GD Culture Group Ltd
For the period ended Dec 31, 2024. Filed Mar 18, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 18, 2025
GDC$1.20+9.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-02.
0001213900-24-029042
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-18.
0001213900-25-024635
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 69 current paragraphs.
28 unchanged; 12 reworded; 28 added; 42 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
SyncWaveX is an AI-powered web-based video generation tool, engineered to enable users to synthesize virtual human videos with precise lip synchronization. Utilization involves text input and selection from a library of integrated character models and auditory profiles. The core technological foundation is comprised of speech synthesis, facial expression emulation, and lip-synchronization algorithms. This solution is primarily directed towards content creators, facilitating the rapid production of spoken-word videos; educational and corporate entities, for the transformation of curricular materials into illustrative video content; e-commerce vendors, for the provision of 24-hour digital broadcast capabilities; and individual users, for the creation of engaging social media content. Foundational functionalities are accessible at no cost, subject to daily generative output constraints. The principal revenue model is predicated upon personalized customization services, wherein users may upload photographic and vocal data to cultivate proprietary digital replicas. Upon depletion of complimentary allocation, a tiered fee structure, contingent on temporal duration or generative frequency, is instituted. The platform also accommodates horizontal and vertical aspect ratios, ensuring cross-platform compatibility, thereby fostering the pervasive integration of AI-driven digital human technology across creative and commercial landscapes.
Current report
The Company aims to generate revenue from customization services subscriptions.
Current report
Offering
Current report
On February 10, 2025, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Univest Securities, LLC as the sales agent (the “February 2025 Offering”). Pursuant to the ATM Agreement, the Company may issue and sell from time to time, shares of its common stock having an aggregate offering price of not more than $10,000,000 through the sales agent or any of its sub-agent(s) or other designees, acting as sales agent. Up to the date the consolidated financial statements were issued, the Company has not issue or sell any shares under the ATM Agreement.
Current report
On March 4, 2025, the Company entered into a securities purchase agreement (the “March 2025 Securities Purchase Agreement”) with certain investor (the “Purchaser”) for the sale of 1,115,600 shares of common stock (the “Shares”) at $0.896379 per share (the “March 2025 Offering”), generating gross proceeds in the amount of $1,000,000, before deducting underwriter’s fees and accountable expenses and other estimated expenses. The Company plans to use the proceeds from the offering for working capital purposes.
Current report
Upon closing of the March 2025 Offering, the Company paid $90,000 cash for underwriting, which consists of a total cash fee of $70,000, equal to seven percent (7%) of the aggregate gross proceeds raised in this Offering and reimbursement of reasonable fees and expenses of $20,000 for the underwriter’s legal counsel and due diligence analysis expenses.
Current report
Nasdaq Compliance
Current report
On May 13, 2024, the Company received a written notice from the Listing Qualifications Department of the Nasdaq Stock Market, LLC (“Nasdaq”) notifying the Company that, based on the closing bid price of the Company’s common stock was below $1.00 for the last 30 consecutive trading days, the Company no longer complies with the minimum bid price requirement (the “Minimum Bid Price Requirement”) for continued listing on the Nasdaq Capital Market as set forth in Nasdaq Listing Rule 5450(a)(1). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has an initial compliance period of 180 calendar days, or until November 11, 2024, to regain compliance with the Minimum Bid Price Requirement.
Current report
On June 18, 2024, the Company received a letter from Nasdaq stating that because the Company’s common stock had a closing bid price at or above $1.00 per share for 10 consecutive business days, the Company had regained compliance with the Minimum Bid Price Requirement, and that the matter is now closed.
Current report
Software Purchase Agreement
Current report
On May 31, 2024, the Company entered into a software purchase agreement with Shanxi Gangdong Cultural Media Co., Ltd., a seller unaffiliated with the Company (the “Seller”). Pursuant to the agreement, the Company agreed to purchase and the Seller agreed to sell all of Seller’s right, title, and interest in and to the certain software. The purchase price of the software shall be $1,248,000, payable in the form of issuance of 1,560,000 shares of common stock of the Company, valued at $0.80 per share. The Company plans to use the software to develop its AI business. On June 4, 2024, the Company issued 1,560,000 shares of common stock of the Company to the Seller’s designees and the transaction was completed.
Current report
Other Income (Expenses)
Current report
The Company’s net loss decreased by approximately $0.2 million, or 1.6%, to approximately $14.1 million net loss for the year ended December 31, 2024, from approximately $14.3 million net loss for the year ended December 31, 2023. The decrease was primarily driven by lower operating expenses, as discussed above, and a reduction in the loss from discontinued operations. These factors were partially offset by an increase in the impairment of intangible assets and provisions for credit losses related to convertible notes and loan receivables.
Current report
Loan Receivable
Current report
Loan receivable is the amounts lent to a third party with the interest rate of 5% per annual. Since the loan will be due within one year, the Company classified the loan as current assets under the loan receivable account on the consolidated balance sheet.
Current report
Loan receivable is assessed for credit loss in accordance withASC 326, Financial Instruments – Credit Losses. The Company evaluates expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts. If it is determined that all or a portion of the loan receivable is uncollectible, the Company records an allowance for credit losses through a provision in the consolidated statements of operations.
Current report
Interest income on loan receivable is recognized using the effective interest method and recorded as interest income on the consolidated statements of operations. However, if the loan is placed on nonaccrual status due to doubt about collectability, the Company ceases recognizing interest income and reverses any previously accrued but unpaid interest against interest income. Interest receipts on nonaccrual loans are recorded as a reduction of principal unless collectability of the full principal balance is reasonably assured.
Current report
The Company accounts for credit losses on AFS debt securities in accordance withASC 326, Financial Instruments—Credit Losses. Under ASC 326, the Company evaluates AFS debt securities at each reporting date to determine whether a decline in fair value below amortized cost is attributable to credit-related factors or non-credit factors. If a credit-related impairment is identified, the Company records an allowance for credit losses through earnings, limited to the difference between amortized cost and fair value. Non-credit related declines remain in accumulated other comprehensive income. If credit quality improves, previously recognized credit losses are reversed through earnings, up to the amount of prior allowance. The Company assesses credit risk based on issuer financial health, market conditions, and macroeconomic factors.
Current report
If the Company determines that it is more likely than not that it will be required to sell an AFS debt security before recovery of its amortized cost, or if the security is deemed uncollectible, the Company writes off the full carrying amount of the security. In such cases, any previously recorded allowance for credit losses is removed, and the full impairment is recognized as a loss in earnings.
Current report
Impairment of long-lived assets
Current report
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.
Current report
Fair value of the long-lived assets was determined by the Company based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. Considerable management judgement is used to estimate future cashflows, particularly revenues expected to be generated from the usage of the long-lived assets and estimates of the price market participants would pay to lease the operating lease right-use assets, which are based on comparable market rental information that could be reasonably obtained for the property. Accordingly, actual results may vary significantly from the Company estimates as they are forward-looking and include assumptions about economic and market conditions with uncertain future outcomes. For the year ended December 31, 2024 and 2023, the Company recognized impairment losses in intangible assets of $2,755,659 and $nil.
Current report
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the amendment is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. The Company adopted ASU 2023-07 for the year ending December 31, 2024.
Current report
As of December 31, 2024, the Company had $22,538 in its operating bank accounts and working capital of approximately $1.4 million. From September 2024 to December 2024, Mr. Xiaojian Wang, the Chief Executive Officer of the Company (“CEO”), lent $349,485 to the Company through five 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, October 23, 2025 and December 16, 2025, respectively. On January 31, 2025, the CEO lent $50,000 to the Company through a loan agreement, for working capital purposes. Pursuant to the loan agreement, this loan is non-interest bearing and will be due on January 31, 2026. On March 10, 2025, the Company repaid $100,000 to the CEO, reducing the outstanding loan balance to $249,485. Up to the date of the consolidated financial statements were issued, the outstanding loan from the CEO remained at $249,485.
Current report
On January 23, 2025, the Green Oasis Limited, a shareholder holding less than a 5% ownership shares in the Company, provided a $100,000 loan to the Company for working capital purposes. Pursuant to the loan agreement, this loan is non-interest bearing and will be due on April 23, 2025.
Current report
On March 4, 2025, the Company entered into a securities purchase agreement (the “March 2025 Securities Purchase Agreement”) with certain investors for the sale of 1,115,600 shares of common stock at $0.896379 per share (the “March 2025 Offering”), generating net proceeds in the amount of $910,000, after deducting underwriter’s fees of $70,000, equal to seven percent (7%) of the aggregate gross proceeds raised in the March 2025 Offering and reimbursement of $20,000 for the underwriter’s legal counsel and due diligence analysis expense. The Company plans to use the proceeds from the offering for working capital purposes.
Current report
In March 2025, the CEO 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 consolidated financial statements for the period ended December 31, 2024.
Current report
The Company also intends to raise additional debt or equity capital to fund future operations. There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. These circumstances give rise to substantial doubt that the Company will continue as a going concern and these consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Removed paragraphs (42)
Previous report
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report
For AI-driven digital human sector, the Company uses AI algorithms and software to generate realistic 3D or 2D digital human models. AI algorithms and machine learning models are used to simulate human characteristics, such as facial expressions, body movements, and even speech patterns. These models can be customized to create and personalize lifelike digital representations of humans. Customization may involve adjusting facial features, body proportions, skin textures, hair styles, clothing, and more. Once created and customized, digital humans find applications in a wide range of industries, including gaming, entertainment, advertising, education, and more. Depending on the specific industry andthe application scenario, the Company helps the customers to define the objectives to achieve with digital humans, choose the technology for character customization, then create unique aviators and deploy in the chosen platform.
Previous report
For live streaming and e-commerce sector, the Company applies digital human technology in live streaming e-commerce businesses. Livestream usage is taking off globally. The integration of cutting-edge AI digital human technologies and live streaming platforms will transform the way businesses, sellers and consumers engage in online commerce. Digital anchors can offer long-duration intelligent live broadcasting. It also supports customized avatars that perfectly adapt to different live streaming scenarios. The company has introduced online e-commerce businesses on TikTok.
Previous report
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.
Previous report
Weaim to generate revenue from: 1) Service revenue and advertising revenue from digital human creation and customization; 2) Products’ sales revenue from social live streaming e-commerce business; and 3) Virtual paid gifts revenue from live streaming interactive gaming.
Previous report
Our principal executive office is located at 810 Seventh Avenue, 22nd Floor, New York, NY 10019, and our telephone number is: +1-347-2590292.
Previous report
Discontinued Business
Previous report
Prior to September 28, 2022, we also conducted business through Sichuan Wuge Network Games Co., Ltd. (“Wuge”) and Makesi WFOE. Makesi WFOE had a series of contractual arrangement with Wuge that established a VIE structure. For accounting purposes, Makesi WFOE was the primary beneficiary of Wuge. Accordingly, under U.S. GAAP, GDC treated Wuge as the consolidated affiliated entity and has consolidated Wuge’s financial statements prior to September 28, 2022. Wuge focused its business on research, development and application of Internet of Things (IoT) and electronic tokens Wuge digital door signs. On September 28, 2022, Makesi WFOE entered into a termination agreement with Wuge and the shareholders of Wuge to terminate the VIE agreements and to cancel the shares previously issued to the shareholders of Wuge, based on the average closing price of $0.237 per share of the Company during the 30 trading days immediately prior to the date of the termination agreement. As a result of such termination, the Company no longer treats Wuge as a consolidated affiliated entity or consolidates the financial results and balance sheet of Wuge in the Company’s consolidated financial statements under U.S. GAAP.
Previous report
Prior to June 26, 2023, we had a subsidiary TMSR Holdings Limited (“TMSR HK”), which owns 100% equity interest in Makesi WFOE. Makesi WFOE had a series of contractual arrangement with Yuan Mathat established a VIE structure. For accounting purposes, Makesi WFOE was the primary beneficiary of Yuan Ma. Accordingly, under U.S. GAAP, GDC treated Yuan Maas the consolidated affiliated entity and has consolidated Yuan Ma’s financial results in GDC’s consolidated financial statements prior to June 26, 2023. On June 26, 2023, GDC entered into a share purchase agreement with a buyer unaffiliated with the Company. Pursuant to the agreement, the Company agreed to sell and the buyer agreed to purchase all the issued and outstanding equity interest in TMSR HK. The purchase price for the transaction contemplated by the Agreement was $100,000. The sale of TMSR HK did not have any material impact on the Company’s consolidated financial statements.
Previous report
Prior to September 26, 2023, we also conducted business through Highlight Media. We had a series of contractual arrangement with Highlight Media through one of our subsidiaries, Highlight WFOE. For accounting purposes, Highlight WFOE was the primary beneficiary of Highlight Media. Accordingly, under U.S. GAAP, GDC treated Highlight Media as the consolidated affiliated entity and has consolidated Highlight Media’s financial results in GDC’s financial statements prior to September 26, 2023. Highlight Media was an integrated marketing service agency, focusing on enterprise brand management, crisis public relations, intelligent public opinion monitoring, media PR, financial and economic we-media operation, digital face application, large-scale exhibition services and other businesses. On September 26, 2023, Highlight WFOE entered into a termination agreement with Highlight Media and the shareholders of Highlight Media to terminate the VIE Agreements and sold the interest in the VIE Agreements for a purchase price of $100,000. As a result of such termination, the Company no longer treats Highlight Media as a consolidated affiliated entity or consolidates the financial results and balance sheet of Highlight Media in the Company’s consolidated financial statements under U.S. GAAP.
Previous report
Change of Auditor
Previous report
On October 9, 2023, the Company notified its independent registered public accounting firm, Enrome LLP, its decision to dismiss Enrome LLP as the Company’s auditor. On October 12, 2023, the Audit Committee and the Board of Directors of the Company approved the appointment of HTL as its new independent registered public accounting firm to audit the Company’s financial statements.
Previous report
Registered Direct Offering
Previous report
On May 4, 2023, the Company issued (i) 310,168 shares of common stock, (ii) registered pre-funded warrants to purchase an aggregate of up to 844,351 shares of common stock and (iii) unregistered warrants to purchase up to 1,154,519 shares of common stock in a registered direct offering and a concurrent private placement, which were exchanged forpre-funded warrants to purchase up to 577,260 shares of common stock on November 3, 2023. See “Part I – Item 1. Business – Recent Business Development – May 2023 Offering.”
Previous report
On November 3, 2023, the Company issued (i) 1,436,253 shares of common stock, (ii) registered pre-funded warrants to purchase an aggregate of up to 1,876,103 shares of common stock and (iii) registered warrants to purchase up to an aggregate of 3,312,356 shares of common stock in a registered direct offering. See “Part I – Item 1. Business – Recent Business Development – November 2023 Offering.”
Previous report
Impact of the COVID-19 Pandemic
Previous report
The COVID-19 pandemic did not have a material impact on our business or results of operation during the year ended December 31, 2023 and 2022. 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 report
Results of Operations
Previous report
Year Ended December 31, 2023 vs. December 31, 2022
Previous report
Other Income, Net
Previous report
The Company’s net loss decreased by approximately $16.5 million, or 59.4%, to approximately $14.3 million net loss for the year ended December 31, 2023, from approximately $30.8 million net loss for the year ended December 31, 2022. The decrease was mainly due to the combined impact of (i) increase in digital human and e-commerce live streaming marketing and advertising, (ii) the expansion of our administrative associated personnel cost, (iii) increase in operating and lease expenses for offices, (iv) increase in researching and development about our artificial intelligence based digital human application and (v) the reduction of impairment of goodwill and prepaid and other current assets.
Previous report
Lease
Previous report
The Company determines if an arrangement is a lease at inception. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. The Company has no significant finance leases.
Previous report
The Company recognizes lease liabilities and corresponding right-of-use assets on the balance sheet for leases. Operating lease right- of-use assets (the “ROU”) are disclosed as non-current assets in the Company’s consolidated balance sheets. Current maturities of operating lease liabilities are classified as operating lease liabilities - current, and operating lease liabilities that will be due in more than one year are disclosed as non-current liabilities on the consolidated balance sheets. Operating lease right-of-use assets and operating lease liabilities are initially recognized based on the present value of future lease payments at lease commencement. The operating lease right-of-use asset also includes any lease payments made prior to lease commencement and the initial direct costs incurred by the lessee and is recorded net of any lease incentives received. As the interest rates implicit in most of the leases are not readily determinable, the Company uses the incremental borrowing rates based on the information available at lease commencement to determine the present value of the future lease payments. Operating lease expenses are recognized on a straight-line basis over the term of the lease.
Previous report
Most leases have initial terms ranging from 1 to 5.5 years. The Company’s lease agreements did not include non-lease components. Lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any significant residual value guarantees or restricted covenants.
Previous report
The Company evaluates the carrying value of ROU assets if there are indicators of impairment and reviews the recoverability of the related asset group.
Previous report
The Company reassesses of a contract is or contains a leasing arrangement and re-measures ROU assets and liabilities upon modification of the contract. The Company will derecognize ROU assets and liabilities, with difference recognized in the income statement on the contract termination.
Previous report
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company has evaluated and concluded that there’s no impact of the new guidance on the consolidated financial statements. The Company will adopt ASU 2021-08 since January 1, 2024.
Previous report
The Company has funded working capital and other capital requirements primarily by equity contributions. Cash is required to repay debts and pay salaries, office expenses and other operating expenses. As of December 31, 2023, our net working capital was approximately $8.7 million.
Previous report
We believe that current levels of cash and cash flows from operations will be sufficient to meet its anticipated cash needs for at least the next twelve months from the date the consolidated financial statements to be issued. However, it may need additional cash resources in the future if it experiences changed business conditions or other developments, and may also need additional cash resources in the future if it wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Company’s amounts of cash and cash equivalents on hand, the Company may seek to issue debt or equity securities or obtain additional credit facility.
Previous report
Risks
Previous report
Credit Risk
Previous report
Credit risk is one of the most significant risks for the Company’s business.
Previous report
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. Cash held at major financial institutions located in the PRC are not insured by the government. While we believe that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.
Previous report
Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The Company manages credit risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. To minimize credit risk, the Company normally require prepayment from the customers prior to begin production or delivery products. The Company identifies credit risk collectively based on industry, geography and customer type. This information is monitored regularly by management.
Previous report
In measuring the credit risk of our sales to our customers, the Company mainly reflects the “probability of default” by the customer on its contractual obligations and considers the current financial position of the customer and the exposures to the customer and its likely future development.
Previous report
Liquidity Risk
Previous report
The Company is also exposed to liquidity risk which is risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Company will turn to other financial institutions and the owners to obtain short-term funding to meet the liquidity shortage.
Previous report
Inflation Risk
Previous report
The Company is also exposed to inflation risk Inflationary factors, such as increases in raw material and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the selling prices of our products do not increase with such increased costs.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Reworded paragraphs (12)
Previous wording
GD Culture Group Limited, formerly known as JM Global Holding Company, TMSR Holding Company Limited and Code Chain New Continent Limited, is a Nevada corporation and a holding company. The Company currently conducts its operations on virtual content production (the “Virtual Content Production”) through the Company and two subsidiaries, AI Catalysis and Shanghai Xianzhui. The Company focuses its business mainly on 1) AI-driven digital human creation and customization; 2) Live streaming and e-commerce and 3) Live streaming interactive game. The company has relentlessly been focusing on serving its customers and creating value for them through the continual innovation and optimization of its products and services. The Company’s current subsidiaries, Citi Profit, Highlight HK, Highlight WFOE, and previous subsidiaries, TMSR Holdings Limited (“TMSR HK”) and Makesi WFOE are holding companies with no material operations.
Current wording
GD Culture Group Limited, formerly known as JM Global Holding Company, TMSR Holding Company Limited and Code Chain New Continent Limited, is a Nevada corporation and a holding company. The Company currently conducts its operations on virtual content production (the “Virtual Content Production”) through the Company and two subsidiaries, AI Catalysis and Shanghai Xianzhui. The Company focuses its business mainly on 1) AI-driven digital human creation and customization; and 2) Live streaming and e-commerce. The company has relentlessly been focusing on serving its customers and creating value for them through the continual innovation and optimization of its products and services. The Company’s current subsidiaries, Citi Profit, Highlight HK, Highlight WFOE, and previous subsidiaries, TMSR Holdings Limited (“TMSR HK”) and Makesi WFOE are holding companies with no material operations.
Previous wording
On October 27, 2023, the Company entered into an equity purchase agreement with Highlight WFOE and Beijing Hehe, which was amended on November 10, 2023 (such equity purchase agreement, as amended, the “Agreement” for purpose of this section “Investment in Shanghai Xianzhui”), pursuant to which the Highlight WFOE agreed to purchase 13.3333% equity interest in Shanghai Xianzhui from Beijing Hehe and the Company agreed to issue 400,000 shares of common stock of the Company, valued at $2.7820 per share, the average closing bid price of the common stock of GDC as of the five trading days immediately preceding the date of the Agreement, to Beijing Hehe or its assigns. On January 11, 2024, the Company issued the 400,000 shares of its common stock to Beijing Hehe and the transaction was completed. Up to the date of this Report, the Company owns 73.3333% of the total equity interest of Shanghai Xianzhui.
Current wording
On October 27, 2023, the Company entered into an equity purchase agreement with Highlight WFOE and Beijing Hehe, which was amended on November 10, 2023 (such equity purchase agreement, as amended, the “Agreement” for purpose of this section “Investment in Shanghai Xianzhui”), pursuant to which the Highlight WFOE agreed to purchase 13.3333% equity interest in Shanghai Xianzhui from Beijing Hehe and the Company agreed to issue 400,000 shares of common stock of the Company, valued at $2.7820 per share, the average closing bid price of the common stock of GDC as of the five trading days immediately preceding the date of the Agreement, to Beijing Hehe or its assigns. On January 11, 2024, the Company issued 400,000 shares of its common stock to Beijing Hehe, at the price of $2.5 per share, and the transaction was completed. As of December 31, 2024, the Company owns 73.3333% of the total equity interest of Shanghai Xianzhui.
Previous wording
On March 26, 2024, the Company issued 810,277 shares of common stock in a registered direct offering. See “Part I – Item 1. Business – Recent Business Development – March 2024 Offering.”
Current wording
On March 26, 2024, the Company issued 810,277 shares of common stock in a registered direct offering. See Note 16 of the notes to the consolidated financial statements.
Previous wording
The Company’s operating expenses include selling and marketing (“S&M”) expenses, general and administrative (“SG&A”) expenses, research and development (“R&D”) expenses. S&M expenses increased to approximately $4.7 million for the year ended December 31, 2023, compared to nil for the year ended December 31, 2022. 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 $4.8 million from approximately $0.4 million for the year ended December 31, 2022 to approximately $5.2 million for the year ended December 31, 2023. The increase was mainly due to the combined impact of (i) the reduction of impairment of prepaid and other current assets, (ii) the expansion of our administrative associated personnel cost, and (iii) increase in operating and lease expenses for offices. R&D expenses increased to approximately $2.1 million for the year ended December 31, 2023, compared to nil for the year ended December 31, 2022. 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, impairment of Intangible assets and provision of credit loss expenses. S&M expenses decreased to $2.4 million for the year ended December 31, 2024, compared to $4.7 million for the year ended December 31, 2023. The decrease was mainly due to the Company decreased inputs on digital human and e-commerce live streaming marketing and advertising due to the uncertainty surrounding TikTok’s potential exit from the U.S. G&A expenses decreased by approximately $0.2 million from approximately $5.2 million for the year ended December 31, 2023 to approximately $5.0 million for the year ended December 31, 2024. The decrease was mainly due to the combined impact of (i) the increase in operating and lease expenses for offices, (ii) the increase in amortization of intangible assets and (iii) the decrease in professional services fee. R&D expenses decreased to approximately $0.8 million for the year ended December 31, 2024, compared to approximately $2.1 million for the year ended December 31, 2023. The decrease was mainly due to the Company decreased inputs on research and development about our artificial intelligence based digital human application. Impairment of Intangible assets increased to $2.8 million for the year ended December 31, 2024, compared to $nil for the year ended December 31, 2023, due to the out of use of purchased soft wares. The provision of credit loss increased to $3.2 million for the year ended December 31, 2024, compared to $nil for the year ended December 31, 2023, due to it was more likely than not that the convertible notes and loan receivable were uncollectible as of December 31, 2024.
Previous wording
The Company’s other income increased by approximately $104 thousand during the year ended December 31, 2023, compared to nil for the year ended December 31, 2022. The increase was mainly due to the gain from disposal of subsidiaries.
Current wording
The Company’s other income decreased to $8,671 for the year ended December 31, 2024, compared to $104,419 for the year ended December 31, 2023. The decrease was mainly due to the non-recurring other income from disposal of subsidiary for the year ended December 31, 2023.
Previous wording
As a result of the foregoing, loss from continuing operations for the year ended December 31, 2023 was approximately $12.2 million, an increase of approximately 2,849.2%, from approximately loss from continuing operations of $0.4 million for the year ended December 31, 2022.
Current wording
As a result of the foregoing, loss from continuing operations for the year ended December 31, 2024 was approximately $14.1 million, an increase of approximately 15.6%, from loss from continuing operations of approximately $12.2 million for the year ended December 31, 2023.
Previous wording
The Company prepares its consolidated financial statements in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires the Company to make estimates, assumptions and judgments that can significantly impact the amounts the Company reports as assets, liabilities, revenue, costs and expenses and the related disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable under the circumstances. The Company’s actual results could differ significantly from these estimates under different assumptions and conditions. The Company has identified the following key accounting estimates:
Current wording
The Company prepares its consolidated financial statements in accordance with U.S. GAAP. The preparation of these consolidated financial statements require the Company to make estimates, assumptions and judgments that can significantly impact the amounts the Company reports as assets, liabilities, revenue, costs and expenses and the related disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable under the circumstances. The Company’s actual results could differ significantly from these estimates under different assumptions and conditions. The Company has identified the following key accounting estimates:
Previous wording
In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for fiscal years beginning after 15 December 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company has evaluated and concluded that there’s no impact of the new guidance on the consolidated financial statements. The Company will adopt ASU 2022-03 since January 1, 2024.
Current wording
In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for fiscal years beginning after 15 December 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company has evaluated and concluded that there’s no impact of the new guidance on the consolidated financial statements. The Company adopted ASU 2022-03 since January 1, 2024.
Previous wording
As of December 31, 2023 and December 31, 2022, the Company had cash in the amount of $5,175,518 and $389,108, respectively. As of December 31, 2023 and December 31, 2022, $211,222 and $215,880 were deposited with various financial institutions located in the PRC, respectively. As of December 31, 2023 and 2022, $4,964,296 and $173,228 were deposited with one financial institution located in the United States, respectively.
Current wording
As of December 31, 2024 and 2023, the Company had cash in the amount of $22,538 and $5,175,518, respectively. As of December 31, 2024 and 2023, $3,267 and $211,222 were deposited with one financial institution located in the PRC, respectively. As of December 31, 2024 and 2023, $19,271 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 $13.2 million for the year ended December 31, 2023, as compared to approximately $0.9 million net cash used in operating activities for the year ended December 31, 2022. Net loss for the year ended December 31, 2023 was approximately $14.3 million, as compared to $30.8 million for the year ended December 31, 2022. Adjustments to reconcile net loss to net cash used in operating activities decreased by $28.8 million, mainly due to the reduction of impairment of prepaid and other current assets and goodwill for approximately $24.6 million and reduction of loss from disposal ofdiscontinued operations or subsidiaries of$4.2 million and changes in operating assets and liabilities decreased approximately $0.5 million, mainly caused by the decrease of $2.2 million of change in customer deposits and $0.3 million of change in deferred tax liability, partially net off by the increase of approximately $1 million of change in other payable-related parties, the increase of approximately $1.2 million of change in prepaid and other current assets and the increase of approximately $0.3 million of change in other assets.
Current wording
Net cash used in operating activities was approximately $5.7 million for the year ended December 31, 2024, as compared to approximately $13.2 million net cash used in operating activities for the year ended December 31, 2023. Net loss for the year ended December 31, 2024 was approximately $14.1 million, as compared to approximately $14.3 million for the year ended December 31, 2023. Adjustments to reconcile net loss to net cash used in operating activities increased by approximately $4.6 million, mainly due to the increase in impairment loss of intangible assets, provision of credit loss related to convertible notes and loan receivables, partially offset by the decrease of impairment loss from goodwill.
Previous wording
Net cash used in investing activities was $5.2 million for the year ended December 31, 2023, as compared to approximately $12.5 million net cash used in investing activities for the year ended December 31, 2022. Net cash used in investing activities was decreased by approximately $7.3 million, mainly due to the decrease of the net cash impact from the disposal of discontinued operations or subsidiaries amounted to approximately $12.9 million, partially offset by purchase of intangible assets with the amount of $2.9 million and investment in convertible notes of Liquid Marketplace Corp and DigiTrax Entertainment Inc. with the amount of $2.5 million.
Current wording
Net cash used in investing activities was approximately $0.7 million for the year ended December 31, 2024, as compared to approximately $5.2 million for the year ended December 31, 2023. Net cash used in investing activities decreased by approximately $4.5 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 $23.1 million for the year ended December 31, 2023, as compared to nil net cash provided by financing activities for the year ended December 31, 2022. Net cash provided by financing activities was mainly due to approximately $12.5 million of issuance of common stock, $5.1 million proceeds from issuance of pre-funded warrants and contribution by noncontrolling interest shareholder with the amount of $5.5 million.
Current wording
Net cash provided by financing activities was approximately $1.2 million for the year ended December 31, 2024, as compared to approximately $23.1 million net cash provided by financing activities for the year ended December 31, 2023. Net cash provided by financing activities decreased by approximately $21.9 million, due to no significant proceeds from issuance of comment stock in 2024.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the Years Ended December 31, 2024 vs. December 31, 2023