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Mega Matrix(MPU) - 2022 Q2 - Quarterly Report
Mega MatrixMega Matrix(US:MPU)2022-08-22 21:01

PART I - Financial Information Financial Statements (Unaudited) The unaudited financial statements reflect the company's transition to GameFi, showing decreased assets and a net loss for the period Condensed Consolidated Balance Sheets Total assets decreased to $11.5 million by June 30, 2022, driven by reduced cash, while digital and intangible assets emerged Condensed Consolidated Balance Sheet Highlights (USD) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $3,967,400 | $7,380,700 | | Digital assets | $314,500 | $0 | | Intangible assets | $888,900 | $0 | | Total assets | $11,458,900 | $14,949,600 | | Liabilities & Equity | | | | Total liabilities | $1,966,500 | $3,136,300 | | Total equity | $9,492,400 | $11,813,300 | Condensed Consolidated Statements of Operations and Comprehensive Loss GameFi revenue emerged, replacing operating lease revenue, leading to a reduced net loss of $1.7 million for Q2 2022 due to fewer impairment charges Statement of Operations Summary (USD) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Gamefi revenue | $3,200 | $0 | | Operating lease revenue | $0 | $1,470,300 | | Total Revenues | $3,200 | $1,480,700 | | Gross (Loss) Profit | ($530,100) | $1,480,700 | | Total Expenses | $1,164,900 | $4,674,800 | | Net Loss | ($1,697,600) | ($3,197,800) | | Basic Loss Per Share | ($0.06) | ($0.41) | Six-Month Statement of Operations Summary (USD) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Gamefi revenue | $326,800 | $0 | | Operating lease revenue | $120,000 | $4,207,600 | | Total Revenues | $446,800 | $4,014,900 | | Net Loss | ($2,373,900) | ($8,608,100) | | Basic Loss Per Share | ($0.09) | ($1.11) | Condensed Consolidated Statements of Changes in Equity (Deficit) Total equity decreased to $9.5 million by June 30, 2022, primarily due to the net loss incurred during the six-month period - Total equity decreased by $2.3 million in the first six months of 2022, from $11.8 million to $9.5 million, mainly due to the net loss incurred during the period24 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $3.4 million for the six months ended June 30, 2022, with no investing or financing activities Cash Flow Summary (USD) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | ($3,413,300) | $561,300 | | Net cash from investing activities | $0 | $11,796,100 | | Net cash from financing activities | $0 | ($14,749,000) | | Net decrease in cash | ($3,413,300) | ($2,391,600) | | Cash at end of period | $3,967,400 | $2,709,300 | Notes to Consolidated Financial Statements Notes detail the company's transformation, including name change, bankruptcy emergence, fresh start accounting, and new policies for digital assets and segments - On March 25, 2022, the company changed its name from AeroCentury Corp. to Mega Matrix Corp. and its ticker from 'ACY' to 'MTMT' to reflect its new focus on the Metaverse and GameFi business31 - The company emerged from Chapter 11 bankruptcy on September 30, 2021, and adopted fresh start accounting, making financial statements after this date not comparable to prior periods3637 - Digital assets are accounted for as indefinite-lived intangible assets, tested for impairment when circumstances indicate, and are not amortized; subsequent reversal of impairment losses is not permitted49 - The company now has two operating segments: GameFi business and the legacy aircraft leasing business; for the six months ended June 30, 2022, the GameFi segment generated $326,800 in revenue with a gross loss of $234,300, while the Leasing segment had $120,000 in revenue and gross profit99103 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic shift to GameFi, the launch of "Mano," and the impact on financial results, noting sufficient liquidity Overview The company pivoted to GameFi with the "Mano" NFT game launch in March 2022, following its bankruptcy emergence and strategic shift - The company launched its GameFi business and released its first NFT game, "Mano," on March 25, 2022, which operates on a "Play-to-earn" model within its "alSpace" metaverse142 - Revenue from the Mano game is generated from fees for resetting NFT energy levels, transaction fees for virtual equipment, and synthesis fees for cloning or converting NFTs144 - The company emerged from bankruptcy on September 30, 2021, after a Plan Sponsor invested approximately $11 million for a 65% stake in the reorganized company149150 Results of Operations Revenues significantly decreased for both three and six-month periods, while operating expenses also fell due to the absence of impairment charges Comparison of Operations for the Three Months Ended June 30 (USD) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenues and Other Income | $3,200 | $1.5 million | | Total Operating Expenses | $1.2 million | $4.7 million | | Impairment of Aircraft | $0 | $2.3 million | Comparison of Operations for the Six Months Ended June 30 (USD) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenues and Other Income | $0.45 million | $4.0 million | | Total Operating Expenses | $2.3 million | $12.6 million | | Impairment of Aircraft | $0 | $4.2 million | | Interest Expense | $0.1 million | $1.9 million | Liquidity and Capital Resources With $9.5 million in net assets, the company believes it has sufficient liquidity for the next year, despite $3.4 million cash used in operations - With $9.5 million in net assets as of June 30, 2022, management believes there is no longer substantial doubt about the company's ability to continue as a going concern174 - Net cash used in operations for the first six months of 2022 was $3.4 million, primarily due to payments for salaries, professional fees, and platform maintenance for the new GameFi business178 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk186 Controls and Procedures Disclosure controls and procedures were ineffective as of June 30, 2022, due to an un-remediated material weakness in tax review controls - Management concluded that disclosure controls and procedures were not effective as of June 30, 2022187 - The ineffectiveness is due to a previously identified material weakness related to tax review controls for complex transactions, which is still in the process of being enhanced188 PART II - Other Information Legal Proceedings No material legal proceedings are pending against the company, and no known matters are expected to have a material adverse effect - To the best of management's knowledge, there are no material legal proceedings pending against the company193 Risk Factors Significant risks include regulatory uncertainty regarding digital asset classification as "securities" and the challenge of expanding and monetizing the metaverse business beyond "Mano" - A key risk is the uncertainty of whether its NFTs and Mano coin could be deemed "securities" by regulators like the SEC, which could lead to penalties and adversely affect the business195196 - The company acknowledges the need to explore and develop other opportunities in the metaverse to expand its business model beyond the single "Mano" game200201 - Future success depends on the ability to develop successful games and monetize its alSpace platform, which is subject to unpredictable factors like consumer preferences and competition202203 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None204 Defaults Upon Senior Securities No defaults upon senior securities were reported - None205 Mine Safety Disclosures This item is not applicable to the company - Not applicable206 Other Information No other information was reported for this item - None207 Exhibits This section lists exhibits, including CEO and CFO certifications and Inline XBRL documents - The report includes required certifications from the CEO and CFO and XBRL data files as exhibits209