REVENUE AND OTHER CONTRACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 2025

Revenue from Contract with Customer [Abstract]

REVENUE AND OTHER CONTRACTS WITH CUSTOMERS

(3) REVENUE AND OTHER CONTRACTS WITH CUSTOMERS

Revenues from SaaS service before the end of 2024

Revenue recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware products bundled with Software-as-a-Service (“SaaS”) offerings are recognized at the time control of the product transfers to the customer. The transaction price allocated to the SaaS offering was recognized ratably beginning when the customer was expected to activate their account and over a three-year period that the Company estimated based on the expected replacement of the hardware.

Revenues from SaaS service- MCN Digital Service in 2025

The Company expands SaaS operations as a digital service provider, delivering full-cycle services to brand clients through legally binding agreements since March 2025. The Company offers full-service account management, content production, and targeted promotion to grow followers across key platforms. Service packages customizable via the SaaS portal. Customers may purchase value-added services with or after their purchases of basic package. Services provided under the basic services and the value-added services are considered two performance obligations, each with a standalone transaction price. The Company recognizes revenues from basic services ratably over the contract term beginning on the commencement date of each contract. The revenues from value-added services are recognized at a point in time when customers approve or accept the value-added services or system automatically approves whichever is later. The Company requires an upfront payment for the services, which is non-refundable upon execution of the contract. Customers retain the right to terminate the contract prior to its expiration date, subject to the early termination fees, including information transfer fee and fan development fee. No value-added revenues were recognized at a point in time as of June 30, 2025.

Transaction Price Allocated to the Remaining Performance Obligations

The remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods for which customer purchase orders have been accepted, that are scheduled or in the process of being scheduled for shipment, and that are not yet invoiced. Prior years’ performance obligations were all satisfied and recognized as revenue in the periods before the end of 2024. As of June 30, 2025, the remaining performance obligation relates to MCN digital services purchased and paid for in advance by customers for basic and value-added packages, which was amounted to $1,468,346, equals the balance of contract liabilities.

Contract Costs

The Company recognizes the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales commissions meet the requirements to be capitalized, and the Company amortizes these costs on a consistent basis with the pattern of transfer of the goods and services in the contract. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our condensed consolidated balance sheets if any.

The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less. These costs include sales commissions on SaaS contracts with a contract period of one year or less as sales commissions on contract renewals are commensurate with those paid on the initial contract.

Contract Balances

The Company records accounts receivable when it has an unconditional right to the consideration. Contract liabilities are recorded when customers remit payment prior to revenue recognition, representing the Company’s obligation to transfer services in the future. Liabilities arise upon customer order placement. The Company did not have contract liabilities at December 31, 2024, while the ending balance at June 30, 2025 was $1,468,346.

Disaggregation of Revenue

The following table sets forth our revenues by distribution channel:

	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Retailers	$	-	$	-	$	-	$	638,904
Other online and offline channels		44,993		-		45,118		989
	$	44,993	$	-	$	45,118	$	639,893

The following table sets forth our revenues by product:

	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Cable modems & gateways	$	-	$	-	$	-	$	638,804
Other networking products		-		-		-		1,089
SaaS – MCN digital services		44,993		-		45,118		-
	$	44,993	$	-	$	45,118	$	639,893