GD Culture Group Ltd
For the period ended Mar 31, 2025. Filed May 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 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-Q
Period ended 2024-09-30; filed 2024-11-14.
0001213900-24-098486
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-044218
Item 2. 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 86 previous paragraphs and 65 current paragraphs.
29 unchanged; 19 reworded; 16 added; 37 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 3 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 (16)
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
Offering
Current report
On February 10, 2025, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Univest 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 unaudited interim condensed consolidated financial statements were issued, the Company has not issued or sold 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 for the sale of 1,115,600 shares of common stock 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. 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 the March 2025 Offering and reimbursement of reasonable fees and expenses of $20,000 for the underwriter’s legal counsel and due diligence analysis expenses.
Current report
On May 2, 2025, the Company entered into a securities purchase agreement (the “May 2025 Securities Purchase Agreement”) with certain investors for the sale of 1,115,600 shares of common stock at approximately $0.524 per share and 9,380,582 pre-funded warrants (the “May 2025 Pre-Funded Warrants”) at approximately $0.523 per warrant (the “May 2025 Offering”). Up to the date of the unaudited condensed interim financial statements were issued, The Company received $4,478,000 in proceeds for subscription of 1,115,600 shares of its common stock and 7,468,536 pre-funded warrants. The offering remains ongoing and has not yet been fully completed. Transaction costs incurred through the reporting date included underwriter’s fees of $313,460 and a $20,000 reimbursement for the underwriter’s legal counsel and due diligence expenses. Net proceeds from the offering, after deducting these expenses, will be $5,095,000. The Company intends to use the proceeds from the offering for working capital purposes.
Current report
Pursuant to the May 2025 Securities Purchase Agreement, the Company has agreed to use commercially reasonable efforts to, within sixty (60) calendar days after the date of the May 2025 Securities Purchase Agreement, file a registration statement on the appropriate form providing for the resale by the investors of the May 2025 Offering.
Current report
Other Income, Net
Current report
The Company’s other income decreased by $19,828 during the three months ended March 31, 2025, compared to $21,946 for the three months ended March 31, 2024. The decrease was mainly due to the absence of interest income for the three months ended March 31, 2025, which had been earned from a loan to a third party in 2024.
Current report
The Company’s net loss decreased by $3,180,029, or 76.5%, to $977,510 for the three months ended March 31, 2025, from $4,157,539 for the three months ended March 31, 2024. The decrease was mainly driven by lower operating expenses, as discussed above.
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 was due on April 23, 2025. On April 25, 2025, Green Oasis Limited and the Company executed an amendment to the previous loan, extending the maturity date to July 23, 2025.
Current report
On March 4, 2025, the Company sold 1,115,600 shares of common stock at $0.896379 per share, generating gross proceeds of $1,000,000. The Company received net proceeds of $910,000 after deducting underwriter’s fees of $70,000 and a $20,000 reimbursement for the underwriter’s legal counsel and due diligence analysis expenses. The Company intends to use the proceeds from the offering for working capital purposes.
Current report
On May 2, 2025, the Company completed a securities offering in which it agreed to sell (i) 1,115,600 shares of its common stock at a purchase price of approximately $0.524 per share and (ii) 9,380,582 pre-funded warrants at a purchase price of approximately $0.523 per warrant. The aggregate gross proceeds from the offering will be $5,500,000. Up to the date of the unaudited condensed interim financial statements were issued, The Company received $4,478,000 in proceeds for subscription of 1,115,600 shares of its common stock and 7,468,536 pre-funded warrants. The offering remains ongoing and has not yet been fully completed. Transaction costs incurred through the reporting date included underwriter’s fees of $313,460 and a $20,000 reimbursement for the underwriter’s legal counsel and due diligence expenses. Net proceeds from the offering, after deducting these expenses, will be $5,095,000. The Company intends to use the proceeds from the offering for working capital purposes.
Current report
The Company evaluated its ability to continue as a going concern in accordance with ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess whether there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.
Current report
As of March 31, 2025, the Company had cash of $51,236 and a working capital deficit of approximately $1.5 million. However, on May 2, 2025, the Company completed a public offering and partially received net proceeds of approximately $4.1 million. After considering the impact of this financing and the Company’s projected operating cash flows, management reassessed its liquidity position and concluded that the Company will have sufficient liquidity to meet its obligations as they become due for at least the next twelve months from the date the financial statements are issued. Accordingly, management determined that substantial doubt about the Company’s ability to continue as a going concern no longer exists as of the issuance date of these unaudited interim condensed consolidated financial statements.
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 three months ended March 31, 2025 and 2024, the Company did not recognized impairment losses in intangible assets.
Current report
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This new guidance is designed to improve the disclosures about the types of expenses, including employee compensation, depreciation, and amortization, and costs incurred related to inventory and manufacturing activities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 on a prospective basis with optional retrospective application. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.
Removed paragraphs (37)
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 and the 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 introduced some licensed games on the TikTok account (TikTok account: almplify001), providing a diverse gaming experience for the players.
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 consolidated statements.
Previous report
Registered Direct 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 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 report
Revenues
Previous report
The Company’s revenue was $nil for the three months ended September 30, 2024 and September 30, 2023.*** ***
Previous report
Gross Profit
Previous report
The Company’s gross profit was $nil for the three months ended September 30, 2024 and September 30, 2023.
Previous report
Other Income (Expenses)
Previous report
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 report
The Company’s net loss increased by approximately $0.3 million, or 8.7%, to approximately $3.8 million net loss for the three months ended September 30, 2024, from approximately $3.5 million net loss for the three months ended September 30, 2023. The increase was mainly due to the other-than-temporary impairment losses from convertible note and intangible assets, partially net off by the decline on loss from discontinued operations.
Previous report
Revenues
Previous report
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 report
Gross Profit
Previous report
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 report
Operating Expenses
Previous report
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 report
Other Income (Expenses)
Previous report
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 report
Loss from Continuing Operations
Previous report
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 report
Net Loss
Previous report
The Company’s net loss increased by approximately $7.9 million, or 212.6%, to approximately $11.6 million net loss for the nine months ended September 30, 2024, from approximately $3.7 million net loss for the nine months ended September 30, 2023. The increase was mainly due to the increase on operating expenses as described above and the other-than-temporary impairment losses from convertible notes and intangible assets.
Previous report
Convertible Notes Receivable
Previous report
The Company evaluated the terms of the DigiTrax Convertible Notes and the Liquid Convertible Notes (as defined in Note 12 of the unaudited consolidated financial statements) according to ASC 320 “Investments — Debt Securities” and concluded that the convertible notes should be classified as an available-for-sale security and measured at fair value. To evaluate the fair value of the available-for-sale security, the Company used the valuation methodology of income approach, which is determined by the future cash flow forecast. The fair value changes of these notes were recorded as accumulated other comprehensive income on the accompanying unaudited consolidated statements of operations and comprehensive loss for the three months ended as of the reporting period.
Previous report
The Company evaluates quarterly whether AFS securities are other-than-temporarily impaired (OTTI) based on criteria that include the extent to which cost exceeds market value, the duration of the market decline, the credit rating of the issuer or security, the failure of the issuer to make scheduled principal or interest payments, and the financial health and prospects of the issuer or security.
Previous report
Declines in the value of AFS securities determined to be OTTI are recognized in earnings and included in other-than-temporary impairment losses. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the security or if the Company will be required to sell the security prior to any anticipated recovery. If the Company determines that a security is OTTI under these circumstances, the impairment recognized in earnings is measured as the difference between the amortized cost and the current fair value. A debt security is also determined to be OTTI if the Company does not expect to recover the amortized cost of the security. However, in this circumstance, if the Company does not intend to sell the security and will not be required to sell the security, the impairment recognized in earnings equals the estimated credit loss as measured by the difference between the present value of expected cash flows and the amortized cost of the security. Expected cash flows are discounted using the security’s effective interest rate. An equity security is determined to be OTTI if the Company does not expect to recover the cost of the security. Declines in the value of AFS securities determined to be temporary are reported, net of tax, as other comprehensive earnings (losses) and included as a separate component of stockholders’ equity.
Previous report
Due to limited potential economic benefits for varying reasons for the nine months ended September 30, 2024, the Company recognized impairment losses of $2,756,986 for the nine months ended September 30, 2024, to the software copyrights. Declines in the value of intangible assets determined to be OTTI are recognized in earnings and included in other-than-temporary impairment losses.
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 unaudited consolidated financial statements. The Company adopted ASU 2021-08 since January 1, 2024.
Previous report
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 unaudited consolidated financial statements. The Company adopted ASU 2022-03 since January 1, 2024.
Previous report
In December 2023, the FASB issued ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which establishes accounting guidance for crypto assets meeting certain criteria. Bitcoin meets this criteria. The amendments require crypto assets meeting the criteria to be recognized at fair value with changes recognized in net income each reporting period. Upon adoption, a cumulative-effect adjustment is made to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption. ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, 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 unaudited consolidated financial statements. The Company adopted ASU 2022-08 since January 1, 2024.
Previous 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. In addition, the Company has planned and implemented cost-cutting measures to reduce operating expenditures and loss. Management believes that the Company can adjust the pace of its business development and control operating expenses when necessary. Therefore, the Company assesses that current working capital, together with the letter of financial support from Mr. Xiaojian Wang, will be sufficient to meet its obligations for the next 12 months from the issuance date of this report. These unaudited consolidated financial statements are prepared on going concern basis.
Previous report
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.
Reworded paragraphs (19)
Previous wording
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with our unaudited financial statements, and the notes to those unaudited financial statements that are included elsewhere in this Report. All monetary figures are presented in U.S. dollars, unless otherwise indicated.
Current wording
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with our unaudited condensed financial statements, and the notes to those unaudited condensed financial statements that are included elsewhere in this Report. All monetary figures are presented in U.S. dollars, unless otherwise indicated.
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 are holding companies with no material operations.
Previous wording
The Company aims 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.
Current wording
The Company aims to generate revenue from customization services subscriptions.
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, at the price of $2.5 per share, and the transaction was completed. As of September 30, 2024, 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 March 31, 2025, 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 Note 16 of the notes to the unaudited consolidated financial statements.
Current wording
On March 26, 2024, the Company issued 810,277 shares of common stock in a registered direct offering. See Note 12 of the notes to the unaudited interim condensed consolidated financial statements.
Previous wording
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 wording
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 “SGCM”). Pursuant to the agreement, the Company agreed to purchase and the SGCM agreed to sell all of SGCM’s right, title, and interest in and to the certain software (the “AIBox”). The purchase price of the software shall be $1,248,000, payable in the form of an 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 SGCM’s designees and the transaction was completed.
Previous wording
E-commerce and live streaming is a competitive industry. Our competition varies and includes content creators on TikTok and other social media platform. Each of these competitors competes with us based on quality of content, activeness and responsiveness on the social placement, product selection, product quality, customer service, price, store format, location, or a combination of these factors. Some of these competitors may have been in business longer, may have more experience, or may have greater financial or marketing resources than us. As competition intensifies, our results of operations may be negatively impacted through a loss of sales and decrease in market share.
Current wording
E-commerce and live streaming is a competitive industry. Our competition varies and includes content creators on TikTok and other social media platforms. Each of these competitors competes with us based on quality of content, activeness and responsiveness on the social placement, product selection, product quality, customer service, price, store format, location, or a combination of these factors. Some of these competitors may have been in business longer, may have more experience, or may have greater financial or marketing resources than us. As competition intensifies, our results of operations may be negatively impacted through a loss of sales and decrease in market share.
Previous wording
Our management team comprises executives with extensive experience in technology and content creation. The management team has led us to take leaps in deploying AI technology in live-steaming, e-commerce, gaming and other sectors. The loss of any of our key executive team member might affect our business and our result of operation.
Current wording
Our management team comprises executives with extensive experience in technology and content creation. The management team has led us to take leaps in deploying AI technology in live-steaming, e-commerce, gaming and other sectors. The loss of any of our key executive team members might affect our business and our result of operation.
Previous wording
We are still in an early development stage. We intend to expand our presence on social media to increase the market presence. If we cannot grow market presence and penetrate new markets in an effective and cost-efficient way, our results of operation will be negatively impacted.
Current wording
We are still in an early development stage. We intend to expand our presence on social media to increase the market presence. If we cannot grow our market presence and penetrate new markets in an effective and cost-efficient way, our results of operation will be negatively impacted.
Previous wording
For Three Months Ended September 30, 2024 vs. September 30, 2023
Current wording
Three Months Ended March 31, 2025 vs. March 31, 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 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.
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 decreased to nil for the three months ended March 31, 2025, compared to $2,191,667 for the three months ended March 31, 2024. 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 $831,403 from $1,769,280 for the three months ended March 31, 2024 to $937,877 for the three months ended March 31, 2025. The decrease was mainly due to the decrease in the professional service fee and the amortization of intangible assets. R&D expenses decreased to nil for the three months ended March 31, 2025, compared to $217,500 for the three months ended March 31, 2024. The decrease was mainly due to the Company decreased inputs on research and development about our artificial intelligence based digital human application.
Previous 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.
Current wording
As a result of the foregoing, loss from continuing operations for the three months ended March 31, 2025 was $935,759, a decrease of approximately 77.5%, as compared to loss from continuing operations of $4,156,501 for the three months ended March 31, 2024.
Previous 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.
Current wording
As of March 31, 2025, the Company had $51,236 in its operating bank accounts and working capital deficit of approximately $1.5 million. From September 2024 to January 2025, Mr. Xiaojian Wang, the Chief Executive Officer of the Company (“CEO”), lent $399,485 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, December 16, 2025 and January 31, 2026, respectively. On each of March 10, 2025 and March 18, 2025, the Company repaid $100,000, for an aggregated of $200,000 to the CEO, reducing the outstanding loan balance to $199,485 as of March 31, 2025. Subsequent to March 31, 2025, the Company repaid $199,485 in full to the CEO. Up to the date of the unaudited interim condensed consolidated financial statements were issued, there was no outstanding loan from the CEO.
Previous wording
The following summarizes the key components of the Company’s cash flows for the nine months ended September 30, 2024 and 2023.
Current wording
The following summarizes the key components of the Company’s cash flows for the three months ended March 31, 2025 and 2024.
Previous 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.
Current wording
Net cash used in operating activities was approximately $0.8 million for the three months ended March 31, 2025, as compared to approximately $3.6 million net cash used in operating activities for the three months ended March 31, 2024. Net loss for the three months ended March 31, 2025 was approximately $1.0 million, as compared to approximately $4.2 million for the three months ended March 31, 2024. Adjustments to reconcile net loss to net cash used in operating activities decreased by approximately $0.2 million, mainly due to the decreased amortization of intangible assets and deferred tax expenses, and changes in operating assets and liabilities decreased approximately $0.2 million.
Previous 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.
Current wording
Net cash used in investing activities was approximately nil for the three months ended March 31, 2025, as compared to $1.9 million for the three months ended March 31, 2024. The decrease in net cash used in investing activities was due to the absence of the loan to a third party for the three months ended March 31, 2025, as compared to the same period of 2024.
Previous 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.
Current wording
Net cash provided by financing activities was approximately $0.8 million for the three months ended March 31, 2024, remaining consistent with the $0.8 million net cash provided by financing activities for the three months ended March 31, 2023. The stable cash flow from financing activities primarily reflects continued proceeds from issuance of debt and new common stock, indicating that our financing structure remained relatively unchanged year over year.
Previous wording
The Company prepares its unaudited consolidated financial statements in accordance with U.S. GAAP. The preparation of these unaudited 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 unaudited interim condensed consolidated financial statements in accordance with U.S. GAAP. The preparation of these unaudited interim condensed 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 identified the following critical accounting estimates.
Previous wording
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 will begin providing the enhanced reportable segment financial disclosures effective with its Annual Report on Form 10-K for the year ending December 31, 2024.
Current wording
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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
On April 28, 2025, the Company entered into a software purchase agreement (the “Agreement”) with Gongzheng Xu and Qing Wang (the “GXQW”), who are unaffiliated with the Company. Pursuant to the Agreement, the Company agreed to purchase and the GXQW agreed to sell all of GXQW’s right, title, and interest in and to the certain software (the “Chat Box”). The purchase price of the software shall be payable in the form of an issuance of 2,444,295 shares of the Company’s common stock (the “Shares”). On April 29, 2025, the Company issued 2,444,295 shares of its common stock to GXQW and the transaction was completed. The Company plans to use the software to develop its AI business.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
For Nine Months Ended September 30, 2024 vs. September 30, 2023