# EDGAR Filing Document

**Accession Number:** 0001953021
**File Stem:** 0001213900-26-044335
**Filing Date:** 2026-4
**Character Count:** 511850
**Document Hash:** d283444b4915144abd01aa306e458bb1
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-044335.hdr.sgml**: 20260416

**ACCESSION NUMBER**: 0001213900-26-044335

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 90

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260416

**DATE AS OF CHANGE**: 20260416

**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:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42370
- **FILM NUMBER:** 26865718

**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 20-F**

☐ **REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended: December 31, 2025**

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

☐ **SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

Date of event requiring this shell company report

**For the transition period from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**

Commission file number: 001-42370

![](ea028186001_img1.jpg)

**MEGA MATRIX INC.**

(Exact name of Registrant as specified in its charter)

**Cayman Islands**

(Jurisdiction of incorporation or organization)

**Level 21, 88 Market Street** 

**CapitaSpring** 

**Singapore 048948**

**(650) 340-1888**

(Address of Principal Executive Offices)

**Yucheng Hu**

**Telephone: (650) 340-1888**

**Email: yucheng.hu@megamatrix.io**

**Level 21, 88 Market Street** 

**CapitaSpring** 

**Singapore 048948** 

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Exchange on which registered** |
| Class A Ordinary Shares, par value $0.001 per share | MPU | NYSE American |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act: **None**

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: **None**

Number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 61,926,888 Class A Ordinary Shares were outstanding, 2,809,977 Class B Ordinary Shares were outstanding and 3,123,723 Class C Ordinary Shares were outstanding as of December 31, 2025.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "accelerated filer and large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Ac. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| [INTRODUCTION](#k_001) | [INTRODUCTION](#k_001) | iii |
| [CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS](#k_002) | [CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS](#k_002) | iv |
| NOTE | NOTE |  |
| [PART I](#k_003) |  | 1 |
| ITEM 1. | [IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#k_004) | 1 |
| ITEM 2. | [OFFER STATISTICS AND EXPECTED TIMETABLE](#k_005) | 1 |
| ITEM 3. | [KEY INFORMATION](#k_006) | 1 |
| ITEM 4. | [INFORMATION ON THE COMPANY](#k_007) | 33 |
| ITEM 4A. | [UNRESOLVED STAFF COMMENTS](#k_008) | 48 |
| ITEM 5. | [OPERATING AND FINANCIAL REVIEW AND PROSPECTS](#k_009) | 49 |
| ITEM 6. | [DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](#k_010) | 63 |
| ITEM 7. | [MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](#k_011) | 69 |
| ITEM 8. | [FINANCIAL INFORMATION](#k_012) | 69 |
| ITEM 9. | [THE OFFER AND LISTING](#k_013) | 70 |
| ITEM 10. | [ADDITIONAL INFORMATION](#k_014) | 70 |
| ITEM 11. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#k_015) | 79 |
| ITEM 12. | [DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](#k_016) | 79 |
| [PART II](#k_017) |  | 80 |
| ITEM 13. | [DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#k_018) | 80 |
| ITEM 14. | [MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#k_019) | 80 |
| ITEM 15. | [CONTROLS AND PROCEDURES](#k_020) | 80 |

---

i

---

| | | |
|:---|:---|:---|
| ITEM 16 | [\[RESERVED\]](#mm_001) | 82 |
| ITEM 16A. | [AUDIT COMMITTEE FINANCIAL EXPERT](#k_021) | 82 |
| ITEM 16B. | [CODE OF ETHICS](#k_022) | 82 |
| ITEM 16C. | [PRINCIPAL ACCOUNTANT FEES AND SERVICES](#k_023) | 83 |
| ITEM 16D. | [EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES](#k_024) | 83 |
| ITEM 16E. | [PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS](#k_025) | 84 |
| ITEM 16F. | [CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT](#k_026) | 84 |
| ITEM 16G. | [CORPORATE GOVERNANCE](#k_027) | 84 |
| ITEM 16H. | [MINE SAFETY DISCLOSURE](#k_028) | 84 |
| ITEM 16I. | [DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.](#k_029) | 84 |
| ITEM 16J. | [INSIDER TRADING POLICIES](#k_030) | 84 |
| ITEM 16K. | [CYBERSECURITY](#k_031) | 85 |
| [PART III](#k_032) |  | 86 |
| ITEM 17 | [FINANCIAL STATEMENTS](#k_033) | 86 |
| ITEM 18 | [FINANCIAL STATEMENTS](#k_034) | 86 |
| ITEM 19 | [EXHIBITS](#k_035) | 86 |

---

ii

**INTRODUCTION**

On October 8, 2024, Mega Matrix Inc. ("MPU Cayman"), Mega Matrix Corp., a Delaware corporation ("MPU DE"), and MPU Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of MPU Cayman ("MPU Merger Sub") effected a redomicile merger (the "Redomicile Merger"). As a result, MPU Merger Sub merged with and into MPU DE, with MPU DE surviving as a wholly-owned subsidiary of MPU Cayman, pursuant to the Third Amended and Restated Agreement and Plan of Merger, dated May 31, 2024 ("Merger Agreement"), which Merger Agreement was approved by MPU DE stockholders on September 25, 2024 ("Redomicile Merger").

After the Redomicile Merger, MPU DE, together with its subsidiaries, owns and continues to its business in substantially the same manner as it was being conducted. MPU Cayman is managed by the same board of directors and executive officers that manage MPU DE prior to the Redomicile Merger, with the directors to serve until such time as they are removed from office by ordinary resolution of the shareholders or by a resolution of the board of directors.

Pursuant to the Redomicile Merger and as approved by the NYSE American, MPU Cayman's Class A Shares are now listed on the NYSE American under the symbol "MPU."

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.

Unless otherwise stated in this Form 20-F, and except where the context otherwise requires and for the purposes of this report only:

● "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;

● "Class A Shares" or "Class A Ordinary Shares" means Class A Ordinary Shares of MPU Cayman with a par value of $0.001 and entitled to one (1) vote per share;

● "Class B Shares" means Class B Ordinary Shares of MPU Cayman with a par value of $0.001 and entitled to one hundred (100) votes per share;

● "Class C Shares" means Class C Ordinary Shares of MPU Cayman with a par value of $0.001 and entitled to fifty (50) votes per share;

● "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 and stablecoin represent a type of digital asset;

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

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

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

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

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

● "Ordinary Shares" means Class A Shares, Class B Shares and Class C Shares;

● "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;

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

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

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

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

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

iii

**CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS**

This report 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. 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:

● our ability to purchase Bitcoin ("BTC"), Ethereum ("ETH" or "Ether"), Ethena governance token ("ENA"), stablecoins, or other crypto assets at the price that we want;

● our ability to reinitiate the ETH staking business;

● our ability to implement the strategic expansion into the stablecoin sector;

● our ability to obtain additional financing in the future to fund capital expenditures and our digital assets treasury reserve strategy and ability to create value;

● our ability to secure sufficient funding to support our current and proposed operations;

● our ability to manage our working capital requirements efficiently;

● the possibility that any of our new lines of businesses do not perform or operate as anticipated;

● the impact of certain industry trends on our performance;

● our ability and our customers' ability to comply with applicable government and regulatory requirements in the numerous jurisdictions in which we and our customers operate;

● our cyber vulnerabilities and the anticipated effects on us if a cybersecurity threat or incident were to materialize;

● general economic, market, political and regulatory conditions, including anticipated changes in these conditions and the impact of such changes on customer demand and other facets of our business;

● the impact of any of the foregoing on the prevailing market price and trading volume of our Class A Ordinary Shares;

● the ongoing development of our short drama streaming business and our ability to continue development of our short drama streaming business model outside of the United States;

iv

● our ability to continue to be in compliance with the development of applicable regulatory regulations in connection with data, intellectual property and short video industry;

● our ability and our film makers' ability to comply with applicable government and regulatory requirements in the numerous jurisdictions in which we and our film makers operate;

● future operating or financial results;

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

● future acquisitions, business strategy and expected capital spending;

● assumptions regarding interest rates and inflation;

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

● ability to manage our growth;

● fluctuations in general economic and business conditions;

● 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;

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

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

● potential changes in the legislative and regulatory environments;

● a lower return on investment; and

● potential volatility in the market price of our securities.

The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under "Risk Factors" may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

The forward-looking statements made in this annual report relate only to events or information as of the date on which these statements are made in this annual report. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this annual report. You should not rely upon forward-looking statements as predictions of future events.

You should carefully read the "Risk Factors" beginning on page 1 of this annual report for a discussion of information that should be considered before making a decision to purchase our Ordinary Shares. Below please find a summary of the principal risks we face, organized under relevant headings.

v

**IMPLICATIONS OF BEING AN "EMERGING GROWTH COMPANY"**

**AND A "FOREIGN PRIVATE ISSUER"**

We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an "emerging growth company," we may take advantage of certain exemptions from specified disclosure and other requirements that are otherwise generally applicable to public companies. These exemptions include:

● not being required to comply with the auditor attestation requirements for the assessment of our internal control over financial reporting provided by Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act");

● reduced disclosure obligations regarding executive compensation; and

● not being required to hold a nonbinding advisory vote on executive compensation or seek shareholder approval of any golden parachute payments not previously approved.

We may take advantage of these reporting exemptions until we are no longer an "emerging growth company."

We are also considered a "foreign private issuer" within the meaning of the rules under the Securities Exchange Act of 1934 (as amended, the "Exchange Act"). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

● we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

● for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;

● we are not required to provide the same level of disclosure on certain issues, such as executive compensation;

● we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;

● we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and

● we are not required to comply with Section 16(d) of the Exchange Act establishing insider liability for profits realized from any "short-swing" trading transaction

 

We currently follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE American in respect of the following:

● the majority independent director requirement under Section 803 of the NYSE American LLC Company Guide;

● the requirement under Section 803 of the NYSE American LLC Company Guide that an audit committee must be comprised of at least three members; and

● the requirement under Section 713 of the NYSE American LLC Company Guide, to seek shareholder approval for the issuance of more than 20% of our outstanding shares at a price less than the Minimum Price (as defined in Section 713(c) therein).

vi

*Risk Relating to Our Short Video Drama Business* 

Risks and uncertainties related to our short video drama business and industry include, but are not limited to, the following:

● We will need to raise additional capital or financing to continue to execute and expand our business.

● Expansion of the Company's operations into new products, services and technologies, including content categories, is inherently risky and may subject it to additional business, legal, financial and competitive risks.

● If our efforts to attract and retain users are not successful, our business will be adversely affected.

● If we do not continuously provide value to our users, including making improvements to our service in a manner that is favorably received by them, our revenue, results of operations and business will be adversely affected.

● If we fail to grow and maintain our active user base, our business, financial condition and operating results may be materially and adversely affected.

● Our advertising offering is new and subject to various risks and uncertainties, which may adversely affect our business.

● We rely on our business collaborations with third parties, including major digital distribution platforms and mobile device manufacturers, to maintain and expand our user base. Our failure to maintain good relationships with these business partners may materially and adversely affect our business and operating results.

● We may be subject to notices or complaints alleging, among other things, our infringement of copyrights and delivery of illegal or inappropriate content through our products, which could lead to suspension or removal of such products from digital distribution platforms, a decrease of our user base, and a significantly adverse impact on our financial results and our reputation.

● We have international operations and plan to continue expanding our operations globally. We may face challenges and risks presented by our growing global operations, which may have a material and adverse impact on our business and operating results.

● Our product development and monetization strategies are highly dependent on our technology capabilities and infrastructure. If the amount of user data generated on our products declines, or if we fail to enhance or upgrade our technologies at a competitive pace, the effectiveness of our business model may be harmed and our operating results may be materially and severely affected.

● If we fail to correctly anticipate user preferences and develop and commercialize new products and services, we may fail to attract or retain existing users, the lifecycles of our mobile applications may end prematurely and our operating results may be materially and adversely affected.

● We may be held liable for information or content displayed on, distributed by, retrieved from or linked to the mobile applications integrated into our products, which may adversely impact our brand image and materially and adversely affect our business and operating results.

vii

● We may not be able to prevent unauthorized use of our intellectual property, which could harm our business and competitive position.

● We may be subject to intellectual property infringement lawsuits which could be expensive to defend and may result in our payment of substantial damages or licensing fees, disruption to our product and service offerings, and reputational harm.

● Yuder, as a Singapore-based company, is subject to laws and regulations of Singapore and each jurisdiction where our services are offered. Our operations require us to apply for specific licenses with Singapore authorities.

● Our efforts to secure necessary licenses and comply with regulatory standards are facing challenges, including the possibility that licenses may not be granted, or could be revoked or not renewed by regulatory authorities.

● Information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.

● Our compliance with regulatory requirements demands significant operational and financial resources.

● We face challenges in continuously monitoring and adapting to the varied regulatory environments across the various jurisdictions where we operate.

● We may encounter restrictions or outright bans in certain jurisdictions if we fail to comply with local regulations or content standards.

*Risks Related to our Digital Assets Treasury Reserve Strategy and Staking*

Risks and uncertainties related to our Digital Assets Treasury Reserve Strategy and Staking include, but are not limited to, the following:

● Digital Assets have historically experienced, and are expected to continue to experience, high price volatility which may influence our financial results and the market price of our Class A Ordinary Shares.

● Our operating results will be dependent on the price of Digital Assets that we own. If such price declines, our business, operating results, and financial condition would be adversely affected.

● Digital Assets are novel assets, and are subject to significant legal, commercial, regulatory, and technical uncertainty.

● Disruptions in the Digital Asset Market may adversely affect the ENA holdings and an investment in us.

● Future regulatory changes are impossible to predict.

● The launch of central bank digital currencies ("CBDCs") may change consumer preferences and the perceived value or prospects of Digital Assets.

viii

● Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our Digital Asset holdings.

● Pricing sources and valuation methodologies may not reflect realizable values in stress.

● The availability of spot ETPs for Bitcoin and other Digital Assets may adversely affect the market price of our Class A Ordinary Shares.

● We have recently announced our new Digital Assets treasury reserve strategy, and we may be unable to successfully implement it.

● Our Digital Asset treasury strategy subjects us to enhanced regulatory oversight.

● Due to the currently unregulated nature and lack of transparency surrounding the operations of many Digital Assets trading venues, Digital Asset 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 Digital Asset trading venues and adversely affect the value of the Digital Assets that we hold.

● There is the possibility that one or more blockchain networks related to the Digital Assets we hold could be manipulated.

● The concentration of our ENA holdings could enhance the risks inherent in our Digital Asset treasury strategy.

● Our Digital Asset holdings will be less liquid than existing cash and cash equivalents and may not be able to serve as a source of liquidity for it to the same extent as cash and cash equivalents.

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

● We face risks relating to the custody of our Digital Assets, including the loss or destruction of private keys required to access our Digital Assets, and cyberattacks or other data loss relating to our Digital Assets.

● Re-staking and smart contract rehypothecation may layer risks.

● If Digital Assets that we hold are determined to constitute a security for purposes of the federal securities laws, such holdings could lead to our classification as an "investment company" under the Investment Company Act of 1940, as amended, or the ICA, and could adversely affect the market price of our Class A Ordinary Shares.

● We may be subject to regulatory developments related to Digital Assets and Digital Asset markets, which could adversely affect our business, financial condition, and results of operations.

● We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.

● Our Digital Asset treasury strategy exposes us to risk of non-performance by counterparties

● Our custodially-held Digital Assets may become part of the custodian's insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings.

● A temporary or permanent blockchain "fork" to a Digital Asset blockchain network could adversely affect our business.

ix

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

● Staking introduces a risk of loss of Digital Assets we stake, which could adversely affect the value of our Class A Ordinary Shares.

● Validator concentration and correlated infrastructure failures could amplify losses.

● Staked Digital Assets may be inaccessible for a variable period of time, determined by a range of factors, which could result in certain liquidity risk to the Company.

● Liquid staking tokens may deviate from underlying value and introduce additional risks.

● The Company will be dependent on third parties to effectively execute the Company's Staking arrangements.

● The regulatory landscape surrounding Staking may change.

● Token unlocks and supply overhang may pressure prices and liquidity.

● Some Digital Assets do not have a cap on supply.

● A disruption of the Internet may affect Digital Asset network operations, which may adversely affect the Digital Asset industry and an investment in us.

● Blockchain networks' decentralized governance structures may negatively affect their ability to grow and respond to challenges.

● Tax treatment of certain digital asset activities remains uncertain.

*Risks Related to our Company and our Securities* 

We are also subject to risks and uncertainties related to our company and securities, including, but not limited to, the following:

● The ownership of our stock is highly concentrated in our management, and we have two controlling stockholders.

● We have a limited operating history in new short video drama business, so there is a limited track record on which to judge our business prospects and management.

● User metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could harm our business, revenue and financial results.

● We will need to raise additional capital or financing to continue to execute and expand our business.

● Our business depends on the continuing efforts of our management. If it loses their services, our business may be severely disrupted.

● We may not be able to prevent or timely detect cyber security breaches and may be subject to data, security and/or system breaches which could adversely affect our business operations and financial conditions.

● We do not maintain commercial insurance to cover loss of digital assets.

x

● We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

● As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from NYSE American corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with NYSE American corporate governance listing standards.

● We are a foreign private issuer within the meaning of the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

● We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us.

● We are subject to various laws relating to foreign corrupt practices, the violation of which could adversely affect its operations, reputation, business, prospects, operating results and financial condition.

● As of December 31, 2025, our internal control over financial reporting was ineffective, and if we continue to fail to improve such controls and procedures, investors could lose confidence in our financial and other reports, the price of our Class A Ordinary Shares may decline, and we may be subject to increased risks and liabilities.

● Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.

● The trading prices of our Class A Ordinary Shares could be volatile, which could result in substantial losses to our shareholders and investors.

● If our Class A Ordinary Shares becomes subject to the SEC's penny stock rules, broker-dealers may experience difficulty in completing customer transactions, and trading activity in our securities may be adversely affected.

● An active trading market for our Class A Ordinary Shares may not develop, and you may not be able to easily sell your Class A Ordinary Shares.

● If we do not continue to satisfy the NYSE American continued listing requirements, our Class A Ordinary Shares could be delisted.

● Sales of a significant number of our share in the public market, or the perception that such sales could occur, could depress the market price of our Class A Ordinary Shares.

● We cannot predict the impact our multi-class share structure may have on the stock price of our Class A Ordinary Shares.

&nbsp;&nbsp;&nbsp;&nbsp;

● Cayman Islands economic substance requirements may have an effect on our business and operations.

● There can be no assurance that we will not be a passive foreign investment company, or PFIC, for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors of our Class A Ordinary Shares.

The foregoing risks are discussed more fully under "Item 3. Key Information—D. Risk Factors" beginning on page 1 of this annual report.

xi

**PART I**

**Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS**

Not Applicable.

**Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE**

Not Applicable.

**Item 3. KEY INFORMATION**

**A. <u>[Reserved]</u>**

**B. <u>Capitalization and Indebtedness</u>**

Not Applicable.

**C. <u>Reasons for the Offer and Use of Proceeds</u>**

Not Applicable.

**D. <u>Risk Factors</u>**

*You should consider carefully all of the following risk factors and all the other information contained in this report, including the financial statements. This report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business.*

**Risks Related to our Short Video Drama Business**

***We will need to raise additional capital or financing to continue to execute and expand our business.***

We will need to raise additional capital to support our new operations and execute on our business plan by issuing equity or convertible debt securities. In the event we are required to obtain additional funds, there is no guarantee that additional funds will be available on a timely basis or on acceptable terms. To the extent that we raise additional funds by issuing equity or convertible debt securities, our stockholders may experience additional dilution and such financing may involve restrictive covenants. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and/or financing. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. If such funds are not available when required, management will be required to curtail investments in additional sales and marketing and product development, which may have a material adverse effect on future cash flows and results of operations.

***Expansion of the Company's operations into new products, services and technologies, including content categories, is inherently risky and may subject it to additional business, legal, financial and competitive risks.***

Historically, the Company's operations have been focused on third-party management service contracts for aircraft operations, NFT gaming, staking as a service, and solo-staking, which operations have ceased. Expansion of the Company's operations and its marketplace into additional products and services, such as short video drama involve numerous risks and challenges, including potential new competition, increased capital requirements and increased marketing spending to achieve customer awareness of these new products and services. Growth into additional content, product, and service areas may require changes to the Company's existing business model and cost structure and modifications to its infrastructure and may expose the Company to new regulatory and legal risks, any of which may require expertise in areas where the Company has little or no experience. There is no guarantee that the Company will be able to generate sufficient revenue from sales of such products and services to offset the costs of developing, acquiring, managing and monetizing such products and services and the Company's business may be adversely affected.

***If our efforts to attract and retain users are not successful, our business will be adversely affected.***

Our future revenue will mainly be derived from subscriber-based fees and advertising. We must continually add active users to convert them to fee-based subscribers or to the users who watch ads to view short dramas for free, thereby increasing advertising revenue. The video streaming business is new to us and our ability to penetration and growth our user base have fluctuated and vary across the jurisdictions where we provide our service. Our ability to attract and retain users and convert them to fee-based subscribers will depend in part on our ability to consistently provide our users in countries around the globe with compelling content choices that keep our users engaged with our service, effectively drive conversation around our content and service, as well as provide a quality experience for choosing and enjoying our short video dramas. Furthermore, the relative service levels, content offerings, pricing and related features of competitors to our service may adversely impact our ability to attract and retain users. Competitors include other entertainment video providers, such as linear television, and streaming entertainment providers (including those that provide pirated content), video gaming providers, as well as user-generated content, and more broadly other sources of entertainment that our users could choose in their moments of free time.

Our users and fee-based subscribers may cancel our service for many reasons, including a perception that they do not use the service sufficiently, that they need to cut household expenses, dissatisfaction with content, a preference for competitive services and customer service issues that they believe are not satisfactorily resolved. Fee-based subscribers growth is also impacted by adverse macroeconomic conditions, including inflation, may also adversely impact our ability to attract and retain users and fee-based subscribers. If we do not grow as expected or be able to increase our fee-based subscriber revenue, including by adjusting subscription pricing, liquidity and results of operations may be adversely impacted. If we are unable to successfully compete with current and new competitors in providing compelling content, retaining our existing users and attracting new users, our business will be adversely affected.

***If we do not continuously provide value to our users, including making improvements to our service in a manner that is favorably received by them, our revenue, results of operations and business will be adversely affected.***

If consumers do not perceive our service offering to be of value, including if we introduce new or adjust existing features, adjust pricing or service offerings, or change the mix of content in a manner that is not favorably received by them, we may not be able to attract and retain users and fee-based subscribers, and accordingly, our revenue, including revenue per paying subscribers, and results of operations may be adversely affected. The video streaming business and the production of short video dramas is new to us. If our efforts to develop and offer short video dramas are not valued by our current and future users and fee-paying subscribers, our ability to attract and retain users and fee-paying subscribers may be negatively impacted. We may also seek to extend our business into new products and services to help drive growth. For example, we are expanding our offering of consumer products and live experiences. To the extent we cannot successfully find and develop new products and services to help drive growth, our future results of operations and growth may be adversely impacted.

We may, from time to time, have to adjust our subscription pricing, or our pricing model itself. Any adjustments we make may not be well-received by our users and could negatively impact our ability to attract and retain users and fee-paying subscribers, revenue per fee-paying subscribers, revenue and our results of operations. If our efforts to satisfy our existing users or adjustments to our service are not successful, we may not be able to attract or retain users and fee-paying subscribers, and as a result, our ability to grow our business will be adversely affected.

 ***If we fail to grow and maintain our active user base, our business, financial condition and operating results may be materially and adversely affected.***

The size of our active user base with our products is critical to our success. We are a new business and focused on attracting and maintaining an active user base. Our financial performance has been and will continue to be significantly affected by our ability to grow and engage our active user base. In addition, we may fail to maintain or increase our user base or our users' engagement if, among other things:

● we fail to innovate or develop new products and services that provide relevant content and satisfactory experience to, or are favorably received by, our users;

● we fail to produce new dramas that are attractive to our users;

● we fail to respond to or adopt evolving technologies for product development on a timely and cost-effective basis;

● we fail to successfully market and monetize our existing and new mobile applications throughout their life cycles;

● we fail to develop products that are compatible with existing or new mobile devices, mobile operating systems or their respective upgrades;

● we fail to maintain or improve our technology infrastructure and security measures designed to protect our users' personal privacy and cyber security;

● we lose users to competing products and services or due to concerns related to personal privacy and cyber security or other reasons;

● we fail to successfully implement our strategies related to the continued expansion of our global user base; or

● we are required by existing or new laws, regulations or government policies to implement changes to our products or services that are adverse to our business.

If we are unable to maintain or increase our user base, our advertising services may become less attractive to our advertising customers, which may have a material and adverse impact on our business, financial condition and operating results.

***Our advertising offering is new and subject to various risks and uncertainties, which may adversely affect our business.***

We have limited experience and operating history offering advertising on our video streaming service, and our advertising revenue may not grow as we expect. Advertisers purchase advertising services either directly from us or through third-party advertising exchanges and advertising agencies. Our advertising customers, including advertisers and advertising exchanges and agencies, typically do not have long-term contractual arrangements with us. They may be dissatisfied with our advertising services or perceive our advertising services as ineffective. Potential new customers may view our advertising services as unproven, and we may need to devote additional time and resources to convince them. In addition, new advertising formats emerge from time to time and customer preferences can change. We may not be able to adapt our products and services to future advertising formats or changing customer preferences on a timely and cost-effective basis, and any such adaption failure could materially and adversely affect our financial conditions, results of operations and prospects.

We compete for advertising customers not only with other providers of digital advertising spaces, but also with other types of platforms and advertising service providers such as newspapers, magazines, billboards, television and radio stations. Some of our competitors have access to considerably greater financial and other resources for expanding their product offerings and present considerable challenges to gaining and maintaining additional market share.

If we fail to deliver advertising services in an effective manner, or if our advertising customers believe that placing advertisements on our platform and in our short dramas do not generate a competitive return when compared to placing advertisements through our competitors' products, they may not continue to do business with us or they may only be willing to advertise with us at reduced prices. If our existing advertising customers reduce or discontinue their advertising spending with us, or if we fail to attract new advertising customers, our business, financial condition and results of operations could be materially and adversely affected.

***We rely on our business collaborations with third parties, including major digital distribution platforms and mobile device manufacturers, to maintain and expand our user base. Our failure to maintain good relationships with these business partners may materially and adversely affect our business and operating results.***

We collaborate with various business partners to promote our products and enlarge our user base. We use third-party digital distribution platforms such as Apple App Store and Google Play to distribute our mobile applications to users. We also advertise on third-party platforms, such as Facebook and TikTok to acquire users. The promotion and distribution of our mobile applications are subject to such digital distribution platforms' standard terms and policies for application developers, which are subject to the interpretation of, and frequent changes by, these platforms. In addition, our applications may be suspended by or removed from such platforms as a result of allegations or claims by third parties regardless of their merits. If we are unable to maintain good relationships with our business partners or the business of our business partners declines, the reach of our products and services may be adversely affected and our ability to maintain and expand our user base may decrease. Most of the agreements with our business partners, including mobile device manufacturers and digital distribution platforms, do not prohibit them from working with our competitors or from offering competing services. If our partner distribution platforms change their standard terms and conditions in a manner that is detrimental to our business, or if our business partners decide not to continue working with us or choose to devote more resources to supporting our competitors or their own competing products, we may not be able to find a substitute on commercially favorable terms, or at all, and our competitive advantages may be diminished.

***We may be subject to notices or complaints alleging, among other things, our infringement of copyrights and delivery of illegal or inappropriate content through our products, which could lead to suspension or removal of such products from digital distribution platforms, a decrease of our user base, and a significantly adverse impact on our financial results and our reputation.***

We use third-party digital distribution platforms such as Apple App Store and Google Play to distribute our mobile applications to users. In the ordinary course of our business, we and the digital distribution platforms may from time to time receive, notices or complaints from third parties alleging that certain of our contents infringe copyrights, deliver illegal, fraudulent, pornographic, violent, bullying or other inappropriate content, or otherwise fail to comply with applicable policies, rules and regulations. Upon receipt of such notices or complaints, those digital distribution platforms may suspend or remove such products from such platforms. The processes for appealing such suspensions and removals with those platforms could be time-consuming, and we cannot guarantee that our appeals will always prevail or that any such suspended or removed application will be made available again. Such suspensions and removals of our products could lead to a decrease of our user base and, if they occur frequently and/or in a large scale, could significantly adversely affect our reputation, business operation and financial performance. In addition, these digital distribution platforms and third-party platforms may also receive, from time to time, notices or complaints from third parties alleging that certain of our products infringe copyrights, deliver illegal, fraudulent, pornographic, violent, bullying or other inappropriate content, or otherwise fail to comply with applicable policies, rules and regulations, consequently those digital distribution platforms may suspend or remove such products from their platforms and those third-party platforms may terminate their collaboration with us.

***We have international operations and plan to continue expanding our operations globally. We may face challenges and risks presented by our growing global operations, which may have a material and adverse impact on our business and operating results.***

Yuder is headquartered in Singapore and provide its products and services to a global user base. We intend to continue the international expansion of our business operations and grow our user base globally. We believe the sustainable growth of our business depends on our ability to increase the penetration of our products in both developed and emerging markets. Our continued international operations and global expansion may expose us to a number of challenges and risks, including:

● challenges in developing successful products and localized adaptions, and implementing effective marketing strategies that respectively target mobile internet users and advertising customers from various countries and with a diverse range of preferences and demands;

● difficulties in managing and overseeing global operations and in affording increased costs associated with doing business in multiple international locations;

● local competitions;

● difficulties in integrating and managing potential foreign acquisitions or investments;

● compliance with applicable laws and regulations in various countries worldwide, including, but not limited to, internet content requirements, cyber security and data privacy requirements, intellectual property protection rules, exchange controls, and cash repatriation restrictions;

● fluctuations in currency exchange rates;

● political, social or economic instability in markets or regions in which we operate; and

● compliance with statutory equity requirements and management of tax consequences.

Our business, financial condition and results of operations may be materially and adversely affected by these challenges and risks associated with our global operations.

***Our product development and monetization strategies are highly dependent on our technology capabilities and infrastructure. If the amount of user data generated on our products declines, or if we fail to enhance or upgrade our technologies at a competitive pace, the effectiveness of our business model may be harmed and our operating results may be materially and severely affected.***

We depend on our technological capabilities and infrastructure to analyze our users' preferences and needs and to generate valuable user insights. Active users of our products generate a large amount of data across our applications and in a variety of use cases on a daily basis. The data generated by our users lays the foundation for us to build our user profiles. By analyzing such user data with our big data analytics and other relevant technologies, we aim to understand our users' interests and needs for content in order to develop products that deliver relevant content catering to their interests and needs. Therefore, the effectiveness of our product development and monetization strategies is dependent on our ability to obtain and process data and to refine the algorithms used in processing such data. If we fail to maintain and expand the user base of our products to continually generate large amounts of user data, or if we fail to keep up with the rapid development and upgrade of big data analytics and other relevant technologies on a timely and cost-effective basis, we may not be able to effectively grow and monetize our products, and our business and operating results may be materially and adversely affected.

***If we fail to correctly anticipate user preferences and develop and commercialize new products and services, we may fail to attract or retain existing users, the lifecycles of our mobile applications may end prematurely and our operating results may be materially and adversely affected.***

Our success depends on our ability to maintain, grow and monetize our user base, which in turn depends on our ability to continually develop and commercialize new mobile applications, introduce new features or functions to our existing mobile applications and provide users with high-quality content and an enjoyable user experience. This is particularly important since the mobile internet industry is characterized by fast and frequent changes, including rapid technological evolution, shifting user demands, frequent introductions of new products and services, and constantly evolving industry standards, operating systems and practices. FlexTV APP was launched in 2023 and over 960 short dramas have been released since October 2023. We intend to continue to produce new short dramas and other contents and services to enlarge our active user base. Our ability to roll out new short video dramas and services depends on a number of factors, including engaging new talents, high-quality contents, as well as correctly analyzing and predicting users' interests and demands for content using our big data analytical capabilities. If we fail to correctly analyze and predict users' interests and demands for content, fail to cater to the anticipated needs and preferences of users, or fail to provide a superior user experience, our existing and new mobile applications may suffer from reduced user traffic or be unsuccessful in the market and our user base may decrease, which in turn may impact our fee-based subscription and our ability to earn advertising revenue. There can be no assurance that our new products and services will generate revenues or profits and we may not be able to recoup the investments and expenditure involved in such development. Our quarterly results may also experience significant fluctuations as we continue to invest in the development of new products and services.

In addition, as a result of rapidly evolving user preferences, our existing mobile applications may reach the end of their lifecycles prematurely. There can be no assurance that we will be able to correctly predict the lifecycles of our new mobile applications, our estimates regarding the lifecycles of our existing mobile applications may turn out to be incorrect, and our business, financial condition and results of operations may be materially and adversely affected.

***We may be held liable for information or content displayed on, distributed by, retrieved from or linked to the mobile applications integrated into our products, which may adversely impact our brand image and materially and adversely affect our business and operating results.***

We may display third-party content, such as videos, pictures, books, articles and other works, on our mobile applications without the explicit consent from such third party, and we may further explore market opportunities in the content-related business. Our users may misuse our products to disseminate content that contains inappropriate, fraudulent or illegal information or that infringes the intellectual property rights of third parties. We have implemented control measures and procedures to detect and block inappropriate, fraudulent or illegal content uploaded to or disseminated through our products, particularly those that violate our user agreements or applicable laws and regulations. However, such procedures may not be sufficient to block all such content due to the large volume of third-party content. Despite the procedures and measures we have taken, if the content displayed on our products are found to be fraudulent, illegal or inappropriate, we may suffer a loss of users and damage to our reputation. In response to any allegations of fraudulent, illegal or inappropriate activities conducted through our mobile applications or any negative media coverage about us, government authorities may intervene and hold us liable for non-compliance with laws and regulations concerning the dissemination of information on the internet and subject us to administrative penalties or other sanctions, such as requiring us to restrict or discontinue certain features and services provided by our mobile applications or to temporarily or permanently disable such mobile applications. If any of such events occurs, our reputation and business may suffer and our operating results may be materially and adversely affected.

***We may not be able to prevent unauthorized use of our intellectual property, which could harm our business and competitive position.***

We regard our patents, copyrights, trademarks, trade secrets, and other intellectual property as critical to our business. Unauthorized use of our intellectual property by third parties may adversely affect our business and reputation. We rely on a combination of intellectual property laws and contractual arrangements to protect our proprietary rights. It is often difficult to register, maintain, and enforce intellectual property rights in countries with less developed regulatory regimes or inconsistent and unreliable enforcement mechanisms. Sometimes laws and regulations are subject to interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. In addition, our contractual agreements may be breached by our counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China and other jurisdictions in which we operate. Detecting and preventing any unauthorized use of our intellectual property is difficult and costly and the steps we have taken may be inadequate to prevent infringement or misappropriation of our intellectual property. In the event that we resort to litigation to enforce or protect our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation.

***We may be subject to intellectual property infringement lawsuits which could be expensive to defend and may result in our payment of substantial damages or licensing fees, disruption to our product and service offerings, and reputational harm.***

The success of our business relies on the quality of our products, which in turn depends on the underlying software and related technology, such as big data analytics. The protection of such software and related technologies primarily relies on intellectual property rights including patents and trade secrets. Meanwhile, for the purpose of our business expansion, we may from time to time display third-party content, such as videos, pictures, books, articles and other works, on our mobile applications without acquiring the explicit consent from such third party. Third parties, including our competitors, may assert claims against us for alleged infringements of their patents, copyrights, trademarks, trade secrets and internet content.

Intellectual property claims against us, whether meritorious or not, are time consuming and costly to resolve, could divert management attention away from our daily business, could require changes of the way we do business or develop our products, could require us to enter into costly royalty or licensing agreements or to make substantial payments to settle claims or satisfy judgments, and could require us to cease conducting certain operations or offering certain products in certain areas or generally. We do not conduct comprehensive patent searches to determine whether the technologies used in our products infringe upon patents held by others. In addition, product development is inherently uncertain in a rapidly evolving technological environment in which there may be numerous patent applications pending, many of which are confidential when filed, with regard to similar technologies. While we believe that our products do not infringe in any material respect upon any intellectual property rights of third parties, we cannot be certain that this is the case.

In addition, in any potential dispute involving our patents or other intellectual property, our advertising customers and business partners could also become the target of litigation. We have certain contractual obligations to indemnify our advertising customers and the mobile device manufacturers that pre-install our products on their devices for liability that they may incur based on third-party claims of intellectual property infringement for the use of our products or technology. Many of our collaboration contracts with mobile device manufacturers provide for a cap on our indemnity obligations. In addition, in the event of any such claims, our advertising customers or business partners may decide not to use our products in the future, which could harm our financial condition and operating results.

Finally, we may also face infringement claims from the employees, consultants, agents and outside organizations we have engaged to develop our technology. While we have sought to protect ourselves against such claims through contractual means, there can be no assurance that such contractual provisions are adequate, and any of these parties might claim full or partial ownership of the intellectual property in the technology that they were engaged to develop for us.

  ****

***Yuder, as a Singapore-based company, is subject to laws and regulations of Singapore and each jurisdiction where our services are offered. Our operations require us to apply for specific licenses with Singapore authorities.***

Yuder's operations as a Singapore-based company are subject to the regulatory environments of Singapore and each jurisdiction where our services are available. In Singapore, Yuder is actively assessing the need for specific licenses such as an Over-the-Top (OTT) Niche Television Service License and, for age-restricted content, a Film Exhibition License. Moreover, we may need to comply with the Content Code for OTT, Video on Demand, and Niche Services in Singapore to ensure our content aligns with public interest and decency standards. Additionally, as our service is accessible over the internet to users worldwide, we are subject to a wide array of international laws and regulations, which vary significantly across different jurisdictions.

***Our efforts to secure necessary licenses and comply with regulatory standards are facing challenges, including the possibility that licenses may not be granted, or could be revoked or not renewed by regulatory authorities.***

The complexity of obtaining necessary licenses and maintaining compliance with regulatory standards presents a risk that licenses may not be granted or could be revoked or not renewed by regulatory authorities. This includes both the specific licenses required for operations in Singapore and potentially different or additional licenses needed in other countries. Such outcomes could prevent us from offering certain services or content, thus significantly impacting our operations and financial condition.

***Information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.***

We receive, process, store and use personal information and other customer data. There are numerous federal, state and local laws regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other data. Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to customers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other player data, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our customers to lose trust in us which could have an adverse impact on our business. The costs of compliance with these types of laws may increase in the future as a result of changes in interpretation or changes in law. Any failure on our part to comply with these types of laws may subject us to significant liabilities.

Third parties we work with may violate applicable laws or our policies, and such violations may also put our customers' information at risk and could in turn have an adverse impact on our business. We will also be subject to payment card association rules and obligations under each association's contracts with payment card processors. Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for the associated expense and penalties. If we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.

Security breaches, computer malware and computer hacking attacks have become more prevalent. Any security breach caused by hacking which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could harm our business. Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure to the satisfaction of our players may harm our reputation and our ability to retain existing players and attract new players.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

***Our compliance with regulatory requirements demands significant operational and financial resources.***

Compliance with regulatory requirements in Singapore and internationally may require significant operational and financial resources. This includes the potential need to furnish security deposits, adhere to content classification requirements, and ensure ongoing compliance with varied regulatory standards across jurisdictions. The financial burden and operational constraints imposed by these regulatory requirements could negatively affect our profitability and operational efficiency.

***We face challenges in continuously monitoring and adapting to the varied regulatory environments across the various jurisdictions where we operate.***

Navigating the regulatory landscapes of multiple jurisdictions increases the risk of inadvertent non-compliance due to the dynamic nature of laws and regulations governing online streaming services. Continuous adjustments to our operational practices and content offerings may be necessary, requiring substantial resources and potentially leading to penalties, restrictions, or the cessation of our services in certain territories.

***We may encounter restrictions or outright bans in certain jurisdictions if we fail to comply with local regulations or content standards.***

Given the global accessibility of our service, there is a risk that certain jurisdictions may impose restrictions or outright bans on our operations due to non-compliance with local regulations or content standards. Such actions could limit our market presence and negatively impact our growth prospects and profitability.

**Risks Related to our Digital Assets Treasury Reserve Strategy and Staking**

While all investments entail a risk of loss of capital, investments in digital assets such as ENA, BTC, ETH, and other cryptocurrencies, tokens, and rights of a similar nature (collectively referred to as, "Digital Assets") should be considered substantially more speculative and significantly more likely to result in a loss, including a total loss of capital, than many other forms of investment. The investment characteristics of Digital Assets differ from those of many traditional currencies, commodities, and securities. A particular Digital Asset's status as a "security" in any relevant jurisdiction is subject to a high degree of uncertainty, and if we are unable to properly characterize a Digital Asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, results of operations and/or financial condition.

On March 17, 2026, the SEC and the Commodity Futures Trading Commission issued a joint interpretation clarifying how the federal securities laws apply to certain crypto assets and transactions ("Interpretation"). By assessing how the assets derive their value and whether a purchaser would reasonably expect profits from essential managerial efforts, the SEC classifies crypto assets into five categories based on their characteristics, uses and functions: (i) digital commodities; (ii) digital collectibles; (iii) digital tools; (iv) stablecoins; and (v) digital securities. It clarifies that digital commodities, digital collectibles, digital tools, and certain stablecoins are not themselves securities, but notes that those assets may be offered and sold subject to an investment contract, which itself is a security. Although most forms of crypto assets are not themselves securities under the Interpretation, it explains that a "non-security crypto asset" may nonetheless become "subject to an investment contract when an issuer offers it by inducing an investment of money in a common enterprise with representations or promises to undertake essential managerial efforts from which a purchaser would reasonably expect to derive profits."

The classification of a Digital Asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale and trading of such assets. Certain Digital Assets may be deemed to be a "security" under the laws of some jurisdictions but not others. Further, various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of Digital Assets as "securities.

We have adopted risk-based policies and procedures to analyze whether the Digital Assets that we hold and sell for our own account could be deemed to be a "security" under applicable laws. Our policies and procedures do not constitute a legal standard, but rather represent our management's assessment, based on advice of our securities counsel, regarding the likelihood that a particular Digital Asset could be deemed a "security" under applicable laws. Regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority, or a court were to determine that a digital asset currently held by us is a "security" under applicable laws. If the Digital Assets mined, staked, and/or held by us are deemed as securities in a relevant jurisdiction, it could limit distributions, transfers, or other actions involving such Digital Assets in the global markets.

***Digital Assets have historically experienced, and are expected to continue to experience, high price volatility which may influence our financial results and the market price of our Class A Ordinary Shares.***

We commenced purchase of digital assets, including Ethna ("ENA"), Bitcoin ("BTC") and Ethereum ("ETH") to hold as a treasury reserve asset. Digital Assets like ENA, BTC, and ETH have historically experienced, and are expected to continue to experience, high price volatility. According to CoinMarketCap, our principal market, historic prices for ENA ranged between approximately $0.1858 and $0.8652 for six months ended December 31, 2025, with annual volatility of 87.26%. historic prices for BTC ranged between approximately $80,659.81 and $126,198.07 for the six months ended December 31, 2025, with annual volatility of 25.74%. Such price fluctuations are 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 Digital Assets we hold decrease substantially, including as a result of:

● decreased user and investor confidence in digital assets, 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 digital assets by large holders, and (iii) actual or perceived manipulation of the spot or derivative markets for digital assets or spot digital asset ETPs;

● negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, Digital Assets or the broader Digital Assets industry;

● changes in consumer preferences and the perceived value or prospects of Digital Assets;

● 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 digital assets 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 Digital Assets like ENA, a stablecoin governance token, and other digital assets like BTC or ETH, 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 BTC from BTC wallets attributed to Mr. Nakamoto or other "whales" that hold significant amounts of BTC;

● disruptions, failures, unavailability, or interruptions in service of trading venues for Digital Assets, 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 Digital Assets, 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 Digital Assets, 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 digital assets 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 Digital Asset networks;

● transaction congestion and fees associated with processing transactions on the cryptocurrency blockchain 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 cryptocurrency 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.

 ****

***Our operating results will be dependent on the price of Digital Assets that we own. If such price declines, our business, operating results, and financial condition would be adversely affected.***

A decline in the market value of Digital Assets or in the demand for trading digital assets could lead to a corresponding decline in the value of our Digital Assets, the number of transactions on the relevant blockchain network and, as such, the opportunities to earn block rewards and transaction fees, and could adversely affect our business, operating results and financial condition. Any decline in the volume of Digital Asset transactions, the price of Digital Assets, or market liquidity for Digital Assets generally may adversely affect our operating results. As part of our Digital Asset treasury strategy, we will have significant investments in ENA, BTC, ETH, and other Digital Assets. Our operating results will be impacted by the revenues and profits we generate from the purchase, sale, and trading of Digital Asset, and financial contracts linked to thereto.

The price and trading volume of any Digital Asset is subject to significant uncertainty and volatility, and may significantly decline in the future, without recovery. Future fluctuations in trading prices of the Digital Assets that we hold may increase the price volatility or affect the value of Digital Assets we acquire or hold, which could materially and adversely affect our business operations, financial performance, and prospects. There is no assurance that any Digital Asset will maintain its value or that there will be meaningful levels of trading activities to support markets in any Digital Asset.

***Digital Assets are novel assets, and are subject to significant legal, commercial, regulatory, and technical uncertainty.***

Digital Assets, including but not limited to, stablecoin governance tokens like ENA are relatively novel and are subject to rapidly evolving legal, commercial, regulatory, and technical landscapes. Because the application of federal and state securities and other applicable laws, regulations, and rules ("Applicable Law") remain unsettled in several material respects, there is substantial risk that a governmental or regulatory authority could adopt or interpret Applicable Law in a manner that adversely affects the price of Digital Assets. Increased regulatory scrutiny may result in additional costs for us and may require our management team to devote increased time and attention to regulatory matters, change aspects of our business, or result in limits on the utility of Digital Assets. Moreover, the regulatory landscape with respect to Digital Assets is rapidly changing and we may be required to comply with any new laws, regulations, or interpretations, which may result in heightened regulatory and compliance related costs, litigation, regulatory investigations, and enforcement or other actions. Adverse changes to, or our failure to comply with Applicable Law may have an adverse effect on our reputation, brand, our business, operating results, and financial condition. Further, if any of our Digital Assets are determined to constitute a security for purposes of U.S. federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of the Digital Assets we hold.

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 Digital Assets or the ability of individuals or institutions such as us to own or transfer Digital Assets. 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 U.S. Congress granting additional authorities to the SEC or other regulators, or whether 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 any Digital Assets we hold specifically. The consequences of increased regulation of Digital Assets and Digital Asset-related activities could adversely affect the market price of any Digital Assets we hold and in turn adversely affect the market price of our Class A Ordinary Shares.

Moreover, the risks of engaging in a Digital Asset 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 stablecoin governance tokens like ENA, in particular, may also impact the price of stablecoin governance tokens and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of Digital Assets may depend, for instance, on public familiarity with Digital Assets, ease of buying, accessing, or gaining exposure to digital assets, institutional demand for digital assets as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for Digital Assets as a means of payment, and the availability and popularity of alternatives to Digital Assets. Even if growth in Digital Asset adoption occurs in the near or medium-term, there is no assurance that usage of Digital Assets we hold, including ENA, BTC, and ETH, will continue to grow over the long-term.

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

The liquidity of Digital Assets may also be impacted to the extent that changes in Applicable Laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for Digital Assets.

***Disruptions in the Digital Asset Market may adversely affect the ENA holdings and an investment in us.***

Digital Assets and Digital Asset markets are extremely volatile and any sustained or acute disruptions in Digital Asset markets could materially and adversely affect the value and liquidity of our Digital Asset holdings. Digital Asset markets have experienced, and may continue to experience, periods of extreme stress, including rapid price declines, trading halts, exchange failures, limited liquidity, and sharp reductions in network activity. Such disruptions have, and may in the future, reduce the market value and liquidity of our ENA holdings and have a negative impact on the economics and reliability of our activities, whether such disruptions are related to the Ethena protocol or not. If such disruptions occur, we may not be able to monetize or rebalance positions without a materially adverse price impact. Additionally, sharp declines in the value of ENA could also affect our ENA used as collateral and we may be forced to liquidate our ENA at unfavorable prices. Volatile and illiquid markets with respect to ENA may also impair our ability to borrow against our ENA holdings or may require us to borrow against our ENA holdings at unfavorable terms. here can be no assurance that liquidity in ENA markets will be sufficient when needed, that staking activities will remain economic or accessible, or that we will be able to mitigate the financing and liquidity impacts of Digital Asset market disruptions. The occurrence of any of the foregoing could also increase the volatility of our reported financial results and adversely affect the market price of our securities.

***Future regulatory changes are impossible to predict.***

Given the growth in popularity and size of the Digital Asset industry, the U.S. Congress and U.S. federal agencies have recently focused on establishing a clear framework for the regulation of Digital Assets. In the past, the SEC has brought several enforcement actions against Digital Asset market participants, including U.S.-based Digital Asset exchanges and Digital Asset issuers, for alleged violations of U.S. securities laws. However, the current administration has taken steps to position the U.S. as a global leader in the Digital Asset industry, resulting in the creation of an interagency working group that aims to propose a regulatory framework for Digital Assets in the United States.

The U.S. Congress has taken measures to introduce legislation aimed at providing clear laws relating to digital assets. Whether new legislation will be introduced remains uncertain, and it is not clear to what extent we and/or any issuer of Digital Assets we hold will be materially and adversely affected by any new laws and regulations. Separately, the SEC has established a "Crypto Task Force" to focus on providing clear guidance with respect to the application of U.S. federal securities laws in the context of Digital Assets generally, as well as for Digital Asset developers and intermediaries.

The evolving regulatory landscape creates uncertainty for the Company, as new regulations or changes to existing regulations could materially and adversely affect our business operations, financial condition, and results of operations. The effect of any future regulatory change on the Company is impossible to predict, but such change could be substantial and adverse.

 ****

 ****

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

The introduction of a federal and state government-issued digital currency could eliminate or reduce the need or demand for private-sector issued cryptocurrencies, 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 Digital Assets, and change consumer preferences and the perceived value or prospects of Digital Assets.

 ****

***Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our Digital Asset 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 Digital Assets.

The price of Digital Assets such as ENA, BTC, and ETH has historically been subject to dramatic price fluctuations and is highly volatile. We expect to determine the fair value of our Digital Assets based on quoted (unadjusted) prices on the Coinbase exchange, and following early adoption of ASU 2023-08, will be required to measure our Digital Asset holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our Digital Asset 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 Digital Assets 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 Digital Assets such as ENA, BTC, and ETH, 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 Digital Assets on our balance sheet.

Because we intend to purchase Digital Assets in future periods and increase our overall holdings of Digital Assets, we expect that the proportion of our total assets represented by our digital assets 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.

 ****

***Pricing sources and valuation methodologies may not reflect realizable values in stress.***

Our digital asset valuations depend on third-party pricing sources and principal trading venues, which may experience outages, errors, manipulation, fragmented liquidity, or methodological changes. During stressed or illiquid conditions, available quotations may not reflect realizable values, and we may be required to apply alternative valuation methods that could materially affect reported results.

 ****

***The availability of spot ETPs for Bitcoin and other Digital Assets may adversely affect the market price of our Class A Ordinary Shares.***

Although BTC 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 BTC through traditional investment channels, and instead generally were only able to hold BTC 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 Digital Assets directly, as well as the potential reluctance of financial planners and advisers to recommend direct Digital Asset holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to BTC and other Digital Assets through investment vehicles that hold BTC and other Digital Assets and issue shares representing fractional undivided interests in their underlying Digital Asset 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 Digital Assets.

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. Additionally, on May 23, 2024, the SEC approved rule changes permitting the listing and trading of spot ETPs that invest in ether, the main crypto asset supporting the Ethereum blockchain. The approved spot ETPs commenced trading directly to the public on July 23, 2024. To the extent investors view our Class A Ordinary Shares as providing exposure to Digital Assets, it is possible that the value of our Class A Ordinary Shares may also have included a premium over the value of our Digital Assets due to the prior scarcity of traditional investment vehicles providing investment exposure to Digital Assets or may be subject to declined due to investors now having a greater range of options to gain exposure to Digital Assets and investors choosing to gain such exposure through spot ETPs rather than our Class A Ordinary Shares. The possible listing and subsequent trading of spot ETPs for other Digital Assets offers investors another alternative to gain exposure to digital assets, which could result in a decline in the trading price of Digital Assets as well as a decline in the value of our Class A Ordinary Shares relative to the value of our Digital Assets.

Although we are an operating company with short drama streaming business, and we believe we offer a different value proposition than a passive Digital Asset investment vehicle such as a spot Bitcoin ETP or a spot ETH 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 BTC 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 Digital Assets 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 ETPs, we (i) do not seek for our shares to track the value of the underlying Digital Assets 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 ETPs to continuously align the value of their shares to the price of the underlying Digital Assets 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 Digital Asset 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 digital assets, such as Bitcoin futures ETFs and leveraged BTC futures ETFs, any premium or discount in our Class A Ordinary Shares relative to the value of our Digital Asset holdings may increase or decrease in different market conditions.

As a result of the foregoing factors, availability of spot ETPs for Digital Assets on U.S. national securities exchanges could have a material adverse effect on the market price of our Class A Ordinary Shares.

 **

***We have recently announced our new Digital Assets treasury reserve strategy, and we may be unable to successfully implement it.***

 **

Our Digital Asset treasury reserve strategy has only been recently approved by our Board. Our Board also approved the restart of our ETH staking business, and in the future may extend staking to other Digital Assets, and the exploration of a broader Web3-foscused strategy. Although protocol staking is currently not deemed a securities activity, based on the joint interpretation issued by the SEC and the Commodity Futures Trading Commission on March 17, 2026, which clarified that protocol staking activities involving the locking or staking of digital commodities to provide validation services in exchange for rewards are not subject to federal securities laws, there is no assurance that we will be able to successfully implement this new strategy or operate Digital Asset-related activities at the scale or profitability currently anticipated. Successfully implementing this strategy may present organizational and infrastructure challenges, and we may not be able to fully implement or realize the intended benefits of our strategy. There can be no assurance that we will be successful in implementing its new business strategy. In addition, moving to a new business strategy may result in a loss of established efficiency, which may have a negative impact on our business. We may also face an increased amount of competition as we attempt to expand and grow its business, which may negatively impact our results of operations, cash flows and financial condition.

***Our Digital Asset treasury strategy subjects us to enhanced regulatory oversight.***

While the Interpretation has clarified that the Digital Assets that we hold are not securities under the Securities Act, we may in the future, purchase other Digital Assets that may be deemed to be securities. In the event any of the Digital Assets we hold in the future are classified as securities, we could face significant regulatory and compliance challenges.

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 Digital Assets 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 Digital Assets from bad actors that have used Digital Assets to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Digital Assets by us may be restricted or prohibited.

We may consider issuing debt or other financial instruments that may be collateralized by our Digital Assets. We may also consider pursuing strategies to create income streams or otherwise generate funds using our Digital Assets. These types of Digital Asset-related transactions are the subject of enhanced regulatory oversight and 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 digital assets, 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 Digital Assets.

In addition, private actors that are wary of digital assets or the regulatory concerns associated with Digital Assets 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.

 ****

***Due to the currently unregulated nature and lack of transparency surrounding the operations of many Digital Assets trading venues, Digital Asset 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 Digital Asset trading venues and adversely affect the value of the Digital Assets that we hold.***

Digital Asset trading venues are relatively new and, in some cases, currently unregulated. Even if regulated, such venues may not be complying with such regulations. Furthermore, there are many digital 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 Digital Asset trading venues, including prominent exchanges that handle a significant volume of ENA, BTC, and ETH trading and/or are subject to regulatory oversight, in the event one or more digital asset trading venues cease or pause for a prolonged period the trading of ENA, BTC, ETH, 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 BTC 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 BTC market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of the Digital Assets we hold. Negative perception, a lack of stability in the broader digital asset markets and the closure, temporary shutdown or operational disruption of digital asset trading venues, lending institutions, institutional investors, institutional miners, custodians, or other major participants in the digital asset 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 Digital Assets and the broader Digital Asset ecosystem and greater volatility in the price of Digital Assets. 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 BTC, ETH, and other Digital Assets significantly declined. As the price of our Class A Ordinary shares is affected by the value of our Digital Asset holdings, the failure of a major participant in the Digital Asset ecosystem could have a material adverse effect on the market price of our Class A Ordinary Shares.

***There is the possibility that one or more blockchain networks related to the Digital Assets we hold could be manipulated.***

If a malicious actor or a group of malicious actors obtain control of more than 50% of the processing power dedicated to mining on a blockchain network, they may be able to alter or manipulate the blockchain network on which such blockchain network and most Digital Asset transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor(s) could control, exclude or modify the ordering of transactions, though it could not generate new Digital Assets or transactions using such control. The malicious actor could "double-spend" its own Digital Asset (*i.e.*, spend the same Digital Asset in more than one transaction) and prevent the confirmation of other users' transactions for so long as it maintained control. To the extent that such malicious actor did not yield its control of the processing power on a blockchain network or the effected Digital Asset community did not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain network and ledger may not be possible. To the extent that a Digital Asset ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Digital Asset mining processing power, the feasibility of a malicious actor obtaining control of the processing power on a digital asset network will increase.

 ****

***The concentration of our ENA holdings could enhance the risks inherent in our Digital Asset treasury strategy.***

The concentration of our ENA holdings limit 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 ENA acquisition strategy. Any future significant declines in the price of ENA and other Digital Assets that we hold would have, a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.

 ****

***Our Digital Asset holdings will be less liquid than existing cash and cash equivalents and may not be able to serve as a source of liquidity for it to the same extent as cash and cash equivalents.***

Historically, the Digital Assets 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 Digital Assets at favorable prices or at all. For example, a number of BTC trading venues temporarily halted deposits and withdrawals in 2022. As a result, our Digital Asset holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, the Digital Assets 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 Digital Assets, or otherwise generate funds using our Digital Asset holdings, including in particular during times of market instability or when the price of a Digital Asset has declined significantly. If we are unable to sell any of our Digital Assets, enter into additional capital raising transactions using any of our Digital Assets as collateral, or otherwise generate funds using our Digital Assets holdings, or if we are forced to sell our Digital Assets at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

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

Our Digital Assets are or will be held in custody accounts at Matrixport Cactus Custody. However in the future, we may engage other custodians for our Digital Assets. We could have a high concentration of Digital Assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, comprised access credentials, malware, or cyberattacks. Security breaches and cyberattacks are of particular concern with respect to our Digital Asset holdings. Digital Assets and the entities that provide services to participants in the Digital Asset 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 Digital Assets in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our Digital Assets;

● 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 blockchain networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader blockchain ecosystem or in the use of the cryptocurrency network to conduct financial transactions, which could negatively impact us.

Attacks upon systems across a variety of industries, including industries related to Digital Assets, 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 cryptocurrency industry, including third-party services on which we rely, could materially and adversely affect our financial condition and results of operations.

 ****

 ****

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

We hold our Digital Assets with regulated custodians that have duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our Digital Assets among our custodians, and our Digital Assets holdings may be concentrated with a single custodian from time to time. In light of the significant amount of Digital Assets (*e.g.*, ENA) we anticipate that we may hold, we continually seek to engage additional custodians to achieve a greater degree of diversification in the custody of our Digital Assets 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 Digital Assets, 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 Digital Assets, 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 Digital Assets with regulated custodians could affect the availability of receiving Digital Assets that may result from "forks" of the blockchain networks 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 Digital Asset holdings may cover only a small fraction of the value of the entirety of our Digital Asset 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 Digital Assets. Moreover, our use of custodians exposes us to the risk that the Digital Assets 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 Digital Assets. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Digital Assets.

Digital Assets 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 cryptocurrency 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 cryptocurrency 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 cryptocurrency 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 cryptocurrency 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.

As part of our treasury management strategy, we may engage in staking, restaking, or other permitted activities that involve the use of "smart contracts" or decentralized applications. The use of smart contracts or decentralized applications entails certain risks including risks stemming from the existence of an "admin key" or coding flaws that could be exploited, potentially allowing a bad actor to issue or otherwise compromise the smart contract or decentralized application, potentially leading to a loss of our Digital Assets. Like all software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract or decentralized application. Smart contracts and decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the irreversible loss our Digital Assets.

 ****

***Re-staking and smart contract rehypothecation may layer risks.***

To the extent we consider re-staking or other smart-contract-based strategies, such arrangements may re-use validator credentials or delegate security to additional protocols, layering protocol and counterparty risks. Correlated failures, coding flaws, or adverse governance actions in the re-staking stack could amplify losses beyond those associated with traditional staking.

 ****

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

As Digital Assets are relatively novel and the application of Applicable Law 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 the Digital Assets we hold. 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 Digital Assets or the ability of individuals or institutions such as us to own or transfer Digital Assets.

If ENA, BTC, ETH, or other Digital Assets that we hold are 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 the Digital Assets we hold and in turn adversely affect the market price of our Class A Ordinary Shares. Moreover, the risks of us engaging in a Digital Asset 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.

***We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.***

Mutual funds, ETFs and their directors and management are subject to extensive regulation as "investment companies" and "investment advisers" under U.S. federal and state law; this regulation is intended for the benefit and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of or changes to our treasury reserve policy or our Digital Asset strategy, our use of Digital Assets for staking, the manner in which our Digital Assets are custodied, our ability to engage in transactions with affiliated parties and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers. For example, although a significant change to our treasury reserve policy would require the approval of our Board, no shareholder or regulatory approval would be necessary. Consequently, our Board has broad discretion over the investment, staking and cash management policies it authorizes, whether in respect of our assets holdings or other activities we may pursue, and has the power to change our current policies, including our strategy of acquiring and holding Digital Assets.

***Our Digital Asset treasury strategy exposes us to risk of non-performance by counterparties***

Our Digital Asset 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 Digital Assets, a loss of the opportunity to generate funds, or other losses.

Our primary counterparty risk with respect to our Digital Assets 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 Asset 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 the Digital Assets that we hold such as ENA, BTC, and ETH (which were 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 Digital Assets 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 Digital Asset 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 Digital Assets, could have a material adverse effect on our business, prospects, financial condition, and operating results.

***Our custodially-held Digital Assets 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 Digital Assets held by a custodian 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 Digital Asset and this may ultimately result in the loss of the value related to some or all of such Digital Assets. 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 Asset industry in the future may further negatively impact the adoption rate, price, and use of Digital Assets, limit the availability to us of financing collateralized by Digital Assets that we hold, 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 Digital Assets. Even if we are able to prevent our Digital Assets 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 Digital Assets 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.

 ****

***A temporary or permanent blockchain "fork" to a Digital Asset blockchain network could adversely affect our business.***

Blockchain protocols, including Ethena, 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 Digital 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 Digital Asset.

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 Digital Assets. Due to the lack of a central registry or rulemaking body, no single entity has the ability to dictate the nomenclature of forked Digital Assets, causing disagreements and a lack of uniformity among platforms on the nomenclature of forked Digital 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 Digital 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 Digital 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 BTC and/or ETH by virtue of BTC and/or ETH 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.

***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 Digital Assets with bad actors that have used Digital Assets to launder money or with persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Digital Assets by us may be restricted or prohibited.

***Staking introduces a risk of loss of Digital Assets we stake, which could adversely affect the value of our Class A Ordinary Shares.***

As part of our Digital Asset treasury strategy, we may participate in process referred to as "staking" which involves deploying our Digital Assets that are intrinsically linked to the programmatic functioning of a public, permissionless network, for which we may earn compensation in consideration for securing the underlying blockchain network ("Staking"). Staking introduces risk of loss of the Digital Assets we stake. None of the Company's Digital Assets, including potentially staked assets, are subject to the protections enjoyed by depositors or customers of institutions with FDIC or SIPC membership. However, many Digital Asset networks, including the Ethereum network, imposes three types of sanctions for validator misbehavior or inactivity, which would result in a portion of staked Digital Assets (*e.g.*, ETH) being destroyed or "burned": penalties, slashing and inactivity leaks.

A validator may face penalties if it fails to take certain actions, such as providing a timely attestation to a block proposed by another validator. Under this scenario, a validator's staked Digital Assets could be burned in an amount equal to the reward to which it would have been entitled for performing the actions.

A more severe sanction (*i.e.*, "slashing") is imposed if a validator commits malicious acts related to the proposal or attestation of blocks with invalid transactions. Slashing can result in the validator having a portion of its staked Digital Assets immediately burned. After this initial slashing, the validator is queued for forceful removal from the blockchain network's validator "pool," and more of the validator's stake is burned over a period of approximately 36 days (as is the case for the Ethereum network), with the exact amount of Digital Assets burned and time period determined by the protocol regardless of whether the validator makes any further slashable errors, at which point the validator is automatically removed from the validator pool.

In the case of the Ethereum network, staked ETH may also be burned through a process known as an "inactivity leak," which is triggered if the Ethereum protocol has gone too long without finalizing a new block. For a new block to be successfully added to the blockchain, validators that account for at least two-thirds of all staked ETH must agree on the validity of a proposed block. This means that if validators representing more than one-third of the total staked ETH are offline, no new blocks can be finalized. To prevent this, an inactivity leak causes the ETH staked by the inactive validators to gradually "bleed away" until these inactive validators represent less than one-third of the total stake, thereby allowing the remaining active validators to finalize proposed blocks. This provides a further incentive for validators to remain online and continue performing validation activities.

There can be no guarantee that penalties, slashing or inactivity leaks and resulting losses will not occur as a result of the activities of a Staking provider. Furthermore, a Staking provider's liability to the Company is expected to be limited, and a Staking provider may lack the assets or insurance in order to support the recovery of any losses incurred. While the Staking arrangements may provide for indemnification up to a specified cap, slashing insurance or other reimbursement programs, there can be no guarantee that the Company would recover any of its staked assets, or the value thereof, if it is subject to sanctions imposed by the applicable blockchain network.

***Validator concentration and correlated infrastructure failures could amplify losses.***

Our reliance on a limited set of validator software stacks, infrastructure providers, or cloud regions may create concentration risk. A defect, exploit, or outage affecting commonly used validator clients or a disruption in a particular cloud region could simultaneously impact multiple validators and lead to missed rewards, slashing events, or prolonged downtime.

***Staked Digital Assets may be inaccessible for a variable period of time, determined by a range of factors, which could result in certain liquidity risk to the Company.***

Staking Digital Assets are subject to the applicable protocol's network rules and requirements. For example, under current Ethereum network protocols, staked ETH tokens are permitted to be un-staked by the holder of such ETH tokens. However, as part of the "activating" and "exiting" processes of staking, staked ETH tokens will be inaccessible for a variable period of time determined by a range of factors, including network congestion, resulting in certain liquidity risks. "Activation" is the funding of a validator to be included in the active set, thereby allowing the validator to participate in the Ethereum network's proof-of-stake consensus protocol. "Exit" is the request to exit from the active set and no longer participate in the Ethereum network's proof-of-stake consensus protocol. As part of these "activating" and "exiting" processes of staking on the Ethereum network, any staked ETH will be inaccessible for a period of time. The duration of activating and exiting periods are dependent on a range of factors, including network conditions. However, depending on demand, un-staking can take between hours, days or weeks to complete. This can result in certain liquidity risk, which the Company will seek to manage through a range of risk management methods.

***Liquid staking tokens may deviate from underlying value and introduce additional risks.***

If we obtain staking exposure through liquid staking protocols that issue liquid staking tokens ("LSTs"), the market price of such tokens may diverge from the value of the underlying staked asset and accrued rewards, and we may be required to sell at disadvantageous prices to meet liquidity needs. LSTs are also subject to validator slashing risk, custodian compromise, and smart contract vulnerabilities, which could result in partial or total losses.

***The Company will be dependent on third parties to effectively execute the Company's Staking arrangements.***

As the management currently anticipates that Staking will be carried out by the custodian and third-party Staking providers, the amount of staking rewards that the Company's staking activity will generate will be dependent on the performance of the custodian and the staking provider, including the adequacy and reliability of the hardware and software utilized by the Staking provider. If the custodian or the Staking provider experience service outages or otherwise are unable to optimally execute the Staking of the Company's Digital Assets, the Company's staking rewards may be adversely affected.

***Token unlocks and supply overhang may pressure prices and liquidity.***

For digital assets subject to vesting or scheduled unlocks, increases in circulating supply can create supply overhang, reduce liquidity support at prior price levels, and increase volatility around unlock events. We may consider projected unlocks in our position sizing and liquidity buffers, but there can be no assurance they will not adversely affect prices.

***Some Digital Assets do not have a cap on supply.***

Some Digital Assets we hold may not have a cap on the total supply. For example, the rate at which new ETH are issued and put into circulation is expected to vary. The Ethereum network has no formal cap on the total supply of ETH and the supply could theoretically be unlimited, which could put downward pressure on the price of ETH and other Digital Assets with a similar structure.

***A disruption of the Internet may affect Digital Asset network operations, which may adversely affect the Digital Asset industry and an investment in us.***

Blockchain networks rely on the Internet. A significant disruption of Internet connectivity (*i.e.*, one that affects large numbers of users or geographic regions) could disrupt one or more blockchain networks' functionality and operations until the disruption in the Internet is resolved. A disruption in the Internet could adversely affect an investment in us.

***Blockchain networks' decentralized governance structures may negatively affect their ability to grow and respond to challenges.***

The governance of decentralized networks, such as the Ethereum network, is by voluntary consensus and open competition. In other words, the Ethereum network has no central decision-making body or clear manner in which participants can come to an agreement other than through voluntary, widespread consensus. As a result, a lack of widespread consensus in the governance of the Ethereum network may adversely affect the network's utility and ability to adapt and face challenges, including technical and scaling challenges. Historically the development of the source code of the Ethereum network has been overseen by the core developers. However, the Ethereum network would cease to operate successfully without both validators and users, and the core developers cannot formally compel them to adopt the changes to the source code desired by core developers, or to continue to render services or participate in the Ethereum network. As a general matter, the governance of the Ethereum network generally depends on most of members of the Ethereum community ultimately reaching some form of voluntary agreement on significant changes.

The decentralized governance of the Ethereum network may make it difficult to find or implement solutions or marshal sufficient effort to overcome existing or future problems, especially protracted ones requiring substantial directed effort and resource commitment over a long period of time, such as scaling challenges. Deeply-held differences of opinion have led to forks in the past, such as between Ethereum and Ethereum Classic, and could lead to additional forks in the future, with potentially divisive effects. The Ethereum network's failure to overcome governance challenges could exacerbate problems experienced by the network or cause the network to fail to meet the needs of its users, and could cause users, miners, and developer talent to abandon the Ethereum network or to choose competing blockchain protocols, or lead to a drop in speculative interest, which could cause the value of ETH to decline. If the Ethereum community is unable to reach consensus in the future, it could have adverse consequences for the network or lead to a fork, which could affect the value of Ethereum.

***Tax treatment of certain digital asset activities remains uncertain.***

The tax characterization of staking rewards, re-staking yields, airdrops, token splits, and similar events remains unsettled in various jurisdictions. Adverse or changing tax interpretations could increase our tax liabilities, require reclassification of prior period items, or affect our after-tax returns.

**Risks Related to our Company and our Securities** 

 ****

***The ownership of our stock is highly concentrated in our management, and we have two controlling stockholders.***

As of the date of this report, our authorized share capital consists of Class A Ordinary Shares, Class B Ordinary Shares, Class C ordinary Shares and preferred shares, par value $0.001 per share. Holders of Class A Ordinary Shares, Class B Ordinary Shares, and Class C Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A Ordinary Share will be entitled to one (1) vote, each Class B Ordinary Share will be entitled to one hundred (100) votes, and each Class C Ordinary Share will be entitled to fifty (50) votes. Each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share or one (1) Class C Ordinary Shares at any time by the holder thereof, and each Class C Ordinary Shares is convertible into one (1) Class A Ordinary Share. See "Description of Share Capital."

As of the date hereof, our chairman, Mr. Yaman Demir, holds 1,000,000 Class B Ordinary Shares and 2,290,390 Class C Ordinary Shares, representing a combined 42.97% voting power. Our, chief executive officer and president, Mr. Yuchen Hu, holds 150,000 Class A Ordinary Shares, 1,809,977 Class B Ordinary Shares, and 833,333 Class C Ordinary Shares, representing a combined 44.63% voting power. Mr. Demir and Mr. Hu have control over a majority of the combined voting power of all our Class A Ordinary Shares, Class B Ordinary Shares and Class C Ordinary Shares, and therefore will be able to control all matters submitted to our stockholders for approval until a significant portion of such outstanding Class B and C Ordinary Shares he holds are converted into Class A Ordinary Shares. See Exhibit 2.5 to this Annual Report on Form 20-F for more information. As a result of their ownership, Mr. Demir and Mr. Yu are able to significantly influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.

In addition to the dilutive effect on the voting power and value of our Class A Ordinary Shares, the foregoing structure of our capital stock may render our Class A Ordinary Shares ineligible for inclusion in certain securities market indices, and thus adversely affect the price and liquidity of, and public sentiment regarding, our Class A Ordinary Shares or other securities.

The existence of, and voting rights associated with, our Class B Ordinary Shares and Class C Ordinary Shares, either alone or in conjunction with certain of the other provisions of our memorandum and articles of association, could also have the effect of delaying, deterring or preventing a change in our control or make the removal of our management more difficult.

***We have a limited operating history in new short video drama business, so there is a limited track record on which to judge our business prospects and management.***

We are currently focusing on short video streaming platform or producing short video dramas which is very different from our prior staking business, NFT gaming, and aircraft leasing business. As such, our historical financial results should not be considered indicative of our future performance. In addition, we have a limited operating history in providing short video streaming platform or producing short video dramas upon which to base an evaluation of our business and prospects. You must consider the risks and difficulties we face as a small operating company with limited operating history.

***User metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could harm our business, revenue and financial results.***

We intend to regularly review our metrics, including the number of our active users, paying users, and other measures to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we currently believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how our FlexTV platform is used across large populations globally. Our metrics calculations may be inaccurate, and we may not be able to identify those inaccuracies. In addition, from time to time, we may implement new methodologies for calculating these metrics, which may result in the metrics changing or decreasing from prior periods or not being comparable to prior periods. If our metrics provide us with incorrect or incomplete information about our users and their behavior, we may make inaccurate conclusions about our business which could harm our business, revenue and financial results.

***We will need to raise additional capital or financing to continue to execute and expand our business.***

We will need to raise additional capital to support our new operations and execute on our business plan by issuing equity or convertible debt securities. In the event we are required to obtain additional funds, there is no guarantee that additional funds will be available on a timely basis or on acceptable terms. To the extent that we raise additional funds by issuing equity or convertible debt securities, our shareholders may experience additional dilution and such financing may involve restrictive covenants. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects. We cannot assure that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. Further, we may incur substantial costs in pursuing future capital and/or financing. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. If such funds are not available when required, management will be required to curtail investments in additional sales and marketing and product development, which may have a material adverse effect on future cash flows and results of operations.

***Our business depends on the continuing efforts of our management. If it loses their services, our business may be severely disrupted.***

Our business operations depend on the efforts of our new management, particularly the executive officers named in this document. If one or more of our management were unable or unwilling to continue their employment with us, it might not be able for us to replace them in a timely manner, or at all. We may incur additional expenses to recruit and retain qualified replacements. Our business may be severely disrupted, and our financial condition and results of operations may be materially and adversely affected. In addition, our management may join a competitor or form a competing company. As a result, our business may be negatively affected due to the loss of one or more members of our management.

***We may not be able to prevent or timely detect cyber security breaches and may be subject to data, security and/or system breaches which could adversely affect our business operations and financial conditions.***

We rely on information technology networks and systems, including the use of third-party communications systems over the Internet, to process, transmit and store electronic information, and to manage or support our business activities. These information technology networks and systems may be subject to security breaches, hacking, phishing, or spoofing attempts by others to gain unauthorized access to our business information and financial accounts. A cyberattack, unauthorized intrusion, or theft of personal, financial or sensitive business information could have a material adverse effect of on our business operations or our clients' information, and could harm our operations, reputation and financial situation. In addition, due to an increase in the types of cyberattacks, our employees could be victim to such scams designed to trick victims into transferring sensitive company data or funds, that could compromise and/or disrupt our business operations.

MPU DE was a victim of a business email compromise scam (BEC) in December 2021. BEC scams involve using social engineering to cause employees to wire funds to the perpetrators in the mistaken belief that the requests were made by a company executive or established vendor. As a result of the BEC scam, we have enhanced BEC awareness within our organization, established additional controls to help detect BEC scams when they occur, and require additional confirmations for large money transactions. In addition, we seek to detect and investigate all cybersecurity incidents and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude, duration, and effects. While we take every effort to train our employees to be cognizant of these types of attacks and to take appropriate precautions, and have taken actions and implemented controls to protect our systems and information, the level of technological sophistication being used by attackers has increased in recent years, and may be insufficient to protect our systems or information. Any successful cyberattack against us could lead to the loss of significant company funds or result in in potential liability, including litigation or other legal actions against us, or the imposition of penalties, which could cause us to incur significant remedial costs. Further, we cannot ensure that our efforts and measures taken will be sufficient to prevent or mitigate any damage caused by a cybersecurity incident, and our networks and systems may be vulnerable to security breaches, hacking, phishing, spoofing, BEC, employee error or manipulation, or other adverse events.

Due to the evolving nature and increased sophistication of these cybersecurity threats, the potential impact of any future incident cannot be predicted with certainty; however, any such incidents could have a material adverse effect on our results of operations and financial condition, especially if we fail to maintain sufficient insurance coverage to cover liabilities incurred or are unable to recover any funds lost in data, security and/or system breaches, and could result in a material adverse effect on our business and results of operations.

***We do not maintain commercial insurance to cover loss of Digital Assets.***

We do not carry any insurance that covers the loss of our Digital Assets held by our custodian and its affiliates. As such, we may not be able to recover any funds lost in data, security and/or system breaches.

***We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.***

We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period, although we have adopted certain new and revised accounting standards based on transition guidance permitted under such standards earlier. As a result of this election, our future financial statements may not be comparable to other public companies that comply with the public company effective dates for these new or revised accounting standards.

 ****

***As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from NYSE American corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with NYSE American corporate governance listing standards.***

As a foreign private issuer, we rely on certain provision under NYSE American Company Guide that allows us to follow Cayman Islands law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the NYSE American.

We currently rely on home country practice to be exempted from certain of the corporate governance requirements of the NYSE American, namely (i) there will not be a necessity to have regularly scheduled executive sessions with independent directors; and (ii) there will be no requirement for the Company to obtain shareholder approval prior to an issuance of securities in connection with (a) the acquisition of stock or assets of another company; (b) equity-based compensation of officers, directors, employees or consultants; (c) a change of control; and (d) transactions other than public offerings. We also follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE American in respect of the following:

● the majority independent director requirement under Section 803 of the NYSE American LLC Company Guide;

● the requirement under Section 803 of the NYSE American LLC Company Guide that an audit committee must be comprised of at least three members; and

● the requirement under Section 713 of the NYSE American LLC Company Guide, to seek shareholder approval for the issuance of more than 20% of our outstanding shares at a price less than the Minimum Price (as defined in Section 713(c) therein).

In the future, we may elect to follow other home country practices with regard to certain matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NYSE American corporate governance requirements.

 ****

***We are a foreign private issuer within the meaning of the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.***

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

● the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;

● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

● the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

● the selective disclosure rules by issuers of material non-public information under Regulation FD.

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our financial results on a semi-annual basis through press releases distributed pursuant to the rules and regulations of the NYSE American. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you if you were investing in a U.S. domestic issuer.

 ****

***We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us.***

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last Business Day of an issuer's most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2025. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or Executive Officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid the loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to comply with U.S. federal proxy requirements, and our officers, directors and 10% shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of the NYSE American. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.

***We are subject to various laws relating to foreign corrupt practices, the violation of which could adversely affect its operations, reputation, business, prospects, operating results and financial condition.***

We are subject to risks associated with doing business outside of the United States, including exposure to complex foreign and U.S. regulations such as the Foreign Corrupt Practices Act (the "FCPA") and other anti-corruption laws which generally prohibit U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business. Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions and other penalties. It may be difficult to oversee the conduct of any contractors, third-party partners, representatives or agents who are not our employees, potentially exposing us to greater risk from their actions. If our employees or agents fail to comply with applicable laws or company policies governing our international operations, we may face legal proceedings and actions which could result in civil penalties, administration actions and criminal sanctions. Any determination that we have violated any anti-corruption laws could have a material adverse impact on our business.

Violations of these laws and regulations could result in significant fines, criminal sanctions against us, our officers or our employees. Additionally, any such violations could materially damage our reputation, brand, international expansion efforts, ability to attract and retain employees and our business, prospects, operating results and financial condition.

Historically, we have dealt with significant amounts of cash in our operations, which have subjected us to various reporting and anti-money laundering regulations. Any violation of anti-money laundering laws or regulations by us could have a material adverse impact on our business.

***As of December 31, 2025, our internal control over financial reporting was ineffective, and if we continue to fail to improve such controls and procedures, investors could lose confidence in our financial and other reports, the price of our Class A Ordinary Shares may decline, and we may be subject to increased risks and liabilities.***

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended ("Exchange Act") and the Sarbanes-Oxley Act of 2002. The Exchange Act requires, among other things, that we file annual reports with respect to our business and financial condition. Section 404 of the Sarbanes-Oxley Act requires, among other things, that we include a report of our management on our internal control over financial reporting. We are also required to include certifications of our management regarding the effectiveness of our disclosure controls and procedures. During our assessment of internal control over financial reporting as of December 31, 2025, we identified a material weakness related to our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements. If we cannot effectively maintain our controls and procedures, we could suffer material misstatements in our financial statements and other information we report which would likely cause investors to lose confidence. This lack of confidence could lead to a decline in the trading price of our Class A Ordinary Shares.

***Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.***

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require us to have such system audited by an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability to provide reliable financial reports could harm our business. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities.

***The trading prices of our Class A Ordinary Shares could be volatile, which could result in substantial losses to our shareholders and investors.***

The trading prices of our Class A Ordinary Shares could be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance or deteriorating financial results of other similarly situated companies that have listed their securities in the U.S. in recent years. The securities of some of these companies have experienced significant volatility including, in some cases, substantial price declines in the trading prices of their securities. In addition, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, such as the large decline in share prices in the United States and other jurisdictions.

In addition to market and industry factors, the price and trading volume for our Class A Ordinary Shares may be highly volatile for factors specific to our own operations including the following:

● variations in our revenue, earnings and cash flow;

● announcements of new product and service offerings, investments, acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors;

● changes in the performance or market valuation of our company or our competitors;

● changes in financial estimates by securities analysts;

● changes in the number of our users and customers;

● fluctuations in our operating metrics;

● failures on our part to realize monetization opportunities as expected;

● additions or departures of our key management and personnel;

● detrimental negative publicity about us, our competitors or our industry;

● market conditions or regulatory developments affecting us or our industry; and

● potential litigations or regulatory investigations.

Any of these factors may result in large and sudden changes in the trading volume and the price at which our Class A Ordinary Shares will trade. In the past, shareholders of a public company often brought securities class action suits against the listed company following periods of instability in the market price of that company's securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

***If our Class A Ordinary Shares becomes subject to the SEC's penny stock rules, broker-dealers may experience difficulty in completing customer transactions, and trading activity in our securities may be adversely affected.***

If at any time we have net tangible assets of $5,000,001 or less and our Class A Ordinary Shares has a market price per share of less than $5.00, transactions in our Class A Ordinary Shares may be subject to the "penny stock" rules promulgated under the Exchange Act. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

● make a special written suitability determination for the purchaser;

● receive the purchaser's written agreement to the transaction prior to sale;

● provide the purchaser with risk disclosure documents which identify certain risks associated with investing in "penny stocks" and which describe the market for these "penny stocks" as well as a purchaser's legal remedies; and

● obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a "penny stock" can be completed.

If our Class A Ordinary Shares become subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our Class A Ordinary Shares may be depressed, and you may find it more difficult to sell our Class A Ordinary Shares.

***An active trading market for our Class A Ordinary Shares may not develop, and you may not be able to easily sell your Class A Ordinary Shares.***

An active trading market for shares of our Class A Ordinary Shares following our emergence from bankruptcy may never develop or be sustained. If an active trading market does not develop, you may have difficulty selling your shares of Class A Ordinary Shares or at all. An inactive market may also impair our ability to raise capital by selling our Class A Ordinary Shares, and it may impair our ability to attract and motivate our employees through equity incentive awards and our ability to acquire other companies by using our Class A Ordinary Shares as consideration.

***If we do not continue to satisfy the NYSE American continued listing requirements, our Class A Ordinary Shares could be delisted.***

The listing of our Class A Ordinary Shares on NYSE American is contingent on our compliance with the NYSE American's conditions for continued listing.

Should we fail to meet the NYSE American's continuing listing requirements, we may be subject to delisting by the NYSE America. In the event our Class A Ordinary Shares are no longer listed for trading on the NYSE American, our trading volume and share price may decrease and we may experience difficulties in raising capital which could materially affect our operations and financial results. Further, delisting from the NYSE American could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers and employees. Finally, delisting could make it harder for us to raise capital and sell securities.

***The sales of a significant number of our Class A Ordinary Shares in the public market, or the perception that such sales could occur, could depress the market price of our Class A Ordinary Shares.***

 ****

The sales of a substantial number of our Class A Ordinary Shares in the public market could depress the market price of our Class A Ordinary Shares and impair our ability to raise capital through the sale of additional equity securities. We have registered with the SEC $2.0 billion of our securities pursuant to a shelf registration statement on Form F-3 in which we may issue from time to time, depending on market conditions. The issuance of such securities may depress the market price of our Class A Ordinary Shares and we cannot predict the effect that future sales of our securities would have on the market price of our Class A Ordinary Shares.

***We cannot predict the impact our multi-class share structure may have on the stock price of our Class A Ordinary Shares.***

We cannot predict whether our multi-class structure will result in a lower or more volatile market price of our Class A Ordinary Shares or in adverse publicity or other adverse consequences. For example, certain index providers have policies that restrict or prohibit the inclusion of companies with multiple-class share structures in certain of their indices, including the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Beginning in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices. However, in October 2018, MSCI announced its decision to include equity securities "with unequal voting structures" in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under the announced policies, our multi-class capital structure will make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices will not be investing in our stock. These policies may depress the valuations of publicly traded companies that are excluded from the indices compared to those of other similar companies that are included. Because of our multi-class structure, we will likely be excluded from certain of these indices and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make shares of our Class A Ordinary Shares less attractive to other investors. As a result, the market price of shares of our Class A Ordinary Shares could be adversely affected.

***Cayman Islands economic substance requirements may have an effect on our business and operations.***

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of the Cayman Islands (the "ES Act") that came into force on January 1, 2019, a "relevant entity" conducting a "relevant activity" is required to satisfy the economic substance test set out in the ES Act. A "relevant entity" includes an exempted company incorporated in the Cayman Islands as is our Company. There are nine designated "relevant activities" under the ES Act, and for so long as our Company is carrying on activities which falls within any of the designated relevant activities, it shall comply with all applicable requirements under the ES Act. If the only business activity that the Company carries on is to hold equity participation in other entities and only earns dividends and capital gains, then based on the current interpretation of the ES Act, our Company is a "pure equity holding company" and will therefore only be subject to the minimum substance requirements, which require us to (i) comply with all applicable requirements under the Companies Act and (ii) have adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities. However, there can be no assurance that we will not be subject to more requirements under the ES Act. Uncertainties over the interpretation of the ES Act may have an adverse impact on our business and operations.

***There can be no assurance that we will not be a passive foreign investment company, or PFIC, for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors of our Class A Ordinary Shares.***

 ****

In general, a non-U.S. corporation is a passive foreign investment company for U.S. federal income tax purposes, or PFIC, for any taxable year in which (i) 75% or more of its gross income consists of passive income; or (ii) 50% or more of the value of its assets (generally determined on an average quarterly basis) consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-U.S. corporation that owns (or is treated as owning for U.S. federal income tax purposes), directly or indirectly, at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and certain gains. Cash is generally a passive asset for these purposes. Goodwill (the value of which generally may be determined by reference to the excess of the sum of the corporation's market capitalization and liabilities over the value of its assets) is generally characterized as a non-passive or passive asset based on the nature of the income produced in the activity to which the goodwill is attributable.

Based on the composition of our income and assets and the estimated value of our assets, including goodwill, which is based on the price of our Class A Ordinary Shares, we believe that we were not a PFIC for our taxable year ended on December 31, 2025. However, our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in large part, by reference to the market price of our Class A Ordinary Shares , which has been and may continue to be volatile). Therefore, the risk of us being or becoming a PFIC will increase if during any taxable year our Class A Ordinary Shares price declines significantly.

In addition, the extent to which our goodwill should be characterized as an active asset is not entirely clear. We also hold a substantial amount of cash. Accordingly, there can be no assurance that we will not be a PFIC for our 2025 or any future taxable year. If we were a PFIC for any taxable year during which a U.S. taxpayer holds our Class A Ordinary Shares, the U.S. taxpayer generally would be subject to adverse U.S. federal income tax consequences, including increased tax liability on disposition gains and "excess distributions," and additional reporting requirements. See "Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules."

**Item 4. INFORMATION ON THE COMPANY**

**A. <u>History and Development of the Company</u>**

Established in October 11, 2022, Mega Matrix Inc. (the "Company" or "MPU Cayman") is an exempted company limited by shares, incorporated in the Cayman Islands and operates under Cayman Islands laws. On October 8, 2024, MPU Cayman, Mega Matrix Corp., a Delaware corporation ("MPU DE"), and MPU Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of MPU Cayman ("MPU Merger Sub") effected a redomicile merger (the "Redomicile Merger"). As a result, MPU Merger Sub merged with and into MPU DE, with MPU DE surviving as a wholly-owned subsidiary of MPU Cayman, pursuant to the Third Amended and Restated Agreement and Plan of Merger, dated May 31, 2024 ("Merger Agreement"), which Merger Agreement was approved by MPU DE stockholders on September 25, 2024 ("Redomicile Merger"). After the Redomicile Merger, MPU DE, together with its subsidiaries, owns and continues to its business in substantially the same manner as it was being conducted. MPU Cayman is managed by the same board of directors and executive officers that manage MPU DE prior to the Redomicile Merger, with the directors to serve until such time as they are removed from office by ordinary resolution of the shareholders or by a resolution of the board of directors.

Pursuant to the Redomicile Merger and as approved by the NYSE American, MPU Cayman's Class A Shares are now listed on the NYSE American under the symbol "MPU."

After the Redomicile Merger, the Company wholly owns MPU DE which wholly owns FunVerse Holding Limited, a British Virgin Islands company ("FunVerse"). Funverse wholly 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. Our principal executive office is located at Level 21, 88 Market Street, CapitaSpring, Singapore 048948, (650) 340-1888. Our website is www.megamatrix.io. The information on our website is not incorporated by reference into this document. Our agent for service of process in the United States is Cogency Global Inc., 122 East 42nd Street, 18th Floor, New York, NY 10168, (212) 947-7200. The Company's website, www.megamatrix.io, provides additional information but is not incorporated into this document.

There have been no public takeover offers for the Company's shares, nor has the Company initiated any takeover offers for other entities during the last or current financial year.

***Foreign Private Issuer Status***

We are a foreign private issuer within the meaning of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

● we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

● for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;

● we are not required to provide the same level of disclosure on certain issues, such as executive compensation;

● we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and

● we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act.

We currently follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE American in respect of the following:

● the majority independent director requirement under Section 803 of the NYSE American LLC Company Guide;

● the requirement under Section 803 of the NYSE American LLC Company Guide that an audit committee must be comprised of at least three members; and

● the requirement under Section 713 of the NYSE American LLC Company Guide, to seek shareholder approval for the issuance of more than 20% of our outstanding shares at a price less than the Minimum Price (as defined in Section 713(c) therein).

Copies of our periodic reports, financial statements and other information, once filed with the SEC, can be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and at the SEC's regional offices in New York, New York and Chicago, Illinois. You can also request copies of these documents, upon payment of a duplicating fee, by writing information on the operation of the SEC's Public Reference Room. The SEC also maintains an Internet website at *http://www.sec.gov* that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our annual report and some of the other information submitted by us to the SEC may be accessed through this website. Such information could also be found at our website, www.megamatrix.io. www. However, information contained in, or that can be accessed through our website or any other website cited in this annual report is not part of this annual report.

***Recent Corporate Developments***

 ****

On August 15, 2025, following the Extraordinary General Meeting, the Third Amended and Restated Memorandum and Articles of Associations became effective which (i) increased of authorized share capital of the Company, created Class C Ordinary Shares, and to amend the rights, preferences and privileges of Class B Ordinary Shares, mainly as follows:

● The authorized share capital of the Company will be increased to US$1,110,000, divided into: (i) 1,000,000,000 class A ordinary shares of par value US$0.001 each, (ii) 50,000,000 class B ordinary shares of par value US$0.001 each, (iii) 50,000,000 class C ordinary shares of par value US$0.001 each, and (iv) 10,000,000 preferred shares of par value US$0.001 each, by an addition of 900,000,000 class A ordinary shares of par value US$0.001 each, and 40,000,000 class B ordinary shares of par value US$0.001 each, and the creation of a new share class comprising of 50,000,000 class C ordinary shares of par value US$0.001 each.

● The number of votes on matters subject to a vote at general meeting of the Company each Class B Ordinary Share is entitled to will be increased from fifty (50) votes to one hundred (100) votes.

● Each Class C Ordinary Shares shall be entitled to fifty (50) votes (compared to one vote per Class A Ordinary Share and one hundred votes per Class B Ordinary Share) on all matters subject to a vote at general meetings of the Company.

● (i) Each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share or one (1) Class C Ordinary Shares at the option of the holder thereof at any time after issuance and without the payment of any additional sum, and (ii) each Class C Ordinary Share is convertible into one (1) Class A Ordinary Share at the option of the holder thereof at any time after issuance and without the payment of any additional sum.

● Management Shareholder is now defined to include Mr. Yucheng Hu and/or Mr. Yaman Demir, including affiliates of such persons.

● Both Class B Ordinary Shares and Class C Ordinary Shares will be subject to automatic conversion into Class A Ordinary Shares upon the occurrence of certain events, including transfers to non-management shareholders or the holder ceasing to serve as a director, officer or employee.

● Eliminating the automatic conversion of Class B Ordinary Shares or Class C Ordinary Shares into Class A Ordinary Shares upon falling below a specified ownership threshold.

● Class A Ordinary Shares are not convertible into Class B Ordinary Shares and/or Class C Shares under any circumstances.

● Except for voting rights and conversion rights as set out, the Class A Ordinary Shares, Class B Ordinary Shares and the Class C Ordinary Shares shall rank pari passu and shall have the same rights, preferences, privileges and restrictions.

As of April 6, 2026, MPU Cayman has issued approximately 62,065,493 Class A Shares, 2,809,977 Class B Shares and 3,123,723 Class C Shares. There are no Preferred Shares outstanding as of the date hereof.

On January 9, 2025, the Company entered into a Business Cooperation Agreement with PT Multimedia Nusantaraan, affiliate company of PT Telekomunikasi Selular ("Telkomsel"), a leading mobile network operator in Indonesia. Pursuant to the agreement, our FlexTV short drama content will be made available to Indonesian mobile users through bundled data packages offered via MyTelkomsel, Telkomsel's official consumer platform. Under the agreement, we have been granted exclusive cooperation rights in the Indonesian short drama market during a four-month period commencing on October 18, 2024. The agreement also sets forth the parties' respective obligations with respect to content distribution, revenue sharing, marketing support, and regulatory compliance.

On May 30, 2025, the Board of Directors of the Company (the "Board") first adopted a digital assets treasury ("DAT") reserve strategy to hold BTC and ETH, which was adjusted on August 21, 2025 to focus on leading stablecoins (such as Ethena token USDe) and their governance tokens (such as Ethena governance token, or ENA) as our primary treasury assets. On September 30, 2025, the Board updated our DAT strategy from holding leading stablecoins tokens and their governance tokens to on a "dual-engine" approach consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Stable
Yield, through holding a basket of stablecoins and deploying them into low-risk decentralized finance ("DeFi") strategies
to generate recurring income; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Growth
Potential, through allocation to governance tokens of leading stablecoin protocols, aiming to capture long-term upside in the stablecoin
sector.

**B. <u>Business Overview</u>**

*<u>Our business</u>*

***Stablecoin Governance Tokens Treasury Reserve Strategy***

 ****

On August 21, 2025, the Board of Directors of the Company (the "Board") adjusted our digital assets treasury reserve policy, to emphasize stablecoin governance tokens (*e.g.,* ENA) to serve as our primary treasury reserve asset on a go-forward basis, subject to market conditions and anticipated needs of the business. As a result of our revised digital assets treasury reserve policy, we may purchase or sell stablecoin governance tokens to adjust our holdings. In addition, depending on market conditions, we may continue to purchase, hold, or sell BTC, ETH, and other digital assets as well as continue with our staking business.

Amid increasingly clear regulatory frameworks for stablecoins, we believe that this sector is entering into a phase of accelerated development. As multiple countries introduce regulations and integrate stablecoins into their financial systems, the issuance volume of stablecoins is poised for exponential growth.

A key aspect of our stablecoins governance tokens treasury strategy is to raise capital to be used to increase our positions in stablecoins governance tokens in a manner which is accretive to shareholders. We plan to allocate the financing proceeds primarily to build a digital token asset allocation with a focus on developing corporate treasury strategy based on stablecoins and governance tokens. This can come in the form of equity, equity-linked debt, or other forms of offerings designed to maximize shareholder exposure to stablecoins governance tokens within a prudent risk management framework. We have not set a specific target for the maximum amount of stablecoins governance tokens we seek to hold.

***Digital Asset Treasury Reserve Strategy***

On May 30, 2025, the Board of Directors of the Company (the "Board") first adopted a digital assets treasury ("DAT") reserve strategy to hold BTC and ETH, which was adjusted on August 21, 2025 to focus on leading stablecoins (such as Ethena token USDe) and their governance tokens (such as Ethena governance token, or ENA) as our primary treasury assets. On September 30, 2025, the Board updated our DAT strategy from holding leading stablecoins tokens and their governance tokens to on a "dual-engine" approach consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Stable
Yield, through holding a basket of stablecoins and deploying them into low-risk decentralized finance ("DeFi") strategies
to generate recurring income; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Growth
Potential, through allocation to governance tokens of leading stablecoin protocols, aiming to capture long-term upside in the stablecoin
sector.

In addition, depending on market conditions, we may continue to purchase, hold, or sell BTC, ETH, and other Digital Assets. We may engage in protocol staking and liquid staking activities ("Staking Activities") with a portion of the Digital Assets we hold, to the extent such Digital Assets are unencumbered and eligible for such activities. Staking Activities typically involve delegating our eligible Digital Assets to one or more third-party validators of the applicable blockchain network through one or more custodians and/or other service providers, or deploying our eligible Digital Assets on one or more third-party DeFi protocols. Generally, when we engage in Staking Activities, we will earn protocol staking rewards or other compensation (*e.g.*, a share of a DeFi protocol's revenue), net of service fees. In some instances, our staked Digital Assets may be subject to a bonding period, meaning, we will be unable to freely withdraw or otherwise un-bond our staked Digital Assets.

As a result of our updated DAT strategy, subject to market conditions and anticipated needs of our business, we may purchase and/or sell cryptocurrencies such as BTC, ETH, USDe, ENA, and other stablecoin and stablecoin governance tokens to adjust our holdings. However, we do not plan to integrate cryptocurrencies into our short drama streaming platform known as "FlexTV" operated by Funverse, our indirect wholly-owned subsidiary. Our DAT strategy and DAT reserve will also not be used to support our streaming business or customers, which will remain a separate segment operated by Funverse.

Amid increasingly clear regulatory frameworks for stablecoins, we believe that this sector is entering into a phase of accelerated development. As multiple countries introduce regulations and integrate stablecoins into their financial systems, the issuance volume of stablecoins is poised for exponential growth.

A key aspect of our DAT strategy is to raise capital to be used to increase our positions in stablecoins in a manner which is accretive to shareholders. This can come in the form of equity, equity-linked debt, or other forms of offerings designed to maximize shareholder exposure to stablecoins within a prudent risk management framework.

We intend to allocate existing funds and capital to purchase ENA, USDe, BTC and other qualified digital assets pursuant to our dual-engine DAT strategy. Capital deployment will be gradual and subject to position limits, liquidity buffers, and drawdown controls. We plan to generate profit from our dual-engine DAT strategy through (i) capital appreciation of long-term strategic holdings; and (ii) engaging in Staking Activities to generate income. Our goal is to acquire and grow our overall positions for the digital assets that we hold and generate recurring yield on our digital asset holdings. Although our DAT strategy is intended for long-term holding for growth, we may monetize or rebalance our digital asset portfolio from time to time to meet liquidity needs, manage risk, or support operational or strategic initiatives. All such actions are subject to management review and, where appropriate, board oversight.

Tokenomics considerations for assets we hold or may acquire, including supply, issuance and peg maintenance, are discussed below.

Our DAT asset strategy is not intended to materially alter our short drama streaming business.

***Our Digital Assets Holdings***

 ****

We acquire and hold digital assets through the use of proceeds of the private placements. As of December 31, 2025, we have used approximately $7.7 million of such proceeds to purchase 5,203,582 ENA and 25 BTC. The Company has not identified what other digital assets we intend to acquire using the remaining proceeds of the private placement we closed in July 2025. The Board plans to discuss and identify other digital assets the Company will acquire and hold by the end of 2025.

For the year ended December 31, 2025, the Company purchased 13 BTC from open market at an aggregate purchase price of approximately $1.4 million for an average purchase price of approximately $106,046 per BTC, inclusive of fees and expenses. In addition, we also exchanged 13 BTC from ENA and exchanged 1 BTC into ENA for the year ended December 31, 2025. As of December 31, 2025, at 4:00 p.m. Eastern Time, the market price of one BTC reported on the CoinMarketCap (our principal market data provider) was $87,509.

For the year ended December 31, 2025, the Company purchased 40 ETH from open market at an aggregate purchase price of approximately $98,500 for an average purchase price of approximately $2,462 per ETH, inclusive of fees and expenses. We exchanged all ETH into ENA for the year ended December 31, 2025. As of December 31, 2025, we did not hold ETH.

For the year ended December 31, 2025, we purchased an aggregated 8,916,805 ENA at an aggregate purchase price of approximately $6.4 million for an average purchase price of approximately $0.72 per ENA. For the year ended December 31, 2025, we exchange an aggregated 3,713,223 ENA into 13 BTC. As of December 31, 2025, at 4:00 p.m. Eastern Time, the market price of one ENA reported on CoinMarketCap (our principal market data provider) was $0.20.

As of December 31, 2025, we carried digital assets of approximately $5.8 million on our balance sheet, consisting of approximately (i) 25 BTC, (ii) 5,203,582 ENA, and (iii) 2,534,100 USDT, and reflecting impairment losses of approximately $5.5 million attributable to the digital assets trading price fluctuations.

***Overview of Bitcoin and the Bitcoin Ecosystem***

Bitcoin is a digital asset that is issued by and transmitted through an open-source protocol, known as the bitcoin protocol, collectively maintained by a peer-to-peer network of decentralized user nodes. This network hosts a public transaction ledger, known as the bitcoin blockchain, on which bitcoin holdings and all validated transactions that have ever taken place on the bitcoin network are recorded. Balances of bitcoin are stored in individual "wallet" functions, which associate network public addresses with one or more "private keys" that control the transfer of bitcoin. The bitcoin blockchain can be updated without any single entity owning or operating the network.

New bitcoin is created and allocated by the bitcoin protocol through a "mining" process that rewards users that validate transactions in the bitcoin blockchain. Validated transactions are added in "blocks" approximately every ten minutes. The mining process serves to validate transactions and secure the bitcoin network. Mining is a competitive and costly operation that requires a large amount of computational power to solve complex mathematical algorithms. This expenditure of computing power is known as "proof of work." To incentivize miners to incur the costs of mining bitcoin, the bitcoin protocol rewards miners that successfully validate a block of transactions with newly generated bitcoin.

The bitcoin protocol limits the total number of bitcoin that can be generated over time to 21 million. As of the date hereof, the reward for miners that successfully validate a block of transactions is 3.125 bitcoin per mined block. After every 210,000 blocks are mined, the reward from validating transactions is "halved." A halving has historically occurred approximately every four years, and the next halving is expected to occur in April 2028.

Mining requires the use of specialized computers equipped with application-specific integrated circuit (ASIC) chips (known as "miners") to solve complex cryptographic algorithms in support of the bitcoin blockchain (in a process known as "solving a block") in exchange for digital asset rewards (to date, only bitcoin). The industry practice is for miners to participate in "mining pools" organized by "mining pool operators" in which all pool participants share mining power (known as "hashrate") to earn digital asset rewards which are shared among pool members. The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool. Fees are paid to the mining pool operator to cover the costs of maintaining the pool. We only use mining pools that pay rewards under the Full-Pay-Per-Share Method, which pays rewards to members based on the member's hashing power contributed to the pool each day times the difficulty index.

According to CoinmarketCap data, as of September 30, 2025, the circulating supply of BTC is estimated to be around 19.9 million coins. In 2024, the price of bitcoin fluctuated from a low of below $40,000 to a high exceeding $106,000, an intra-year fluctuation of more than 160%. In 2025, bitcoin recorded a high of approximately $126,000 and a low near $74,500, implying an estimated price change of about 70 % between those extremes.

***Overview of Ethereum and the Ethereum Ecosystem***

 ****

Ethereum is a decentralized, open-source blockchain platform that enables the creation and execution of smart contracts and decentralized applications (dApps). Ether (or ETH) is the native cryptocurrency of the Ethereum network and is used to pay for transaction fees and computational services on the network. Launched in 2015, Ethereum was designed to expand upon the capabilities of earlier blockchain technologies by supporting programmable, self-executing contracts that do not require intermediaries.

Ethereum is the second-largest blockchain platform by market capitalization, following Bitcoin. It is widely regarded as the leading platform for smart contracts and dApp development. In recent years, the Ethereum ecosystem has experienced significant growth, with thousands of dApps, a robust developer community and a rapidly expanding DeFi sector. As of 2024, Ethereum hosts the majority of DeFi protocols by total value locked (TVL) and is the primary platform for NFT issuance and trading. Ethereum is increasingly being integrated into traditional financial systems, with growing interest from institutional investors, enterprises and governments. The network's programmability and security have made it a preferred choice for tokenization and digital asset issuance. The Ethereum community continues to pursue upgrades aimed at improving scalability, security and usability. Notable initiatives include the implementation of sharding and layer-2 scaling solutions, which are expected to further enhance network performance and reduce transaction costs. However, the Ethereum ecosystem is subject to various risks, including regulatory uncertainty, technological challenges, competition from other blockchain platforms, and potential vulnerabilities in smart contract code. The value of ETH and the success of the Ethereum network depend on continued adoption, technological advancement, and the ability to address these risks effectively.

Some of the key features and capabilities that distinguish Ethereum as a leading decentralized blockchain platform, include but are not limited to: (1) Ethereum's Smart Contracts: self-executing agreements with the terms directly written into code. These contracts automatically execute transactions when predefined conditions are met, reducing the need for third-party oversight; (2) Decentralized Applications (dApps): Developers can build and deploy dApps on the Ethereum platform, enabling a wide range of use cases, including decentralized finance (DeFi), non-fungible tokens (NFTs), gaming, supply chain management and more; (3) Programmability: Ethereum's Turing-complete programming language, Solidity, allows for complex logic and a broad array of applications, making it a foundational platform for blockchain innovation; and (4) Transition to Proof-of-Stake: In September 2022, Ethereum transitioned from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism, significantly reducing its energy consumption and enabling new features such as staking.

The Ethereum ecosystem includes, among its participants: (1) developers – a global community contributing to the Ethereum protocol by building dApps and creating new use cases for the network; (2) validators – responsible for securing the network by proposing and attesting to new blocks in exchange for rewards in ETH; (3) users – individuals and organizations that use Ethereum for a variety of purposes (e.g., transferring value, interacting with dApps and participating in DeFi protocols); (4) enterprises and institutions - businesses and institutions exploring or utilizing Ethereum for enterprise solutions, tokenization and blockchain-based services; and (5) miners (historical) - prior to the transition to PoS, miners played a key role in validating transactions and securing the network.

ETH does not have a fixed maximum supply under the protocol and issues new ETH continuously as rewards to validators, less burns under EIP-1559. ETH has at times been net-inflationary and at other times net-deflationary depending on network activity. The rate at which new ETH are issued and put into circulation is expected to vary. In September 2022 the Ethereum network converted from proof-of-work to a new proof-of-stake consensus mechanism. In addition, the issuance of new ether could be partially or completely offset by the burn mechanism introduced by the EIP-1559 modification, under which ether are removed from supply at a rate that varies with network usage. A high usage scenario can create an environment where the circulating ETH supply decreases. A higher burn rate than issuance rate results in the net removal of ETH from the circulating supply. EIP-1559 has reduced the total net issuance of ether fees to validators. Future updates may impact the supply of or demand for ETH or its price.

According to CoinmarketCap data, as of September 30, 2025, the circulating supply of ETH is estimated to be around 120.7 million coins. In 2021, ETH rose from about $730 to a peak of $4,815 (an approximate 559% range), reflecting DeFi and NFT speculation and macro-regulatory events. These episodes illustrate that Ethereum's price can move several-fold within a year, creating material risk and uncertainty for any business or asset exposed to ETH valuation. In 2024, the price of ETH experienced extreme volatility, plunging to a low of $2,193 and surged to a peak to $4,070, representing an intra-year swing of over 82%. In 2025, ETH recorded a high of approximately $4,950 and a low near $1,380, implying a massive price surge of 260% from bottom to peak.

***Overview of ENA (Ethena Governance Token)***

 ****

*Creation and Purpose of ENA*

 

$ENA is the native governance token of Ethena Labs, governing the Ethena protocol and its critical decisions. $ENA holders can vote bi-annually to elect members to a Risk Committee, and in the future additional committees performing critical roles within the ecosystem. In this framework, $ENA governance tokenholders are able to delegate everyday decision-making with respect to key aspects of the ecosystem to sophisticated, expert-level stakeholders - most of whom provide advisory and similar services to other projects and protocols in the industry - while retaining transparency during the process. (Source: Ethena Docs 2025/10 - https://docs.ethena.fi/ena)

 

*Supply and Distribution of ENA*

 

● Initial Total Supply: 15 billion $ENA (fixed cap at genesis).

● As of Oct 10<sup>th</sup>, 2025, $ENA has an Unlocked Circulating Supply (UCS) of ~7.15B $ENA (% unlocked 47.71%) with an Unlocked Market Cap (UMC) of ~$4.03B.

According to CoinmarketCap historical data, in 2024, ENA's all-time high was approximately $1.52 (around April 2024). The lowest noted price in the cycle was as low as approximately $0.196 (September 2024). That represents a drawdown of approximately -87 % from high to low. Because of the relatively short trading history, but already extreme variability, reliance on ENA's price stability or predictability introduces heightened risk to any business model that depends on it. In 2025, ENA recorded a high of approximately $0.80 and a low near $0.13, implying an estimated price surge of about 515% from bottom to high.

***Overview of USDe (Ethena Synthetic Dollar)***

 ****

*Creation Mechanism of USDe*

Ethena's synthetic dollar, USDe, provides the crypto-native, scalable solution for money achieved by delta-hedging Bitcoin, Ethereum and other governance-approved spot assets using perpetual and deliverable futures contracts, as well as holding liquid stables such as USDC and USDT. (Source: Ethena Docs 2025/10 - https://docs.ethena.fi/)

*Supply and Circulation of USDe*

 

● Current Circulating Supply (as of Oct 10<sup>th</sup> 2025): ~14.66 billion USDe.(Source: Ethena HP 2025/10 https://ethena.fi/)

● Mint/Burn Model:

○ A whitelisted user provides ~$100 of USDT and receives ~100 newly-minted Use atomically in return less the gas & execution costs to execute the hedge.

○ Slippage & execution fees are included in the price when minting & redeeming. Ethena earns no profit from the minting or redeeming of USDe.

○ The protocol opens a corresponding short perpetual position for the approximate same notional dollar value on a derivatives exchange.

![](ea028186001_img2.jpg)

(Source: Ethena Docs 2025/10 - https://docs.ethena.fi/how-usde-works

*Stability Mechanism of USDe*

 

USDe peg stability is supported through the use of delta hedging derivatives positions against protocol-held backing assets, maintaining a relatively stable value with reference to the value spot crypto assets as well as futures positions.

The inclusion of liquid stables (such as USDC and USDT) enhances the efficiency of the delta hedging process, while also potentially acting as a safeguard in bear markets when funding rates and futures basis are suboptimal. Liquid stables may earn rewards depending on where they are held, potentially enhancing overall protocol revenue. (Source: coinmarketcap - https://coinmarketcap.com/currencies/ethena/#token_unlocks)

***Other Digital Assets***

On February 20, 2026, the Company purchased approximately 300 million ARAI AA tokens for around USD $1million. ARAI AA is the native token of an AI-powered Web3 infrastructure platform that provides modular AI agent services and developer API tools to streamline on-chain interactions and scale intelligent automation in decentralized applications. As of the disclosure date of this annual report, the market capitalization of ARAI is $3.4 million.

**Consultants and Advisers**

The Board, in the future, may exploring holding other digital assets as a part of the DAT strategy, and my engage strategic consultants and third party advisors in the execution of the DAT strategy. However, as of the date of this current report, apart from the use of third-party qualified custodians for the holding of our current Digital Assets portfolio, we have not engaged any strategic consultants or third party advisors.

 ****

***Custodians***

We do not self-custody and only utilize third-party qualified custodians to hold our Digital Assets. Our BTC, ENA and USDe are currently held in custody accounts with two institutional custodian platforms at Matrixport Cactus Custody ("Cactus Custody") and Anchorage Digital Bank N.A. ("Anchorage"), pursuant to written custody agreements whereby Cactus Custody and Anchorage have agreed to custody and safeguard our Digital Asset holdings and/or execute trading on our behalf. We retain the cryptographic keys, title and control of our digital assets. From time to time, under our discretion, our custodians will execute buy, sell and convert trade transactions on our behalf. As of December 31, 2025, we deposited approximately digital assets of approximately $5.8 million including 25 BTC, 5,203,582 ENA, and 2,034,090 USDT at Cactus Custody and deposited 500,000 USDT at Anchorage.

Under the Custody Agreement with Cactus Custody, Cactus Custody acts solely as an independent custodian responsible for holding, safeguarding, and maintaining accurate records of the Company's digital assets and related accounts. Cactus Custody is required to exercise reasonable care in the custody of assets and to maintain complete and accurate books and records in accordance with applicable law. Cactus Custody is authorized to disclose account information to regulators or law enforcement when required by applicable laws or court orders. Cactus Custody and its affiliates maintain insurance coverage up to $50,000,000 in the aggregate for digital asset crime for losses from digital assets exposures including physical harm, malicious damage, robbery and theft. However, sub-limits may apply to certain types of transactions, such as those lacking manual verification.

The Agreement includes comprehensive anti–money laundering and "know-your-customer" provisions. The Company and all authorized users must complete Cactus Custody's AML/KYC procedures and promptly provide updated documentation or information upon request, as well as disclose any sanctions exposure or regulatory investigations.

Cactus Custody may facilitate connections to third-party staking platforms at the Company's discretion and may charge an additional service fee for such connections. Cactus Custody expressly disclaims investment or advisory responsibility for any staking-related losses. The Agreement has an initial twelve-month term and renews automatically unless terminated in accordance with its notice provisions; either party may terminate for cause or by written notice subject to applicable conditions.

Separately, the Company also engages Anchorage for institutional-grade custody and settlement services. According to Anchorage's insurance and service disclosure, Anchorage provides custody, settlement, staking, and governance services, while Anchorage Hold LLC provides digital-asset trading services. Digital assets held with Anchorage are not insured by the Federal Deposit Insurance Corporation ("FDIC") or the Securities Investor Protection Corporation ("SIPC"), and Anchorage does not guarantee any digital assets held in custody. Anchorage and its affiliates maintain extensive commercial insurance coverage, including Crime coverage up to $100 million, Cyber / Technology Errors & Omissions coverage of $1 million, General Liability coverage of $4 million, and Workers' Compensation and Employer's Liability coverage up to statutory limits plus $1 million.

The Company selected these custodians after evaluating their regulatory standing, institutional infrastructure, insurance coverage, and operational controls. Both custodians maintain comprehensive compliance programs and provide transparent reporting mechanisms that enable the Company to segregate and monitor its digital assets. The Company may terminate either relationship at any time subject to contractual notice and settlement of outstanding fees.

However, in the future, we may engage other custodians to further diversify the custody of our Digital Assets. We could have a high concentration of Digital Assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, comprised access credentials, malware, or cyberattacks. Security breaches and cyberattacks are of particular concern with respect to our Digital Asset holdings. Digital Assets and the entities that provide services to participants in the Digital Asset ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For a discussion of risks relating to the custody of our digital assets, see "Risk Factors—*We face risks relating to the custody of our Digital Assets, including the loss or destruction of private keys required to access our Digital Assets, and cyberattacks or other data loss relating to our Digital Assets*."

***FlexTV Operations***

 

Through Yuder, we now operate 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 is FlexTV platform.

Our focus is to be a leading short drama streaming platform in the global streaming video industry. FlexTV stands out as an innovative force, introducing short dramas as a unique form of storytelling, committed to leading vertical screen entertainment globally.

![](ea028186001_img3.jpg)

Short dramas aim to capture the essence of narratives within concise time frames, typically formatted vertically for optimal viewing on mobile phones, ranging from 1 (one) to 3 (three) minutes per episode. Each episode seamlessly integrates into a series, where complete storylines unfold across 40 (forty) to over 100 (one hundred) episodes. Short dramas usually offer users a virtual escape, presenting narratives that resonate with emotions, fostering a sense of connection, and serving as a wellspring of comfort or inspiration in the digital realm.

The move from conventional TV streaming to short drama streaming is a worldwide shift, offering users enhanced options and increased flexibility in their entertainment choices. We acknowledge the significant and profound impact of short video platforms on viewer behaviors, characterized by shorter attention spans, vertical screen viewing, and increased multitasking. We leverage the substantial void between the long-form dramas provided by entities like Netflix and the predominantly influencer-created short videos.

The content characteristics of short dramas determine that they can be produced in quick batches and monetized rapidly. Users are used to scrolling through videos, movie narrations and at a faster pace. The threshold for short drama production has lowered, with lower costs, shorter cycles, and higher operational efficiency. Short dramas are more attractive, more direct, faster-paced, and better suited for mobile entertainment.

We recognize the significant impact of short video platforms like Facebook Reels, Instagram Reels, YouTube Shorts, TikTok, and others on user behaviors. Our dedication to innovative short dramas stems from a deep understanding of evolving viewing habits influenced by shorter attention spans and increased multitasking.

We are steadfast in delivering innovative content that connects with diverse audiences worldwide, promoting cultural appreciation and entertainment on a global scale, and bringing joy to the lives of users worldwide. The content characteristics of short dramas determine that they can be produced in quick batches and monetized rapidly.

***Our Short Drama Business Model***

FlexTV has already formed a mature content business model that integrates content production, distribution, and operation. Short drama content on the FlexTV platform is divided into two categories: one category consists of dramas in which we participate in the scripts creation and drama production, primarily in English, Japanese and Thai, and the other category consists of translated dramas, where we purchase the copyrights of completed high-quality short dramas from third parties and then translate them into 16 languages, including but not limited to, English, Spanish, Portuguese, Japanese, Korean, French, Arabic and Thai. As of the date hereof, FlexTV's content library consisted of approximately 968 short dramas, spanning over 10,508 multi-language titles across 16 languages. Among these, around 105 short dramas are self-produced, with half of them originally in English.

A typical timeline for launching one short drama product is divided into three stages. The first stage is the script polishing period, which lasts approximately 15-30 days. The second stage is the filming and post-production stage, which lasts around 14-30 days. The third stage is the release stage, primarily lasting within 30-60 days.

FlexTV is strategically strengthening its script acquisition capabilities through a dual approach: developing in-house content production teams and partnering with top-tier scriptwriting studios. This ensures a steady and consistent pipeline of high-quality scripts. We have strict criteria for selecting short drama studios and their scripts. First, we integrate user research in the topic and script stages with internal original production and external procurement. Then, in the matching production studios and evaluation stage, we establish a stable producing process, efficient editing, and a hit production experience. This approach ensures a stable industrialized supply of content.As the production model for short drama content matures and our collaborative teams stabilize,the production costs for English short dramas are gradually decreasing, from around $120,000 per drama by 2024 to $100,000 per drama in 2025.

In May 2025, the Company implemented strategic optimization and dissolved its in-house content production teams. Against the backdrop of a maturing short drama ecosystem and intensifying industry competition, this adjustment represents an important step for the Company to shift toward an asset-light operating model. It aims to fully integrate mature external production resources, leverage the deep application of AI technologies in script generation, content optimization, and production efficiency improvement, and achieve industrialized, standardized, and stable content supply through large-scale strategic partnerships.

Our revenue is primarily driven by three key streams: top-ups and subscription fees for content streaming services, advertising, which involve ads displayed within our FlexTV streaming platform and content licensing fee.

We offer a variety of streaming top-up and membership plans, the price of which varies by country and the features of the plan. Users typically can watch about five (5) to ten (10) episodes of each short drama on our platform for free. To continue watching, they will need to become subscription members or top up their account 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, such as watching ads, inviting friends, and sharing FlexTV on Facebook and TikTok. The in-app coins can only be used on our platform and are not transferrable. Users can subscribe to FlexTV memberships on a weekly, monthly, or annual basis, and during the membership subscription period, users will have unlimited access to view any short drama on FlexTV. We measure monetization of our platform by calculating the return on investment ('ROI") per drama and the average revenue per active user ("ARPU"), which we believe represents the inherent value of our business model.

In addition, in the three months ended September 30, 2024, the Company launched its content licensing business where it licenses its self-produced short dramas to third party platform providers and allow the platform to distribute the short dramas for an agreed period of time. This allows the Company to leverage its content library that it is developing from its self-produced short dramas.

Our business success hinges on navigating the growing and competitive short drama market by continuously innovating in content creation and market promotion. Quality, compliant content remains crucial, and we are expanding beyond emotional dramas to explore diverse themes—like suspense, comedy, sci-fi, and historical dramas—to attract a broader audience and meet evolving viewer demands. Strengthening customer engagement through improved user experience and platform functionality is essential for retention and profitability. Additionally, we rely on suppliers for innovative scripts, efficient production, and technical support, while leveraging AI technology across all production stages to enhance efficiency and reduce costs, ensuring sustained growth and profitability.

***Competitive Strengths***

We believe that FlexTV has the following competitive advantages:

**Content barrier**: We continuously internally build multiple content production teams and externally collaborate with top-tier scriptwriting studio that supply content to our platform, assisting them in establishing industrialized production processes. In the short term, we provide funding for studio content production. FlexTV encourages healthy competition, and we anticipate more studios shifting towards producing short-form content in the future. As the number of studios on the platform increases and their capabilities improve, studios will raise funds independently to produce content. FlexTV provides more traffic and distribution resources for good content, significantly reducing the risk of platform investment in content production.

**Network effects**: As the platform's content library accumulates, it attracts more users to watch content for longer durations, generating more revenue for the platform. This, in turn, attracts more studios to create content for the platform, resulting in a positive feedback loop.

**Global distribution resources**: We own the rights to series, translating them into various languages for global distribution. Through our proprietary advertising placement system, KOL distribution, and media copyright cooperation resources, we can rapidly increase the series' influence and generate substantial revenue within a short period. Outstanding distribution capabilities are a key reason why studios choose to collaborate with our streaming platform.

 **

***User Growth Strengths and Marketing Channels***

 

**Major social media traffic distribution**: We achieve user growth by advertising on mainstream social media channels such as Facebook, TikTok, Google, YouTube and Instagram. We edit highlights of our series into clips to attract users to download the FlexTV app.

**KOL marketing**: We invite Key Opinion Leaders (KOLs) to market our series on their social media accounts. When users download FlexTV and make deposits, KOLs can share in the deposit revenue. Through this way, we attract a large number of KOLs to proactively share content related to our series.

***Intellectual Property***

 ****

The protection of our technology and intellectual property is an important aspect of our business. We currently rely upon a combination of trademarks, trade secrets, copyrights, nondisclosure contractual commitments, and other legal rights to establish and protect our intellectual property.

As of March 20, 2026, we held two (2) pending trademark applications in Japan, and two (2) pending trademark applications in Indonesia. Additionally, We held three (3) registered trademarks in Hong Kong, one (1) registered trademark in United States, four (4) registered trademarks in United Kingdom, two (2) registered trademarks in Thailand, two (2) registered trademarks in Indonesia, one (1) registered trademark in Japan, and four(4) registered trademarks in Singapore. As of March 12, 2026, we have registered the copyrights for thirty-four (34) self-produced English dramas in the U.S., with twelve (12) still pending.

We will evaluate our development efforts to assess the existence and patentability of new intellectual property. To the extent that it is feasible, we will file new patent applications with respect to our technology and trademark applications with respect to our brands. ****

 ****

***Human Capital Resources***

As of March 20, 2026, we had around 146 individuals, including 23 full-time employees and the remainder being indirect contractors. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good. In addition to our direct employment, Yuder has engaged over 120 indirect contractors through a services agreement with a third-party company based in Asia. This agreement, entered into in November 2023 provides a cost-efficient way to support FlexTV operations on an as-needed basis. The number of indirect contractors is still increasing with the development of FlexTV. This strategy provides flexibility in managing our workforce.

 ****

***International Markets***

FlexTV is available in more than 200 countries. Our production teams film in various locations including, but not limited to, United States, Mexico, Australia, Thailand, Japan and Philippines. We will continue to expand our international markets and collaborate with local partners in each major market.

***Our Industry***

In 2025, the global short drama industry continued its rapid development on the basis of the explosive growth in 2024, entering a critical stage of simultaneous scale expansion and quality upgrading. The industry as a whole presents distinct characteristics of high growth, high monetization, and technology-driven development, providing broad development space and competitive opportunities for market participants. According to industry data, the global short drama industry revenue reached $1.1 billion in 2025, of which more than 60% came from subscriptions and transaction-based payments, with the highest average revenue per user (ARPU) reaching $80 per month, demonstrating significant monetization potential; the global short drama user base reached 696 million, accounting for 69.6% of the total number of netizens, an increase of 7.3 percentage points compared with 2024, and the user foundation continued to expand.

The scale of the overseas short drama market reached $400 million, achieving a year-on-year growth rate of over 200%. Among them, the United States, as the core profit hub, contributed 45.65% of the global in-app purchase revenue in the first quarter of 2025, a month-on-month increase of 20%, with more than 380 competing platforms. Downloads in the first quarter reached 30.809 million, an increase of 52.9% compared with the fourth quarter of 2024; Japan ranked second in the overseas market, with a payment ratio of 7%, in-app purchase revenue reaching $30.805 million from January to April 2025, a user base of 4 to 5 million, and a local self-produced drama capacity of about 300 to 500 episodes; Indonesia, as the third-largest market, contributed 50% of the downloads in the Southeast Asian market, while the total downloads of short drama apps in Southeast Asia reached 372 million, with Chinese manufacturers accounting for 90%; emerging markets such as India and Brazil performed impressively, among which India's downloads jumped to the world's first. The global annual downloads of short drama apps reached 2.3 billion, a year-on-year surge of over 100%, and a year-on-year increase of 186% in the fourth quarter, surpassing the downloads of traditional OTT streaming media for the first time.

At the technical level, AI technology has achieved large-scale application with a penetration rate of 70%, widely covering script creation, content production, and localization adaptation. It can reduce the production cost of short dramas by more than 50%, among which the cost per minute of AI comic dramas has dropped to 400-1000 yuan, a decrease of 60% compared with the early stage, and the production cycle has been shortened from "month-level" to "day-level". A small team of 4-5 people can complete the production of 80 episodes in 5 days. In 2025, the market scale of AI live-action short dramas exceeded 1.2 billion yuan, a year-on-year increase of over 300%. In the markets of the United States, Brazil, and Indonesia, 55% of users are willing to pay for short dramas produced with AI participation, and 49% of users accept paid pure AI short dramas.

In the future, with the continuous cultivation of users' payment habits, the in-depth integration of AI technology, and the continuous penetration of the global market, the industry scale will continue to expand. Institutions predict that the overseas short drama market scale will exceed $500 million in 2026, among which the scale of the Japanese vertical-screen micro-short drama market may reach $100 million, and the Southeast Asian market will reach $51 million. At the same time, industry competition will further intensify. Content refinement, localization, and diversified business models will become the core focus of market competition, which is expected to spawn new industry leaders and business model innovations.

***Seasonality of Business Operations***

The demand for short dramas follows distinct seasonal trends, with user engagement and revenue opportunities fluctuating in response to holidays and seasonal variations. Public holidays, school breaks, major cultural events, and long weekends consistently drive the highest levels of streaming activity. For example, long weekends and public holidays often lead to higher viewership, as audiences have more leisure time to consume content. Similarly, seasonal events like new year, summer vacations, and year-end holidays drive spikes in demand, resulting in increased revenue from in-app purchases and advertising.

These periods represent critical opportunities for platforms to maximize user engagement and monetization.

In addition to holiday-driven trends, content release cycles also shape seasonal demand. Viewership tends to rise when highly anticipated dramas are launched or when viral trends emerge. Understanding these patterns allows platforms to optimize content scheduling, improve user retention, and align monetization strategies with seasonal audience behavior.

***Government Regulations***

**The United States**

At the federal level, the main regulations that may have potential impacts on the Company could be the DMCA (Digital Millennium Copyright Act), COPPA (Children's Online Privacy Protection Act), PLSA (Protecting Lawful Streaming Act) and the Trade Regulation Rule on the Use of Consumer Reviews and Testimonials.

The DMCA is a key copyright law in the United States, and most of the Company's business operations, including series production, copyright acquisition and licensing are governed by the DMCA.

The Protecting Lawful Streaming Act (PLSA) became effective in the United States in December 2020. This legislation targets illegal streaming platforms by imposing felony penalties on providers of unauthorized streaming services. Following its enactment, the Company's original short-form dramas released in the U.S. market will benefit from enhanced and more comprehensive legal protections. Additionally, this act broadens the Company's legal avenues for combating piracy platforms within the United States, thereby strengthening its ability to protect its intellectual property rights.

The Trade Regulation Rule on the Use of Consumer Reviews and Testimonials mainly provides clear regulations on the language norms and the prohibition of misleading promotion during the advertising process of the Company within the United States.

**Japan**

Copyright Act is the Japanese copyright law. Most of the Company's business operations, including series production, copyright acquisition and licensing shall fall under the jurisdiction of the Copyright Act in Japan.

The Act on the Protection of Personal Information (APPI) regulates privacy protection issues in Japan and the Personal Information Protection Commission ("PPC"), a central agency acts as a supervisory governmental organization on issues of privacy protection. Currently, discussions are underway regarding amendments to the APPI from 2025 onward. Key topics include the introduction of an administrative monetary penalty system in addition to the current fines, as well as the establishment of systems for injunction claims and remedies for damages initiated by organizations like qualified consumer organizations. However, the specific timing for the enactment and implementation of the APPI amended provisions remains unclear at this time.

The Act Against Unjustifiable Premiums and Misleading Representations is the Japan's principal legal frameworks governing unfair advertising and promotional practices. Companies engaging in advertising activities in Japan must adhere to the stringent requirements set forth by these laws, including restrictions on the use of superlative terms. All claims must be substantiated by factual evidence rather than being based solely on subjective opinions.

**Indonesia**

The new Copyright Law became effective on 16 October 2014 in Indonesia. Most of the Company's business operations, including series production, copyright acquisition and licensing shall fall under the jurisdiction of the new Copyright Law within Indonesia.

The Personal Data Protection Law (PDP Law) serves as Indonesia's legal framework for safeguarding personal information. During its legislative development, it incorporated relevant provisions from the General Data Protection Regulation (GDPR). Consequently, akin to the GDPR, the PDP Law mandates that the Company must rigorously secure users' explicit consent prior to collecting, processing, or transferring the personal data of Indonesian citizens. Furthermore, the law obligates companies to uphold users' fundamental privacy rights, encompassing the right to be informed, the right to access, the right to rectification, and the right to erasure (commonly referred to as the right to be forgotten).

Online advertising is governed under Minister of Trade Regulation No. 50 of 2020 on Provisions on Business Licensing, Advertising, Guidance, and Supervision of Business in Trade through Electronic Systems. Its provisions apply universally to every electronic advertisement, regardless of the industry. Targeted advertising and online behavioural advertising collected based on personal data must receive prior consent from the subject data, as it may be interpreted as processing personal data.

**C. <u>Organizational Structure</u>**

The following diagram illustrates our corporate structure as of December 31, 2025.

![](ea028186001_img4.jpg)

**D. <u>Property, Plants and Equipment</u>**

Our principal executive office is located at Level 21, 88 Market Street, CapitaSpring, Singapore 048948,The lease termination date is March 31, 2027. As of December 31, 2025, we also rent an additional office primarily used for the operation, The lease termination date is January 14, 2027. We lease a total of 1,000 square meters of office space, including our principal executive office. We pay monthly rent of approximately $23,000 per month in total. We believe that our current offices are suitable and adequate to operate our business at this time. We do not own any real property.

**Item 4A. UNRESOLVED STAFF COMMENTS**

Not applicable.

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

*You should read the following discussion and analysis of the Company's financial condition and results of operations in conjunction with the section entitled "Selected Consolidated Financial Data" and the Company's consolidated financial statements and the related notes included elsewhere in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this Report.*

***Overview***

We are a holding company incorporated in the Cayman Islands and headquartered in Singapore. We wholly own MPU DE, which in turn wholly owns FunVerse Holding Limited, a British Virgin Islands company ("FunVerse"). FunVerse directly owns Yuder Pte. Ltd., a Singapore corporation ("Yuder"), which operates FlexTV, our short drama streaming platform. FlexTV offers English, Japanese and Thai short dramas translated into multiple languages for users across Europe, the Americas, Southeast Asia and other global regions. In addition to original content production, Yuder also acquires third-party content licenses for translation and distribution on the FlexTV platform. To provide diverse international content, our production team has filmed in multiple locations worldwide, including the United States, Mexico, Australia, Japan, Thailand and the Philippines.

The year 2025 saw intensified competition in the global short drama industry, characterized by elevated user acquisition costs, aggressive marketing spending and widespread operating losses across peers. Against this challenging environment, the Company implemented a tightened and prudent operating strategy focused on operational efficiency, margin stability and long-term sustainable growth. We proactively shifted from self-developed short drama production to an asset-light model through strategic content procurement, optimized marketing expenditure to improve delivery efficiency, and expanded organic user acquisition via social media engagement. As a result, advertising expenses as a percentage of total revenue improved significantly from 62% in 2024 to 47% in 2025, while average revenue per user ("ARPU") increased from $3.15 in 2024 to $3.42 in 2025, reflecting enhanced user monetization efficiency. For the year ended December 31, 2025, our adjusted EBITDA loss improved from $7.1 million in 2024 to $5.6 million, driven by stronger operational leverage and strict cost discipline.

Looking ahead, the Company plans to accelerate the integration of AI-generated short dramas to further reduce content costs, enrich high-quality content offerings, expand our global user base and drive sustainable profitability. Management remains confident in our strategic transformation and long-term value creation potential.

***Recent Corporate Developments***

 ****

On February 18, 2025, the Company entered into an At The Market Offering Agreement (the "ATM 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 $20.0 million. Under the ATM Agreement, the Manager may sell the Shares by any method deemed to be an "at-the-market" offering ("ATM") 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 ATM 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. For the year ended December 31, 2025, the Company sold 2,089,272 shares of Class A Ordinary Share and raised net proceeds of approximately $2.8 million through ATM.

*Updates to Digital Asset Treasury and Web3 Strategy*

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

This business strategy was updated on July 2, 2025, in which the Company's Board of Directors approved to restart its Ethereum ("ETH") staking business and the exploration of a broader Web3-focused strategy. Through staking, the Company earns rewards that can be reinvested into ETH or used for general corporate purposes. The Company believes that its strategy to reinstate its ETH staking business will enhance long-term shareholder value. On August 21, 2025, the Company further updated its digital asset treasury ("DAT") reserve strategies and focus on stablecoin governance token its primary treasury asset. On September 4, the Company provided a business update regarding its DAT strategy, emphasizing its focus on leading stablecoin governance tokens.

*Private placement*

On July 24, 2025, the Company signed a Securities Purchase Agreement (the "2025 SPA") with certain accredited investors (collectively, the "Investors"), pursuant to which the Investors, severally and not jointly, agreed, subject to certain terms and conditions of the 2025 SPA, to purchase an aggregate of 16,000,000 Class A ordinary shares, par value $0.001 (the "Class A Shares"), for an aggregate purchase price of $16.0 million, or $1.00 per Class A Share (the "Offering Purchase Price", the transactions contemplated under the 2025 SPA, the "Offering"). The Offering closed on the same day and the proceeds therefrom will provide a solid capital foundation for the Company's proposed strategic expansion into the stablecoin sector.

In connection with preparation of the Offering, on July 17, 2025, the Company entered into a Finder's Agreement with Web3 Capital Limited, a company formed under the laws of Cayman Islands (the "Finder"). Under the Finder's Agreement, the Finder was engaged on a non-exclusive basis to introduce potential subscribers that are non-U.S. Persons (as defined in Regulation S) to the offering. The Company has agreed to a fee, to be paid in Class A Shares, equal to 5% of the Class A Shares subscribed by the investors introduced by the Finder. Upon the closing of the Offering, the Company issued 785,000 Class A Shares to the Finder under the Finder's Agreement.

In addition, pursuant to a prior engagement letter with H.C. Wainwright & Co. ("Wainwright"), the Company agreed to pay Wainwright a cash fee equal to 3% of the aggregate gross proceeds raised in the Offering that is in excess of $5.0 million. Wainwright acted as financial advisor to the Company and has not been engaged in the solicitation or distribution of the Offering.

*Increase of share capital*

On August 15, 2025, the Company's shareholders approved an increase of the share capital to US$1,110,000, divided into: (i) 1,000,000,000 class A ordinary shares of par value US$0.001 each, (ii) 50,000,000 class B ordinary shares of par value US$0.001 each, (iii) 50,000,000 class C ordinary shares of par value US$0.001 each, and (iv) 10,000,000 preferred shares of par value US$0.001 each, by an addition of 900,000,000 class A ordinary shares of par value US$0.001 each, and 40,000,000 class B ordinary shares of par value US$0.001 each, and the creation of a new share class comprising of 50,000,000 class C ordinary shares of par value US$0.001 each.

*Conversion of Class B ordinary shares into Class C ordinary shares and grant Class C ordinary shares to a management*

On September 2, 2025, Mr. Yucheng Hu, Chairman of the Board of Directors and a shareholder of the Company, submitted a notice of conversion pursuant to the Company's Third Amended and Restated Memorandum and Articles of Association ("MAA"), requesting to convert 3,123,723 Class B ordinary shares, par value $0.001 per share ("Class B Shares"), into 3,123,723 Class C ordinary shares, par value $0.001 per share ("Class C Shares") (the "Conversion"). Each Class B Share is convertible into one (1) Class A ordinary share, par value$0.001 ("Class A Share"), or one (1) Class C Share, at the option of the holder. Each Class C Share is convertible into one (1) Class A Share at the option of the holder. Each Class A Share shall be entitled to one (1) vote, each Class B Share shall be entitled to one hundred (100) votes, and each Class C Share shall be entitled to fifty (50) votes.

On September 3, 2025, Mr. Hu entered into a share transfer agreement, pursuant to which he agreed to transfer 2,290,390 Class C Shares to Mr. Yaman Demir, a director of the Company, at par value and as permitted under the MAA (the "Transfer").

The Conversion and the Transfer closed on September 22, 2025.

**Key Components of Results of Operations**

***Revenues***

 **

We generated revenue primarily from (i) membership and top-up streaming services, also known as in-App purchase services ("IAP"), (ii) online advertising services, also known as in-App advertising services ("IAA"), and (iii) content licensing business of our short dramas. For the years ended December 31, 2025, 2024 and 2023, our revenues were comprised of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Membership and top-up streaming services | $21620200 | $31586800 | $- |
| Online advertising services | 2616500 | 3698500 |  |
| Content licensing business | 1868900 | 898700 | - |
|  | $**26105600** | $**36184000** | $**-** |

---

 

*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 years ended December 31, 2025 and 2024, we collected recharge amount of approximately $21.3 million and $33.4 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 Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 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 | $6522600 | $8917800 | $5022500 | $1157300 | $21620200 |
| Period Active Users ("PAU")(1) | 773212 | 2767396 | 1987768 | 793476 | 6321852 |
| Average membership and top-up streaming services revenue per active user ("ARPU")(2) | $8.44 | $3.22 | $2.53 | $1.46 | $3.42 |
| Period Paying Users ("PPU") (3) | 136427 | 282008 | 170048 | 56927 | 645410 |
| Average membership and top-up streaming services revenue per paying user ("ARPPU")(4) | $47.81 | $31.62 | $29.54 | $20.33 | $33.50 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** |
|  | **United <br> States and**<br>**Canada** | **Asia-**<br>**Pacific** | **Europe, <br> Middle East**<br>**and Africa** | **Latin**<br>**America** |<br>**Total** |
| Membership and top-up streaming services revenue | $13427900 | $11645300 | $4399700 | $2113900 | $31586800 |
| Period Active Users ("PAU")(1) | 2055267 | 3656621 | 2772315 | 1541915 | 10026118 |
| Average membership and top-up streaming services revenue per active user ("ARPU")(2) | $6.53 | $3.18 | $1.59 | $1.37 | $3.15 |
| Period Paying Users ("PPU") (3) | 355963 | 405560 | 153564 | 96675 | 1011762 |
| Average membership and top-up streaming services revenue per paying user ("ARPPU")(4) | $37.72 | $28.71 | $28.65 | $21.87 | $31.22 |

---

(1) A PAU is defined as a user who has downloaded and opened FlexTV app at least once. For the years ended December 31, 2025 and 2024, the PAU is calculated at the total of 12 months 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 years ended December 31, 2025 and 2024, the PPU is calculated at the total of 12 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 years ended December 31, 2025 and 2024, the Company generated revenues of approximately $1.9 million and $0.9 million, respectively, from its content licensing business.

 ****

***Cost of revenues***

For the year ended December 31, 2025 and 2024, 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 Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Platform service fees charged by third party payment processors | $5947000 | $9845200 | $- |
| Amortization of content assets | 4995900 | 4599000 |  |
| Others | 767600 | 720300 | - |
|  | $**11710500** | $**15164500** | $**-** |

---

***Selling expenses***

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

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Advertising expenses | $12301300 | $22391900 | $- |
| Others | 81100 | 163800 | 28000 |
|  | $**12382400** | $**22555700** | $**28000** |

---

***General and administrative expenses***

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

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| IT expenses | $4260100 | $3188800 | $12500 |
| Payroll and welfare expenses | 10816200 | 2548400 | 1509700 |
| Consulting expenses | 15444800 | 3214200 | 2119600 |
| Others | 422100 | 1130800 | 1595100 |
|  | $**30943200** | $**10082200** | $**5236900** |

---

***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 December 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**

***For the years ended December 31, 2025 and 2024***

 

The following table represents our consolidated statement of operations for the years ended December 31, 2025 and 2024.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** | **Changes** | **Changes** |
|  | **2025** | **2024** | **in Amount** | **in %** |
| Revenues | $26105600 | $36184000 | $(10078400) | (28)% |
| Cost of revenues | (11710500) | (15164500) | 3454000 | (23)% |
| Gross profit | **14395100** | **21019500** | **(6624400)** | **(32)%** |
| **Operating expenses:** |  |  |  |  |
| Selling expenses | (12382400) | (22555700) | 10173300 | (45)% |
| General and administrative expenses | (30943200) | (10082200) | (20861000) | 207% |
| **Total operating expenses** | **(43325600)** | **(32637900)** | **(10687700)** | **33%** |
| **Loss from operations** | **(28930500)** | **(11618400)** | **(17312100)** | **149%** |
| **Other income (expenses):** |  |  |  |  |
| Changes in fair value of digital assets | (5521300) | 2238700 | (7760000) | (347)% |
| Share of equity loss | (300) | (19200) | 18900 | (98)% |
| Impairment of long-term investments |  | (770800) | 770800 | (100)% |
| Changes in fair value of trading securities | 21400 | (36400) | 57800 | (159)% |
| Investment loss on trading securities | (25900) | (740100) | 714200 | (97)% |
| Interest income, net | 101900 | 131300 | (29400) | (22)% |
| Other income, net | 60000 | 35800 | 24200 | 68% |
| **Total other (expenses) income, net** | **(5364200)** | **839300** | **(6203500)** | **(739)%** |
| **Loss from operations before income tax** | **(34294700)** | **(10779100)** | **(23515600)** | **218%** |
| Income tax (expenses) benefits | (1600) | 275400 | (277000) | (101)% |
| **Net loss** | **(34296300)** | **(10503700)** | $**(23792600)** | **227%** |

---

*Revenues*

Compared with revenues for the year ended December 31, 2024, our revenues for the year ended December 31, 2025 decreased by approximately $10.1 million, or 28%. The decrease was primarily due to a decrease of approximately $10.0 million in revenues from membership and top-up streaming services and a decrease of approximately $1.1 million in revenues from online advertising services, partially offset by an increase of revenues from content licensing business of approximately $1.0 million.

*Revenues from membership and top-up streaming services.* Revenues from membership and top-up streaming services for the year ended December 31, 2025 decreased by approximately $10.0 million, representing a 31.6% year-over-year decline. The decline was driven by two key factors. First, commencing in May 2025, the Company strategically scaled back self-developed short dramas and shifted to a model centered on acquiring copyrighted content, which resulted in fewer new titles being released on the platform. Second, against a backdrop of intensifying industry competition characterized by aggressive marketing spend and widespread losses among peers, the Company adopted a disciplined operational strategy, optimizing its promotional policies to safeguard profit margins and preserve cash flow.

During 2025, average revenue per user ("ARPU") for the short drama business rose from $3.15 in 2024 to $3.42, primarily supported by improved user subscription conversion and retention.

Looking ahead, the Company intends to integrate AI-generated short dramas into its content portfolio, attracting a broader user base through a balanced approach of in-house development and strategic content procurement. This model is expected to drive meaningful production cost efficiencies while sustaining healthy ARPU performance. With sustained investment in AI-powered short drama content, the Company anticipates a return to growth in membership and top-up streaming services revenue in the coming periods.

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2025** | **2024** |
| Membership and top-up streaming services | $21620200 | $31586800 |
| **ARPU** | $**3.42** | $**3.15** |

---

*Revenues from online advertising services.* Our revenues from online advertising services decreased by approximately $1.1 million, or 29.3%. The decrease was also affected by a decrease in paying users in the year ended December 31, 2025, leading to less advertisers placed ads on our platform.

 

*Revenues from content licensing business.* Our revenues from content licensing business were approximately $1.9 million for the year ended December 31, 2025. We commenced the content licensing business in the third quarter of 2024, and generated approximately $0.9 million for the year ended December 31, 2024.

*Cost of revenues*

For the year ended December 31, 2025, the cost of revenues decreased by approximately $3.5 million, or 22.8% from approximately $15.2 million for the year ended December 31, 2024. The changes in cost of revenues was primarily derived from a decrease of approximately $3.9 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 $0.4 million in amortization of content assets with an increase in content assets on our platform.

We expect our cost of revenues will increase in the next year with net effects of increase in purchase of AI-based short-drams to attract more customers, partially offset by a decrease of amortization of content assets as we plan to reduced self-developed short-dramas.

*Gross profit* 

Gross profit for the years ended December 31, 2025, 2024 and 2023 was approximately $14.4 million, $21.0 million and $nil, respectively.

 

*Selling expenses*

As compared with the year ended December 31, 2024, selling expenses for the year ended December 31, 2025 decreased by approximately $10.2 million. The decrease was primarily driven by a reduction of approximately $10.1 million in advertising expenses, consistent with the decline in our revenues from membership and top-up streaming services.

Notably, advertising expenses as a percentage of total revenue improved significantly from 62% for the year ended December 31, 2024 to 47% for the year ended December 31, 2025. This improvement was mainly attributable to our successful acquisition of organic traffic through social media engagement and content initiatives, which enhanced overall marketing efficiency.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the<br> Years Ended<br> December 31, <br> 2025** | **% of<br> revenue** | **For the<br> Years Ended<br> December 31, <br> 2024** | **% of<br> revenue** |
| Advertising expenses | $12301300 | 47% | $22391900 | 62% |

---

*General and administrative expenses*

For the year ended December 31, 2025, we incurred general and administrative expenses of approximately $30.9 million, representing an increase of approximately $20.9 million, or 206.9% from approximately $10.1 million for the year ended December 31, 2024. The increase was primarily attributable to an increase of approximately $1.1 million in IT expenses because we incurred more IT support expenses for our short drama streaming platform, an increase of approximately $8.3 million in payroll expenses, which was because we issued more ordinary shares as compensation expenses to management, leading to an increase of share-based compensation expense of approximately $8.7 million, and an increase of approximately $12.2 million in consulting expenses, which was because we issued more ordinary shares with as compensation expenses to consultants leading to an increase of share-based compensation expense of approximately $10.7 million and an increase of consulting expenses of approximately $1.5 million which was incurred in private placements.

*Income tax (expenses) benefits*

Income tax expense changed by approximately $0.3 million, or 101% during the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to the overall business operation loss, offset majorly by valuation allowance in all jurisdictions, compared to the one-time tax benefit of approximately $0.3 million from Yuder's acquisition in 2024.

Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable capital gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies. We also continue to monitor the adoption of Pillar Two relating to the global minimum tax in each of our tax jurisdictions to evaluate its impact on our effective income tax rate. For the year ended December 31, 2025, we are not subject to Pillar Two global minimum tax.

*Net Loss*

As a result of the foregoing, net loss for the year ended December 31, 2025 was approximately $34.3 million, increasing by approximately $23.8 million, or 226.5%, from approximately $10.5 million for the year ended December 31, 2024.

***For the years ended December 31, 2024 and 2023***

 ****

The following table represents our consolidated statement of operations for the years ended December 31, 2024 and 2023.

 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** | **Changes** | **Changes** |
|  | **2024** | **2023** | **in Amount** | **in %** |
| Revenues | $36184000 | $- | $36184000 | 100% |
| Cost of revenues | (15164500) | - | (15164500) | 100% |
| Gross profit | **21019500** | **-** | **21019500** | **100%** |
| **Operating expenses:** |  |  |  |  |
| Selling expenses | (22555700) | (28000) | (22527700) | 80456% |
| General and administrative expenses | (10082200) | (5236900) | (4845300) | 93% |
| **Total operating expenses** | **(32637900)** | **(5264900)** | **(27373000)** | **520%** |
| **Loss from operations** | **(11618400)** | **(5264900)** | **(6353500)** | **121%** |
| **Other income (expenses):** |  |  |  |  |
| Changes in fair value of digital assets | 2238700 | 1721900 | 516800 | 30% |
| Share of equity loss | (19200) | (75200) | 56000 | (74)% |
| Impairment of long-term investments | (770800) |  | (770800) | 100% |
| Changes in fair value of trading securities | (36400) |  | (36400) | 100% |
| Investment loss on trading securities | (740100) |  | (740100) | 100% |
| Interest income, net | 131300 |  | 131300 | 100% |
| Other income, net | 35800 | 58200 | (22400) | (38)% |
| Loss from dissolution of subsidiaries | - | (1033100) | 1033100 | (100)% |
| **Total other income, net** | **839300** | **671800** | **167500** | **25%** |
| **Loss from operations before income tax** | **(10779100)** | **(4593100)** | **(6186100)** | **135%** |
| Income tax benefits (expenses) | 275400 | (87100) | 362500 | (416)% |
| **Net loss** | **(10503700)** | $**(4680200)** | $**(5823500)** | **124%** |

---

*Revenues*

In January 2024, we commenced operations of FlexTV, which is a short drama streaming platform, through Yuder. For the year ended December 31, 2024, we collected recharge amount of approximately $33.4 million from membership and top-up streaming services, we generated revenues from membership and top-up streaming services of approximately $31.6 million, online advertising service of approximately $3.7 million and content licensing services of approximately $0.9 million, respectively. For the year ended December 31, 2024, we had paying users of 1,011,762. We earned ARPPU of $31.22 for the year ended December 31, 2024.

For the year ended December 31, 2023, we were engaged in solo-staking business, which was ceased in March 2024. Accordingly, we reclassified the revenues from solo-staking business to other income, net.

 

*Cost of revenues*

For the year ended December 31, 2024, the cost of revenues was primarily comprised of platform service fees charged by third party payment processors and amortization of produced contents and software and copyrights which were applied to produce short dramas.

For the year ended December 31, 2023, the cost of revenues was primarily comprised of IT expenses incurred to support our solo-staking business. With the cessation of the business in March 2024 and reclassification of revenues to other income, we reclassified the cost of revenues to general and administrative expenses.

*Gross profit* 

Gross profit for the years ended December 31, 2024, and 2023 was approximately $21.0 million and $nil, respectively.

 

*Selling expenses*

For the year ended December 31, 2024, we incurred selling expenses of approximately $22.6 million, which was primarily incurred for advertising expenses of approximately $22.4 million, which was incurred for our short drama streaming platform.

For the year ended December 31, 2023, we incurred advertising expenses of $28,000 which was incurred for our solo-staking business.

*General and administrative expenses*

For the year ended December 31, 2024, we incurred general and administrative expenses of approximately $10.1 million, representing an increase of approximately $4.9 million, or 92.5% from approximately $5.2 million for the year ended December 31, 2023. The increase was primarily attributed to an increase of approximately $3.2 million in IT expenses because we incurred more IT support expenses for our short drama streaming platform, an increase of approximately $1.0 million in payroll and welfare expenses because we had an increase in headcounts with acquisition of Yuder in January 2024, and an increase of approximately $0.4 million in legal expenses. Our counselor assisted us in preparation of filing of the Redomicile Merger.

*Income tax benefits (expenses)*

Income tax expense was $0.3 million for the year ended December 31, 2024, which was mostly driven by a deferred tax liability of $0.3 million from intangible assets acquired from Yuder Pte Ltd.

Income tax benefits were $0.09 million for the year ended December 31, 2023, which was comprised of additional foreign corporation income tax refund issued by UK HMRC as part of the JMC resolution.

*Net Loss*

As a result of the foregoing, net loss for the year ended December 31, 2024 was approximately $10.5 million, increasing by approximately $5.8 million, or 124.4%, from approximately $4.7 million for the year ended December 31, 2023.

***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 December 31, 2025, the Company held cash of approximately $7.3 million.

For the years ended December 31, 2025, 2024 and 2023, the Company reported net losses of approximately $34.3 million, $10.5 million and $4.7 million, respectively. In addition, the Company had accumulated deficits of approximately $60.6 million and $26.3 million as of December 31, 2025 and 2024, respectively, but the Company had working capital of approximately $13.3 million, including cash of approximately $7.3 million as of December 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 20-F. Accordingly, management continues to prepare the Company's consolidated financial statements on going concern basis.

The preparation of the audited condensed consolidated financial statements in conformity with U.S. 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 years ended December 31, 2025, 2024 and 2023 presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Net cash (used in) provided by operating activities | $(9905900) | $4121200 | $(3001400) |
| Net cash used in investing activities | (1588600) | (1885100) | (4832500) |
| Net cash provided by financing activities | 9921100 | 3504900 | 3700100 |
| Net (decrease) increase in cash and cash equivalents | (1573400) | 5741000 | (4133800) |
| Cash, cash equivalents, beginning of year | 8870800 | 3129800 | 7263600 |
| **Cash, cash equivalents, end of year** | $**7297400** | $**8870800** | $**3129800** |

---

 

*Operating activities*

Net cash used in operating activities for the year ended December 31, 2025 was $10.0 million, primarily attributable to net loss of approximately $34.3 million, adjusted for (a) non-cash items including a decrease in fair value of approximately $5.5 million in digital assets, gain from exchange of digital assets of approximately $1.1 million, amortization of content assets of approximately $5.0 million, share-based compensation expenses to certain employees of approximately $8.7 million and share-based compensation expenses to certain non-employees of approximately $10.7 million, and (b) changes in operating assets and liabilities primarily in an increase of content assets of approximately $4.3 million as we continuously invested in content assets for short drama since we acquired FunVerse in January 2024.

Net cash provided by operating activities for the year ended December 31, 2024 was $4.1 million, primarily attributable to net loss of approximately $10.5 million, adjusted for (a) non-cash items including an increase in fair value of approximately $2.2 million in digital assets, amortization of content assets of approximately $4.6 million, impairment of long-term investments of approximately $0.8 million, and share-based compensation expenses to certain employees of approximately $1.4 million, and (b) changes in operating assets and liabilities including (i) a decrease of digital assets of approximately $12.3 million as we exchanged ETH and USDT into cash, (ii) an increase of content assets of approximately $4.6 million as we invested in content assets since we acquired FunVerse in January 2024, and (iii) an increase of approximately $1.7 million in contract liabilities and an increase of approximately $0.7 million in accrued and other current liabilities, which were caused by acquisition of Yuder in January 2024.

Net cash used in operating activities for the year ended December 31, 2023 was approximately $3.0 million, primarily attributable to net loss of $4,680,200, adjusted for (a) non-cash items including an increase in fair value of approximately $1.7 million in digital assets, loss of approximately $1.0 million from dissolution of subsidiaries and share-based compensation expenses to one non-employee of approximately $0.2 million, and (b) changes in operating assets and liabilities including (i) a decrease of tax receivable of approximately $1.1 million as the Company received tax refund from tax authorities, and (ii) a decrease of prepaid expenses and other current assets because of amortization of directors' and officers' insurance.

*Investing activities*

For the year ended December 31, 2025, the cash flow used in investing activities was approximately $1.6 million, which was primarily attributable to purchase of digital assets of approximately $1.4 million and investment of approximately $0.3 million in an equity investee, partially offset by collection of loans of approximately $0.1 million from a related party.

For the year ended December 31, 2024, the cash flow used in investing activities was approximately $1.9 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, loans of $0.9 million made to a related party, partially offset by acquisition of cash of approximately $0.1 million from acquisition of Yuder.

For the year ended December 31, 2023, the cash flow used in investing activities was approximately $4.8 million, which was primarily attributable to purchase of digital assets of approximately $3.1 million, purchase of stablecoins of approximately $0.1 million, and investment in equity investees of approximately $1.5 million.

*Financing activities*

For the year ended December 31, 2025, we raised cash of approximately $7.1 million from private placements and approximately $2.8 million from equity financing through at the market offering.

For the year ended December 31, 2024, we raised cash of approximately $3.5 million from private placement closed in January 2024, May 2024 and August 2024.

For the year ended December 31, 2023, the cash flow provided by financing activities was approximately $3.7 million, which was primarily attributable to proceeds of approximately $1.4 million collected from investors for subscription for the private placement that closed in February 2023, and proceeds of approximately $2.3 million advanced from investors for subscription for the private placement closed in January 2024.

***Critical Accounting Estimates***

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

Our expectations regarding the future are based on available information and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Out of our significant accounting policies, which are described in Note 2—Summary of Significant Accounting Policies of our consolidated financial statements included elsewhere in this Form 20-F, certain accounting policies are deemed "critical", as they require management's highest degree of judgment, estimates and assumptions, including (i) revenue recognition, and (ii) income tax.

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.

We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements.

***Valuation allowance for deferred tax assets***

We account for income taxes using the liability method in accordance with ASC 740, Income Taxes ("ASC 740"). Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect when the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in earnings. Deferred tax assets are reduced by a valuation allowance through a charge to income tax expense when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized.

The valuation allowance is considered on an individual entity basis. As of December 31, 2025 and 2024, valuation allowances on deferred tax assets are provided because we believe that it is more-likely-than-not that certain of the subsidiaries will not be able to generate sufficient taxable income in the near future, to realize the deferred tax assets carried-forwards.

As of December 31, 2025 and 2024, the total valuation allowance for deferred tax assets was approximately $18.2 million and $13.2 million, respectively.

**Non-GAAP Financial Measures**

In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, "Adjusted EBITDA".

Adjusted EBITDA is a financial measure defined as our EBITDA, adjusted to eliminate the effects of certain non-cash and/or non-recurring items, that do not reflect our ongoing strategic business operations. EBITDA is computed as net loss before interest, taxes, depreciation, and amortization. Adjusted EBITDA is EBITDA further adjusted for certain income and expenses, which management believes results in a performance measurement that represents a key indicator of the Company's core business operations of membership and top-up streaming services and online advertising business. The adjustments currently include share-based compensation expenses, (gain) loss from exchange of digital assets, changes in fair value of digital assets and impairment of content assets.

We believe Adjusted EBITDA can be important financial measures because they allow management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.

Adjusted EBITDA are provided in addition to and should not be considered to be a substitute for, or superior to net loss, the comparable measures under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net loss, diluted loss per share or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for historical periods are presented in the table below:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Reconciliation of non-GAAP loss from operations:** |  |  |  |
| **Net Loss** | $(34296300) | $(10503700) | $(4680200) |
| Depreciation and amortization expenses | 4995900 | 4599000 |  |
| Income tax expenses (benefits) | 1600 | (275400) | 87100 |
| Interest expenses | (101800) | (131300) | - |
| **EBITDA** | **(29400600)** | **(6311400)** | **(4593100)** |
| **Adjustments:** |  |  |  |
| Share-based compensation expenses | 19438700 | 1502200 | 237700 |
| (Gain) loss from exchange of digital assets | (1120700) | (24600) | 900 |
| Changes in fair value of digital assets | 5521300 | (2238700) | (1721900) |
| Impairment of content assets | 8700 | 3000 | - |
| **Adjusted EBITDA** | **(5552600)** | **(7069500)** | $**(6076400)** |

---

For the year ended December 31, 2025, adjusted EBITDA was a loss of $5.6 million, a meaningful improvement compared to a loss of $7.1 million in 2024 and $6.1 million in 2023.

The improvement in adjusted EBITDA was mainly driven by the Company's disciplined operational strategy amid intensifying competition in the short-drama industry. The Company successfully transitioned from self-developed content production to a more asset-light model focused on acquiring copyrighted short dramas, while optimizing its go-to-market strategy to drive organic user acquisition through social media engagement. This shift enhanced operational efficiency and stabilized margin profiles despite a challenging industry environment.

These operational improvements were partially offset by non-cash and non-recurring items that are not reflective of ongoing core operations, including share-based compensation expenses of $19.4 million (one-time equity grant) and changes in the fair value of digital assets of $5.5 million, which relate to the Company's investment activities rather than day-to-day short-drama operations. Management believes excluding these items provides a clearer view of the Company's true operating performance.

Looking ahead, the Company plans to integrate AI-generated short dramas into its content pipeline. This strategic initiative is expected to reduce content costs, improve user engagement, and strengthen profitability over time. With a clearer path to sustainable growth and operational efficiency, management remains confident in the Company's long-term value creation potential.

 ****

**Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**

**A. <u>Directors and Senior Management</u>**

The following table set forth the names and ages as of our current directors, executive officers and significant employees as of the date of this annual report. All of the directors will serve until the next annual meeting of shareholders or until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. The Company's directors have received compensation in the form of cash for their services on the Board.

---

| | | |
|:---|:---|:---|
| Name | Age | Position |
| Yucheng Hu \* | 40 | President, Chief Executive Officer, and Director |
| Yaman Demie \* | 45 | Chairman |
| Jie Ma \*\* | 32 | Chief Financial Officer, Treasurer and Secretary |
| Yunhao Chen <sup>(1)(2)</sup> | 49 | Director |
| Qin Yao <sup>(1)(3)</sup> | 43 | Director |

---

(1) Independent Director

(2) Chairperson of the Audit Committee and Member of the Compensation
Committee

(3) Chairperson of the Compensation Committee and Member of the
Audit Committee

\* On October 27, 2025, Mr. Yucheng Hu notified the Board of Directors of his decision to step down as Chairman of the Board, while continuing to serve as an executive director and the Chief Executive Officer of the Company. On the same day, the Board appointed Mr. Yaman Demir to serve as Chairman of the Board.

\*\* On December 23, 2025 (Singapore Time), Ms. Qin (Carol) Wang notified the Board of Directors of her resignation from the office of Chief Financial Officer, Treasurer and Secretary of the Company, effective immediately. Ms. Wang's resignation was not due to a disagreement with the Company, its operations, policies, or practices but due to personal matters. On the same day, the Board appointed Ms. Jie Ma, the Company's current head of finance, to serve as the Chief Financial Officer, Treasurer and Secretary of the Company, effective immediately.

None of the directors or executive officers have a family relationship as defined in Item 401 of Regulation S-K. There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.

**Business Experience**

*Mr. Yucheng Hu, President and Chief Executive Officer*. Mr. Yucheng Hu has been our president and chief executive officer since September 30, 2021, and our director since October 1, 2021. Mr. Hu is the founder of Chengdu Quleduo Technology Co., Ltd., and has served as its Chief Executive Officer since 2011. Mr. Hu is a successful entrepreneur with over 15 years of experience in the internet industry. Mr. Hu established the Xiyou online mobile game platform (www.x52xiyou.com), which is a popular online gaming platform in China. Mr. Hu has also formed various software programming studios, such as the Mengqu studio, and has developed various mini-programs for social media applications such as the "click-and-play" application for instant on-line games access. Mr. Hu brings a wealth of management experience to the Board, including several executive positions within the internet and online gaming industry.

*Mr. Yaman Demir, Chairman*. Mr. Demir is a seasoned digital asset investor with a proven track record of successful exits across 20+ crypto projects. His investment portfolio spans key sectors including DeFi, NFT infrastructure, Layer1 network and stable coins.

*Ms. Jie Ma, Chief Financial Officer, Treasurer and Secretary.* Ms. Jie Ma has served as Head of Finance of Mega Matrix Inc. since December 2023. Prior to that, she was a Senior Auditor at PricewaterhouseCoopers (PwC) in Shenzhen from October 2018 to May 2023. She has extensive experience in financial reporting under U.S. GAAP and IFRS, as well as in mergers and acquisitions, due diligence, internal controls, and SEC financial reporting. Ms. Ma holds a Master of Science in Accounting and Finance from Newcastle University in the United Kingdom and a Bachelor of Administration in Accounting from Shenzhen University in China. The Company believes that Ms. Ma's extensive experience in listed company financial management, cross-border compliance, capital operations and audit, as well as her professional qualifications, make her qualified to hold the position.

***Non-Employee Directors***

*Ms. Yunhao Chen, Director*. Dr. Yunhao Chen, currently serves as the Chief Financial Officer of Massimo Group since May 2023 and its director since April 2024, where she led the company through its IPO process and directs and manages its financial reporting and capital market functions. Prior to joining Massimo, Dr. Chen served as the Chief Financial Officer of Dogness International Corporation, where she had served similar roles and successfully executed several private placements. Dr. Chen, as the Chief Financial Officer, has extensive knowledge and experience with U.S. GAAP and SEC reporting and compliance requirements. As part of her experience, she has conducted analyses and research regarding a large amount of formal filings of SEC registrants, with focuses on financial disclosure, capital market anomaly, business valuation, internal control and auditing, corporate tax avoidance, and earnings-returns relation. With a Ph.D. in Accounting and an MBA in Finance and MIS from the University of Minnesota, and a BE degree from University of International Business and Economics of China, Dr. Chen has been active in academia. From 2007 to 2014, she served as a faculty member at the University of Miami and Florida International University. In addition, from 2011 until 2023, she has been teaching courses at the Healthcare MBA program at Southern Medical University in China. Dr. Chen has also published research results in both accounting and finance journals, such as Financial Management, the Journal of American Tax Association, and the Journal of Information System. Dr. Chen also serves on the boards of several public firms.

*Ms. Qin Yao, Director*. Ms. Qin Yao has been our director since October 1, 2021. Ms. Yao is currently an information engineer at Tencent Holdings Co., Ltd (stock code: 00700), a company listed on the Hong Kong Stock Exchange, and responsible for the products and market expansion of Tencent's industrial Internet Sector since 2017. From 2010 to 2017, Ms. Yao served as an electronic information engineer in China United Network Communications Co., Ltd. Ms. Yao has more than 10 years of investment experience in the field of cloud computing, big data, artificial intelligence and technology information services. She also has profound knowledge of financial planning, financial budgeting and financial risk management related to the cloud business. Ms. Yao holds a Bachelor's degree in Electronic Information Engineering from the University of Electronic Science and Technology in Chengdu in 2004. The Board believes Ms. Yao brings a long history of product and market expansion experience to the Board, which qualifies her to serve on the Board.

**B. <u>Compensation</u>**

In 2025, we paid an aggregate of $101.6 million in cash to our executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.

**Benefit Plans**

We do not have any profit sharing plan or similar plans for the benefit of our officers, directors or employees. However, we may establish such plan in the future.

**Equity Compensation Plan Information**

On December 29, 2021, shareholders of MPU DE approved the 2021 Equity Incentive. On December 15, 2023, shareholders of MPU DE approved the amended and restated 2021 Equity Incentive Plan ("2021 Plan"). The 2021 Plan allows for the award of stock and options, up to 1,580,000 Class A ordinary shares. Please see "Item 6. Directors, Senior Management and Employees—B. Compensation" for grant of shares or restricted stock units to our executive officers. During fiscal year 2025, a total of 361,500 Class A ordinary shares were granted under 2021 Plan. As of December 31, 2025, no options and restricted share were outstanding under the 2021 Plan.

On August 15, 2025, the shareholders of the Company approved the Company's 2025 Equity Incentive Plan ("2025 Plan"). Pursuant to the terms of the 2025 Plan, the number of authorized shares automatically resets on the first day of each calendar year during the term of the Plan, commencing on January 1, 2026, and continuing until (and including) January 1, 2035 (provided, however, that the maximum number of Class A Ordinary Shares that may be issued through 2025 Plan is set at eight million (8,000,000)) to a number of Class A Ordinary Shares equal to the lesser of (i) ten percent (10%) of the total number of Class A Ordinary Shares issued and outstanding on December 31 of the calendar year immediately preceding the date of such increase, and (ii) a number of Class A Ordinary Shares determined by the Board. Accordingly, as of January 1, 2026, the authorized number of Class A Ordinary Shares under the 2025 Plan was reset to an aggregate of 14,192,688 shares, of which eight million (8,000,000) shares have been authorized as incentive stock options. During fiscal year 2025, a total of 7,955,000 Class A ordinary shares were issued under 2025 Plan. As of December 31, 2025, no options and restricted share were outstanding under the 2025 Plan.

**Long-term incentive plans**

No long term incentive awards were granted by us in the last fiscal year.

**Pension Benefits**

None of our named executive officers participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by it.

**Nonqualified Deferred Compensation**

None of our named executive officers participate in or have account balances in nonqualified defined contribution plans or other deferred compensation plans maintained by it.

**Compensation of Non-Executive Directors**

The Company executed a standard form of indemnification agreement ("Indemnification Agreement") with each of its Board members and executive officers (each, an "Indemnitee"). Pursuant to and subject to the terms, conditions and limitations set forth in the Indemnification Agreement, the Company agreed to indemnify each Indemnitee, against any and all expenses incurred in connection with the Indemnitee's service as our officer, director and or agent, or is or was serving at the Company's request as a director, officer, employee, agent or advisor of another corporation, partnership, joint venture, trust, limited liability company, or other entity or enterprise but only if the Indemnitee acted in good faith and in a manner he/she reasonably believed to be in or not opposed to our best interest, and in the case of a criminal proceeding, had no reasonable cause to believe that his/her conduct was unlawful. In addition, the indemnification provided in the indemnification agreement is applicable whether or not negligence or gross negligence of the Indemnitee is alleged or proven. Additionally, the Indemnification Agreement establishes processes and procedures for indemnification claims, advancement of expenses and costs and contribution obligations.

**Employment Agreements with Executive Officers**

On October 25, 2022, the Board of MPU DE approved the increase to Mr. Hu's annual base salary from $1.00 to $192,000, effective as of October 16, 2022. Mr. Hu's employment is at-will and may be terminated at any time for any reason.

In connection with Ms. Ma's appointment as Chief Financial Officer, Company Secretary and Treasurer of MPU DE, Ms. Ma entered into standard form of employment agreement, effective as of December 23, 2025, for a term of two (2) years, which provides for an annual base salary of $120,000.

For the year ended December 31, 2025, a total of 361,500 restricted stock units were granted to our executive officers under the 2021 Plan.

**C. <u>Board Practices</u>**

**Board of Directors**

The term of office of our board of directors unless re-elected at the 2026 annual meeting will expire at the 2026 annual meeting.

Our officers are elected by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our memorandum and articles of association as it deems appropriate. Our memorandum and articles of association provide that our officers may consist of a Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer and such other offices as may be determined by the board of directors.

<u>Director Independence</u>

Dr. Chen and Ms. Yao, are independent directors, as defined in Section 803A of the NYSE American Company Guide. In addition, each of Dr. Chen and Ms. Yao are members of the Board's Audit and Compensation. Our independent directors will have regularly scheduled meetings at which only independent directors are present.

<u>Home Country Practice</u>

We currently follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE American in respect of the following:

● the majority independent director requirement under Section 803 of the NYSE American LLC Company Guide;

● the requirement under Section 803 of the NYSE American LLC Company Guide that an audit committee must be comprised of at least three members; and

● the requirement under Section 713 of the NYSE American LLC Company Guide, to seek shareholder approval for the issuance of more than 20% of our outstanding shares at a price less than the Minimum Price (as defined in Section 713(c) therein).

**Committees of the Board of Directors**

Dr. Chen and Ms. Yao, are independent directors, as defined in Section 803A of the NYSE American Company Guide. In addition, each of Dr. Chen and Ms. Yao are members of the Board's Audit and Compensation.

***Audit Committee****.* The Audit Committee operates under a charter adopted and approved by the board of directors. The Audit Committee meets with the Company's management and its independent registered public accounting firm to review internal financial information, audit plans and results, and financial reporting procedures. The current Audit Committee consists of Dr. Yunhao Chen (Chair) and Qin Yao. The board of directors has determined that Dr. Yunhao Chen and Qin Yao are independent within the meaning of Sections 803A and 803B(2) of the NYSE American Company Guide, and that Dr. Chen is an "audit committee financial expert" within the meaning of Item 407(d)(5) of Regulation S-K promulgated by the SEC. The Audit Committee held two meetings during the fiscal year ended December 31, 2025.

***Compensation Committee****.* The Compensation Committee assists the board of directors in discharging its responsibilities relating to the compensation of the Company's directors and officers and complying with disclosure requirements regarding such compensation, if and when required and in accordance with applicable SEC and stock exchange rules and regulations. The Compensation Committee operates under a charter adopted and approved by the board of directors. The current Compensation Committee consists of Dr. Yunhao Chen , and Qin Yao (Chair). The board of directors has determined that Dr. Yunhao Chen and Qin Yao are independent within the meaning of Section 803A anI05(c) of the NYSE American Company Guide and Rule 10C-1(b)(1) under the Securities Exchange Act of 1934, and a "non-employee director" as defined in Rule 16b-3 promulgated under the Exchange Act. The Compensation Committee held two meetings during the fiscal year ended December 31, 2025.

***Nominating and Governance Committee***. The Company does not have a formal nominating committee. The independent directors separately consider and make recommendations to the full board of directors regarding any candidate being considered to serve on the board of directors, and the full board of directors' reviews and makes determination regarding such potential candidates. In light of this practice, which is similar to the practices of many boards of directors that have a standing nominating committee, the board of directors believes it is unnecessary to formally establish such a committee.

Although the Company's board of directors does not have a formal policy with respect to board of directors diversity, it strives to constitute the board of directors with directors who bring to our Company a variety of perspectives, cultural sensitivity, life experiences, skills, expertise, and sound business understanding and judgment derived from a broad range of business, professional, community involvement, and finance experiences, as well as directors who have skills and experience that are relevant and helpful to the Company's industry and operations and who have the desire and capacity to actively serve.

***Executive Committee****.* The Executive Committee has the authority to acquire, dispose of and finance investments for the Company and execute contracts and agreements, including those related to the borrowing of money by the Company, and generally exercises all other powers of the board of directors except for those which require action by all of the directors or the independent directors under the Certificate of Incorporation or the Bylaws of the Company, or under applicable law or stock exchange requirements. As of December 31, 2025, the current Executive Committee consisted of only 1 (1) directors, Yucheng Hu. The Executive Committee did not meet during the fiscal year ended December 31, 2025.

**Board Leadership Structure and Role in Risk Oversight**

No policy exists requiring combination or separation of leadership roles and our governing documents do not mandate a particular structure. This has allowed our Board the flexibility to establish the most appropriate structure for the Company at any given time.

The Board is actively involved in overseeing our risk management processes. The Board focuses on our general risk management strategy and ensures that appropriate risk mitigation strategies are implemented by management. Further, operational and strategic presentations by management to the Board include consideration of the challenges and risks of our businesses, and the Board and management actively engage in discussion on these topics. In addition, each of the Board's committees considers risk within its area of responsibility.

**Involvement in Certain Legal Proceedings**

To the best of our knowledge, during the past ten years, none of our directors or executive officers were involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

**Compensation committee Interlocks and Insider Participation**

None of our officers currently serves, or in the past year has served, as a member of the compensation committee of any entity that has one or more officers serving on our Board of Directors.

**Code of Ethics**

The Company has adopted a code of business conduct and ethics, or the "code of conduct." The code of conduct applies to all of the Company's employees, including its executive officers, and non-employee directors, and it qualifies as a "code of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. A copy of the code of conduct is available upon written request to the Investor Relations Department, Level 21, 88 Market Street, CapitaSpring, Singapore 048948. To the extent required by law, any amendments to, or waivers from, any provision of the code of conduct will be promptly disclosed publicly. To the extent permitted by such requirements, the Company intends to make such public disclosure on its website in accordance with SEC rules.

**E. <u>Share Ownership</u>**

The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Class A Ordinary Shares as of the date of this annual report.

● each of our directors and executive officers who beneficially own our Class A Ordinary Shares; and

● each person known to us to own beneficially more than 5.0% of our Class A Ordinary Shares.

Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person is based on 62,056,493 Class A Ordinary Shares outstanding as of April 6, 2026.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Except as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown as beneficially owned, subject to applicable community property laws. In computing the number and percentage of shares beneficially owned by a person as of a particular date, shares that may be acquired by such person (for example, upon the exercise of options or warrants) within 60 days of such date are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Address of Beneficial Owner<sup>(1)</sup>** | **Number of<br> Class A<br> Shares** | **% of<br> Class A <br> Shares** | **Number of<br> Class B <br> Shares** | **% of<br> Class B<br> Shares** | **Number of<br> Class C<br> Shares** | **% of<br> Class C<br> Shares** | **% of<br> Total<br> Voting<br> Power** |
| Officers and Directors |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Yucheng Hu (Chief Executive Officer and President)<sup>(2)</sup> | 150000<sup>(2)</sup> | 4.32% | 1809977 | 64.41% | 83333 | 26.68% | 44.63% |
| &nbsp;&nbsp;&nbsp;Jie Ma (Chief Financial Officer and Secretary) | 900 | \* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Yaman Demir (Chairman) | 3290390<sup>(3)</sup> | 5.04% | 1000000 | 35.59% | 2290390 | 73.32% | 42.97% |
| &nbsp;&nbsp;&nbsp;Qin Yao (Director) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Yunhao Chen (Director) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**All directors and executive officers as a group (5 individuals)** | **150900** **<sup>(2)</sup>** | **8.96%** | **2809977** | **100%** | **3123723** | **100%** | **87.60%** |
| &nbsp;&nbsp;&nbsp;**Five Percent Stockholders** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Yaman Demir (Chairman) | 3290391<sup>(3)</sup> | 5.04% | 1000000 | 35.59 | 2290390 | 73.32% | 42.97% |

---

\* Less than 0.1%

(1) The
address of each holder listed above, except as otherwise indicated, is c/o Mega Matrix Inc., 88 Market Street, Level 21, CapitaSpring,
Singapore 048948. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment
power with respect to securities. In accordance with SEC rules, shares of common stock issuable upon the exercise of options or warrants
which are currently exercisable or which become exercisable within 60 days following the date of the information in this table are
deemed to be beneficially owned by, and outstanding with respect to, the holder of such option or warrant. Subject to community property
laws where applicable, to our knowledge, each person listed is believed to have sole voting and investment power with respect to all
shares of common stock owned by such person.

(2) Includes 1,809,977 Class B
 shares and 833,333 Class C Shares that may be converted into a total of 2,643,310 Class A Shares by Mr. Hu at his option, 150,000
 Class A Shares directly owned by Mr. Hu.

(3) Includes 1,000,000 Class B
 shares and 2,290,390 Class C Shares that may be converted into a total of 3,290,391 Class A Shares by Mr. Demir at his
 option.

**F. Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation**

Not applicable.

**Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

Please refer to "Item 6. Directors, Senior Management and Employees—E. Share Ownership."

**Employment Agreements**

See "Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements."

**C. <u>Interests of Experts and Counsel</u>**

Not applicable.

**Item 8. FINANCIAL INFORMATION**

**A. <u>Consolidated Statements and Other Financial Information</u>**

See "Item 18. Financial Statements."

**Legal Proceedings**

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. To the best knowledge of management, there are no material legal proceedings pending against us. There are no proceedings in which any of our directors, officers, or any beneficial shareholder of more than five percent (5%) of our voting securities is an adverse party or has a material interest adverse to us.

**Dividend Policy**

We presently do not expect to declare or pay such dividends in the foreseeable future and expect to reinvest all undistributed earnings to expand our operations, which our management believes would be of the most benefit to our shareholders. The declaration of dividends, if any, will be subject to the discretion of our Board of Directors, which may consider such factors as our results of operations, financial condition, capital needs and acquisition strategy, among others.

**B. <u>Significant Changes</u>**

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

**Item 9. THE OFFER AND LISTING**

**A. <u>Offer and Listing Details.</u>**

Our Class A Ordinary Shares are listed on the NYSE American exchange under the symbol "MPU".

**B. <u>Plan of Distribution</u>**

Not applicable.

**C. <u>Markets</u>**

Our Class A Ordinary Shares are listed on the NYSE American exchange under the symbol "MPU".

**D. <u>Selling Shareholders</u>**

Not applicable.

**E. <u>Dilution</u>**

Not applicable.

**F. <u>Expenses of the Issue</u>**

Not applicable.

**Item 10. ADDITIONAL INFORMATION**

**A. <u>Share Capital</u>**

Not applicable.

**B. <u>Memorandum and Articles of Association</u>**

We incorporate by reference into this annual report the description of our Third Amended and Restated Memorandum of Association incorporated by reference to Exhibit 3.1 to the Form 6-K filed with the Commission on August 15, 2025.

**C. <u>Material Contracts</u>**

Other than as described above, we have not entered into any material contracts other than in the ordinary course of business and other than those described in "Item 4. Information on the Company" or elsewhere in this annual report.

**D. <u>Exchange Controls</u>**

Describe any governmental laws, decrees, regulations or other legislation of the home country of the company which may affect: 1. the import or export of capital, including the availability of cash and cash equivalents for use by the company's group. 2. the remittance of dividends, interest or other payments to nonresident holders of the company's securities.

**E. <u>Taxation</u>**

The company shall provide information regarding taxes (including withholding provisions) to which shareholders in the host country may be subject. Information should be included as to whether the company assumes responsibility for the withholding of tax at the source and regarding applicable provisions of any reciprocal tax treaties between the home and host countries, or a statement, if applicable, that there are no such treaties.

**Cayman Islands Tax Considerations**

The following is a discussion on certain Cayman Islands income tax consequences of an investment in the securities of the Company. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor's particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.

***Under Existing Cayman Islands Laws***

 ****

Payments of dividends and capital in respect of our securities will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the securities nor will gains derived from the disposal of the securities be subject to Cayman Islands income or corporate tax. The Cayman Islands currently has no income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax.

No stamp duty is payable in respect of the issue of our ordinary shares or on an instrument of transfer in respect of such shares.

The Company has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, has applied for and received an undertaking from the Financial Secretary of the Cayman Islands in the following form:

The Tax Concessions Act

(As Revised)

Undertaking as to Tax Concessions

In accordance with the provision of Section 6 of The Tax Concessions Act (As Revised), the Financial Secretary undertakes with Cheer Holding, Inc. (the "Company"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. That
no law which is hereafter enacted in the Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply
to the Company or its operations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. In
addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance
tax shall be payable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 On
or in respect of the shares, debentures or other obligations of the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 by
way of the withholding in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Act (As Revised).

These concessions shall be for a period of 20 years from the date hereof.

**Material United States Federal Income Tax Considerations**

The summary below does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:

● a bank;

● a financial institution;

● an insurance company;

● a regulated investment company;

● a real estate investment trust;

● a dealer in securities or currencies;

● a person that has elected the mark-to-market method of accounting for your securities;

● a U.S. expatriate or former long-term resident of the U.S.;

● a government or agency or instrumentality thereof;

● a tax-exempt organization;

● a person liable for alternative minimum tax;

● a person holding our ordinary shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;

● a person who owns or is deemed to own 10% or more of our stock (by vote or value);

● a person who acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation;

● a partnership or other pass-through entity for United States federal income tax purposes;

● a person whose "functional currency" is not the U.S. dollar; or

● a person required to accelerate the recognition of any item of gross income with respect to our ordinary shares as a result of such income being recognized on an applicable financial statement.

The summary below does not contain a detailed description of all the United States federal income tax consequences to you in light of your particular circumstances and does not materially address the Medicare tax on net investment income, United States federal estate and gift taxes or the effects of any state, local or non-United States tax laws. If you are considering the purchase, ownership or disposition of our ordinary shares, you should consult your own tax advisors concerning the United States federal income tax consequences to you in light of your particular situation as well as any consequences arising under other United States federal tax laws and the laws of any other taxing jurisdiction.

***Material Tax Consequences Applicable to U.S. Holders of Our Class A Ordinary Shares***

The following summary describes the material United States federal income tax consequences of the ownership of our ordinary shares as of the date of this annual report. The discussion set forth below is applicable only to United States Holders ("U.S. Holder(s)") that hold ordinary shares as capital assets. As used herein, the term "U.S. Holder" means a beneficial owner of an ordinary share that is for United States federal income tax purposes:

● an individual citizen or resident of the United States;

● a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

● an estate the income of which is subject to United States federal income taxation regardless of its source; or

● a trust if it is subject to the primary supervision of a court within the United States and one or more United States persons has or have the authority to control all substantial decisions of the trust, or if it has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, and regulations, rulings and judicial decisions thereunder as of the date of this annual report, and the relevant authorities may be replaced, revoked or modified so as to result in United States federal income tax consequences different from those discussed below.

If a partnership holds our ordinary shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our ordinary shares, you should consult your tax advisors.

**Taxation of Dividends and Other Distributions on our Class A Ordinary Shares**

Subject to the discussion under "Passive Foreign Investment Company" below, the gross amount of distributions on the ordinary shares (including any amounts withheld to reflect PRC withholding taxes) will be taxable as dividends, to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. The income (including withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of the ordinary shares. The dividends will not be eligible for the dividends received deduction allowed to corporations under the Code. The following discussion assumes that all dividends will be paid in U.S. dollars.

Subject to applicable limitations (including a minimum holding period requirement), dividends received by non-corporate United States investors from a qualified foreign corporation may be treated as "qualified dividend income" that is subject to reduced rates of taxation. A foreign corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on ordinary shares that are readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that our ordinary shares (which are listed on the Nasdaq Capital Market) are readily tradable on an established securities market in the United States. Thus, we believe that any dividends we pay on our ordinary shares will be eligible for these reduced tax rates. A qualified foreign corporation also includes a foreign corporation that is eligible for the benefits of certain income tax treaties with the United States. In the event that we were deemed to be a PRC resident enterprise under the EIT Law, although no assurance can be given, we might be eligible for the benefits of the income tax treaty between the United States and the PRC, which is hereinafter referred to as the Treaty, and if we were eligible for such benefits, dividends we pay on our ordinary shares would be eligible for the reduced rates of taxation. You should consult your own tax advisors regarding the application of these rules given your particular circumstances.

Non-corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which the dividends are paid or in the preceding taxable year. See "Passive Foreign Investment Company" below.

To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under United States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ordinary shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by you on a subsequent disposition of the ordinary shares), and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange, as described under "Taxation of Capital Gains and Dispositions of Ordinary Shares" below. Consequently, any distributions in excess of our current and accumulated earnings and profits would generally not give rise to foreign source income and you would generally not be able to use the foreign tax credit arising from any PRC withholding tax imposed on those distributions unless the credit can be applied (subject to applicable limitations) against United States federal income tax due on other foreign source income in the appropriate category for foreign tax credit purposes. However, we do not expect to keep earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be reported as a dividend (as discussed above).

Distributions of ordinary shares or rights to subscribe for ordinary shares that are received as part of a pro rata distribution to all of our shareholders generally will not be subject to United States federal income tax. Consequently, these distributions generally will not give rise to foreign source income, and you generally will not be able to use the foreign tax credit arising from any PRC withholding tax imposed on the distributions unless the credit can be applied (subject to applicable limitations) against United States federal income tax due on other foreign source income in the appropriate category for foreign tax credit purposes.

**Taxation of Capital Gains and Dispositions of Class A Ordinary Shares**

For United States federal income tax purposes, you will recognize taxable gain or loss on any sale, exchange or other disposition of ordinary shares in an amount equal to the difference between the amount realized for the ordinary shares (including any amounts withheld to reflect PRC withholding taxes) and your tax basis in the ordinary shares. Subject to the discussion under "Passive Foreign Investment Company" below, this gain or loss will generally be capital gain or loss. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by you will generally be treated as United States source gain or loss. However, if we were treated as a PRC resident enterprise for EIT Law purposes and PRC tax were imposed on any gain, and if you are eligible for the benefits of the Treaty, you may elect to treat this gain as PRC source gain under the Treaty. If you are not eligible for the benefits of the Treaty or you fail to make the election to treat any gain as PRC source, then you may not be able to use the foreign tax credit arising from any PRC tax imposed on the disposition of our ordinary shares unless the credit can be applied (subject to applicable limitations) against tax due on other income derived from foreign sources. You will be eligible for the benefits of the Treaty if, for purposes of the Treaty, you are a resident of the United States, and you meet other requirements specified in the Treaty. Because the determination of whether you qualify for the benefits of the Treaty is fact-intensive and depends upon your particular circumstances, you are specifically urged to consult your tax advisors regarding your eligibility for the benefits of the Treaty. You are also urged to consult your tax advisor regarding the tax consequences in case any PRC tax is imposed on gain on a disposition of our ordinary shares, including the availability of the foreign tax credit and the election to treat any gain as PRC source, under your particular circumstances.

**Medicare Tax**

Certain U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition of our ordinary shares.

**Ownership, Disposition and Exercise of Warrants**

*Exercise of Warrants*

A U.S. Holder generally will not recognize gain or loss upon the acquisition of an ordinary share ("Warrant Share") on the exercise of a warrant for cash. A U.S. Holder's initial tax basis in the Warrant Share received on exercise of a warrant will be equal to the sum of (i) the U.S. Holder's tax basis in the warrant, plus (ii) the exercise price paid by the U.S. Holder on the exercise of the warrant. A U.S. Holder's holding period for the Warrant Share received on the exercise of a warrant will begin on the day after the warrant is exercised.

*Disposition of Warrants*

Subject to the PFIC rules, upon the sale or other taxable disposition of a warrant, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any property received and such U.S. Holder's tax basis in the warrant sold or otherwise disposed of. Such capital gain or loss will be long-term capital gain or loss if, at the time of the sale or other taxable disposition, the U.S. Holder's holding period for the warrant is more than one year. Preferential tax rates apply to long-term capital gains of non-corporate U.S. Holders. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is taxable as a corporation for U.S. federal income tax purposes. Deductions for capital losses are subject to significant limitations under the Code.

*Expiration of Warrants Without Exercise*

Subject to the PFIC rules, upon the lapse or expiration of a warrant, a U.S. Holder will recognize a loss in an amount equal to such U.S. Holder's tax basis in the warrant. Any such loss generally will be a capital loss and will be a long-term capital loss if, at the time of the lapse or expiration, the U.S. Holder's holding period for the warrant is more than one year. Deductions for capital losses are subject to significant limitations under the Code.

**Adjustments to the Warrants**

The warrant provides for an adjustment to the number of Warrant Shares for which a warrant may be exercised or to the exercise price of a warrant upon certain events. Subject to the PFIC rules discussed below, an adjustment that has the effect of preventing dilution of the interest of the warrant holders generally will not be taxable to a U.S. Holder. However, an adjustment may be treated as a constructive distribution to a U.S. Holder if and to the extent that such adjustment has the effect of increasing such U.S. Holder's proportionate interest in our assets or earnings and profits. Subject to the PFIC rules discussed below, any such constructive distribution would be taxable under the rules described above under the heading "Taxation of Dividends and Other Distributions on our Class A Ordinary Shares."

**Passive Foreign Investment Company ("PFIC")**

Based on the projected composition of our income and assets and the valuation of our assets, we do not expect to be a PFIC for our current taxable year, and we do not expect to become one in the future, although there can be no assurance in this regard.

In general, we will be a PFIC for any taxable year in which:

● at least 75% of our gross income is passive income; or

● at least 50% of the value (determined on a quarterly basis) of our assets is attributable to assets that produce or are held for the production of passive income.

For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person). In addition, cash and other assets readily convertible into cash are generally considered passive assets. If we own at least 25% (by value) of the stock of another corporation, we will be treated, for purposes of the PFIC tests, as owning our proportionate share of the other corporation's assets and receiving our proportionate share of the other corporation's income. Although we do not expect to be a PFIC, it is not entirely clear how the contractual arrangements between us and our variable interest entities will be treated for purposes of the PFIC rules. If it were determined that we do not own the stock of our variable interest entities for United States federal income tax purposes (for instance, because the relevant PRC authorities do not respect these arrangements), we may be treated as a PFIC.

The determination of whether we are a PFIC is made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. If we are a PFIC for any taxable year during which you hold our ordinary shares, you will be subject to special tax rules discussed below.

If we are a PFIC for any taxable year during which you hold our ordinary shares and you do not make a timely mark-to-market election (as discussed below), you will be subject to special tax rules with respect to any "excess distribution" received and any gain realized from a sale or other disposition, including a pledge of ordinary shares. Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the ordinary shares will be treated as excess distributions. Under these special tax rules:

● the excess distribution or gain will be allocated ratably over your holding period for the ordinary shares;

● the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and

● the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year for individuals or corporations, as applicable, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each relevant year.

Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year in which you hold our ordinary shares, you will generally be subject to the special tax rules described above for that year and for each subsequent year in which you hold the ordinary shares (even if we do not qualify as a PFIC in such subsequent years). However, if we cease to be a PFIC, you can avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if your ordinary shares had been sold on the last day of the last taxable year during which we were a PFIC. You are urged to consult your own tax advisors about this election.

In certain circumstances, in lieu of being subject to the special tax rules discussed above, you may make a mark-to-market election with respect to your ordinary shares, provided such ordinary shares are treated as "marketable stock." The ordinary shares generally will be treated as marketable stock if the ordinary shares are regularly traded on a "qualified exchange or other market" (within the meaning of the applicable Treasury regulations). Under current law, the mark-to-market election may be available to U.S. Holders of ordinary shares since they are listed on the Nasdaq Capital Market, which constitutes a qualified exchange.

If you make an effective mark-to-market election, for each year that we are a PFIC you will include as ordinary income the excess of the fair market value of your ordinary shares at the end of the year over your adjusted tax basis in the ordinary shares. You will be entitled to deduct as an ordinary loss in each relevant year the excess of your adjusted tax basis in the ordinary shares over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. If you make an effective mark-to-market election, in each year that we are a PFIC: (i) any gain you recognize upon the sale or other disposition of your ordinary shares will be treated as ordinary income and (ii) any loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election.

Your adjusted tax basis in the ordinary shares will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ordinary shares are no longer regularly traded on a qualified exchange or the Internal Revenue Service, or the IRS, consents to the revocation of the election. However, because a mark-to-market election cannot be made for any lower-tier PFICs that we may own (as discussed below), you will generally continue to be subject to the special tax rules discussed above with respect your indirect interest in any such lower-tier PFIC. You are urged to consult your tax advisor about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.

Alternatively, you can sometimes avoid the rules described above by electing to treat a PFIC as a "qualified electing fund" under Section 1295 of the Code. However, this option is not available to you because we do not intend to comply with the requirements necessary to permit you to make this election.

In addition, non-corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which the dividends are paid or in the preceding taxable year. You will generally be required to file IRS Form 8621 if you hold our ordinary shares in any year in which we are classified as a PFIC.

If we are a PFIC for any taxable year during which you hold our ordinary shares and any of our non-United States subsidiaries is also a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.

You are urged to consult your tax advisors concerning the United States federal income tax consequences of holding ordinary shares if we are considered a PFIC in any taxable year.

**Information Reporting and Backup Withholding**

In general, information reporting will apply to dividends in respect of our ordinary shares and the proceeds from the sale, exchange or other disposition of our ordinary shares that are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. A backup withholding tax may apply to these payments if you fail to provide a taxpayer identification number or certification of exempt status or, in the case of dividend payments, if you fail to report in full dividend and interest income.

Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished to the IRS in a timely manner.

Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to ordinary shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial institutions), by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold ordinary shares. You are urged to consult your own tax advisors regarding information reporting requirements relating to your ownership of the ordinary shares.

**F. <u>Dividends and Paying Agents</u>**

Not applicable.

**G. <u>Statement by Experts</u>**

Not applicable.

**H. <u>Documents on Display</u>**

We have previously filed with the SEC our registration statements on Form F-4 (File Number 333-271349), Form S-8 (File Number 333-277227-01), Form F-3 (File Number 333-283739), Form S-8 (File No. 333-289715), and Form F-3 (File No. 333-290026).

We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the SEC at Judiciary Plaza, 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing, among other things, the furnishing and content of proxy statements to shareholders, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

**I. <u>Subsidiary Information</u>**

For a listing of our subsidiaries, see "Item 4. Information on the Company—C. Organizational Structure."

**J. <u>Annual Report to Security Holders</u>**

If we are required to provide an annual report to security holders in response to the requirements of Form 6-K, we will submit the annual report to security holders in electronic format in accordance with the EDGAR Filer Manual.

**Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

***Foreign Exchange 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.

***Concentration Risk***

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 December 31, 2025, three customers accounted for 22.5%, 19.7% and 15.8% of accounts receivable, respectively. As of December 31, 2024, two customers accounted for 38.3% and 15.7% of accounts receivable, respectively.

**Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**

**A. <u>Debt Securities</u>**

Not Applicable.

**B. <u>Warrants and Rights</u>**

Not applicable.

**C. <u>Other Securities</u>**

Not applicable.

**D. <u>American Depositary Shares</u>**

Not applicable.

**PART II**

**Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES**

None.

**Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**

On August 15, 2025, Mega Matrix Inc. (the "Company") announced the results of its Extraordinary General Meeting, which was held earlier that day in Singapore. At the Extraordinary General Meeting, shareholders approved a proposal, as an ordinary resolution, to increase the share capital to US$1,110,000, divided into: (i) 1,000,000,000 class A ordinary shares of par value US$0.001 each, (ii) 50,000,000 class B ordinary shares of par value US$0.001 each, (iii) 50,000,000 class C ordinary shares of par value US$0.001 each, and (iv) 10,000,000 preferred shares of par value US$0.001 each, by an addition of 900,000,000 class A ordinary shares of par value US$0.001 each, and 40,000,000 class B ordinary shares of par value US$0.001 each, and the creation of a new share class comprising of 50,000,000 class C ordinary shares of par value US$0.001 each, with the rights and privileges as set out in the Third Amended and Restated Memorandum and Articles of Association of the Company with immediate effect. We incorporate by reference into this annual report the description of our share capital and rights of Class A Shares, Class B Shares and Class C Shares by reference to Exhibit 3.1 and Exhibit 4.(vi) to the Form 6-K filed with the Commission on August 15, 2025.

In February 2025, we filed a registration statement on Form F-3 (File Number 333-283739), which was declared effective on February 7, 2025, to offer Class A Ordinary Shares, preferred shares, debt securities, warrants, units consisting of Class A Ordinary Shares, preferred shares, debt securities or warrants, or any other combination of these securities at an aggregate offering price of up to $250,000,000. We intend to use the net proceeds from such offerings in the manner as disclosed in our registration statement on Form F-3 (File Number 333-283739).

On September 4, 2025, we filed a registration statement on Form F-3 (File Number 333-290026), which was amended on November 25, 2025, and declared effective on January 15, 2026, to offer Class A Ordinary Shares, preferred shares, debt securities, warrants, units consisting of Class A Ordinary Shares, preferred shares, debt securities or warrants, or any other combination of these securities at an aggregate offering price of up to $2,000,000,000. We intend to use the net proceeds from such offerings in the manner as disclosed in our registration statement on Form F-3 (File Number 333-290026).

**Item 15. CONTROLS AND PROCEDURES** 

**Disclosure Controls and Procedures**

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025. Based upon that evaluation, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has concluded that, due to the material weakness described below, as of December 31, 2025, our disclosure controls and procedures were not effective.

**Management's Annual Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America and includes those policies and procedures that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of our management and directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our company's assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as promulgated by the Securities and Exchange Commission, our management including our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of internal control over financial reporting As of December 31, 2025 using the criteria set forth in the report "Internal Control—Integrated Framework (2013)" published by the Committee of Sponsoring Organizations of the Treadway Commission (known as COSO).

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. During our assessment of internal control over financial reporting as of December 31, 2025, we identified a material weakness related to our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of the generally accepted accounting principles in the United States ("U.S. GAAP") and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements.

Because of the material weakness described above, our management has concluded that we had not maintain effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

**Attestation Report of the Registered Public Accounting Firm**

This annual report on Form 20-F does not include an attestation report of internal controls from our independent registered public accounting firm. We qualify as an "emerging growth company" pursuant to the JOBS Act, and, since our public float was not over $75 million as of June 30, 2025, we are exempted from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 for the assessment of our internal control over financial reporting for the year ended December 31, 2025.

**Changes in Internal Control over Financial Reporting**

In preparing our consolidated financial statements, a material weakness described above was identified in our internal control over financial reporting as of December 31, 2025. As defined in standards established by the PCAOB, a "material weakness" is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

To remedy our identified material weakness in connection with preparation of our consolidated financial statements, we try to adopt several measures to improve our internal control over financial reporting, including (i) hiring additional accounting personnel with experience in U.S. GAAP and SEC reporting requirements, and (ii) providing more regular training on an ongoing basis to our accounting personnel that cover a broad range of accounting and financial reporting topics.

Other than as described above, no changes in our internal controls over financial reporting occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Our management has worked, and will continue to work to strengthen our internal controls over financial reporting. There were no other changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**Item 16. [RESERVED]**

**Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT**

The current Audit Committee consists of Dr. Yunhao Chen (Chair) and Qin Yao. The board of directors has determined that Dr. Yunhao Chen (Chair) and Qin Yao are independent within the meaning of Sections 803A and 803B(2) of the NYSE American Company Guide, and that Dr. Chen is an "audit committee financial expert" within the meaning of Item 407(d)(5) of Regulation S-K promulgated by the SEC.

**Item 16B. CODE OF ETHICS**

The Company has adopted a code of business conduct and ethics, or the "code of conduct." The code of conduct applies to all of the Company's employees, including its executive officers, and non-employee directors, and it qualifies as a "code of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. A copy of the code of conduct is available upon written request to the Investor Relations Department, Level 21, 88 Market Street, CapitaSpring, Singapore 048948. To the extent required by law, any amendments to, or waivers from, any provision of the code of conduct will be promptly disclosed publicly. To the extent permitted by such requirements, the Company intends to make such public disclosure on its website in accordance with SEC rules.

**Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered and billed by our independent registered public accounting firm for the periods indicated.

---

| | | |
|:---|:---|:---|
|  | **2024** | **2025** |
| Audit Fees<sup>(1)</sup> | $224050 | $219000 |
| Audit-Related Fees<sup>(2)</sup> | 79390 | 850 |
| Tax Fees<sup>(3)</sup> |  |  |
| All Other Fees<sup>(4)</sup> | - | - |
| **Total** | $303440 | $219850 |

---

(1) Audit
fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review
of our quarterly financial statements. This information is presented as of the latest practicable date for this annual report.

(2) Audit
related fees represent fees for assurance and related services that are reasonably related to the performance of the audit or review
of our financial statements and not reported above under "Audit Fees.". Those services are normally provided in connection
with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC matters.

(3) Our
independent registered public accounting firms did not provide us with tax compliance, tax advice or tax planning services. No such fees
were incurred during the fiscal years ended December 31, 2024 or 2025.

(4) All
other fees include fees billed by our independent registered public accounting firms for products or services other than as described
in the immediately preceding three categories. No such fees were incurred during the fiscal years ended December 31, 2024 or 2025.

The policy of our audit committee is to pre-approve all audit and non-audit services provided by Audit Alliance LLP, our independent registered public accounting firm, including audit services, audit-related services, tax services and other services as described above.

**Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**

Not applicable.

**Item 16E. PURCHASES OF EQUITY SECURITIES BY THE COMPANY AND AFFILIATED PURCHASERS**

Neither we nor any "affiliated purchaser," as defined in Rule 10b-18(a)(3) of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.

**Item 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT**

Not Applicable.

**Item 16G. CORPORATE GOVERNANCE**

As a foreign private issuer, we rely on certain provision under NYSE American Company Guide that allows us to follow Cayman Islands law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the NYSE American.

We currently rely on home country practice to be exempted from certain of the corporate governance requirements of the NYSE American, namely (i) there will not be a necessity to have regularly scheduled executive sessions with independent Directors; and (ii) there will be no requirement for the Company to obtain shareholder approval prior to an issuance of securities in connection with (a) the acquisition of stock or assets of another company; (b) equity-based compensation of officers, directors, employees or consultants; (c) a change of control; and (d) transactions other than public offerings. We have also followed and intend to continue to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE that listed companies must have a majority of independent directors and that the audit committee consists of at least three members.

Other than those described above, currently there are no other significant differences between our corporate governance practices and those followed by U.S. domestic companies under NYSE American corporate governance listing standards we are aware of. Also see "Item 3. Key Information — D. Risk Factors — Risks Related to our Company and Our Securities — As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from NYSE American corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with NYSE American corporate governance listing standards" and see "Item 3. Key Information — D. Risk Factors — Risks Related to our Company and Our Securities — We are a foreign private issuer within the meaning of the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies."

In the future, we may elect to follow other home country practices with regard to certain matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NYSE American corporate governance requirements.

**Item 16H. MINE SAFETY DISCLOSURE**

Not applicable.

**Item 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not Applicable.

**ITEM 16J. INSIDER TRADING POLICIES**

The Company has adopted an insider trading policy that is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy is filed as Exhibit 11.2 to this annual report.

**ITEM 16K. CYBERSECURITY**

The Company operates in a dynamic environment with evolving cybersecurity threats. Our business relies heavily on the secure operation of our technology infrastructure and the protection of user data.

A successful cyberattack could have a significant negative impact on our business, including:

● **Data breaches:** Unauthorized access to user data, including nicknames, email addresses, country, and identification numbers, could lead to reputational damage, regulatory fines, and legal action, a loss of users and loss of revenue.

● **Disruption of service:** A cyberattack could disrupt our service, preventing users from accessing content and impacting our revenue.

● **Loss of intellectual property:** Cybercriminals could steal our proprietary content or intellectual property, harming our competitive advantage.

● **Costs associated with responding to a cyberattack:** Costs of remediation, legal fees, and regulatory fines, could be significant.

The security and privacy of our users and their data is our priority, and we proactively manage cybersecurity risks to ensure robust protection for our platform. We integrate cybersecurity risk management into our overall organizational strategy. Our Board of Directors oversees risk management, including cybersecurity. Key elements of our framework include:

● **Risk Assessment and Identification:** We conduct regular assessments to identify, evaluate, and prioritize potential cybersecurity threats and vulnerabilities. We utilize various methods like vulnerability scanning, threat intelligence feeds, and penetration testing.

● **Technical Safeguards:** We deploy a multi-layered defense system with various technical safeguards to protect our infrastructure and user data. This includes firewalls, intrusion detection and prevention systems (IDS/IPS), data encryption (at rest and in transit), and access controls based on the principle of least privilege.

● **Incident Response and Recovery:** We have documented and well-rehearsed incident response procedures to effectively respond to, contain, and remediate security incidents. These procedures ensure timely detection, investigation, and recovery, minimizing potential damage and ensuring user privacy.

● **Mapping data flows and user locations:** We understand where user data is stored and transmitted, enabling us to identify relevant privacy laws and to implement suitable user data protection.

● **Third-Party Risk Management:** We implement a rigorous process for vetting and securing our relationships with third-party vendors. This includes security assessments and contractual agreements outlining specific security measures they must adhere to.

● **Security Awareness and Training:** We regularly conduct comprehensive security awareness training programs for all employees. These programs educate them on cybersecurity best practices, threat identification, and reporting procedures.

Despite our efforts, there is no guarantee that we can completely eliminate the risk of cyberattacks. Our cybersecurity measures may not be effective against all threats, and new vulnerabilities may emerge that we are unaware of.

**PART III**

**Item 17. FINANCIAL STATEMENTS**

We have elected to provide financial statements pursuant to Item 18.

**Item 18. FINANCIAL STATEMENTS**

The consolidated financial statements of Mega Matrix Inc., and its subsidiaries are included at the end of this annual report.

**Item 19. EXHIBITS** 

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 1.1 | [Third Amended and Restated Memorandum of Association and Articles of Association of Mega Matrix Inc. (incorporated by reference to Exhibit 3.1 to the registrant's Current Report on Form 6-K filed with the Commission on August 15, 2025).](https://www.sec.gov/Archives/edgar/data/1953021/000121390025077536/ea025343101ex3-1_mega.htm) |
| 2.1 | [Form of Warrant Certificate (Incorporated herein by reference to Exhibit 4.1 to MPU DE's Report on Form 8-K filed with the Commission on January 18, 2024).](http://www.sec.gov/Archives/edgar/data/1036848/000121390024004291/ea191737ex4-1_megamatrix.htm) |
| 2.2 | [Form of Series A Common Stock Warrant (incorporated herein by reference to Exhibit 4.2 to the registrant's Current Report on Form 8-K filed with the Commission on August 5, 2024).](http://www.sec.gov/Archives/edgar/data/1036848/000121390024065200/ea021048101ex4-2_mega.htm) |
| 2.3 | [Form of Series B Common Stock Warrant (incorporated herein by reference to Exhibit 4.3 to the registrant's Current Report on Form 8-K filed with the Commission on August 5, 2024).](http://www.sec.gov/Archives/edgar/data/1036848/000121390024065200/ea021048101ex4-3_mega.htm) |
| 2.4 | [Form of Placement Agent Warrant (incorporated herein by reference to Exhibit 4.4 to the registrant's Current Report on Form 8-K filed with the Commission on August 5, 2024).](http://www.sec.gov/Archives/edgar/data/1036848/000121390024065200/ea021048101ex4-4_mega.htm) |
| 2.5 | [Description of Securities (incorporated by reference to Exhibit 2.5 to the registrant's annual report on Form 20-F filed with the Commission on March 28, 2025).](https://www.sec.gov/Archives/edgar/data/1953021/000101376225003608/ea023442501ex2-5_mega.htm) |
| 4.1 | [Form of Independent Director Agreement (Incorporated herein by reference to Exhibit 10.4 to MPU DE's Report on Form 8-K filed with the Commission on October 1, 2021).](http://www.sec.gov/Archives/edgar/data/1036848/000121390021051095/ea148089ex10-4_aerocentury.htm) |
| 4.2+ | [Form of Employment Agreement (Incorporated herein by reference to Exhibit 10.5 to MPU DE's Report on Form 8-K filed with the Commission on October 1, 2021).](http://www.sec.gov/Archives/edgar/data/1036848/000121390021051095/ea148089ex10-5_aerocentury.htm) |
| 4.3+ | [Amendment to Employment Agreement by and between AeroCentury Corp and Yucheng Hu, dated as of December 16, 2021 (Incorporated herein by reference to Exhibit 10.1 to MPU DE's Report on Form 8-K filed with the Commission on December 17, 2021).](http://www.sec.gov/Archives/edgar/data/1036848/000121390021065830/ea152392ex10-1_aerocentury.htm) |
| 4.4 | [2021 Equity Incentive Plan (Incorporated herein by reference to Exhibit 10.1 to MPU DE's Report on Form 8-K filed with the Commission on January 3, 2022).](http://www.sec.gov/Archives/edgar/data/1036848/000121390022000004/ea153198ex10-1_aerocen.htm) |
| 4.5 | [Form of Unit Subscription Agreement (Incorporated by reference to Exhibit 10.1 to MPU DE's Report on Form 8-K filed on January 18, 2024).](http://www.sec.gov/Archives/edgar/data/1036848/000121390024004291/ea191737ex10-1_megamatrix.htm) |
| 4.6+ | [Form of Restricted Stock Unit Award Agreement under the 2021 Amended and Restated Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 to MPU DE's Report on Form 8-K filed on January 19, 2024).](http://www.sec.gov/Archives/edgar/data/1036848/000121390024004665/ea191859ex10-3_megamatrix.htm) |
| 4.7 | [Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.1 to MPU DE's Report on Form 8-K filed with the Commission on May 14, 2024)](http://www.sec.gov/Archives/edgar/data/1036848/000121390024042908/ea020595201ex10-1_megamat.htm) |

---

---

| | |
|:---|:---|
| 4.8 | [Form of Independent Director Agreement (incorporated herein by reference to Exhibit 10.2 to MPU DE's Report on Form 8-K filed with the Commission on May 14, 2024).](https://www.sec.gov/Archives/edgar/data/1036848/000121390021051095/ea148089ex10-4_aerocentury.htm) |
| 4.9 | [Form of Share Subscription Agreement (incorporated herein by reference to Exhibit 10.1 to MPU DE's Report on Form 8-K filed with the Commission on May 9, 2024)](https://www.sec.gov/Archives/edgar/data/1036848/000121390024041040/ea020563601ex10-1_mega.htm) |
| 4.10 | [Form of Securities Purchase Agreement dated August 1, 2024 (incorporated herein by reference to Exhibit 10.1 to MPU DE's Report on Form 8-K filed with the Commission on August 5, 2024).](https://www.sec.gov/Archives/edgar/data/1036848/000121390024065200/ea021048101ex10-1_mega.htm) |
| 4.11 | [Form of Registration Rights Agreement, dated August 1, 2024 (incorporated herein by reference to Exhibit 10.2 to MPU DE's Report on Form 8-K filed with the Commission on August 5, 2024).](https://www.sec.gov/Archives/edgar/data/1036848/000121390024065200/ea021048101ex10-2_mega.htm) |
| 4.12 | [Share Exchange Agreement dated August 15, 2024 (incorporated herein by reference to Exhibit 10.1 to MPU DE's Current Report on Form 8-K filed with the Commission on August 16, 2024).](https://www.sec.gov/Archives/edgar/data/1036848/000121390024070267/ea021152101ex10-1_mega.htm) |
| 4.13 | [Form of Repurchase Agreement (incorporated herein by reference to Exhibit 4.1 to the registrant's Current Report on Form 6-K filed with the Commission on December 11, 2024).](http://www.sec.gov/Archives/edgar/data/1953021/000121390024107938/ea022415701ex4-1_megamatrix.htm) |
| 4.14 | [Form of Subscription Agreement (incorporated herein by reference to Exhibit 4.2 to the registrant's Current Report on Form 6-K filed with the Commission on December 11, 2024).](http://www.sec.gov/Archives/edgar/data/1953021/000121390024107938/ea022415701ex4-2_megamatrix.htm) |
| 4.15 | [Third Amended and Restated Agreement and Plan of Merger (incorporated by reference to Exhibit 2.1 to the Form F-4, as amended, filed with the Commission on August 7, 2024).](http://www.sec.gov/Archives/edgar/data/1953021/000101376224003211/ea0210303-f4a6_megamatrix.htm#annexa) |
| 4.16 | [At The Market Offering Agreement, dated February 18, 2025, by and between Mega Matrix Inc. and H.C. Wainwright & Co., LLC (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 6-K filed with the Commission on February 18, 2025).](https://www.sec.gov/Archives/edgar/data/1953021/000121390025014895/ea023133001ex10-1_megamatrix.htm) |
| 4.17 | [Form of Standard Indemnification Agreement (Incorporated by reference to Exhibit 10.2 to the Company's Report on Form 6-K filed with the Commission on June 30, 2025)](https://www.sec.gov/Archives/edgar/data/1953021/000121390025059250/ea024731601ex10-2_mega.htm) |
| 4.18 | [Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 6-K filed with the Commission on July 25, 2025).](https://www.sec.gov/Archives/edgar/data/1953021/000121390025067479/ea025015301ex10-1_megamatrix.htm) |
| 4.19 | [Master Purchase And Sale Agreement For Digital Assets With A1 Ltd (Incorporated by reference to Exhibit 10.1 to the Company's Amendment No.1 to Form F-3 filed with the Commission on November 25, 2025)](https://www.sec.gov/Archives/edgar/data/1953021/000121390025114823/ea026591701ex10-1_megamatrix.htm) |
| 4.20 | [Custody Agreement With Matrix Trust Company Limited (Incorporated by reference to Exhibit 10.2 to the Company's Amendment No.1 to Form F-3 filed with the Commission on November 25, 2025)](https://www.sec.gov/Archives/edgar/data/1953021/000121390025114823/ea026591701ex10-2_megamatrix.htm) |
| 8.1\* | [Subsidiaries](ea028186001ex8-1.htm) |
| 11.1 | [Code of Ethics (incorporated by reference to Exhibit 11.1 to the registrant's annual report on Form 20-F filed with the Commission on March 28, 2025).](https://www.sec.gov/Archives/edgar/data/1953021/000101376225003608/ea023442501ex11-1_mega.htm) |
| 11.2 | [Insider Trading Policy (incorporated by reference to Exhibit 11.2 to the registrant's annual report on Form 20-F filed with the Commission on March 28, 2025).](https://www.sec.gov/Archives/edgar/data/1953021/000101376225003608/ea023442501ex11-2_mega.htm) |
| 12.1\* | [Certifications of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act.](ea028186001ex12-1.htm) |
| 12.2\* | [Certifications of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act.](ea028186001ex12-2.htm) |
| 13.1\*\* | [Certifications of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act.\*\*](ea028186001ex13-1.htm) |
| 13.2\*\* | [Certifications of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act.\*\*](ea028186001ex13-2.htm) |
| 15.1\* | [Consent of Audit Alliance LLP](ea028186001ex15-1.htm) |
| 97 | [Clawback Policy (incorporated by reference to Exhibit 97 to the MPU DE's Form 10-K filed with the Commission on March 18, 2024)](https://www.sec.gov/Archives/edgar/data/1036848/000121390024023493/ea020101701ex97_megamatrix.htm) |
| 101.INS | Inline XBRL Instance Document (\*) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema (\*) |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase (\*) |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase (\*) |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase (\*) |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (\*) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (\*) |

---

*+* Management contract or compensatory plan or arrangement.

\* Filed herewith.

\*\* Furnished herewith.

**SIGNATURES**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

---

| | | |
|:---|:---|:---|
|  | **Mega Matrix Inc.** | **Mega Matrix Inc.** |
|  | By: | /s/ Yucheng Hu |
|  | Name: | Yucheng Hu |
|  | Title: | Chief Executive Officer |
| Date: April 16, 2026 |  |  |

---

**<u>**TABLE OF CONTENTS**</u>**

---

| | |
|:---|:---|
|  | **Page** |
| [Report of independent registered public accounting firm](#f_001) | F-2 |
| [Consolidated Balance Sheets](#f_002) | F-3 |
| [Consolidated Statements of Operations and Comprehensive Loss](#f_003) | F-4 |
| [Consolidated Statements of Changes in Equity](#f_004) | F-5 |
| [Consolidated statements of Cash Flows](#f_005) | F-6 |
| [Notes to consolidated financial statements](#f_006) | F-7 |

---

![](ea028186001_img5.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Shareholders of Mega Matrix Inc.

 ****

***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of Mega Matrix Inc. and its subsidiaries (collectively, the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for each of the three years in the period ended December 31, 2025, 2024, and 2023 and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

 ****

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Audit Alliance LLP

Audit Alliance LLP (PCAOB ID 3487)

Singapore, April 15, 2026

We have served as the Company's auditor since 2021.

**MEGA MATRIX INC.**

**CONSOLIDATED BALANCE SHEETS**

**(Rounded to the Nearest Hundred US Dollar, except for share and per share data, unless otherwise stated)**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| **ASSETS** |  |  |
| **Current Assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $7297400 | $8870800 |
| &nbsp;&nbsp;&nbsp;Trading securities | 4100 | 7000 |
| &nbsp;&nbsp;&nbsp;Stable coins | 100 | - |
| &nbsp;&nbsp;&nbsp;Digital assets | 5760400 | - |
| &nbsp;&nbsp;&nbsp;Loans receivable - a related party | 771200 | 866000 |
| &nbsp;&nbsp;&nbsp;Due from a related party | 6200 | - |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 508800 | 422800 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 2352900 | 3175100 |
| &nbsp;&nbsp;&nbsp;Current content assets, net | 966300 | 1566800 |
| **Total current assets** | **17667400** | **14908500** |
| **Non-current Assets:** |  |  |
| Long-term investments | 1757200 | 1480800 |
| Goodwill | 2889200 | 2889200 |
| Content assets, net | 113500 | 183800 |
| **Total non-current assets** | **4759900** | **4553800** |
| **Total assets** | $**22427300** | $**19462300** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $775300 | $1000500 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 1738200 | 2095500 |
| &nbsp;&nbsp;&nbsp;Income taxes payable | 4400 | 2700 |
| &nbsp;&nbsp;&nbsp;Other current liabilities and accrued expenses | 1837600 | 2255300 |
| **Total liabilities** | **4355500** | **5354000** |
| Commitments and contingencies (Note 12) |  |  |
| **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, 1,000,000,000 and 100,000,000 shares authorized, 61,926,888 and 34,536,384 shares outstanding as of December 31, 2025 and 2024, respectively | 61900 | 34600 |
| &nbsp;&nbsp;&nbsp;Class B Ordinary Shares, $0.001 par value, 50,000,000 and 10,000,000 shares authorized, 2,809,977 and 5,933,700 shares outstanding as of December 31, 2025 and 2024, respectively | 2800 | 5900 |
| &nbsp;&nbsp;&nbsp;Class C Ordinary Shares, $0.001 par value, 10,000,000 and nil shares authorized, 3,123,723 and nil shares outstanding as of December 31, 2025 and 2024, respectively | 3100 | - |
| &nbsp;&nbsp;&nbsp;Paid-in capital | 78637900 | 40405400 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (60633900) | (26337600) |
| **Total shareholder's equity** | **18071800** | **14108300** |
| **Total liabilities and shareholder's equity** | $**22427300** | $**19462300** |

---

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

**MEGA MATRIX INC.**

**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 Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Revenues | $26105600 | $36184000 | $- |
| Cost of revenues | (11710500) | (15164500) | - |
| Gross profit | **14395100** | **21019500** | **-**  |
| **Operating expenses:** |  |  |  |
| Selling expenses | (12382400) | (22555700) | (28000) |
| General and administrative expenses | (30943200) | (10082200) | (5236900) |
| **Total operating expenses** | **(43325600)** | **(32637900)** | **(5264900)** |
| **Loss from operations** | **(28930500)** | **(11618400)** | **(5264900)** |
| **Other income (expenses):** |  |  |  |
| Changes in fair value of digital assets | (5521300) | 2238700 | 1721900 |
| Share of equity loss | (300) | (19200) | (75200) |
| Impairment of long-term investments | - | (770800) | - |
| Changes in fair value of trading securities | 21400 | (36400) | - |
| Investment loss on trading securities | (25900) | (740100) | - |
| Interest income, net | 101900 | 131300 | - |
| Other income, net | 60000 | 35800 | 58200 |
| **Total other (expenses) income, net** | **(5364200)** | **839300** | **671800** |
| **Loss from operations before income tax** | **(34294700)** | **(10779100)** | **(4593100)** |
| Loss from dissolution of subsidiaries | - | - | (1033100) |
| Income tax (expenses) benefits | (1600) | 275400 | (87100) |
| **Net loss and comprehensive loss** | **(34296300)** | **(10503700)** | $**(4680200)** |
| Less: Net loss and comprehensive loss attributable to non-controlling interests | - | (1620300) | (615800) |
| **Net loss and comprehensive loss attributable to Mega Matrix Inc.'s stockholders** | $**(34296300)** | $**(8883400)** | $**(4064400)** |
| **Loss per share:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and Diluted | $(0.75) | $(0.23) | $(0.13) |
| **Weighted average shares used in loss per share computations:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and Diluted | 45723613 | 37998749 | 31323124 |

---

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

**MEGA MATRIX INC.**

**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<br> Ordinary Shares** | **Class A<br> Ordinary Shares** | **Class B<br> Ordinary Shares** | **Class B<br> Ordinary Shares** | **Class C<br> Ordinary Shares** | **Class C<br> Ordinary Shares** | | | | |
|  | **Number of<br> Stocks** | **Amount** | **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, 2022** | **26484055** | $**26500** | **-** | $**-** | **-** | $**-** | $**21372100** | $**(13420400)** | $**(1016300)** | $**6961900** |
| Cumulative-effect adjustment of opening balance due to adoption of fair value measurement of digital assets |  |  |  |  |  |  |  | 30600 |  | 30600 |
| Issuance of common stocks pursuant to private placement | 5079999 | 5100 |  |  |  |  | 6598900 |  |  | 6604000 |
| Issuance of common stocks to a service provider | 160577 | 200 |  |  |  |  | 237500 |  |  | 237700 |
| Capital injection from a non-controlling shareholder |  |  |  |  |  |  |  |  | 88900 | 88900 |
| Withdrawal of capital by a non-controlling shareholder |  |  |  |  |  |  |  |  | (88900) | (88900) |
| Dissolution of subsidiaries |  |  |  |  |  |  | (386300) |  | 1632100 | 1245800 |
| Net loss | - | - | - | - | - | - | - | (4065400) | (615800) | (4680200) |
| **Balance, December 31, 2023** | **31724631** | $**31800** | **-** | $**-** | **-** | $**-** | $**27822200** | $**(17454200)** | $**-** | $**10399800** |
| Issuance of Class B Ordinary shares |  |  | 5933700 | 5900 |  |  | (5900) |  |  |  |
| Issuance of common stocks to certain investors in a private placement | 4853635 | 4900 |  |  |  |  | 8930100 |  |  | 8935000 |
| Issuance of common stocks to an underwriter | 208091 | 200 |  |  |  |  | (200) |  |  |  |
| Issuance of common stocks to acquire a subsidiary | 1500000 | 1500 |  |  |  |  | 2263500 |  | 1510000 | 3775000 |
| Share-based compensation to employees | 626650 | 600 |  |  |  |  | 1355200 |  |  | 1355800 |
| Share-based compensation to non-employees | 57077 | \* |  |  |  |  | 146400 |  |  | 146400 |
| Issuance of common stocks to acquire noncontrolling interest of a subsidiary (Note 4) | 1500000 | 1500 |  |  |  |  | (111800) |  | 110300 |  |
| Net loss |  |  |  |  |  |  |  | (8883400) | (1620300) | (10503700) |
| Repurchase of Class A Ordinary Shares | (5933700) | (5900) | - | - | - | - | 5900 | - | - | - |
| **Balance, December 31, 2024** | **34536384** | $**34600** | **5933700** | $**5900** | **-** | $**-** | $**40405400** | $**(26337600)** | $**-** | $**14108300** |
| Reclassification of Class B Ordinary Shares to Class C Ordinary Shares |  |  | (3123723) | (3100) | 3123723 | 3100 |  |  |  |  |
| Share-based compensation to employees | 3888400 | 3900 |  |  |  |  | 8708900 |  |  | 8712800 |
| Share-based compensation to non-employees | 4627832 | 4500 |  |  |  |  | 10721400 |  |  | 10725900 |
| Issuance of ordinary shares to Manager of ATM (Note 9) | 2089272 | 2100 |  |  |  |  | 2819000 |  |  | 2821100 |
| Issuance of ordinary shares pursuant to a private placement | 16000000 | 16000 |  |  |  |  | 15984000 |  |  | 16000000 |
| Issuance of ordinary shares to an underwriter of a private placement | 785000 | 800 |  |  |  |  | (800) |  |  |  |
| Net loss | - | - | - | - | - | - | - | (34296300) | - | (34296300) |
| **Balance, December 31, 2025** | **61926888** | $**61900** | **2809977** | $**2800** | **3123723** | **3100** | $**78637900** | $**(60633900)** | $**-** | $**18071800** |

---

\* 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 consolidated financial statements.

**MEGA MATRIX INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Rounded to the Nearest Hundred US Dollar, unless otherwise stated)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended <br> December 31,** | **For the Years Ended <br> December 31,** | **For the Years Ended <br> December 31,** |
|  | **2025** | **2024** | **2023** |
| **Operating activities:** |  |  |  |
| Net loss | $(34296300) | $(10503700) | $(4680200) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 4995900 | 4599000 | - |
| &nbsp;&nbsp;&nbsp;Impairment of content assets | 8700 | 3000 | - |
| &nbsp;&nbsp;&nbsp;Share-based compensation for employees | 8712800 | 1355800 | - |
| &nbsp;&nbsp;&nbsp;Share-based compensation for non-employees | 10725900 | 146400 | 237700 |
| &nbsp;&nbsp;&nbsp;Gain of digital assets from revenues | - | (14300) | (47800) |
| &nbsp;&nbsp;&nbsp;(Gain) loss from exchange of digital assets | (1120700) | (24600) | 900 |
| &nbsp;&nbsp;&nbsp;Changes in fair value of digital assets | 5521300 | (2238700) | (1721900) |
| &nbsp;&nbsp;&nbsp;Interest income from loans receivable due from a related party | (17100) | (16000) | - |
| &nbsp;&nbsp;&nbsp;Share of equity loss in an equity method investee | 300 | 19200 | 75200 |
| &nbsp;&nbsp;&nbsp;Loss from dissolution of subsidiaries | - | - | 1033100 |
| &nbsp;&nbsp;&nbsp;Changes in fair value of trading securities | (21400) | 36400 | - |
| &nbsp;&nbsp;&nbsp;Impairment of long-term investments | - | 770800 | - |
| &nbsp;&nbsp;&nbsp;Deferred tax benefits | - | (277000) | - |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stable coins | - | 1500000 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Digital assets | - | 12307100 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (86000) | (99300) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 822000 | (2300700) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from a related party | (6200) | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current content assets, net | (4333800) | (4558200) | 324400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes receivable | - | - | 1095600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (225100) | 957100 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | (357300) | 1700500 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable | 1600 | 1600 | 124200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities and accrued expenses | (230500) | 756800 | 557400 |
| **Net cash (used in) provided by operating activities** | **(9905900)** | **4121200** | **(3001400)** |
| **Investing activities:** |  |  |  |
| Purchases of digital assets | (1448200) | - | (3146600) |
| Purchases of stable coins | - | (610000) | (139900) |
| Investment in equity investees | (276700) | (500000) | (1546000) |
| Loans made to a related party | - | (850000) | - |
| Repayment of loans from a related party | 111900 | - | - |
| Investment in trading securities | (19800) | (267800) | - |
| Redemption of investments in trading securities | 44200 | 224400 | - |
| Acquisition of net assets of a subsidiary | - | 118300 | - |
| **Net cash used in investing activities** | **(1588600)** | **(1885100)** | **(4832500)** |
| **Financing activities:** |  |  |  |
| Subscription fee advanced from investors | - | 3504900 | 2280100 |
| Proceeds from issuance of common stocks pursuant to private placements | 7100000 | - | 1420000 |
| Proceeds from issuance of common stocks pursuant to at the market offering | 2821100 | - | - |
| Capital injection from a non-controlling shareholder | - | - | 88900 |
| Capital withdrawal by a non-controlling shareholder | - | - | (88900) |
| **Net cash provided by financing activities** | **9921100** | **3504900** | **3700100** |
| Net (decrease) increase in cash and cash equivalents | (1573400) | 5741000 | (4133800) |
| Cash, cash equivalents, beginning of year | 8870800 | 3129800 | 7263600 |
| **Cash, cash equivalents, end of year** | $**7297400** | $**8870800** | $**3129800** |
| **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 USDC and USDT | $- | $- | $475000 |
| Subscription fee paid from investors in the form of USDC and USDT | $8900000 | $2675000 | $- |
| Purchase of digital assets in the form of USDT | $7398200 | $- | $- |
| Issuance of common stocks to settle subscription fee advanced from investors | $- | $2755100 | $6604000 |

---

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

**MEGA MATRIX INC.**

**NOTES TO 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, Class B and Class C 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. The Redomicile Merger does not have accounting impact on the consolidated financial statements.

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 the Preferred 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 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.

On August 15, 2025, the Company's shareholders approved an increase of the share capital to US$1,110,000, divided into: (i) 1,000,000,000 class A ordinary shares of par value US$0.001 each, (ii) 50,000,000 class B ordinary shares of par value US$0.001 each, (iii) 50,000,000 class C ordinary shares of par value US$0.001 each, and (iv) 10,000,000 preferred shares of par value US$0.001 each, by an addition of 900,000,000 class A ordinary shares of par value US$0.001 each, and 40,000,000 class B ordinary shares of par value US$0.001 each, and the creation of a new share class comprising of 50,000,000 class C ordinary shares of par value US$0.001 each.

On September 2, 2025, Mr. Yucheng Hu, Chairman of the Board of Directors and a shareholder of the Company, submitted a notice of conversion pursuant to the Company's Third Amended and Restated Memorandum and Articles of Association ("MAA"), requesting to convert 3,123,723 Class B ordinary shares, par value $0.001 per share ("Class B Shares"), into 3,123,723 Class C ordinary shares, par value $0.001 per share ("Class C Shares") (the "Conversion"). Each Class B Share is convertible into one (1) Class A ordinary share, par value$0.001 ("Class A Share"), or one (1) Class C Share, at the option of the holder. Each Class C Share is convertible into one (1) Class A Share at the option of the holder. Each Class A Share shall be entitled to one (1) vote, each Class B Share shall be entitled to one hundred (100) votes, and each Class C Share shall be entitled to fifty (50) votes. On September 3, 2025, Mr. Hu entered into a share transfer agreement, pursuant to which he agreed to transfer 2,290,390 Class C Shares to Mr. Yaman Demir, a director of the Company, at par value and as permitted under the MAA (the "Transfer"). The Conversion and the Transfer closed on September 22, 2025.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

*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 subsidiaries*

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.

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.

On September 24, 2025, the Company set up FunVerse Holding Inc, a wholly owned subsidiary in Cayman Islands. FunVerse Holding Inc is a holding company.

*Digital asset treasury ("DAT") reserve strategies*

In May 2025, the Company's Board of Directors approved the purchase of Bitcoin and/or Ethereum to hold as a treasury reserve asset. This business strategy was updated on July 2, 2025, in which the Company's Board of Directors approved to restart its Ethereum ("ETH") staking business and the exploration of a broader Web3-focused strategy. Through staking, the Company earns rewards that can be reinvested into ETH or used for general corporate purposes. The Company believes that its strategy to reinstate its ETH staking business will enhance long-term shareholder value. On August 21, 2025, the Company further updated its DAT reserve strategies and focus on stablecoin governance token its primary treasury asset.

*<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 Holding Limited, 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 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 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 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.

The major subsidiaries of the Company as of December 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% | ETH staking |
| Marsprotocol Technologies Pte. Ltd. | March 1, 2023 | Singapore | 100% | Investment holding |
| FunVerse Holding Inc | September 24, 2025 | Cayman | 100% | Investment holding |

---

**MEGA MATRIX INC.**

**NOTES TO 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 consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America ("US GAAP").

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company's ability to generate cash flows from operations, and the Company's ability to arrange adequate financing arrangements to support its working capital requirements.

***Non-controlling interests***

 ****

Non-controlling interests represent the equity interests of MTP and JMC that are not attributable, either directly or indirectly, to the Company. In the July 2023, the non-controlling equity holder exited its investment in MTP. In December 2023, JMC closed dissolution.

As of December 31, 2025 and 2024, the Company did not have outstanding balance of non-controlling interests.

 ****

***Use of Estimates***

The Company's consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments that are not readily apparent from other sources.

The most significant estimates with regard to these consolidated financial statements are accounting for the application of the amount and timing of future cash flows associated with each asset that are used to evaluate whether assets are impaired, useful lives of content assets, revenue recognition from contract liabilities, accounting for income taxes, and the amounts recorded as allowances for credit loss accounts.

***Functional currency***

 ****

The reporting currency and functional currency of the Company is U.S. dollars ("$") and the accompanying consolidated financial statements have been expressed in $.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

***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.

Fair value of digital assets is based on Level 1 inputs as these were based on observable quoted prices in the Company's principal market for identical assets. 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 9).

***Business combinations***

Business combinations are recorded using the acquisition method of accounting. The Company uses a screen test to evaluate whether a transaction should be accounted for as an acquisition and/or disposal of a business versus assets. In order for a purchase to be considered an acquisition of a business, and receive business combination accounting treatment, the set of transferred assets and activities must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business.

The purchase price of business acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and noncontrolling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred.

Where the consideration in an acquisition includes contingent consideration and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and if recorded as a liability, it is subsequently carried at fair value with changes in fair value reflected in earnings.

Changes in the ownership interest that do not result in a change in control of the subsidiary that is a business are accounted for as equity transactions (i.e., no gain or loss is recognized in earnings) and are accounted for in accordance with ASC 810-10-45-22 through ASC 810-10-45-24. The carrying amount of the noncontrolling interest will be adjusted to reflect the change in the noncontrolling interest's ownership interest in the subsidiary. Any difference between the amount by which the noncontrolling interest is adjusted and the fair value of the consideration paid or received is recognized in equity/additional paid-in capital and attributed to the equity holders of the parent in accordance with ASC 810-10-45-23.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

***Cash and Cash Equivalents***

 ****

The Company considers highly liquid investments readily convertible into known amounts of cash, with original maturities of 90 days or less from the date of acquisition, as cash equivalents.

***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 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 December 31, 2025 and 2024, the Company did not provide expected credit losses against accounts receivable.

***Digital assets***

 ****

For the year ended December 31, 2025, the Company purchased bitcoin from open market. As of December 31, 2025, digital assets (primarily include bitcoin ("BTC") and Ethena ("ENA") are initially recorded at cost in current assets in the accompanying consolidated balance sheets.

The Company holds its digital assets in accounts with third-party custodians and exchanges. The Company assesses the custodial arrangements and related risks, including cybersecurity and counterparty risks.

The Company adopted ASU 2023-08 in the year ended December 31, 2025, which requires entities to measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. The Company's digital assets are within the scope of ASU 2023-08.

ASC 820 defines "principal market" as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company considered CoinMarketCap to be its principal market as it provides reliable and great volume and level of activity for bitcoin for which the Company can access.

Purchases of digital assets by the Company are included within investing activities on the accompanying consolidated statements of cash flows. The changes of digital assets are included within operating activities in the accompanying consolidated statements of cash flows. Changes in fair value are reported as "changes in fair value on digital assets" and realized gains or losses are reported as "realized gains (loss) on digital assets" in the consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first-in first-out method of accounting.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

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

---

***Long-term investments***

 ****

As of December 31, 2025 and 2024, long-term investments represent the Company's investment in two equity method investees over which the Company has significant influence, and investment in two privately held companies over which the Company neither has control nor significant influence through investments in ordinary shares.

*Investment in equity method investees*

In accordance with ASC 323, *Investments - Equity Method and Joint Ventures*, the Company accounts for the investment in privately held companies using equity method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity investees.

Under the equity method, the Company initially records its investment at cost and prospectively recognizes its proportionate share of each equity investee's net income or loss into its consolidated statements of operations. When the Company's share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee.

The Company continually reviews its investment in the equity investee to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value.

*Investment in privately held companies*

Equity investments not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated statements of operations, according to ASC 321, *Investments - Equity Securities*. The Company elected to record the equity investments in privately held companies 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.

Equity investments in privately held companies accounted for using the measurement alternative are subject to periodic impairment reviews. The Company's impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of these equity securities, including consideration of the impact of the COVID-19 pandemic. In computing realized gains and losses on equity securities, the Company calculates cost based on amounts paid using the average cost method. Dividend income is recognized when the right to receive the payment is established.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

***Impairment of long-lived assets***

In accordance with ASC Topic 360, the Company reviews long-lived assets or asset group for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be fully recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Any impairment write-downs would be treated as permanent reductions in the carrying amounts of the assets and a charge to operations would be recognized.

For the year ended December 31, 2024, the Company provided impairment of $770,800 against investment in equity investees (Note 6).

For the years ended December 31, 2025 and 2023, the Company did not provide impairment against long-lived assets.

 ****

***Goodwill***

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.

The Company assesses goodwill for impairment on annual basis as of December 31 or if indicators were noted for goodwill impairment. In accordance with ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04") issued by the Financial Accounting Standards Board ("FASB") guidance on testing of goodwill for impairment, the Company will first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test. If this is the case, the quantitative goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the quantitative goodwill impairment test is not required.

Quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss, comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired. If the fair value of the reporting unit is less than its carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

In January 2024, the Company recognized goodwill of $2,889,200 arising from business combination of FunVerse and its subsidiary (Note 4). As of December 31, 2025 and 2024, no impairment was provided against the goodwill.

**MEGA MATRIX INC.**

**NOTES TO 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 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 evaluates whether the license provides a right-to-use or right-to-access intellectual property. Revenue from fixed consideration is recognized at a point in time when control of the license is transferred for right-to-use licenses, or over time for right-to-access licenses. Variable consideration is recognized when it is probable that a significant reversal will not occur.

*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 year ended December 31, 2025.

**MEGA MATRIX INC.**

**NOTES TO 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 years ended December 31, 2025, 2024 and 2023, 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 Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2025** | **2024** | **2023** |
| Membership and top-up streaming services | $21620200 | $31586800 | $- |
| Online advertising services | 2616500 | 3698500 | - |
| Content licensing business | 1868900 | 898700 | - |
|  | $26105600 | $36184000 | $**-**  |

---

 ****

***Cost of revenues***

For the year ended December 31, 2025 and 2024, the cost of revenues was primarily comprised of platform service fees charged by third party payment processors, amortization of produced contents, software and copyrights which were applied to produce short dramas and other expenses which were directly attributable to producing short dramas. Cost of revenues are recorded in the consolidated statements of operations and comprehensive loss as incurred.

 ****

***Income Taxes***

The Company accounts for current and deferred income taxes in accordance with the authoritative guidance, which requires that the income tax impact is to be recognized in the period in which the law is enacted. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized using enacted tax rates for the future tax impact of temporary differences between the financial statement and tax bases of recorded assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on historical and projected future taxable income over the periods in which the temporary differences are expected to be recovered or settled on each jurisdiction.

In accordance with the authoritative guidance on accounting for uncertainty in income taxes, the Company recognizes 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 December 31, 2025, the Company has not uncertain tax positions recorded.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

***Warrant***

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter with changes in fair value recognized in the statements of operations in the period of change.

***Share-based compensation***

 ****

The Company grants restricted shares to its management and employees. The Company measures the cost of the share options and restricted shares based on the grant date fair value of the awards and recognizes compensation cost over the vesting period, which is generally the requisite service period as required by the option agreement. When no future services are required to be performed by the employee in exchange for an award of equity instruments, the cost of the award is expensed on the grant date. The Company elects to recognize forfeitures when they occur.

***Reclassification***

 ****

Certain items in the financial statements of the comparative period have been reclassified to conform to the financial statements for the current period (Note 3). The reclassification has no impact on the total assets and total liabilities as of December 31, 2023 or on the statements of operations for the years ended December 31, 2023.

***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 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 (cont'd)***

The following table disaggregates the Company's revenues by primary geographical markets based on the location of customers for the years ended December 31, 2025 and 2024.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended December 31, 2025** | **For the year ended December 31, 2025** | **For the year ended December 31, 2025** | **For the year ended December 31, 2025** | **For the year ended December 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 | $6522600 | $8917800 | $5022500 | $1157300 | $21620200 |
| Online advertising services | - | 2616500 | - | - | 2616500 |
| Content licensing | - | 1868900 | - | - | 1868900 |
| **Total** | $**6522600** | $**13403200** | $**5022500** | $**1157300** | $**26105600** |

---

 ****

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended December 31, 2024** | **For the year ended December 31, 2024** | **For the year ended December 31, 2024** | **For the year ended December 31, 2024** | **For the year ended December 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 | $13427900 | $11645300 | $4399700 | $2113900 | $31586800 |
| Online advertising services | - | 3698500 | - | - | 3698500 |
| Content licensing | - | 898700 | - | - | 898700 |
| **Total** | $**13427900** | $**16242500** | $**4399700** | $**2113900** | $**36184000** |

---

***Going concern***

For the years ended December 31, 2025, 2024 and 2023, the Company reported net losses of $34,296,300, $10,503,700 and $4,680,200, respectively. In addition, the Company had accumulated deficits of $60,633,900 and $26,337,600 as of December 31, 2025 and 2024, respectively, but the Company had working capital of $13,311,900 among which the Company held cash of $7,297,400 as of December 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 consolidated financial statements on going concern basis.

**MEGA MATRIX INC.**

**NOTES TO 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 December 31, 2025, $7,297,400 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

We incurred certain operating expenses in the subsidiaries in Singapore which 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"). 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. For the years ended December 31, 2025 and 2024, the Company had no customers which accounted for more than 10% of revenues.

As of December 31, 2025, three customers accounted for 22.5%, 19.7% and 15.8% 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 CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

***Recently adopted accounting standards***

 ****

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. This ASU is effective for fiscal years beginning after December 15, 2024 on either a prospective or retrospective basis, with early adoption permitted. This ASU is intended to enhance the transparency and decision usefulness of income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) income taxes paid disaggregated by jurisdiction. The Company adopted this ASU on a prospective approach for the 2025 annual reporting period.

***Recent accounting pronouncements***

 ****

In December 2025, the FASB issued ASU 2025-12, which is to correct, clarify, and otherwise improve U.S. GAAP. ASU 2025-12 includes 33 improvements that span a wide range of topics, including Clarifying diluted earnings per share (EPS) calculation when a loss from continuing operations exists, Clarifying disclosure requirements for lease receivables from sales-type or direct financing leases, Revising the calculation of the reference amount for beneficial interests to prevent double counting credit losses, Clarifying the permissible methods to account for treasury stock retirements, and Clarifying the guidance for transfers of receivables from contracts with customers. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this Update in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments on an issue-by-issue basis. For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at the effective date. An entity should apply the amendments in this Update (except for the amendments to Topic 260, Earnings Per Share, related to Issue 4) using one of the following transition methods: (i) Prospectively to all transactions recognized on or after the date that the entity first applies the amendments, or (ii) Retrospectively to the beginning of the earliest comparative period presented. An entity should adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

In December 2025, the FASB issued ASU 2025-11, which is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with U.S. GAAP. The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. As the Board stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. For public business entities, the amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For entities other than public business entities, for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted for all entities. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

In July 2025, the FASB issued ASU 2025-05, which amends ASC 326-20 to provide a practical expedient for all entities which elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset in developing reasonable and supportable forecasts as part of estimating expected credit losses, and an accounting policy election for all entities, other than a public business entity, that elect the practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient and, if so, whether it has also applied the accounting policy election. An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

In January 2025, the FASB issued ASU 2025-01, "Income Statement – Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Clarifying the Effective Date." This pronouncement revises the effective date of ASU 2024-03 and clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Entities within the ASU's scope are permitted to early adopt the accounting standard update. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

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 October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — codification amendments in response to SEC's disclosure Update and Simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows — Overall, 250-10 Accounting Changes and Error Corrections — Overall, 260-10 Earnings Per Share — Overall, 270-10 Interim Reporting — Overall, 440-10 Commitments — Overall, 470-10 Debt — Overall, 505-10 Equity — Overall, 815-10 Derivatives and Hedging — Overall, 860-30 Transfers and Servicing — Secured Borrowing and Collateral, 932-235 Extractive Activities — Oil and Gas — Notes to Financial Statements, 946-20 Financial Services — Investment Companies — Investment Company Activities, and 974-10 Real Estate — Real Estate Investment Trusts — Overall. The amendments represent changes to clarify or improve disclosure and presentation requirements of above subtopics. Many of the amendments allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the SEC's requirements. Also, the amendments align the requirements in the Codification with the SEC's regulations. For entities subject to existing SEC disclosure requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all other entities, the amendments will be effective two years later from the date of the SEC's removal.

Recently issued ASUs by the FASB, except for the ones mentioned above, have no material impact on the Company's consolidated statements of operations and comprehensive loss or consolidated balance sheets.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**3. REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS**

The Company has noted the following matters in relation to its consolidated financial statements for the year ended December 31, 2023 that had been filed on August 19, 2024. The matter related to the reclassification of other income.

*a. Reclassification of revenue and cost of revenues*

The Company ceased solo-staking business in March 2024, and accordingly the Company reclassified revenues from solo-staking business to other income, net, and cost of revenues to general and administrative expenses. For comparison purpose, the Company reclassified revenues to other income, net, and reclassified cost of revenues to general and administrative expenses for the year ended December 31, 2023.

The following tables present the effects of revisions on the Company's financial statements for the year ended December 31, 2023.

---

| | | | |
|:---|:---|:---|:---|
| | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** |
| <br>**Consolidated statements of operations** | **As previously<br> reported** | **Adjustments** | **As Revised** |
| Revenues | $47800 | $(47800) | $- |
| Cost of revenues | $(281100) | $281100 | $- |
| Gross profit | $(233300) | $233300 | $- |
| Selling expenses | $- | $(28000) | $(28000) |
| General and administrative expenses | $(3261900) | $(1975000) | $(5236900) |
| Total operating expenses | $(3261900) | $(2003000) | $(5264900) |
| Loss from operations | $(3495200) | $(1769700) | $(5264900) |
| Changes in fair value of digital assets | $- | $1721900 | $1721900 |
| Other income | $10400 | $47800 | $58200 |
| Total other income (expenses), net | $(1097900) | $1769700 | $671800 |

---

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**4. ACQUISITION OF FUNVERSE**

On January 7, 2024, the Company acquired 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** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(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.

(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.

---

| | |
|:---|:---|
|  | **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)** |

---

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**4. ACQUISITION OF FUNVERSE (CONTINUED)**

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 non-controlling interest as of August 15, 2024 and the fair value of 1,500,000 share consideration was recognized in additional paid-in capital.

**5. DIGITAL ASSETS**

Digital asset holdings were comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| BTC | $2187600 | $&nbsp;&nbsp;&nbsp;&nbsp; - |
| ENA | 1038700 | - |
| USDT | 2534100 | - |
|  | $**5760400** | $**-**  |

---

For the year ended December 31, 2025, the Company purchased 13 BTC from open market and exchanged 13 BTC from ENA. For the year ended December 31, 2025, the Company exchanged 1 BTC into ENA and realized exchange loss of $400. For the year ended December 31, 2025, the Company recognized a decrease in fair value of BTC of $1,707,300. As of December 31, 2025, the Company held 25 BTC with fair value of $2,187,600.

For the year ended December 31, 2025, the Company exchanged an aggregated 8,916,805 ENA from USDT, BTC and ETH. For the year ended December 31, 2025, the Company also exchange 3,713,223 ENA into 13 BTC and realized exchange gain of $1,121,100. For the year ended December 31, 2025, the Company recognized a decrease in fair value of ENA of $3,887,900. As of December 31, 2025, the Company held 5,203,582 ENA with fair value of $1,038,700.

For the year ended December 31, 2025, the Company exchanged an aggregated 40 ETH from open market and exchanged 40 ETH into ENA. For the year ended December 31, 2025, the Company recognized an increase in fair value of $73,900. As of December 31, 2025, the Company did not hold ETH.

As of December 31, 2025, the Company held 2,534,100 USDT, respectively. The fair value of USDT was both kept at $1.00 because one USDT is pegged to one U.S. dollar.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**5. DIGITAL ASSETS (CONTINUED)**

*Additional information about digital assets*

 

As the Company did not adopt DAT reserve strategies until May 2025, the additional information about digital assets is not available for the year ended December 31, 2025. The following tables present additional information about digital assets for the year ended December 31, 2025.

The following table presents additional information about BTC for the year ended December 31, 2025:

---

| | |
|:---|:---|
|  | **For the<br> year ended <br> December 31,**<br>**2025** |
| Opening balance | $- |
| Purchases of BTC | 630300 |
| Purchases of BTC from exchange of USDT | 748200 |
| Purchases of BTC from exchange of ENA | 2632100 |
| Exchange of BTC into ENA | (115300) |
| Exchange loss | (400) |
| Changes in fair value of BTC | (1707300) |
|  | $**2187600** |

---

The following table presents additional information about ENA for the year ended December 31, 2025:

---

| | |
|:---|:---|
|  | **For the<br> year ended <br> December 31,**<br>**2025** |
| Opening balance | $- |
| Purchases of ENA from exchange of USDT | 6149900 |
| Purchases of ENA from exchange of BTC | 115300 |
| Purchases of ENA from exchange of ETH | 172400 |
| Exchange of ENA into BTC | (2632100) |
| Exchange gain | 1121100 |
| Changes in fair value of ENA | (3887900) |
|  | $**1038700** |

---

The following table presents additional information about ETH for the year ended December 31, 2025:

---

| | |
|:---|:---|
|  | **For the<br> year ended <br> December 31,**<br>**2025** |
| Opening balance | $- |
| Purchases of ETH | 98500 |
| Purchases of ENA from exchange of ETH | (172400) |
| Changes in fair value of ETH | 73900 |
|  | $**-**  |

---

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**5. DIGITAL ASSETS (CONTINUED)**

The following table presents additional information about USDT for the year ended December 31, 2025:

---

| | |
|:---|:---|
|  | **For the<br> year ended <br> December 31,**<br>**2025** |
| Opening balance | $- |
| Purchases of USDT | 719400 |
| Addition of USDT from private placement | 8900000 |
| Purchase of USDT from exchange of USDe | 500000 |
| Exchange of USDT into BTC | (748200) |
| Exchange of USDT into ENA | (6149900) |
| Exchange of USDT into USDe | (500000) |
| Exchange of USDT into USDC | (100) |
| Payment of operating expenses | (187100) |
|  | $**2534100** |

---

The following table presents additional information about USDe for the year ended December 31, 2025:

---

| | |
|:---|:---|
|  | **For the<br> year ended <br> December 31,**<br>**2025** |
| Opening balance | $- |
| Purchases of USDe from exchange of USDT | 500000 |
| Exchange of USDe into USDT | (500000) |
|  | $**-**  |

---

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**6. LONG-TERM INVESTMENTS**

As of December 31, 2025 and December 31, 2024, long-term investments were comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Investment in Quleduo | $1500000 | $1500000 |
| Investment in AIFLIX LLC ("AIFlix") | 276700 | - |
| Less: share of equity loss in Quleduo | (19500) | (19200) |
|  | $**1757200** | $**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 year ended December 31, 2025, Quleduo reported net loss of approximately $1,200 and the Company recorded share of equity loss of $300. 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.

On March 17, 2025, the Company setup AIFlix with Wardour Studios Inc. ("Wardour Studios"), a leading Hollywood production and digital-effects studio specializing in next-generation content creation, for AI-generated short drama production. The Company and Wardour Studios owned equity interest of 50% and 50% in AIFlix, respectively. For the year ended December 31, 2025, the Company made investment of $276,700 to AIFlix, and AIFLIX has not generated revenue or net income. 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 AIFlix.

As of December 31, 2025 and 2024, 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 December 31, 2025 and 2024, the Company had investment of $nil in Marsland.

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 the management of DaoMax assessed that it could not 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 December 31, 2025 and 2024, the Company had investment of $nil in DaoMax.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**7. CONTENT ASSETS, NET**

Content assets were comprised of 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 were comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Produced contents |  |  |
| - in development and production | $64500 | $321600 |
| - released | 6104900 | 3449400 |
| Copyrights | 3524900 | 1691700 |
|  | 9694300 | 5462700 |
| Less: accumulated amortization | (8716300) | (3892900) |
| Less: accumulated impairment | (11700) | (3000) |
| **Total** | $**966300** | $**1566800** |

---

Non-current content assets were comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Produced contents | $581000 | $581000 |
| Copyrights | 415200 | 313000 |
|  | 996200 | 894000 |
| Less: accumulated amortization | (882700) | (710200) |
| **Total** | $**113500** | $**183800** |

---

The following is a schedule, by fiscal years, of amortization amount of content asset as of December 31, 2025:

---

| | |
|:---|:---|
| For the year ending December 31, 2026 | $1058200 |
| For the year ending December 31, 2027 | 21600 |
| **Total** | $**1079800** |

---

For the year ended December 31, 2025 and 2024, the Company recorded amortization expenses of $4,995,900 and $4,599,000 on content assets. In addition, for the year ended December 31, 2025 and 2024, the Company provided impairment of $8,700 and $3,000 on production contents in development and production, as our customers defaulted in acceptance of the products. The Company did not record amortization expenses for the years ended December 31, 2023 on content assets.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**8. OPERATING LEASES**

As of December 31, 2025 and 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 years ended December 31, 2025, 2024 and 2023, the Company recorded rent expenses of $29,300, $49,500 and $94,000, respectively.

**9. EQUITY**

Ordinary Shares

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 August 15, 2025, the Company's shareholders approved an increase of the share capital to US$1,110,000, divided into: (i) 1,000,000,000 class A ordinary shares of par value US$0.001 each, (ii) 50,000,000 class B ordinary shares of par value US$0.001 each, (iii) 50,000,000 class C ordinary shares of par value US$0.001 each, and (iv) 10,000,000 preferred shares of par value US$0.001 each, by an addition of 900,000,000 class A ordinary shares of par value US$0.001 each, and 40,000,000 class B ordinary shares of par value US$0.001 each, and the creation of a new share class comprising of 50,000,000 class C ordinary shares of par value US$0.001 each.

On September 2, 2025, Mr. Yucheng Hu, Chairman of the Board of Directors and a shareholder of the Company, submitted a notice of conversion pursuant to the Company's Third Amended and Restated Memorandum and Articles of Association ("MAA"), requesting to convert 3,123,723 Class B ordinary shares, par value $0.001 per share ("Class B Shares"), into 3,123,723 Class C ordinary shares, par value $0.001 per share ("Class C Shares") (the "Conversion"). Each Class B Share is convertible into one (1) Class A ordinary share, par value$0.001 ("Class A Share"), or one (1) Class C Share, at the option of the holder. Each Class C Share is convertible into one (1) Class A Share at the option of the holder. Each Class A Share shall be entitled to one (1) vote, each Class B Share shall be entitled to one hundred (100) votes, and each Class C Share shall be entitled to fifty (50) votes. On September 3, 2025, Mr. Hu entered into a share transfer agreement, pursuant to which he agreed to transfer 2,290,390 Class C Shares to Mr. Yaman Demir, a director of the Company, at par value and as permitted under the MAA (the "Transfer"). The Conversion and the Transfer closed on September 22, 2025.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**9. EQUITY (CONTINUED)**

Ordinary Shares (continued)

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. For the year ended December 31, 2025, the Company sold 2,089,272 shares of Class A Ordinary Share and raised net proceeds of $2,821,100. 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.

On July 24, 2025, the Company signed a Securities Purchase Agreement (the "Agreement") with certain accredited investors (collectively, the "Investors"), pursuant to which the Investors, severally and not jointly, agreed, subject to certain terms and conditions of the Agreement, to purchase an aggregate of 16,000,000 Class A ordinary shares, par value $0.001 (the "Class A Shares"), for an aggregate purchase price of $16,000,000, or $1.00 per Class A Share (the "Offering Purchase Price", the transactions contemplated under the Agreement, the "Offering"). The Offering closed on the same day and the proceeds therefrom will provide a solid capital foundation for the Company's proposed strategic expansion into the stable coin sector. In connection with preparation of the Offering, on July 17, 2025, the Company entered into a Finder's Agreement with Web3 Capital Limited, a company formed under the laws of Cayman Islands (the "Finder"). The Company has agreed to a fee, to be paid in Class A Shares, equal to 5% of the Class A Shares subscribed by the investors introduced by the Finder. Upon the closing of the Offering, the Company issued 785,000 Class A Shares to the Finder under the Finder's Agreement.

In addition, pursuant to a prior engagement letter with H.C. Wainwright & Co. ("Wainwright"), the Company agreed to pay Wainwright a cash fee equal to 3% of the aggregate gross proceeds raised in the Offering that is in excess of $5,000,000. Wainwright acted as financial advisor to the Company and has not been engaged in the solicitation or distribution of the Offering.

For the year ended December 31, 2025, the Company issued an aggregated 4,627,832 shares of Class A Ordinary Shares stocks to certain service providers, among which 262,832 shares were vest immediately and 4,365,000 shares

were vest in four months through December 2025. For the year ended December 31, 2025, the Company recognized services expenses of $10,725,900 in the account of general and administrative expenses.

For the year ended December 31, 2025, the Company issued 3,888,400 restricted stock units to the Company's management and staff under the Amended and Restated 2021 Equity Incentive Plan, among which 2,998,400 shares were vest immediately and 3,590,000 shares were vest in four months through December 2025. For the year ended December 31, 2025, the Company recognized share-based compensation expenses of $8,712,800 in the account of general and administrative expenses.

As of December 31, 2025, the Company had 61,926,888 shares of Class A Ordinary Shares, 2,809,977 shares of Class B Ordinary Shares, and 3,123,723 shares of Class C Ordinary Shares issued and outstanding.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**9. 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 underlying 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 <br> Warrants** | **Series B <br> Warrants** |
| Risk-free rate of return | 3.89% | 3.62% |
| Estimated volatility rate | 136.12% | 166.01% |
| Dividend yield | 0% | 0% |
| Spot price of underlying 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 December 31, 2025, the Company had outstanding warrants to purchase up to 3,853,636 Class A Ordinary Shares.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**10. INCOME TAXES**

Income tax provision (benefit) were comprised of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2025** | **2024** | **2023** |
| **Current income tax provision (benefits)** |  |  |  |
| Federal | $- | $- | $- |
| State | 1600 | 1600 | 4000 |
| Foreign | - | - | 83100 |
|  | **1600** | **1600** | **87100** |
| **Deferred income tax provision (benefits)** |  |  |  |
| Federal | - | - | - |
| State | - | - | - |
| Foreign | - | (277000) | - |
|  | **-**  | **(277000)** | **-**  |
| **Income tax provision (benefits)** | $**1600** | $**(275400)** | $**87100** |

---

We applied ASU 2023-09 on a prospective basis. Accordingly, the disaggregation of rate reconciliation categories in the table below provide the disclosures required by ASU 2023-09 for the year ended December 31, 2025. The reconciliation of the U.S. federal statutory income tax rate to the 2025 effective income tax rate was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the years ended<br> December 31, <br> 2025** | **For the years ended<br> December 31, <br> 2025** |
|  | **Amount** | **%** |
| Federal tax at statutory rate | $(7200700) | $21.0 |
| State and local income taxes, net of federal effect\* (a) | 1600 | (0.0) |
| Change in valuation allowance | 4570400 | (13.3) |
| Non-taxable income or non-deductible expenses | 0 | (0.0) |
| Others | (200) | 0.0 |
| Foreign tax effects: |  |  |
| &nbsp;&nbsp;&nbsp;Singapore |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statutory income tax rate differential | 327900 | (1.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nondeductible Capital Loss | 931600 | (2.7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in Valuation Allowance | 462000 | (1.3) |
| &nbsp;&nbsp;&nbsp;Cayman Islands |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statutory income tax rate differential | 906800 | (2.6) |
| &nbsp;&nbsp;&nbsp;Other foreign jurisdictions | 2200 | (0.0) |
| **Income tax provision** | $**1600** | $**(0.00)** |

---

Income tax expense (benefit)for the years ended December 31, 2024 and 2023 differed from the amounts computed by applying the U.S. federal income rate of 21% to pre-tax income as a result of the following:

---

| | | |
|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** |
|  | **2024** | **2023** |
| Income tax benefits at statutory federal income tax rate | $(2261300) | $(976100) |
| State tax expense, net of federal benefit | 1600 | 4000 |
| Foreign tax expenses (benefit) | (159000) | 54700 |
| Non-taxable income | (383000) | (284600) |
| Others | (14830) | 2900 |
| Impairment on long-term investments | 131530 | - |
| Global intangible low tax income | - | 173700 |
| Valuation allowance | 2409600 | 1112500 |
| **Income tax provision (benefits)** | $**(275400)** | $**87100** |

---

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**10. INCOME TAXES (CONTINUED)**

Temporary differences and carry-forwards that give rise to a significant portion of deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2025** | **December 31,<br> 2024** |
| **Deferred tax assets:** | | |
| Current and prior year tax losses | $13120500 | $8168900 |
| Deferred interest expense | 3991300 | 3991300 |
| Basis in deductible goodwill | 722000 | 787700 |
| Deferred maintenance, bad debt allowance and other | 210000 | 210000 |
| Capital loss carryforward | 4000 | - |
| **Gross deferred tax assets** | 18047800 | 13157900 |
| Valuation allowance | (18047800) | (13157900) |
| **Deferred tax assets, net of valuation allowance** | $**-**  | $**-**  |

---

Reported as:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31,<br> 2024** |
| Deferred tax assets | $18047800 | $13157900 |
| Valuation allowance | (18047800) | (13157900) |
| Net deferred tax assets | $**-**  | $**-**  |

---

The accounting for deferred taxes requires an assessment of the realizability of deferred tax assets in each taxing jurisdiction, based on the weight of available positive and negative evidence. In evaluating the need for a valuation allowance, we considered factors among duration of current and cumulative financial reporting losses, future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, taxable income in carryback years if carryback is permitted by the tax law, and feasible tax-planning strategies. Based on this analysis, as of December 31, 2025, the Company concluded that valuation allowances were required in all jurisdictions.

As of December 31, 2025, the Company had a full valuation allowance of $18,047,800 against its net deferred tax assets not supported by either future taxable income or availability of future reversals of existing taxable temporary differences, for which realization cannot be considered more likely than not at this time. Recent negative operating result has caused the Company to be in a cumulative loss position as of December 31, 2025. As of December 31, 2024, the Company had a valuation allowance of 13,157,900.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**10. INCOME TAXES (CONTINUED)**

The current year federal operating loss carryovers of $22,076,000 will be available to offset 80% of annual taxable income in future years. $3,155,700 of federal net operating loss carryovers may be carried forward through 2037 and the remaining $51,380,100 federal net operating loss carryovers may be carried forward indefinitely. The current year California operating loss carryovers of $400,000 will be available to offset taxable income in future years through 2042. As discussed below, the Company does not expect to utilize the net operating loss carryovers remaining at December 31, 2025 in future years.

In the ordinary course of business, the Company is subject to examination by tax authorities in various jurisdictions. With respect to U.S. federal and state income taxes, tax years since inception remain open to examination. For foreign jurisdictions, including but not limited to Singapore, in which the Company operates, tax years beginning on or after December 31, 2021 remain open to examination through the current year, subject to applicable statutes of limitations. As of the December 31, 2025, the Company is not under audit by any taxing authority in the jurisdictions in which it operates.

We applied ASU 2023-09 on a prospective basis. Accordingly, the income taxes paid/(refund) by jurisdiction (net of refunds received) below provide the disclosures required by ASU 2023-09 for the year ended December 31, 2025:

---

| | |
|:---|:---|
|  | **For the year ended<br> December 31, <br> 2025** |
| US Federal | $- |
| US State - California | 1600 |
| Foreign | - |
| **Total income taxes paid (net of refunds received)** | $**1600** |

---

On July 4, 2025, President Trump signed into law the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA introduces several changes to U.S. federal income tax law, such as suspending the capitalization and amortization of domestic research and development expenditures and reinstating bonus depreciation. It also modifies the deductions available for net controlled foreign corporation tested income (formerly referred to as "global intangible low-taxed income") from non-U.S. subsidiaries and changes the limitations on deductible interest. The effective dates of the OBBBA provisions range from 2025 through 2027. We do not expect the OBBBA provisions to have a material impact on our consolidated financial statements.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**11. RELATED PARTIES**

*1) Nature of relationships with related parties*

 

---

| | |
|:---|:---|
| **Name** | **Relationship with the Company** |
| Yucheng Hu | Chairman of the Board of Directors and a shareholder of the Company |
| Quleduo | Over which the Company owned 25% equity interest |

---

*2) Transactions with related parties*

For the year ended December 31, 2024, the Company made loans of $850,000 to Quleduo. 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 year ended December 31, 2025, the Company collected repayment of $111,900 from Quleduo. For the years ended December 31, 2025 and 2024, the Company recognized interest income of $17,100 and $16,000, respectively.

*3) Balances with related parties*

As of December 31, 2025 and 2024, the Company had balances due from below related parties:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2025** | **December 31,<br> 2024** |
| **Loans receivable - a related party** | | |
| Quleduo (a) | $771200 | $866000 |
| **Due to a related party** |  |  |
| Yucheng Hu (b) | $6200 | $- |

---

a. As of December 31, 2025, the balance due from Quleduo was comprised of loan principal of $756,100 and interest receivable of $15,100. As of December 31, 2024, the balance due from Quleduo was comprised of loan principal of $850,000 and interest receivable of $16,000.

b. As of December 31, 2025, the balance due to Yucheng Hu represented
advance to the related party for daily operation purpose. The balance would be settled Yucheng Hu reimbursed expenses with the Company.

**MEGA MATRIX INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Rounded to the Nearest Hundred US Dollar, except for share data, unless otherwise stated)**

**12. 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.

**13. SUBSEQUENT EVENTS**

These consolidated financial statements were approved by management and available for issuance on March 31, 2026. The Company has evaluated subsequent events through this date and concluded that there are no additional reportable subsequent events other than those disclosed in above.

## Exhibit 8.1

**Exhibit 8.1**

**LIST OF SUBSIDIARIES**

The following list sets forth the subsidiaries of the registrant as of December 31, 2025:

---

| | |
|:---|:---|
| **Company** | **State/Country of Incorporation** |
| Mega Matrix Corp.<sup>(1)</sup> | Delaware |
| Mega Metaverse Corp.<sup>(2)</sup> | California |
| AIFLIX LLC<sup>(3)</sup> | Delaware |
| Bona Box FZ LLC<sup>(2)</sup> | Abu Dhabi |
| FunVerse Holding INC<sup>(2)</sup> | Cayman Islands |
| MarsProtocol Technologies Pte. LTD. <sup>(2)</sup> | Singapore |
| FunVerse Holding Limited<sup>(2)</sup> | British Virgin Islands |
| Yuder Pte. Ltd.<sup>(4)</sup> | Singapore |
| Saving Digital Pte. Ltd.<sup>(4)</sup> | Singapore |

---

(1) A wholly owned subsidiary of the Company.

(2) A wholly owned subsidiary of Mega Matrix Corp.

(3) A 50% owned subsidiary of Mega Metaverse Corp.

(4) A wholly owned subsidiary of FunVerse Holding Limited.

## Exhibit 12.1

**Exhibit 12.1**

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE**

**SARBANES-OXLEY ACT OF 2002**

I, Yucheng Hu, certify that:

1. I have reviewed this annual report on Form 20-F of Mega
Matrix Inc. (the "Company");

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and cash
flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and
have:

&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the Company's disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the Company's
internal control over financial reporting that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee
of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's
ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control over financial reporting.

Date: April 16, 2026

---

| | |
|:---|:---|
| By: | /s/ Yucheng Hu |
| Name: | Yucheng Hu |
| Title: | Chief Executive Officer |

---

## Exhibit 12.2

**Exhibit 12.2**

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE**

**SARBANES-OXLEY ACT OF 2002**

I, Jie Ma, certify that:

1. I have reviewed this annual report on Form 20-F of Mega
Matrix Inc. (the "Company");

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and cash
flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and
have:

&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the Company's disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the Company's
internal control over financial reporting that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee
of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's
ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control over financial reporting.

Date: April 16, 2026

---

| | |
|:---|:---|
| By: | /s/ Jie Ma |
| Name: | Jie Ma |
| Title: | Chief Financial Officer |

---

## Exhibit 13.1

**Exhibit 13.1**

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF**

**THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Mega Matrix Inc. (the "Company") on Form 20-F for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Yucheng Hu, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the Company.

Date: April 16, 2026

---

| | |
|:---|:---|
| By: | /s/ Yucheng Hu |
| Name: | Yucheng Hu |
| Title: | Chief Executive Officer |

---

## Exhibit 13.2

**Exhibit 13.2**

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF**

**THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Mega Matrix Inc. (the "Company") on Form 20-F for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jie Ma, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the Company.

Date: April 16, 2026

---

| | |
|:---|:---|
| By: | /s/ Jie Ma |
| Name: | Jie Ma |
| Title: | Chief Financial Officer |

---

## Exhibit 15.1

**Exhibit 15.1** 

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-277227), Form F-3 (File No. 333-283739), Form S-8 (File No. 333-289715), and Form F-3 (File No. 333-290026) of our report dated April 15, 2026, relating to the consolidated financial statements of Mega Matrix Inc., appearing in this Annual Report on Form 20-F for the year ended December 31, 2025.

/s/ Audit Alliance LLP

Singapore

April 16, 2026