000 | $1281800 | $315400 | $6590400 |
| Period Active Users ("PAU")(1) | 350762 | 922492 | 607312 | 268394 | 2148960 |
| Average membership and top-up streaming services revenue per active user ("ARPU")(2) | $8.24 | $2.28 | $2.11 | $1.18 | $3.07 |
| Period Paying Users ("PPU") (3) | 67202 | 68206 | 45075 | 14907 | 195390 |
| Average membership and top-up streaming services revenue per paying user ("ARPPU")(4) | $43.01 | $30.83 | $28.44 | $21.16 | $33.73 |

---

(1) A PAU is defined as a user who has downloaded and opened FlexTV app at least once. For the three months ended March 31, 2025, the PAU is calculated at the total of three monthly PAU.

(2) ARPU is defined as average membership and top-up streaming services revenue generated by each active user in one period.

(3) A PPU is defined as a user who has registered for a membership or topping up, provided a method of payment, and is entitled to access FlexTV services. This membership or topping up does not include participation in free trials or other promotional offers extended by the company to new users. For the three months ended March 31, 2025, the PPU is calculated at the total of three monthly PPU.

(4) ARPPU is defined as average membership and top-up streaming services revenue generated by each paying user in one period.

*Online advertising services ("IAA")*

 ****

Online advertising services are referred to as In-App Advertising ("IAA"). We sell advertising services by delivering brand advertising primarily to third-party advertising agencies. We provide advertisement placements on our short drama streaming platform in different formats, including but not limited to video, banners, links, logos, brand placement and buttons. We identify one performance obligation in the contracts with customers. Revenues are recognized over time 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 platforms in the year of 2024. The Company entered into license agreements with third party platform customers, pursuant to which the Company grants licenses of its self-produced short-dramas to the platforms and allows 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 licenses 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 approximately $0.5 million and $nil, respectively, from its content licensing business.

 ****

***Cost of revenues***

For the three months ended March 31, 2025, the cost of revenues was primarily comprised of platform service fees charged by third party payment processors, amortization of produced contents and software and copyrights which were applied to produce short dramas and other expenses which were directly attributable to producing short dramas.

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |
|  | **2025** | **2024** |
| Platform service fees charged by third party payment processors | $1857800 | $2698800 |
| Amortization of content assets | 1372200 | 546600 |
| Others | 191800 | 254800 |
|  | $**3421800** | $**3500200** |

---

***Selling expenses***

Selling and marketing expenses primarily consist of advertising expenses, primarily composed of traffic expenses, and other miscellaneous expenses.

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |
|  | **2025** | **2024** |
| Advertising expenses | $4387700 | $7673900 |
| Others | 13900 | 44500 |
|  | $**4401600** | $**7718400** |

---

***General and administrative expenses***

General and administrative expenses primarily consist of (i) IT expenses, (ii) payroll and welfare expenses advertising expenses; (iii) professional and consulting expenses including legal expenses, audit expenses and other consultants, and (iv) other miscellaneous expenses.

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |
|  | **2025** | **2024** |
| IT expenses | $957100 | $554400 |
| Payroll and welfare expenses | 487200 | 562700 |
| Consulting expenses | 819300 | 924100 |
| Others | 186800 | 197200 |
|  | $**2450400** | $**2238400** |

---

***Income taxes***

 ****

We account for income taxes in accordance with the authoritative guidance, which requires income tax effects for changes in tax laws to be recognized in the period in which the law is enacted.

 ****

*Cayman Islands*

Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains. Additionally, upon payments of dividends by us our shareholders, no withholding tax will be imposed.

 

*United States*

 

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state. Currently we are not under any audit examination from federal or state tax authority in the United States.

The tax expenses primarily come from the state minimum taxes and franchise taxes.

 

*Singapore*

We are subject to corporate income tax for its business operation in Singapore. Tax on corporate income is imposed at a flat rate of 17% based on the adjusted taxable income.

Deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. The ASC 740 – Accounting for Income Tax guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized.

We have determined that a valuation allowance is necessary against the full population of the deferred tax assets as based on all available evidence, we do not anticipate that our future taxable income will be sufficient to recover our deferred tax assets. However, should there be a change in our ability to recover our deferred tax assets, we will re-valuate our position and release a portion or all the valuation allowance if required.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize liabilities for uncertain tax positions based on the two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. As of March 31, 2025, we do not have any uncertain tax positions based on our analysis.

We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activities. Any change in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.

**Results of Operations**

The following table represents our unaudited condensed consolidated statement of operations for the three months ended March 31, 2025 and 2024.

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |
|  | **2025** | **2024** |
| Revenues | $7736200 | $8691600 |
| Cost of revenues | (3421800) | (3500200) |
| Gross profit | **4314400** | **5191400** |
| **Operating expenses:** |  |  |
| Selling expenses | (4401600) | (7718400) |
| General and administrative expenses | (2450400) | (2238400) |
| **Total operating expenses** | **(6852000)** | **(9956800)** |
| **Loss from operations** | **(2537600)** | **(4765400)** |
| **Other income (expenses):** |  |  |
| Changes in fair value of digital assets |  | 2540700 |
| Share of equity loss in an equity method investee | (1400) |  |
| Changes in fair value of trading securities | 800 |  |
| Interest income (expenses), net | 58200 | (2500) |
| Other income, net | 2500 | 14900 |
| **Total other income, net** | **60100** | **2553100** |
| **Loss before income tax** | **(2477500)** | **(2212300)** |
| Income tax (expenses) benefits | (400) | 276600 |
| **Net loss** | $**(2477900)** | $**(1935700)** |

---

 

*Revenues*

For the three months ended March 31, 2025, we collected recharge amount of approximately $6.8 million from membership and top-up streaming services, we generated revenues from membership and top-up streaming services of approximately $6.6 million, online advertising service of approximately $0.6 million and content licensing services of approximately $0.5 million, respectively. For the three months ended March 31, 2025, we had paying users of 195,390. We earned ARPPU of $33.73 for the three months ended March 31, 2025.

For the three months ended March 31, 2024, we collected recharge amount of approximately $9.3 million from membership and top-up streaming services, we generated revenues from membership and top-up streaming services of approximately $8.0 million and online advertising service of approximately $0.6 million, respectively. For the three months ended March 31, 2024, we had paying users of 322,732. We earned ARPPU of $24.94 for the three months ended March 31, 2024.

Compared with revenues for the three months ended March 31, 2024, our revenues for the three months ended March 31, 2025 decreased by approximately $1.0 million, or 11.0%. The decrease was primarily due to a decrease of approximately $1.5 million in revenues from membership and top-up streaming services, partially offset by an increase of revenues from content licensing business of approximately $0.5 million.

*Revenues from membership and top-up streaming services.* Our revenues from membership and top-up streaming services for the three months ended March 31, 2025 decreased by approximately $1.5 million, or 18.1%. The decrease was primarily caused by a decrease in paying users from 322,732 for the three months ended March 31, 2024 to 195,390 for the same period of 2025, affected by a decrease in release of new short-dramas on our platform. For the three months ended March 31, 2025, we focused on developing short-dramas for our content licensing business.

*Revenues from content licensing business.* Our revenues from content licensing business was approximately $0.5 million for the three months ended March 31, 2025. We commenced the content licensing business in the third quarter of 2024, and did not generate such revenues for the three months ended March 31, 2024.

 

*Cost of revenues*

For the three months ended March 31, 2025 and 2024, the cost of revenues kept stable. The changes in cost of revenues was primarily derived from a decrease of approximately $0.8 million in platform service fees charged by third party payment processors which was in line with a decrease in revenues from membership and top-up streaming services, partially offset by an increase of approximately $0.8 million in amortization of content assets with an increase in content assets on our platform.

*Gross profit* 

As a result of the foregoing, we generated gross profit of approximately $4.3 million and $5.2 million, respectively, for the three months ended March 31, 2025 and 2024.

 

*Selling expenses*

Our selling expenses decreased by approximately $3.3 million, or 43.0%, from approximately $7.7 million for the three months ended March 31, 2024 to approximately $4.4 million for the same period of 2025. The decrease was primarily due to a decrease of approximately $3.3 million in advertising expenses which was in line with our decrease in revenues from membership and top-up streaming services.

*General and administrative expenses*

For the three months ended March 31, 2025, we incurred general and administrative expenses of approximately $2.5 million, representing an increase of approximately $0.3 million, or 9.5% from approximately $2.2 million for the three month ended March 31, 2024. The increase was primarily attributed to an increase of approximately $0.4 million in IT expenses because we incurred more IT support expenses for our short drama streaming platform partially offset by a decrease of approximately $0.2 million in legal expenses which was included in consulting expenses. The decrease in legal expenses was because we incurred higher counsel fees for acquisition of FunVerse and deconsolidation of staking business and leasing of regional aircraft business in the three months ended March 31, 2024.

*Income tax (expenses) benefits*

Income tax expenses were $400 for the three months ended March 31, 2025, which was state tax incurred by one subsidiary.

Income tax benefits were approximately $0.3 million for the three months ended March 31, 2024, which was mostly driven by a deferred tax liability of $0.3 million from intangible assets acquired from Yuder Pte Ltd.

*Net Loss*

As a result of the foregoing, net loss for the three months ended March 31, 2025 was approximately $2.5 million, increasing by approximately $0.6 million, or 28.0%, from approximately $1.9 million for the three months ended March 31, 2024.

***Liquidity and Capital Resources***

To date, we have financed our operating and investing activities primarily through cash generated from operating activities and equity financing through private placements. As of March 31, 2025, the Company held cash of approximately $6.8 million.

For the three months ended March 31, 2025 and 2024, the Company reported net losses of approximately $2.5 million and $1.9 million, respectively. In addition, the Company had accumulated deficits of approximately $28.8 million and $26.3 million as of March 31, 2025 and December 31, 2024, respectively, but the Company had working capital of approximately $7.4 million among which the Company held cash of approximately $6.8 million as of March 31, 2025, which is expected to support our operating and investing activities for the next 12 months.

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 the Form 6-K. Accordingly, management continues to prepare the Company's unaudited condensed consolidated financial statements on going concern basis.

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the disclosure of contingent assets and liabilities, and (iii) the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. Estimates and judgments are used when accounting for the amount and timing of future cash flows associated with each asset that are used to evaluate whether assets are impaired, accounting for income taxes, and the amounts recorded as allowances for credit losses.

*Cash Flow*

The following table sets forth a summary of our cash flows for the three months ended March 31, 2025 and 2024 presented:

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |
|  | **2025** | **2024** |
| Net cash used in operating activities | $(2210500) | $(96900) |
| Net cash provided by (used in) investing activities | 92800 | (991700) |
| Net cash provided by financing activities | 3400 | 809900 |
| Net decrease in cash and cash equivalents | (2114300) | (278700) |
| Cash, cash equivalents, beginning of period | 8870800 | 3129800 |
| Cash, cash equivalents, end of period | $6756500 | $2851100 |

---

*Operating activities*

Net cash used in operating activities for the three months ended March 31, 2025 was approximately $2.2 million, primarily attributable to net loss of approximately $2.5 million, adjusted for (a) non-cash items including amortization of content assets of approximately $1.4 million and share-based compensation expenses to certain management and non-employees of approximately $0.3 million, and (b) changes in operating assets and liabilities including (i) an increase of content assets of approximately $1.7 million as we invested in content assets since we acquired FunVerse in January 2024, and (ii) an increase of approximately $0.3 million in contract liabilities as a result of less of our paying users subscribed for short-dramas because of decrease in release of new short-dramas on our platform.

Net cash used in operating activities for the three months ended March 31, 2024 was $96,900, primarily attributable to net loss of approximately $1.9 million, adjusted for (a) non-cash items including an increase in fair value of approximately $2.5 million in digital assets, amortization of content assets of approximately $0.5 million, and share-based compensation expenses to certain employees of approximately $0.3 million, and (b) changes in operating assets and liabilities including (i) a decrease of digital assets of approximately $0.7 million as we exchanged ETH into USDC, (ii) an increase of approximately $2.3 million of prepaid expenses, an increase of approximately $1.2 million in contract liabilities and an increase of approximately $4.6 million, all of which were caused by acquisition of Yuder in January 2024.

*Investing activities*

For the three months ended March 31, 2025, the cash flow provided by investing activities was approximately $0.1 million, which was primarily attributable to repayment of loans of approximately $0.1 million from a related party.

For the three months ended March 31, 2024, the cash flow used in investing activities was approximately $1.0 million, which was primarily attributable to purchase of digital assets of approximately $0.6 million and investment in equity investees of approximately $0.5 million, partially offset by acquisition of cash of approximately $0.1 million from acquisition of Yuder.

*Financing activities*

For the three months ended March 31, 2025, we raised cash of $3,400 from private placement closed in March 2025.

For the three months ended March 31, 2024, we raised cash of approximately $0.8 million from private placement closed in January 2024.

***Critical Accounting Estimates***

In preparing the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liabilities in the future.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. The management determines there are no critical accounting estimates.

## Exhibit 99.3

**Exhibit 99.3**

**MEGA MATRIX INC.**

**RISK FACTORS**

The following risk factors discussion updates the risk factors section previously disclosed in the Mega Matrix Inc.'s Annual Report on Form 20-F for the fiscal year ended December 31, 2024 in the section entitled "Risk Factors."

Unless otherwise indicated, the terms "MPU Cayman," the "Company," "we," "us," "our," "our company" and "our business" refer to Mega Matrix Inc. together with its consolidated subsidiaries as a consolidated entity.

**Risks Related to Our Bitcoin and/or Ethereum Treasury Strategy**

**WE ARE NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 AND SHAREHOLDERS DO NOT HAVE THE PROTECTIONS ASSOCIATED WITH OWNERSHIP OF SHARES IN A REGISTERED INVESTMENT COMPANY NOR THE PROTECTIONS AFFORDED BY THE COMMODITIES EXCHANGE ACT.**

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***Bitcoin and Ethereum are highly volatile assets, and fluctuations in the price of Bitcoin or Ethereum is likely to influence our financial results and the market price of our class A ordinary shares.***

Bitcoin and Ethereum are highly volatile assets, and fluctuations in the price of Bitcoin or Ethereum is likely to influence our financial results and the market price of our class A ordinary shares. Our financial results and the market price of our class A ordinary shares would be adversely affected, and our business and financial condition would be negatively impacted, if the price of Bitcoin or Ethereum decreased substantially (as it has in the past, such as during 2022), including as a result of:

● decreased user and investor confidence in Bitcoin or Ethereum, including due to the various factors described herein;

● investment and trading activities, such as (i) trading activities of highly active retail and institutional users, speculators, miners and investors, (ii) actual or expected significant dispositions of Bitcoin or Ethereum by large holders, and (iii) actual or perceived manipulation of the spot or derivative markets for Bitcoin or spot Bitcoin ETPs;

● negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, Bitcoin, Ethereum or the broader digital assets industry;

● changes in consumer preferences and the perceived value or prospects of Bitcoin or Ethereum;

● competition from other digital assets that exhibit better speed, security, scalability, or energy efficiency, that feature other more favored characteristics, that are backed by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets;

● a decrease in the price of other digital assets, including stablecoins, or the crash or unavailability of stablecoins that are used as a medium of exchange for Bitcoin or Ethereum purchase and sale transactions, such as the crash of the stablecoin Terra USD in 2022, to the extent the decrease in the price of such other digital assets or the unavailability of such stablecoins may cause a decrease in the price of Bitcoin or Ethereum or adversely affect investor confidence in digital assets generally;

● the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of substantial amounts of Bitcoin from Bitcoin wallets attributed to Mr. Nakamoto or other "whales" that hold significant amounts of Bitcoin;

● disruptions, failures, unavailability, or interruptions in service of trading venues for Bitcoin, such as, for example, the announcement by the digital asset exchange FTX Trading that it would freeze withdrawals and transfers from its accounts and subsequent filing for bankruptcy protection;

● the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians, trading venues, lending platforms, investment funds, or other digital asset industry participants;

● regulatory, legislative, enforcement and judicial actions that adversely affect the price, ownership, transferability, trading volumes, legality or public perception of Bitcoin and/or Ethereum, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry participants from operating in a manner that allows them to continue to deliver services to the digital assets industry;

● further reductions in mining rewards of Bitcoin, including block reward halving events, which are events that occur after a specific period of time that reduce the block reward earned by "miners" who validate Bitcoin transactions, or increases in the costs associated with Bitcoin mining, including increases in electricity costs and hardware and software used in mining, that may cause a decline in support for the Bitcoin network;

● transaction congestion and fees associated with processing transactions on the Bitcoin and/or Ethereum network;

● macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions, and fiat currency devaluations;

● developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography used by the Bitcoin blockchain becoming insecure or ineffective; and

● changes in national and international economic and political conditions, including, without limitation, the adverse impact attributable to the economic and political instability caused by the current conflict between Russia and Ukraine and the economic sanctions adopted in response to the conflict, and the potential broadening of the Israel-Hamas conflict to other countries in the Middle East.

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***Bitcoin, Ethereum and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.***

Bitcoin, Ethereum and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of Bitcoin or Ethereum.

The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of Bitcoin, Ethereum or the ability of individuals or institutions such as us to own or transfer Bitcoin or Ethereum. Regulatory authorities have been evolving in their approach to digital assets. It is not possible to predict whether, or when, any of these developments will lead to Congress granting additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function or the willingness of financial and other institutions to continue to provide services to the digital assets industry, nor how any new regulations or changes to existing regulations might impact the value of digital assets generally and Bitcoin or Ethereum specifically. The consequences of increased regulation of digital assets and digital asset activities could adversely affect the market price of Bitcoin or Ethereum and in turn adversely affect the market price of our class A ordinary shares.

Moreover, the risks of engaging in a Bitcoin and/or Ethereum treasury strategy are relatively novel and have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.

The growth of the digital assets industry in general, and the use and acceptance of Bitcoin or Ethereum in particular, may also impact the price of Bitcoin or Ethereum and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of Bitcoin or Ethereum may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to Bitcoin or Ethereum, institutional demand for Bitcoin or Ethereum as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for Bitcoin or Ethereum as a means of payment, and the availability and popularity of alternatives to Bitcoin or Ethereum. Even if growth in Bitcoin or Ethereum adoption occurs in the near or medium-term, there is no assurance that Bitcoin or Ethereum usage will continue to grow over the long-term.

Because Bitcoin and Ethereum have no physical existence beyond the record of transactions on their respective blockchains, a variety of technical factors related to the Bitcoin or Ethereum blockchain could also impact the price of Bitcoin or Ethereum. For example, malicious attacks by miners, inadequate mining fees to incentivize validating of Bitcoin transactions, hard "forks" of the Bitcoin blockchain into multiple blockchains, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the Bitcoin blockchain and negatively affect the price of Bitcoin. The liquidity of Bitcoin may also be reduced and damage to the public perception of Bitcoin may occur, if financial institutions were to deny or limit banking services to businesses that hold Bitcoin, provide Bitcoin-related services or accept Bitcoin as payment, which could also decrease the price of Bitcoin. Similarly, the open-source nature of the Bitcoin blockchain means the contributors and developers of the Bitcoin blockchain are generally not directly compensated for their contributions in maintaining and developing the blockchain, and any failure to properly monitor and upgrade the Bitcoin blockchain could adversely affect the Bitcoin blockchain and negatively affect the price of Bitcoin.

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***The launch of central bank digital currencies ("CBDCs") may change consumer preferences and the perceived value or prospects of Bitcoin or Ethereum.***

The introduction of a government-issued digital currency could eliminate or reduce the need or demand for private-sector issued crypto currencies, or significantly limit their utility. National governments around the world could introduce CBDCs, which could in turn limit the size of the market opportunity for cryptocurrencies, and change consumer preferences and the perceived value or prospects of Bitcoin or Ethereum.

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***Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our Bitcoin and/or Ethereum holdings.***

Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of Bitcoin and/or Ethereum.

The price of Bitcoin and Ethereum has historically been subject to dramatic price fluctuations and is highly volatile. We expect to determine the fair value of our Bitcoin and Ethereum based on quoted (unadjusted) prices on the Coinbase exchange, and following early adoption of ASU 2023-08, will be required to measure our Bitcoin and Ethereum holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our Bitcoin and Ethereum in net income each reporting period, which may create significant volatility in our reported earnings and decrease the carrying value of our digital assets, which in turn could have a material adverse effect on the market price of our class A ordinary shares. Conversely, any sale of Bitcoins and Ethereum at prices above our carrying value for such assets creates a gain for financial reporting purposes even if we would otherwise incur an economic or tax loss with respect to such transaction, which also may result in significant volatility in our reported earnings.

Due in particular to the volatility in the price of Bitcoin and Ethereum, we expect our adoption of ASU 2023-08 to increase the volatility of our financial results and it could significantly affect the carrying value of our Bitcoin and Ethereum on our balance sheet.

Because we intend to purchase additional Bitcoin and Ethereum in future periods and increase our overall holdings of Bitcoin and Ethereum, we expect that the proportion of our total assets represented by our Bitcoin and Ethereum holdings will increase in the future. As a result, and in particular with respect to the quarterly periods and full fiscal year with respect to which ASU 2023-08 will apply, and for all future periods, volatility in our earnings may be significantly more than what we experienced in prior periods.

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***The availability of spot Bitcoin ETPs may adversely affect the market price of our class A ordinary shares.***

Although Bitcoin and other digital assets have experienced a surge of investor attention since Bitcoin was invented in 2008, until recently investors in the United States had limited means to gain direct exposure to Bitcoin through traditional investment channels, and instead generally were only able to hold Bitcoin through "hosted" wallets provided by digital asset service providers or through "unhosted" wallets that expose the investor to risks associated with loss or hacking of their private keys. Given the relative novelty of digital assets, general lack of familiarity with the processes needed to hold Bitcoin directly, as well as the potential reluctance of financial planners and advisers to recommend direct Bitcoin holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to Bitcoin through investment vehicles that hold Bitcoin and issue shares representing fractional undivided interests in their underlying Bitcoin holdings. These vehicles, which were previously offered only to "accredited investors" on a private placement basis, have in the past traded at substantial premiums to net asset value, or NAV, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to Bitcoin.

On January 10, 2024, the SEC approved the listing and trading of spot Bitcoin ETPs, the shares of which can be sold in public offerings and are traded on U.S. national securities exchanges. The approved ETPs commenced trading directly to the public on January 11, 2024, with a trading volume of approximately $4.6 billion on the first trading day. To the extent investors view our class A ordinary shares as providing exposure to Bitcoin, it is possible that the value of our class A ordinary shares may also have included a premium over the value of our Bitcoin due to the prior scarcity of traditional investment vehicles providing investment exposure to Bitcoin or may be subject to declined due to investors now having a greater range of options to gain exposure to Bitcoin and investors choosing to gain such exposure through ETPs rather than our class A ordinary shares.

Although we are an operating company with short drama streaming business, and we believe we offer a different value proposition than a passive Bitcoin investment vehicle such as a spot Bitcoin ETP, investors may nevertheless view our class A ordinary shares as an alternative to an investment in an ETP, and choose to purchase shares of a spot Bitcoin ETP instead of our class A ordinary shares. They may do so for a variety of reasons, including if they believe that ETPs offer a "pure play" exposure to Bitcoin that is generally not subject to federal income tax at the entity level as we are, or the other risk factors applicable to an operating business, such as ours. Additionally, unlike spot Bitcoin ETPs, we (i) do not seek for our shares to track the value of the underlying Bitcoin we hold before payment of expenses and liabilities, (ii) do not benefit from various exemptions and relief under the Securities Exchange Act of 1934, as amended, or the Exchange Act, including Regulation M, and other securities laws, which enable spot Bitcoin ETPs to continuously align the value of their shares to the price of the underlying Bitcoin they hold through share creation and redemption, (iii) are a Cayman Islands corporation rather than a statutory trust, and do not operate pursuant to a trust agreement that would require us to pursue one or more stated investment objectives, and (iv) are not required to provide daily transparency as to our Bitcoin holdings or our daily NAV. Furthermore, recommendations by broker-dealers to buy, hold, or sell complex products and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that would not be applicable to broker-dealers making recommendations with respect to our class A ordinary shares. Based on how we are viewed in the market relative to ETPs, and other vehicles that offer economic exposure to Bitcoin, such as Bitcoin futures ETFs and leveraged Bitcoin futures ETFs, any premium or discount in our class A ordinary shares relative to the value of our Bitcoin holdings may increase or decrease in different market conditions.

As a result of the foregoing factors, availability of spot Bitcoin ETPs on U.S. national securities exchanges could have a material adverse effect on the market price of our class A ordinary shares

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***Our Bitcoin and/or Ethereum treasury strategy subjects us to enhanced regulatory oversight.***

As noted above, several spot Bitcoin ETPs have received approval from the SEC to list their shares on a U.S. national securities exchange with continuous share creation and redemption at NAV. Even though we are not, and do not function in the manner of, a spot Bitcoin ETP, it is possible that we nevertheless could face regulatory scrutiny from the SEC or other federal or state agencies due to our Bitcoin and Ethereum holdings.

In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine. While we have implemented and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our Bitcoin and Ethereum through entities subject to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our Bitcoin and Ethereum from bad actors that have used Bitcoin and Ethereum to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Bitcoin and Ethereum by us may be restricted or prohibited.

We may consider issuing debt or other financial instruments that may be collateralized by our Bitcoin holdings. We may also consider pursuing strategies to create income streams or otherwise generate funds using our Bitcoin and Ethereum holdings. These types of Bitcoin and Ethereum -related transactions are the subject of enhanced regulatory oversight. These and any other Bitcoin and Ethereum -related transactions we may enter into, beyond simply acquiring and holding Bitcoin, may subject us to additional regulatory compliance requirements and scrutiny, including under federal and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations.

Additional laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection by FTX Trading, one of the world's largest cryptocurrency exchanges, in November 2022. U.S. and foreign regulators have also increased, and are highly likely to continue to increase, enforcement activity, and are likely to adopt new regulatory requirements in response to FTX Trading's collapse. Increased enforcement activity and changes in the regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting Bitcoin and Ethereum, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant costs or significantly limit our ability to hold and transact in Bitcoin and Ethereum.

In addition, private actors that are wary of Bitcoin and Ethereum or the regulatory concerns associated with Bitcoin and Ethereum may in the future take further actions that may have an adverse effect on our business or the market price of our class A ordinary shares.

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***Due to the currently unregulated nature and lack of transparency surrounding the operations of many Bitcoin and Ethereum trading venues, Bitcoin and Ethereum trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in Bitcoin and Ethereum trading venues and adversely affect the value of our Bitcoin and Ethereum.***

Bitcoin and Ethereum trading venues are relatively new and, in many cases, currently unregulated. Even if regulated, such venues may not be complying with such regulations. Furthermore, there are many crypto assets trading venues that do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance. As a result, the marketplace may lose confidence in Bitcoin and Ethereum trading venues, including prominent exchanges that handle a significant volume of Bitcoin and Ethereum trading and/or are subject to regulatory oversight, in the event one or more Bitcoin and Ethereum trading venues cease or pause for a prolonged period the trading of Bitcoin and Ethereum or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems.

In 2019 there were reports claiming that 80-95% of Bitcoin trading volume on trading venues was false or non-economic in nature, with specific focus on currently unregulated exchanges located outside of the United States. Any actual or perceived false trading in the Bitcoin market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of our Bitcoin and Ethereum. Negative perception, a lack of stability in the broader Bitcoin markets and the closure, temporary shutdown or operational disruption of Bitcoin trading venues, lending institutions, institutional investors, institutional miners, custodians, or other major participants in the Bitcoin ecosystem, due to fraud, business failure, cybersecurity events, government-mandated regulation, bankruptcy, or for any other reason, may result in a decline in confidence in Bitcoin and the broader Bitcoin ecosystem and greater volatility in the price of Bitcoin. For example, in 2022, each of Celsius Network, Voyager Digital, Three Arrows Capital, FTX Trading, and BlockFi filed for bankruptcy, following which the market prices of Bitcoin and other digital assets significantly declined. As the price of our class A ordinary shares is affected by the value of our Bitcoin and Ethereum holdings, the failure of a major participant in the Bitcoin and Ethereum ecosystem could have a material adverse effect on the market price of our class A ordinary shares.

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***The concentration of our proposed Bitcoin and/or Ethereum holdings enhances the risks inherent in our Bitcoin and/or Ethereum treasury strategy.***

The concentration of our planned Bitcoin and Ethereum holdings limits the risk mitigation that we could take advantage of by purchasing a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our Bitcoin and Ethereum acquisition strategy. Any future significant declines in the price of Bitcoin and Ethereum would have, a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.

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***The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of Bitcoin or Ethereum and adversely affect our financial condition and results of operations.***

As a result of our Bitcoin and/or Ethereum treasury strategy, the majority of our cash may be concentrated in our Bitcoin and Ethereum holdings. Accordingly, the emergence or growth of digital assets other than Bitcoin or Ethereum may have a material adverse effect on our financial condition. There are numerous alternative digital assets and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets that do not use proof-of-work mining like the Bitcoin network.

Other alternative digital assets that compete with Bitcoin or Ethereum in certain ways include "stablecoins," which are designed to maintain a constant price because of, for instance, their issuers' promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to Bitcoin and Ethereum and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms.

Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China's CBDC project was made available to consumers in January 2022, and governments including the United States, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, Bitcoin, Ethereum and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of Bitcoin and/or Ethereum to decrease, which could have a material adverse effect on our financial condition, and operating results.

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***Our Bitcoin and/or Ethereum holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.***

Historically, the Bitcoin and Ethereum markets have been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our Bitcoin or Ethereum at favorable prices or at all. For example, a number of Bitcoin trading venues temporarily halted deposits and withdrawals in 2022. As a result, our Bitcoin holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, Bitcoin and/or Ethereum we intend to hold with our custodians and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered Bitcoin and/or Ethereum, or otherwise generate funds using our Bitcoin or Ethereum holdings, including in particular during times of market instability or when the price of Bitcoin and/or Ethereum has declined significantly. If we are unable to sell our Bitcoin and/or Ethereum, enter into additional capital raising transactions using Bitcoin and/or Ethereum as collateral, or otherwise generate funds using our Bitcoin and/or Ethereum holdings, or if we are forced to sell our Bitcoin and/or Ethereum at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

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***If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our Bitcoin and/or Ethereum, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our Bitcoin and/or Ethereum and our financial condition and results of operations could be materially adversely affected.***

Currently, substantially all of the Bitcoin we own is held in custody accounts at Matrixport Cactus Custody. Security breaches and cyberattacks are of particular concern with respect to our Bitcoin and/or Ethereum. Bitcoin, Ethereum and other blockchain-based cryptocurrencies and the entities that provide services to participants in the crypto assets ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For example, in October 2021 it was reported that hackers exploited a flaw in the account recovery process and stole from the accounts of at least 6,000 customers of the Coinbase exchange, although the flaw was subsequently fixed and Coinbase reimbursed affected customers. Similarly, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in digital assets from customers. A successful security breach or cyberattack could result in:

● a partial or total loss of our Bitcoin and/or Ethereum in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our Bitcoin and/or Ethereum;

● harm to our reputation and brand;

● improper disclosure of data and violations of applicable data privacy and other laws; or

significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure.

Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader Bitcoin and/or Ethereum blockchain ecosystem or in the use of the Bitcoin and/or Ethereum network to conduct financial transactions, which could negatively impact us.

Attacks upon systems across a variety of industries, including industries related to Bitcoin and/or Ethereum , are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities. In particular, we expect that unauthorized parties will attempt, to gain access to our systems and facilities, as well as those of our partners and third-party service providers, through various means, such as hacking, social engineering, phishing and fraud. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In addition, certain types of attacks could harm us even if our systems are left undisturbed. For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures. Further, there has been an increase in such activities due to the increase in work-from-home arrangements. The risk of cyberattacks could also be increased by cyberwarfare in connection with the ongoing Russia-Ukraine and Israel-Hamas conflicts, or other future conflicts, including potential proliferation of malware into systems unrelated to such conflicts. Any future breach of our operations or those of others in the Bitcoin and/or Ethereum industry, including third-party services on which we rely, could materially and adversely affect our financial condition and results of operations.

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***We face risks relating to the custody of our Bitcoin and/or Ethereum, including the loss or destruction of private keys required to access our Bitcoin and/or Ethereum, and cyberattacks or other data loss relating to our Bitcoin and/or Ethereum.***

We hold our Bitcoin and/or Ethereum with regulated custodians that have duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our Bitcoin and/or Ethereum among our custodians, and our Bitcoin and/or Ethereum holdings may be concentrated with a single custodian from time to time. In light of the significant amount of Bitcoin and/or Ethereum we may hold, we continually seek to engage additional custodians to achieve a greater degree of diversification in the custody of our Bitcoin and/or Ethereum as the extent of potential risk of loss is dependent, in part, on the degree of diversification. If there is a decrease in the availability of digital asset custodians that we believe can safely custody our Bitcoin and/or Ethereum, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our Bitcoin and/or Ethereum, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected. In addition, holding our Bitcoin and/or Ethereum with regulated custodians could affect the availability of receiving digital assets that may result from "forks" of the Bitcoin and/or Ethereum blockchain if our custodians are unable to support or otherwise provide us with such digital assets, thereby reducing the amount of digital assets we may hold as a result. While our custodians carry insurance policies to cover losses for commercial crimes, cyber and cold storage, the policy limits vary per provider and would be shared among all of their customers, and subject to various limitations and exclusions (such as if a loss arises due to our failure to protect our login credentials and devices). The insurance that covers losses of our Bitcoin and/or Ethereum holdings may cover only a small fraction of the value of the entirety of our Bitcoin and/or Ethereum holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our Bitcoin and/or Ethereum. Moreover, our use of custodians exposes us to the risk that the Bitcoin and/or Ethereum our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Bitcoin and/or Ethereum. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Bitcoin.

Bitcoin and/or Ethereum are controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the assets are held. While the Bitcoin and Ethereum blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the Bitcoin or Ethereum held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the Bitcoin and/or Ethereum held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. The Bitcoin and Ethereum and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.

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***Regulatory change reclassifying Bitcoin or Ethereum as a security could lead to our classification as an "investment company" under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of Bitcoin or Ethereum and the market price of our class A ordinary shares.***

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an "investment company" for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an "investment company," as such term is defined in the 1940 Act, and are not registered as an "investment company" under the 1940 Act as of the date hereof.

While certain SEC officials have stated their personal view that Bitcoin is not a "security" for purposes of the federal securities laws, and the SEC closed that investigation into Ethereum 2.0 and will not pursue charges alleging that sales of ETH are securities transactions, a contrary determination by the SEC could lead to our classification as an "investment company" under the 1940 Act, if the portion of our assets consists of investments in Bitcoins and/or Ethereum exceeds 40% safe harbor limits prescribed in the 1940 Act, which would subject us to significant additional regulatory controls that could have a material adverse effect on our business and operations and may also require us to change the manner in which we conduct our business.

We monitor our assets and income for compliance under the 1940 Act and seek to conduct our business activities in a manner such that we do not fall within its definitions of "investment company" or that we qualify under one of the exemptions or exclusions provided by the 1940 Act and corresponding SEC regulations. If Bitcoin or Ethereum is determined to constitute a security for purposes of the federal securities laws, we would take steps to reduce the percentage of Bitcoins or Ethereum that constitute investment assets under the 1940 Act. These steps may include, among others, selling Bitcoins or Ethereum that we might otherwise hold for the long term and deploying our cash in non-investment assets, and we may be forced to sell our Bitcoins or Ethereum at unattractive prices. We may also seek to acquire additional non-investment assets to maintain compliance with the 1940 Act, and we may need to incur debt, issue additional equity or enter into other financing arrangements that are not otherwise attractive to our business. Any of these actions could have a material adverse effect on our results of operations and financial condition. Moreover, we can make no assurance that we would successfully be able to take the necessary steps to avoid being deemed to be an investment company in accordance with the safe harbor. If we were unsuccessful, and if Bitcoin or Ethereum is determined to constitute a security for purposes of the federal securities laws, then we would have to register as an investment company, and the additional regulatory restrictions imposed by 1940 Act could adversely affect the market price of Bitcoin or Ethereum and in turn adversely affect the market price of our class A ordinary shares.

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***We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.***

As Bitcoin, Ethereum and other digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of Bitcoin and/or Ethereum. The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of Bitcoin and/or Ethereum or the ability of individuals or institutions such as us to own or transfer Bitcoin and/or Ethereum . For examples, see "Bitcoin, Ethereum and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty" elsewhere in this Exhibit 99.3.

If Bitcoin and/or Ethereum is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of Bitcoin and in turn adversely affect the market price of our class A ordinary shares. See "Regulatory change reclassifying Bitcoin or Ethereum as a security could lead to our classification as an "investment company" under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of Bitcoin or Ethereum and the market price of our class A ordinary shares" above. Moreover, the risks of us engaging in a Bitcoin treasury strategy have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.

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***Our Bitcoin and/or Ethereum treasury strategy exposes us to risk of non-performance by counterparties***

Our Bitcoin and/or Ethereum treasury strategy exposes us to the risk of non-performance by counterparties, whether contractual or otherwise. Risk of non-performance includes inability or refusal of a counterparty to perform because of a deterioration in the counterparty's financial condition and liquidity or for any other reason. For example, our execution partners, custodians, or other counterparties might fail to perform in accordance with the terms of our agreements with them, which could result in a loss of Bitcoin and/or Ethereum, a loss of the opportunity to generate funds, or other losses.

Our primary counterparty risk with respect to our Bitcoin and/or Ethereum is custodian performance obligations under the various custody arrangements we have entered into. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, SEC enforcement actions against other providers, or placement into receivership or civil fraud lawsuit against digital asset industry participants have highlighted the perceived and actual counterparty risk applicable to digital asset ownership and trading. Although these bankruptcies, closures and liquidations have not adversely impacted our Bitcoin (which was only recently acquired), legal precedent created in these bankruptcy and other proceedings may increase the risk of future rulings adverse to our interests in the event one or more of our custodians becomes a debtor in a bankruptcy case or is the subject of other liquidation, insolvency or similar proceedings.

While our custodians are subject to regulatory regimes intended to protect customers in the event of a custodial bankruptcy, receivership or similar insolvency proceeding, no assurance can be provided that our custodially-held Bitcoin and/or Ethereum will not become part of the custodian's insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings. Additionally, if we pursue any strategies to create income streams or otherwise generate funds using our Bitcoin and/or Ethereum holdings, we would become subject to additional counterparty risks. Although no such strategies are contemplated at this time, we will need to carefully evaluate market conditions, including price volatility as well as service provider terms and market reputations and performance, among others, prior to implementing any such strategy, all of which could affect our ability to successfully implement and execute on any such future strategy. These risks, along with any significant non-performance by counterparties, including in particular the custodians with which we custody substantially all of our Bitcoin and/or Ethereum, could have a material adverse effect on our business, prospects, financial condition, and operating results.

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***Our custodially-held Bitcoin and/or Ethereum may become part of the custodian's insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings.***

If our custodially-held Bitcoin and/or Ethereum are considered to be the property of our custodians' estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such Bitcoin and/or Ethereum and this may ultimately result in the loss of the value related to some or all of such Bitcoin and/or Ethereum. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, including the filings for bankruptcy protection by Three Arrows Capital, Celsius Network, Voyager Digital, FTX Trading and Genesis Global Capital, the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, including Signature Bank and Silvergate Bank, SEC enforcement actions against Coinbase, Inc. and Binance Holdings Ltd., the placement of Prime Trust, LLC into receivership following a cease-and-desist order issued by Nevada's Department of Business and Industry, and the filing and subsequent settlement of a civil fraud lawsuit by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company, have highlighted the counterparty risks applicable to owning and transacting in digital assets. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of Bitcoin and/or Ethereum, limit the availability to us of financing collateralized by Bitcoin and/or Ethereum, or create or expose additional counterparty risks. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Bitcoin and/or Ethereum. Even if we are able to prevent our Bitcoin and/or Ethereum from being considered the property of a custodian's bankruptcy estate as part of an insolvency proceeding, it is possible that we would still be delayed or may otherwise experience difficulty in accessing our Bitcoin and/or Ethereum held by the affected custodian during the pendency of the insolvency proceedings. Any such outcome could have a material adverse effect on our financial condition and the market price of our class A ordinary shares.

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***A temporary or permanent blockchain "fork" to Bitcoin, Ethereum or other crypto assets could adversely affect our business.***

Blockchain protocols, including Bitcoin and Ethereum, are open source. Any user can propose modifications to the protocol software. If a substantial majority of participants—such as miners in proof-of-work systems or validators in proof-of-stake systems—agree to adopt a proposed change, the modification may be implemented, allowing the protocol to evolve without disrupting network functionality. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a "fork", *i.e.*, "split" of the impacted blockchain protocol network and respective blockchain, with one prong running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two parallel versions of the Bitcoin or other blockchain protocol network, as applicable, running simultaneously, but with each split network's crypto asset lacking interchangeability. A "hard fork" – where there is disagreement among the users about the rules of the network – can have a significant negative impact on value of the crypto asset.

The Bitcoin has been subject to "forks" that resulted in the creation of new networks, including Bitcoin cash ABC, Bitcoin cash SV, Bitcoin diamond, Bitcoin gold and others. Some of these forks have caused fragmentation among platforms as to the correct naming convention for forked crypto assets. Due to the lack of a central registry or rulemaking body, no single entity has the ability to dictate the nomenclature of forked crypto assets, causing disagreements and a lack of uniformity among platforms on the nomenclature of forked crypto assets, and which results in further confusion to customers as to the nature of assets they hold on platforms, and which can negatively impact the value of the crypto assets. In addition, several of these forks were contentious and as a result, participants in certain communities may harbor ill will towards other communities. As a result, certain community members may take actions that adversely impact the use, adoption, and price of Bitcoin, or any of their forked alternatives.

Furthermore, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast on the other network to achieve "double-spending," plagued platforms that traded Ethereum through at least October 2016, resulting in significant losses to some crypto asset platforms. Similar replay attacks occurred in connection with the Bitcoin cash and Bitcoin cash SV network split in November 2018. Another possible result of a hard fork is an inherent decrease in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to exceed 50% of the mining power of that network, thereby making crypto assets that rely on proof-of-work more susceptible to attack, as has occurred with Ethereum Classic.

We intend to recognize forked and airdropped assets consistent with our custodians. We may not immediately or ever have the ability to withdraw a forked or airdropped Bitcoin and/or Ethereum by virtue of Bitcoins and/or Ethereum that we hold with our custodians. Future forks may occur at any time. A fork can lead to a disruption of networks and our information technology systems, cybersecurity attacks, replay attacks, or security weaknesses, any of which can further lead to temporary or even permanent loss of our and our assets.

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***The due diligence procedures conducted by us and our liquidity provider to mitigate transaction risk may fail to prevent transactions with a sanctioned entity.***

We execute trades through our liquidity providers, and rely on these third parties to implement controls and procedures to mitigate the risk of transacting with sanctioned entities. While we expect our third party service providers to conduct their business in compliance with applicable laws and regulations and in accordance with our contractual arrangements, there is no guarantee that they will do so. Accordingly, we are exposed to risk that our due diligence procedures may fail. If we are found to have transacted in Bitcoin and/or Ethereum with bad actors that have used Bitcoin and/or Ethereum to launder money or with persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Bitcoin and/or Ethereum by us may be restricted or prohibited.