GD Culture Group Ltd

Previous wording

For live streaming interactive game sector, the Company has launched a live-streamed game called “Trible Light.” This game is owned by the company, and we independently operate it. Currently, the game is being livestreamed on TikTok (TikTok account: almplify001). In addition to “Trible Light,” we have also introduced other licensed games on the same TikTok account, providing a diverse gaming experience for the players.

Current wording

For live streaming interactive game sector, the Company has introduced some licensed games on the TikTok account (TikTok account: almplify001), providing a diverse gaming experience for the players.

Previous wording

The COVID-19 pandemic did not have a material impact on our business or results of operation for the six months ended June 30, 2024 and 2023. However, the extent to which the COVID-19 pandemic may negatively impact the general economy and our business is highly uncertain and cannot be accurately predicted. These uncertainties may impede our ability to conduct our operations and could materially and adversely affect our business, financial condition and results of operations, and as a result could adversely affect our stock price and create more volatility.

Current wording

The COVID-19 pandemic did not have a material impact on our business or results of operation for the nine months ended September 30, 2024 and 2023. However, the extent to which the COVID-19 pandemic may negatively impact the general economy and our business is highly uncertain and cannot be accurately predicted. These uncertainties may impede our ability to conduct our operations and could materially and adversely affect our business, financial condition and results of operations, and as a result could adversely affect our stock price and create more volatility.

Previous wording

The Company’s operating expenses include selling and marketing (“S&M”) expenses, general and administrative (“G&A”) expenses, research and development (“R&D”) expenses. S&M expenses increased to approximately $0.2 million for the three months ended June 30, 2024, compared to approximately $nil for the three months ended June 30, 2023. The increase was mainly due to the Company increased inputs on digital human and e-commerce live streaming marketing and advertising to improve its brand reputation, attract a large following on social media. G&A expenses increased by approximately $1.4 million from approximately $0.3 million for the three months ended June 30, 2023 to approximately $1.7 million for the three months ended June 30, 2024. The increase was mainly due to the combined impact of (i) the expansion of our administrative associated personnel cost, (ii) increase in operating and lease expenses for offices, (iii) increase in the professional service fee and (iv) amortization of intangible assets. R&D expenses increased to approximately $0.2 million for the three months ended June 30, 2024, compared to nil for the three months ended June 30, 2023. The increase was mainly due to the Company increased inputs on research and development about our artificial intelligence based digital human application, to create unconventional digital characters and customize digital humans to support the clients’ marketing efforts.

Current wording

The Company’s operating expenses include selling and marketing (“S&M”) expenses, general and administrative (“G&A”) expenses, research and development (“R&D”) expenses. S&M expenses increased to approximately $2,909 for the three months ended September 30, 2024, compared to approximately $nil for the three months ended September 30, 2023. The increase was mainly due to the Company increased inputs on artificial intelligence marketing and advertising to improve its brand reputation, attract a large following on social media. G&A expenses decreased by approximately $0.7 million from approximately $1.60 million for the three months ended September 30, 2023 to approximately $0.9 million for the three months ended September 30, 2024. The decrease was mainly due to the of the decrease in the professional service fee. R&D expenses increased to approximately $0.2 million for the three months ended September 30, 2024, compared to nil for the three months ended September 30, 2023. The increase was mainly due to the Company increased inputs on research and development about our artificial intelligence based digital human application, to create unconventional digital characters and customize digital humans to support the clients’ marketing efforts.

Previous wording

The Company’s other expense increased by approximately $1.5 million during the three months ended June 30, 2024, compared to $179 other income for the three months ended June 30, 2023. The other expense increment was mainly due to the impairment loss recognized on the convertible note receivable.

Current wording

The Company’s other expense increased by approximately $2.9 million during the three months ended September 30, 2024, compared to $146,839 other income for the three months ended September 30, 2023. The other expense increase was mainly due to the other-than-temporary impairment losses from convertible note and intangible assets.

Previous wording

As a result of the foregoing, loss from continuing operations for the three months ended June 30, 2024 was approximately $3.6 million, an increase of approximately 2,867.9%, from loss from continuing operations of $121,058 for the three months ended June 30, 2023.

Current wording

As a result of the foregoing, loss from continuing operations for the three months ended September 30, 2024 was approximately $3.8 million, an increase of approximately 164.9%, from loss from continuing operations of approximately $1.4 million for the three months ended September 30, 2023.

Previous wording

For Six Months Ended June 30, 2024 vs. June 30, 2023

Current wording

For Nine Months Ended September 30, 2024 vs. September 30, 2023

Previous wording

The Company’s revenue consists of software copyright. Total revenues decreased by approximately $150,000 to $nil for the three months ended June 30, 2024, compared to approximately $150,000 for the three months ended June 30, 2023. The decrease was mainly due to no sales of software copyright in 2024.

Current wording

The Company’s revenue consists of software copyright. Total revenues decreased by approximately $150,000 to $nil for the nine months ended September 30, 2024, compared to approximately $150,000 for the nine months ended September 30, 2023. The decrease was mainly due to no sales of software copyright in 2024.

Previous wording

The Company’s gross profit decreased by $150,000 to nil, during the three months ended June 30, 2024, from $150,000 for the three months ended June 30, 2023. The decrease was due to no sales of software copyright in 2024.

Current wording

The Company’s gross profit decreased by $150,000 to nil, during the nine months ended September 30, 2024, from $150,000 for the nine months ended September 30, 2023. The decrease was due to no sales of software copyright in 2024.

Previous wording

The Company’s operating expenses include selling and marketing (“S&M”) expenses, general and administrative (“G&A”) expenses, research and development (“R&D”) expenses. S&M expenses increased to $2.4 million for the six months ended June 30, 2024, compared to $nil for the six months ended June 30, 2023. The increase was mainly due to the Company increased inputs on digital human and e-commerce live streaming marketing and advertising to improve its brand reputation, attract a large following on social media. G&A expenses increased by approximately $3.2 million from approximately $0.3 million for the six months ended June 30, 2023 to approximately $3.5 million for the six months ended June 30, 2024. The increase was mainly due to the combined impact of (i) the expansion of our administrative associated personnel cost, (ii) increase in operating and lease expenses for offices, (iii) increase in the professional service fee and (iv) amortization of intangible assets. R&D expenses increased to approximately $0.4 million for the six months ended June 30, 2024, compared to nil for the six months ended June 30, 2023. The increase was mainly due to the Company increased inputs on research and development about our artificial intelligence based digital human application, to create unconventional digital characters and customize digital humans to support the clients’ marketing efforts.

Current wording

The Company’s operating expenses include selling and marketing (“S&M”) expenses, general and administrative (“G&A”) expenses, research and development (“R&D”) expenses. S&M expenses increased to $2.4 million for the nine months ended September 30, 2024, compared to $nil for the nine months ended September 30, 2023. The increase was mainly due to the Company increased inputs on digital human and e-commerce live streaming marketing and advertising to improve its brand reputation, attract a large following on social media. G&A expenses increased by approximately $2.4 million from approximately $1.9 million for the nine months ended September 30, 2023 to approximately $4.3 million for the nine months ended September 30, 2024. The increase was mainly due to the combined impact of (i) the expansion of our administrative associated personnel cost, (ii) increase in operating and lease expenses for offices, (iii) increase in the professional service fee and (iv) amortization of intangible assets. R&D expenses increased to approximately $0.7 million for the nine months ended September 30, 2024, compared to nil for the nine months ended September 30, 2023. The increase was mainly due to the Company increased inputs on research and development about our artificial intelligence based digital human application, to create unconventional digital characters and customize digital humans to support the clients’ marketing efforts.

Previous wording

The Company’s other income decreased by approximately $1.5 million during the six months ended June 30, 2024, compared to $179 for the six months ended June 30, 2023. The decrease was mainly due to the impairment loss recognized on the convertible note receivable.

Current wording

The Company’s other income decreased by approximately $4.4 million during the nine months ended September 30, 2024, compared to $147,018 for the nine months ended September 30, 2023. The decrease was mainly due to the other-than-temporary impairment losses from convertible notes and intangible assets.

Previous wording

As a result of the foregoing, loss from continuing operations for the six months ended June 30, 2024 was approximately $7.8 million, an increase of approximately 6,067.1%, from loss from continuing operations of $125,675 for the six months ended June 30, 2023.

Current wording

As a result of the foregoing, loss from continuing operations for the nine months ended September 30, 2024 was approximately $11.6 million, an increase of approximately 635.8%, from loss from continuing operations of approximately $1.6 million for the nine months ended September 30, 2023.

Previous wording

The Company’s determination of whether or not an indication of impairment exists at the cash generating unit level requires significant management judgment pertaining to intangible assets, including a copyright of a broadcast game (the “Tribal Light”), 55 digital humans and a copyright of AI Box, which are used for online living-stream, as well as the operating Right-of-use (“ROU”) assets, including the offices of the Company. Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s intangible assets and ROU assets are impaired.

Current wording

The Company’s determination of whether or not an indication of impairment exists at the cash generating unit level requires significant management judgment pertaining to intangible assets, including a software copyright of a broadcast game (the “Tribal Light”), 55 digital humans and a software copyright of AI Box, which are used for online living-stream, as well as the operating Right-of-use (“ROU”) assets, including the offices of the Company. Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s intangible assets and ROU assets are impaired.

Previous wording

As of June 30, 2024, the Company had $301,837 in its operating bank accounts and working capital of approximately $2.1 million. In August 2024, Mr. Xiaojian Wang, the Chief Executive Officer of the Company, executed a Letter of Support in which he agreed to provide continuing financial support to the Company for a period of at least 12 months from the issuance date of the Company’s unaudited consolidated financial statements for the period ended June 30, 2024.

Current wording

As of September 30, 2024, the Company had $31,969 in its operating bank accounts and working capital of approximately $1.2 million. In October 2024, Mr. Xiaojian Wang, the Chief Executive Officer (“CEO”) of the Company, executed a Letter of Support in which he agreed to provide continuing financial support to the Company for a period of at least 12 months from the issuance date of the Company’s unaudited consolidated financial statements for the period ended September 30, 2024. On September 18, 2024 and September 20, 2024, the CEO lent $9,500 and $50,000, respectively, to the Company through two loan agreements, for working capital purposes. On October 4, 2024 and October 23, 2024, the CEO lent $50,000 and $200,000, respectively, to the Company through two loan agreements, for working capital purposes. Pursuant to the loan agreements, these loans are non-interest bearing and will be due on September 18, 2025, September 20, 2025, October 4, 2025 and October 23, 2025, respectively. Up to the date of the unaudited consolidated financial statements were issued, the Company received $309,500 in total from the CEO.

Previous wording

The following summarizes the key components of the Company’s cash flows for the six months ended June 30, 2024 and 2023.

Current wording

The following summarizes the key components of the Company’s cash flows for the nine months ended September 30, 2024 and 2023.

Previous wording

As of June 30, 2024 and December 31, 2023, the Company had cash in the amount of $301,837 and $5,175,518, respectively. As of June 30, 2024 and December 31, 2023, $31,933 and $211,222 were deposited with one financial institution located in the PRC, respectively. As of June 30, 2024 and December 31, 2023, $269,904 and $4,964,296 were deposited with one financial institution located in the United States, respectively.

Current wording

As of September 30, 2024 and December 31, 2023, the Company had cash in the amount of $31,969 and $5,175,518, respectively. As of September 30, 2024 and December 31, 2023, $11,429 and $211,222 were deposited with one financial institution located in the PRC, respectively. As of September 30, 2024 and December 31, 2023, $20,540 and $4,964,296 were deposited with one financial institution located in the United States, respectively.

Previous wording

Net cash used in operating activities was approximately $5.1 million for the six months ended June 30, 2024, as compared to approximately $1.7 million net cash used in operating activities for the six months ended June 30, 2023. Net loss for the six months ended June 30, 2024 was approximately $7.8 million, as compared to approximately $177 thousands for the six months ended June 30, 2023. Adjustments to reconcile net loss to net cash used in operating activities increased by approximately $2.1 million, mainly due to the increased amortization of intangible assets of approximately $0.4 million, the increased lease expenses of right - of - use assets of approximately $0.2 million and impairment of convertible notes receivable of $1.5 million.

Current wording

Net cash used in operating activities was approximately $5.3 million for the nine months ended September 30, 2024, as compared to approximately $6.5 million net cash used in operating activities for the nine months ended September 30, 2023. Net loss for the nine months ended September 30, 2024 was approximately $11.5 million, as compared to approximately $3.7 millions for the nine months ended September 30, 2023. Adjustments to reconcile net loss to net cash used in operating activities increased by approximately $2.9 million, mainly due to the increase on other-than-temporary impairment losses from convertible note and intangible assets, partially impairment loss from goodwill.

Previous wording

Net cash used in investing activities was approximately $0.7 million for the six months ended June 30, 2024, as compared to $4,642 for the six months ended June 30, 2023. Net cash used in investing activities was increased by approximately $0.7 million, due to the increase of the loan to a third party.

Current wording

Net cash used in investing activities was approximately $0.7 million for the nine months ended September 30, 2024, as compared to approximately $5.0 million for the nine months ended September 30, 2023. Net cash used in investing activities decreased by approximately $4.3 million, due to no purchase of intangible assets and no purchase of convertible notes in 2024, partially offset by the loan to a third party.

Previous wording

Net cash provided by financing activities was approximately $0.8 million for the six months ended June 30, 2024, as compared to approximately $8.7 million net cash provided by financing activities for the six months ended June 30, 2023. Net cash provided by financing activities was decreased by approximately $7.9 million, due to no significant proceeds from issuance of comment stock in 2024.

Current wording

Net cash provided by financing activities was approximately $0.8 million for the nine months ended September 30, 2024, as compared to approximately $12.7 million net cash provided by financing activities for the nine months ended September 30, 2023. Net cash provided by financing activities decreased by approximately $11.9 million, due to no significant proceeds from issuance of comment stock in 2024.