PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section presents the unaudited interim condensed consolidated financial statements of GD Culture Group Limited and its subsidiaries for the three months ended March 31, 2025 and 2024, including balance sheets, statements of operations and comprehensive loss, statements of changes in shareholders' equity, and statements of cash flows, along with detailed notes explaining the nature of business, significant accounting policies, and specific financial line items [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) **Balance Sheet Summary (March 31, 2025 vs. December 31, 2024):** | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :----------------------------- | :------------------------- | :------------------ | | Total Assets | $2,603,247 | $2,734,987 | | Total Liabilities | $2,668,108 | $2,732,344 | | Total Shareholders' Equity (Deficit) | $(64,861) | $2,643 | | Cash and cash equivalents | $51,236 | $22,538 | | Total Current Assets | $76,010 | $31,733 | | Total Current Liabilities | $1,571,766 | $1,473,881 | [Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Unaudited%20Interim%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) **Statements of Operations and Comprehensive Loss (Three Months Ended March 31):** | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :------------------------------------------------- | :--------------- | :--------------- | | Total Operating Expenses | $(937,877) | $(4,178,447) | | Loss from Operations | $(937,877) | $(4,178,447) | | Total Other Income | $2,118 | $21,946 | | Loss Before Income Taxes from Continuing Operations | $(935,759) | $(4,156,501) | | Less: Income Tax Expenses | $(41,751) | $(1,038) | | Net Loss | $(977,510) | $(4,157,539) | | Basic and Diluted Loss per Share | $(0.08) | $(0.56) | [Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Unaudited%20Interim%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) - Shareholders' Equity Changes (Three Months Ended March 31, 2025): * Balance as of January 1, 2025: Total Shareholders' Equity (Deficit) was **$2,643**[20](index=20&type=chunk) * Net loss for the period: **$(977,510)**[20](index=20&type=chunk) * Issuance of common stock for cash: **$910,000**[20](index=20&type=chunk) * Foreign currency translation adjustment: **$4**[20](index=20&type=chunk) * Balance as of March 31, 2025: Total Shareholders' Equity (Deficit) was **$(64,861)**[20](index=20&type=chunk) - Shareholders' Equity Changes (Three Months Ended March 31, 2024): * Balance as of January 1, 2024: Total Shareholders' Equity was **$12,161,483**[22](index=22&type=chunk) * Net loss for the period: **$(4,157,539)**[22](index=22&type=chunk) * Issuance of common stock for cash: **$829,879**[22](index=22&type=chunk) * Issuance of common stock for acquisition of 13.33% noncontrolling interest of Shanghai Xianzhui: **$3,150,793**[22](index=22&type=chunk) * Exercise of pre-funded warrants: **$654**[22](index=22&type=chunk) * Exercise of November 2023 Registered Warrants: **$0**[22](index=22&type=chunk) * Foreign currency translation: **$(15,109)**[22](index=22&type=chunk) * Fair value changes of convertible notes receivable: **$54,849**[22](index=22&type=chunk) * Balance as of March 31, 2024: Total Shareholders' Equity was **$8,874,217**[22](index=22&type=chunk) [Unaudited Interim Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) **Cash Flow Summary (Three Months Ended March 31):** | Cash Flow Activity | 2025 (Unaudited) | 2024 (Unaudited) | | :--------------------------------------- | :--------------- | :--------------- | | Net cash used in operating activities | $(831,308) | $(3,617,910) | | Net cash used in investing activities | $0 | $(1,900,000) | | Net cash provided by financing activities | $860,000 | $830,533 | | Net increase (decrease) in cash and cash equivalents | $28,698 | $(4,689,317) | | Cash and cash equivalents, end of year | $51,236 | $486,201 | [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements, covering the company's business nature, significant accounting policies, specific asset and liability breakdowns, related party transactions, lease obligations, tax information, equity changes, and subsequent events [Note 1 – Nature of Business and Organization](index=10&type=section&id=Note%201%20%E2%80%93%20Nature%20of%20Business%20and%20Organization) - GD Culture Group Limited (GDC) is a Nevada corporation and a holding company, primarily engaged in virtual content production through its subsidiaries AI Catalysis corp. and Shanghai Xianzhui Technology Co., Ltd. (SH Xianzhui)[28](index=28&type=chunk) - The Company focuses its business mainly on 1) AI-driven digital human creation and customization, and 2) Live streaming and e-commerce[28](index=28&type=chunk) - As of the report date, the Company owns **73.3333%** of SH Xianzhui and **100%** of AI Catalysis, Citi Profit BVI, Highlight HK, and Highlight WFOE[29](index=29&type=chunk)[31](index=31&type=chunk) - As of March 31, 2025, the Company had **$51,236** cash and a working capital deficit of approximately **$1.5 million**[33](index=33&type=chunk)[38](index=38&type=chunk) - However, subsequent to March 31, 2025, a public offering partially received net proceeds of approximately **$4.1 million**, leading management to conclude that substantial doubt about the Company's ability to continue as a going concern no longer exists for the next twelve months[33](index=33&type=chunk)[38](index=38&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=11&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) - Unaudited interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC regulations for interim financial statements[39](index=39&type=chunk) - The reporting currency is USD, while PRC subsidiaries use RMB as functional currency[42](index=42&type=chunk) - Assets and liabilities are translated at period-end rates, operations at average rates, and equity at historical rates, with translation adjustments included in accumulated other comprehensive income[43](index=43&type=chunk) - Software copyrights are stated at cost less accumulated amortization, amortized on a straight-line basis over an estimated useful life of **5 years**[48](index=48&type=chunk) - Recently Adopted/Issued Accounting Pronouncements: * ASU 2023-07 (Segment Reporting): Adopted for FY2024, with no significant impact[69](index=69&type=chunk) * ASU 2023-09 (Income Taxes): Effective for FY beginning after Dec 15, 2024; no material impact expected[70](index=70&type=chunk) * ASU 2024-03 (Disaggregation of Income Statement Expenses): Effective for FY beginning after Dec 15, 2026; impact currently being assessed[71](index=71&type=chunk) [Note 3 – Prepaid and Other Current Assets](index=17&type=section&id=Note%203%20%E2%80%93%20Prepaid%20and%20Other%20Current%20Assets) **Prepaid and Other Current Assets:** | Asset Type | March 31, 2025 (Unaudited) | December 31, 2024 | | :---------------- | :------------------------- | :---------------- | | Prepaid car rental | $15,579 | $0 | | Total | $15,579 | $0 | [Note 4 – Equipment, net](index=17&type=section&id=Note%204%20%E2%80%93%20Equipment%2C%20net) **Equipment, Net:** | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :------------------------- | :------------------------- | :---------------- | | Office equipment and furniture | $14,190 | $14,190 | | Less: accumulated depreciation | $(7,486) | $(6,409) | | Total | $6,704 | $7,781 | - Depreciation expense for the three months ended March 31, 2025, was **$1,077**, compared to **$1,183** for the same period in 2024[74](index=74&type=chunk) [Note 5 – Intangible Assets, net](index=17&type=section&id=Note%205%20%E2%80%93%20Intangible%20Assets%2C%20net) **Intangible Assets, Net:** | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :------------------------- | :------------------------- | :---------------- | | Software copyrights | $4,890,092 | $4,890,092 | | Less: accumulated amortization | $(1,098,918) | $(1,036,518) | | Accumulated impairment | $(2,751,174) | $(2,751,174) | | Total | $1,040,000 | $1,102,400 | - Amortization expense for the three months ended March 31, 2025, was **$62,400**, a decrease from **$182,373** for the same period in 2024[75](index=75&type=chunk) - No impairment losses were recorded for intangible assets for the three months ended March 31, 2025 and 2024[76](index=76&type=chunk) **Future Amortization of Intangible Assets:** | Fiscal Year | Amortization | | :---------------- | :----------- | | Remaining of FY2025 | $187,200 | | FY2026 | $249,600 | | FY2027 | $249,600 | | FY2028 | $249,600 | | FY2029 | $104,000 | | Total | $1,040,000 | [Note 6 – Other Payables and Accrued Liabilities](index=18&type=section&id=Note%206%20%E2%80%93%20Other%20Payables%20and%20Accrued%20Liabilities) **Other Payables and Accrued Liabilities:** | Liability Type | March 31, 2025 (Unaudited) | December 31, 2024 | | :---------------------- | :------------------------- | :---------------- | | Professional service fee | $431,598 | $375,085 | | Payroll | $17,943 | $26,558 | | Loan payable - shareholder | $100,000 | $0 | | Others | $998 | $178 | | Total | $550,539 | $401,821 | [Note 7 – Related Party Balances and Transactions](index=18&type=section&id=Note%207%20%E2%80%93%20Related%20Party%20Balances%20and%20Transactions) **Other Payables – Related Parties:** | Related Party | Relationship | Nature | March 31, 2025 (Unaudited) | December 31, 2024 | | :------------ | :------------------ | :------------------------------------ | :------------------------- | :---------------- | | Xiaojian Wang | Chief Executive Officer | Accrued compensations | $62,500 | $50,000 | | Xiaojian Wang | Chief Executive Officer | Interest-free loans to the Company | $199,485 | $349,485 | | Xiaojian Wang | Chief Executive Officer | Operating related fees paid on behalf | $50,000 | $50,000 | | Zihao Zhao | Chief Finance Officer | Accrued compensations | $58,333 | $50,833 | | Zihao Zhao | Chief Finance Officer | Reimbursement | $1,958 | $1,948 | | Total | | | $372,276 | $502,266 | - As of the issuance date of the financial statements, interest-free loans received from the Company's officers were fully repaid[80](index=80&type=chunk) - Compensation expenses to officers for the three months ended March 31, 2025 and 2024, amounted to **$20,000** for both periods[81](index=81&type=chunk) [Note 8 – Leases](index=18&type=section&id=Note%208%20%E2%80%93%20Leases) **Operating Lease Metrics:** | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :-------------------------- | :------------------------- | :---------------- | | Weighted average remaining lease term | 3.49 years | 3.63 years | | Weighted average discount rate | 7.56% | 7.53% | **Operating Lease Balances:** | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :------------------------------------ | :------------------------- | :---------------- | | Operating lease right-of-use assets, net | $1,229,793 | $1,342,333 | | Current portion of operating lease liabilities | $381,434 | $427,984 | | Non-current portion of operating lease liabilities | $1,026,387 | $1,104,552 | | Total Lease Liabilities | $1,407,821 | $1,532,536 | - Lease expense for the three months ended March 31, 2025, was **$123,492**, up from **$95,057** for the same period in 2024[85](index=85&type=chunk) **Future Operating Lease Payments (as of March 31, 2025):** | Fiscal Year | Operating Leases | | :---------------- | :--------------- | | FY2025 | $371,061 | | FY2026 | $393,261 | | FY2027 | $401,127 | | FY2028 | $409,149 | | FY2029 | $34,605 | | Total lease payments | $1,609,203 | | Less: imputed interest | $201,382 | | Present value of lease liabilities | $1,407,821 | [Note 9 – Taxes](index=19&type=section&id=Note%209%20%E2%80%93%20Taxes) **Income Tax Expenses (Three Months Ended March 31):** | Tax Component | 2025 (Unaudited) | 2024 (Unaudited) | | :------------------------ | :--------------- | :--------------- | | Total current tax expenses | $(125,707) | $0 | | Total deferred tax benefits (expenses) | $83,956 | $(1,038) | | Total benefits (provision) for income taxes | $(41,751) | $(1,038) | - The effective tax rate for the three months ended March 31, 2025, was **4.46%**, compared to **0.02%** for the same period in 2024[93](index=93&type=chunk) - As of March 31, 2025, income tax payable to US tax authorities was **$267,517**, up from **$141,810** as of December 31, 2024[93](index=93&type=chunk) **Deferred Tax Assets and Liabilities (March 31, 2025 vs. December 31, 2024):** | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :------------------------------------ | :------------------------- | :---------------- | | Total deferred tax assets | $8,741,413 | $8,647,326 | | Less: Valuation allowance | $(8,583,371) | $(8,020,571) | | Deferred tax assets, net of valuation allowance | $158,042 | $626,755 | | Total deferred tax liabilities | $(227,997) | $(780,666) | | Total deferred tax liabilities, net | $(69,955) | $(153,911) | - The Company recorded **$57,303** in penalties and interest for failed timely tax filing for the three months ended March 31, 2025[62](index=62&type=chunk) - The Company has tax loss carryforwards of approximately **$5.3 million** from PRC entities (expiring 2028-2029) and **$17.5 million** from US entities (indefinite carryforward)[94](index=94&type=chunk)[95](index=95&type=chunk) - A **100%** valuation allowance is provided for deferred tax assets due to uncertainty of realization[94](index=94&type=chunk)[95](index=95&type=chunk) [Note 10 – Concentration of Credit Risk](index=21&type=section&id=Note%2010%20%E2%80%93%20Concentration%20of%20Credit%20Risk) - Financial instruments subject to credit risk include cash deposits and accounts receivable[96](index=96&type=chunk)[97](index=97&type=chunk) - Cash held in PRC financial institutions is not government-insured, but creditworthiness is monitored[97](index=97&type=chunk) - Accounts receivable credit risk is managed through credit approvals, limits, monitoring, and requiring prepayments[173](index=173&type=chunk) [Note 11 – Equity](index=22&type=section&id=Note%2011%20%E2%80%93%20Equity) - Common Stock Issuances: * January 11, 2024: Issued **400,000 shares** for **13.3333%** equity interest in SH Xianzhui[101](index=101&type=chunk) * March 2024: Sold **810,277 shares** in a registered direct offering for approximately **$0.9 million** gross proceeds[103](index=103&type=chunk) * June 4, 2024: Issued **1,560,000 shares** for the purchase of software (AIBox) valued at **$1,248,000**[104](index=104&type=chunk) * March 4, 2025: Sold **1,115,600 shares** for net proceeds of **$910,000** for working capital[109](index=109&type=chunk) - Warrant Activities: * As of March 31, 2025, **2,312,006** unregistered warrants were outstanding, exercisable into **2,110,618 shares** at a weighted average exercise price of **$29.94**[113](index=113&type=chunk) * No prefunded warrants were outstanding as of March 31, 2025, as all were exercised between February and October 2024[114](index=114&type=chunk) * As of March 31, 2025, **1,616,471 shares** of November 2023 Registered Warrants were outstanding[116](index=116&type=chunk) - Total outstanding common stock shares were **12,282,894** as of March 31, 2025, up from **11,167,294** as of December 31, 2024[110](index=110&type=chunk) [Note 12 – Commitments and Contingencies](index=24&type=section&id=Note%2012%20%E2%80%93%20Commitments%20and%20Contingencies) - The Company may be subject to legal proceedings, claims, and disputes in the ordinary course of business, but does not believe these will have a material adverse impact on its financial position, results of operations, or liquidity[117](index=117&type=chunk) [Note 13 – Segment Reporting](index=24&type=section&id=Note%2013%20%E2%80%93%20Segment%20Reporting) - The Company's sole remaining business segment and operations is Virtual Content Production[119](index=119&type=chunk) - Management evaluates performance and allocates resources based primarily on operating expenses[118](index=118&type=chunk) [Note 14 – Subsequent events](index=24&type=section&id=Note%2014%20%E2%80%93%20Subsequent%20events) - Subsequent to March 31, 2025, the Company fully repaid **$200,000** to its CEO, including **$199,485** for interest-free loans and **$515** for operating-related expenses[122](index=122&type=chunk) - On May 2, 2025, the Company entered into a securities purchase agreement for the sale of **1,115,600** common shares and **9,380,582** pre-funded warrants, with aggregate gross proceeds of **$5,500,000**[123](index=123&type=chunk)[124](index=124&type=chunk) - As of the issuance date, **$4,478,000** in proceeds were received, with net proceeds expected to be **$5,095,000** for working capital[123](index=123&type=chunk)[124](index=124&type=chunk) - On April 28, 2025, the Company agreed to purchase "Chat Box" software by issuing **2,444,295 shares** of common stock to Gongzheng Xu and Qing Wang[125](index=125&type=chunk) - The transaction was completed on April 29, 2025, and the software will be used to develop its AI business[125](index=125&type=chunk) - On April 30, 2025, holders of **1,051,341** registered November 2023 Registered Warrants exercised their options to purchase **952,644 shares** of common stock on a cashless basis, leaving **565,130 shares** of these warrants outstanding[127](index=127&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2025, compared to the same period in 2024, covering business overview, recent developments, key factors affecting operating results, detailed financial performance analysis, liquidity, capital resources, and critical accounting policies [Overview](index=26&type=section&id=Overview) - GD Culture Group Limited operates in virtual content production through AI Catalysis and Shanghai Xianzhui[132](index=132&type=chunk) - The company's main business areas are AI-driven digital human creation and customization, and live streaming and e-commerce[132](index=132&type=chunk) - SyncWaveX is an AI-powered web-based video generation tool for virtual human videos with lip synchronization, targeting content creators, educational/corporate entities, e-commerce vendors, and individual users[133](index=133&type=chunk) - Revenue is primarily generated from personalized customization services subscriptions, with foundational functionalities accessible at no cost subject to daily generative output constraints[133](index=133&type=chunk)[134](index=134&type=chunk) [Recent Development](index=27&type=section&id=Recent%20Development) - Investment in Shanghai Xianzhui: As of March 31, 2025, the Company owns **73.3333%** of Shanghai Xianzhui, which provides social media marketing agency services[136](index=136&type=chunk) - Offerings: * March 4, 2025: Sold **1,115,600** common shares for **$1,000,000** gross proceeds (**$910,000** net) for working capital[139](index=139&type=chunk) * May 2, 2025: Entered into an agreement to sell **1,115,600** common shares and **9,380,582** pre-funded warrants for **$5,500,000** aggregate gross proceeds[140](index=140&type=chunk) * As of the report date, **$4,478,000** was received, with net proceeds expected to be **$5,095,000** for working capital[140](index=140&type=chunk) - Nasdaq Compliance: The Company regained compliance with Nasdaq's minimum bid price requirement on June 18, 2024, after its common stock closed at or above **$1.00** for **10 consecutive business days**[143](index=143&type=chunk) - Software Purchase Agreements: * May 31, 2024: Purchased "AIBox" software for **$1,248,000**, paid by issuing **1,560,000** common shares, to develop its AI business[144](index=144&type=chunk) * April 28, 2025: Purchased "Chat Box" software by issuing **2,444,295** common shares, also for AI business development[145](index=145&type=chunk) [Key Factors that Affect Operating Results](index=28&type=section&id=Key%20Factors%20that%20Affect%20Operating%20Results) - Competition: The e-commerce and live streaming industry is highly competitive, with rivals on platforms like TikTok, potentially impacting sales and market share[146](index=146&type=chunk) - Retention of Key Management Team Members: The loss of key executives with experience in AI technology and content creation could negatively affect business operations[147](index=147&type=chunk) - Ability to Grow Market Presence and Penetrate New Markets: As an early-stage company, failure to effectively and cost-efficiently expand market presence, especially on social media, could negatively impact operating results[148](index=148&type=chunk) [Results of Operations (Three Months Ended March 31, 2025 vs. March 31, 2024)](index=29&type=section&id=Results%20of%20Operations) **Operating Expenses:** | Expense Type | March 31, 2025 | March 31, 2024 | | :---------------------------- | :------------- | :------------- | | Selling expenses | $0 | $(2,191,667) | | General and administrative | $(937,877) | $(1,769,280) | | Research and development expense | $0 | $(217,500) | | Total Operating Expenses | $(937,877) | $(4,178,447) | - Other Income, Net: Decreased by **$19,828 (90.3%)** to **$2,118** for the three months ended March 31, 2025, primarily due to the absence of interest income from a third-party loan present in 2024[149](index=149&type=chunk)[151](index=151&type=chunk) - Net Loss: Decreased by **$3,180,029 (76.5%)** to **$977,510** for the three months ended March 31, 2025, from **$4,157,539** in the prior year, mainly driven by lower operating expenses[149](index=149&type=chunk)[153](index=153&type=chunk) - The decrease in selling expenses and R&D expenses was mainly due to reduced investment in digital human and e-commerce live streaming marketing/advertising, partly due to uncertainty surrounding TikTok's potential exit from the U.S., and decreased R&D for AI-based digital human applications[150](index=150&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash Position & Working Capital (March 31, 2025): The Company had **$51,236** in cash and a working capital deficit of approximately **$1.5 million**[154](index=154&type=chunk)[159](index=159&type=chunk) - Subsequent Financing: On May 2, 2025, the Company completed a public offering, partially receiving net proceeds of approximately **$4.1 million**, which is expected to provide sufficient liquidity for the next twelve months[157](index=157&type=chunk)[159](index=159&type=chunk) **Cash Flow Summary (Three Months Ended March 31):** | Cash Flow Activity | 2025 (Unaudited) | 2024 (Unaudited) | | :--------------------------------------- | :--------------- | :--------------- | | Net cash used in operating activities | $(831,308) | $(3,617,910) | | Net cash used in investing activities | $0 | $(1,900,000) | | Net cash provided by financing activities | $860,000 | $830,533 | - Net cash used in operating activities decreased significantly due to lower net loss and decreased adjustments for non-cash items like amortization and deferred tax expenses[162](index=162&type=chunk) - Net cash used in investing activities decreased due to the absence of a loan to a third party in 2025[162](index=162&type=chunk) - Net cash provided by financing activities remained consistent, reflecting continued proceeds from debt issuance and new common stock[163](index=163&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Impairment of Long-lived Assets: Management judgment is crucial in assessing impairment for intangible assets (e.g., software copyrights, digital humans) and Right-of-Use (ROU) assets, based on discounted cash flow analysis and market rental information[165](index=165&type=chunk)[166](index=166&type=chunk) - No impairment losses were recognized for intangible assets for the three months ended March 31, 2025 and 2024[166](index=166&type=chunk) [Recently Issued Accounting Pronouncements](index=31&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - ASU 2023-09 (Income Taxes): Effective for fiscal years beginning after December 15, 2024[167](index=167&type=chunk) - Management does not expect a material impact on financial statements[167](index=167&type=chunk) - ASU 2023-07 (Segment Reporting): Adopted retrospectively for the year ended December 31, 2024, to improve segment expense disclosures[168](index=168&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses): Effective for fiscal years beginning after December 15, 2026[169](index=169&type=chunk) - The Company is currently assessing its impact[169](index=169&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=32&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section discusses the Company's exposure to various market risks, including credit risk, liquidity risk, inflation risk, and foreign currency risk, and outlines the strategies employed to manage these risks [Credit Risk](index=32&type=section&id=Credit%20Risk) - Financial instruments with significant credit risk include cash and accounts receivable[172](index=172&type=chunk) - Cash in PRC financial institutions is not government-insured, but creditworthiness is monitored[172](index=172&type=chunk) - Accounts receivable credit risk is managed through approvals, limits, monitoring, and requiring prepayments[173](index=173&type=chunk) [Liquidity Risk](index=32&type=section&id=Liquidity%20Risk) - As of March 31, 2025, the Company had **$51,236** cash and a working capital deficit of approximately **$1.5 million**[175](index=175&type=chunk) - The CEO provided a Letter of Support for continued financial backing for at least **12 months** from the issuance date of the financial statements[175](index=175&type=chunk) - Management believes that with recent financing and projected cash flows, the Company has sufficient liquidity for the next twelve months and plans to raise additional capital and implement cost-cutting measures[176](index=176&type=chunk) [Inflation Risk](index=33&type=section&id=Inflation%20Risk) - Inflationary factors could impair operating results if raw material and overhead costs increase without corresponding increases in product selling prices[178](index=178&type=chunk) - While inflation has not materially impacted financial position or results to date, future high inflation could adversely affect gross margin and operating expenses[178](index=178&type=chunk) [Foreign Currency Risk](index=33&type=section&id=Foreign%20Currency%20Risk) - A majority of the Company's operations, assets, and liabilities are denominated in RMB, which is subject to PRC government control over currency conversion[179](index=179&type=chunk) - Shortages in foreign currency availability could restrict PRC subsidiaries' ability to remit dividends or other payments to the Company[180](index=180&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=33&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section reports on the effectiveness of the Company's disclosure controls and procedures and internal control over financial reporting - The Certifying Officers concluded that the Company's disclosure controls and procedures were **not effective** as of March 31, 2025[180](index=180&type=chunk) - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[182](index=182&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that the Company is not currently involved in any material legal proceedings - None[185](index=185&type=chunk) [ITEM 1A. RISK FACTORS](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to the risk factors discussed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, noting no material changes in the risks for this quarterly report - Investing in common stock involves a high degree of risk[186](index=186&type=chunk) - No material changes to the risk factors described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[186](index=186&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the unregistered sales of equity securities and the use of proceeds from such sales during the reporting period - On March 4, 2025, the Company issued **1,115,600 shares** of common stock at **$0.896379** per share, generating **$1,000,000** gross proceeds, for working capital purposes[187](index=187&type=chunk) - These securities were issued under exemptions from registration requirements of the Securities Act (Section 4(a)(2) and Rule 506(b) of Regulation D)[187](index=187&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=34&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section reports on any defaults upon senior securities - None[188](index=188&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=34&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the Company - Not applicable[189](index=189&type=chunk) [ITEM 5. OTHER INFORMATION](index=34&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section reports on any other information required to be disclosed that is not covered by other items - None[190](index=190&type=chunk) [ITEM 6. EXHIBITS](index=35&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - The section lists various exhibits filed as part of or incorporated by reference into the Quarterly Report on Form 10-Q, including certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[192](index=192&type=chunk)

Group 1 - GD Culture Group Limited ("GDC") has entered into a Common Stock Purchase Agreement to sell up to $300 million of its common stock [1] - Proceeds from the stock sale will support the Company's crypto asset treasury strategy, including the purchase of Bitcoin and OFFICIAL TRUMP [2] - GDC aims to enhance its balance sheet with high-performance digital assets and align with the decentralized finance (DeFi) ecosystem [3] Group 2 - The adoption of crypto assets as treasury reserve holdings is a strategic move reflecting industry trends and GDC's strengths in digital technologies and livestreaming e-commerce [4] - GDC's partnership with the Investor is expected to provide strong momentum for its initiatives and reinforce its leadership in blockchain-driven industrial transformation [4] - The Company plans to enter the livestreaming market with a focus on e-commerce through its subsidiary, AI Catalysis [5]

Group 1 - GD Culture Group Inc. successfully completed a private investment public stock offering, raising approximately $5.5 million [1] - The company agreed to sell a total of 1,115,600 shares of common stock at a price of $0.524 per share, along with warrants to purchase an additional 9,380,582 shares at a price of $0.523 per warrant [1] - The net proceeds from the offering will be used for working capital purposes [1] Group 2 - GD Culture Group operates primarily through its subsidiaries, AI Catalysis Corp. and Shanghai Xianzhui Technology Co., Ltd., focusing on AI digital human technology and live e-commerce [4] - The company plans to enter the live e-commerce market through its wholly-owned U.S. subsidiary, AI Catalysis, established in May 2023 [4]

Core Viewpoint - GD Culture Group Limited has successfully closed a private placement, raising approximately $5.5 million to support its working capital needs [3]. Group 1: Private Placement Details - The company sold an aggregate of 1,115,600 shares of common stock at a price of $0.524 per share and pre-funded warrants to purchase up to 9,380,582 shares at a price of $0.523 per warrant [2]. - The gross proceeds from the offering amounted to approximately $5.5 million, which will be utilized for working capital purposes [3]. Group 2: Company Overview - GD Culture Group Limited operates primarily through its subsidiaries, AI Catalysis Corp. and Shanghai Xianzhui Technology Co, Ltd., and is planning to enter the livestreaming market focused on e-commerce [7]. - The company’s main business activities include AI-driven digital human technology and live-streaming e-commerce [7].

Core Viewpoint - GD Culture Group Limited announced a private placement to raise approximately $5.5 million through the sale of common stock and pre-funded warrants [1][2]. Group 1: Private Placement Details - The company signed a private placement agreement on May 2, 2025, for the purchase of 1,115,600 shares of common stock at a price of $0.524 per share [1]. - Additionally, pre-funded warrants to purchase up to 9,380,582 shares of common stock were included in the offering at a price of $0.523 per warrant [1]. - The gross proceeds from the offering are expected to be around $5.5 million, which will be used for working capital purposes [2]. Group 2: Company Overview - GD Culture Group Limited operates primarily through its subsidiaries, including AI Catalysis Corp., and is focused on entering the livestreaming market with an emphasis on e-commerce [5]. - The company's main business activities involve AI-driven digital human technology and live-streaming e-commerce [5].

Core Points - GD Culture Group Limited ("GDC") received a Notification Letter from Nasdaq indicating non-compliance with Listing Rule 5550(b)(1), which requires a minimum of $2.5 million in stockholders' equity for continued listing [1] - As of the fiscal year ended December 31, 2024, GDC reported stockholders' equity of $2.643 million, which is above the minimum requirement, but Nasdaq determined that the company does not meet other listing criteria [1] - The Notification Letter does not have an immediate effect on GDC's listing status, and the company has until May 4, 2025, to submit a compliance plan [2] - If the compliance plan is accepted, GDC may receive an additional compliance period of up to 180 days to demonstrate compliance [2] - The company's business operations remain unaffected by the Notification Letter, and it is exploring options to regain compliance [3] - GDC is focused on entering the livestreaming market with an emphasis on e-commerce through its subsidiary, AI Catalysis Corp. [4] Company Overview - GD Culture Group Limited operates primarily through its subsidiaries, including AI Catalysis Corp. and Shanghai Xianzhui Technology Co, Ltd. [4] - The company is engaged in AI-driven digital human technology and live-streaming e-commerce business [4]

Core Viewpoint - GD Culture Group Limited has received a notification from Nasdaq regarding non-compliance with listing rules, specifically concerning stockholders' equity requirements [1][2]. Group 1: Compliance Notification - The Company received a Notification Letter from Nasdaq dated March 20, 2025, indicating it is no longer in compliance with Nasdaq Listing Rule 5550(b)(1), which requires a minimum of $2.5 million in stockholders' equity [1]. - As of the fiscal year ended December 31, 2024, the Company reported stockholders' equity of $2.643 million, which is above the minimum requirement [1]. - Nasdaq has determined that the Company does not meet the alternatives of market value of listed securities or net income from continuing operations for continued listing [1]. Group 2: Compliance Plan - The Notification Letter does not have an immediate effect on the Company's listing on the Nasdaq Capital Market [2]. - The Company has 45 calendar days, until May 4, 2025, to submit a plan to regain compliance [2]. - If the compliance plan is accepted, the Company may be granted a compliance period of up to 180 calendar days from the date of the Notification Letter [2]. Group 3: Business Operations - The Company's business operations remain unaffected by the receipt of the Notification Letter [3]. - The Company is exploring various options to regain compliance and maintain its listing on the Nasdaq Capital Market [3]. - The Company intends to submit the compliance plan as soon as practicable [3]. Group 4: Company Overview - GD Culture Group Limited operates mainly through its subsidiaries, including AI Catalysis Corp. and Shanghai Xianzhui Technology Co, Ltd. [4]. - The Company plans to enter the livestreaming market with a focus on e-commerce through its wholly owned U.S. subsidiary, AI Catalysis [4]. - The main businesses of the Company include AI-driven digital human technology and live-streaming e-commerce [4].

Company Classification and Stock Information - The company is classified as a "smaller reporting company," which subjects it to reduced disclosure requirements, potentially making its common stock less attractive to investors [325]. - As of March 12, 2025, the company had 12,282,894 shares of common stock issued and outstanding, with authorization to issue up to 200,000,000 shares [334]. - The common stock price may experience rapid and substantial volatility, making it difficult for prospective investors to assess its value [330]. - Future sales of common stock could lead to a decline in market price, affecting existing shareholders [336]. - The company has no plans to pay cash dividends on its common stock for the foreseeable future, intending to retain earnings for operations and growth [339]. - The market for the company's common stock may not be sustained, potentially impairing its ability to raise capital or enter into strategic partnerships [338]. Financial Performance and Risks - The company has incurred losses in each year since its inception, indicating a need for significant additional financing to continue operations [335]. - The company may face significant liabilities and costs due to potential securities litigation following periods of stock price volatility [333]. Cybersecurity Concerns - Cybersecurity threats remain a concern, with plans to develop information security policies and incident response plans to mitigate risks [327]. - The company acknowledges that it may not be able to fully mitigate cybersecurity risks, which could harm its reputation and business [328].

Group 1 - GD Culture Group Limited ("GDC") announced the closing of a private placement on March 6, 2025, for the purchase and sale of up to 1,115,600 shares of its common stock at a price of approximately $0.896 per share [1][2] - The aggregate gross proceeds from the Offering were approximately $1.0 million [2] - The shares were sold under the exemption from registration requirements of the Securities Act of 1933, relying on Section 4(a)(2) and Rule 506(b) of Regulation D [3] Group 2 - GD Culture Group Limited is primarily engaged in AI-driven digital human technology and live-streaming e-commerce business through its subsidiaries, including AI Catalysis Corp. [5] - The company plans to enter the livestreaming market with a focus on e-commerce through its wholly owned U.S. subsidiary, AI Catalysis, which was incorporated in May 2023 [5]

Core Insights - Snail, Inc. is set to showcase its latest projects and innovations at the 2025 Game Developers Conference (GDC), highlighting its role as a leading global independent developer and publisher of interactive digital entertainment [1][10] - The company will feature a series of panels that include new trailers, behind-the-scenes insights, and technical discussions, providing attendees with exclusive announcements and firsthand access to upcoming projects [1][10] Panel Schedule Highlights - The GDC will include a panel celebrating the 10-year anniversary of "ARK: Survival Evolved," offering insights into the company's plans for this milestone [2] - Another panel will focus on "For The Stars," discussing the creation of immersive worlds through game design and art [3] - The development journey of "Bellwright" will be explored, detailing the transition from modding to full development by Donkey Crew [4] - A technical showcase by Frozen Way will address the challenges in creating a lively world in "Honeycomb: The World Beyond" [5] - Finish Line Games will present their development journey and provide a first look at "Robots at Midnight" [6] - Loric Games will share their experiences and challenges faced during the development of "Echoes of Elysium" [7] Company Overview - Snail Games is recognized for delivering innovative and immersive gaming experiences across various genres and platforms, emphasizing technological innovation and community engagement [8]