GD Culture Group Ltd
For the period ended Mar 31, 2026. Filed Apr 10, 2026.
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, 2026 · Filed Apr 10, 2026
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 2025-09-30; filed 2025-11-03.
0001213900-25-104943
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-10.
0001213900-26-042579
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 77 previous paragraphs and 69 current paragraphs.
25 unchanged; 16 reworded; 26 added; 33 removed; 3 previous and 2 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 (26)
Current report
The Company has recently begun adjusting its strategic direction and has been scaling back certain artificial intelligence-related initiatives while evaluating new opportunities to utilize its existing artificial intelligence and virtual content generation technologies. As part of this strategic transition, the Company is expanding into the interactive reading and narrative entertainment market.
Current report
The Company is currently developing a platform intended to enable creators to produce interactive, game-like reading experiences for end users. The platform is expected to provide creators with a suite of AI-powered content creation tools developed by the Company, which are designed to assist creators in generating narrative structures, story plots, and visual assets associated with storylines. The platform is also expected to incorporate AI-driven dialogue systems designed to enable readers to interact with characters within the story environment, creating a more dynamic and immersive narrative experience.
Current report
The platform remains in the development stage, and the Company is continuing to refine its technology and product design. The Company has not yet launched the platform commercially, and there can be no assurance regarding the timing of its commercialization, market acceptance, or the Company’s ability to successfully execute its strategic transition.
Current report
Referring to Financial Accounting Standards Board (“FASB”) ASC Topic 805-10-55-5, the Company applied two steps (including step 1, screen test and step 2, evaluation of process and input) in evaluating whether the acquisition was an asset acquisition or a business combination. Pallas had no operations except for holding Bitcoin as a reserve, and substantially all of the fair value of the gross assets acquired is concentrated in its Bitcoin. Therefore, the Company decided that Pallas cannot constitute a business and such Pallas Transaction should be accounted for as an asset acquisition. The purchase consideration is measured based on the fair value of the Company’s common stock issued and the consideration is further allocated to the value of the asset acquired in the transaction. Given the related party nature of the Pallas Transaction and the fact that the acquired digital assets are highly liquid and have observable market prices, which indicated that the fair value of the assets acquired is far higher than the fair value of the common stock issued, management concluded that the such Pallas transaction indicated a capital contribution from the shareholders. Accordingly, the excess of the fair value of the digital assets acquired over the fair value of the common stock issued should be recorded as an increase in additional paid-in capital and the value of the assets acquired, which was concurrently with the determination of the value of the assets acquired under asset acquisition.
Current report
Our results of operations are influenced by several factors related to the development of our interactive reading and narrative entertainment platform and our ongoing strategic transition.
Current report
Early-Stage Development of Our Platform
Current report
We are currently in the early stages of developing our interactive reading and narrative entertainment platform. Because the platform has not yet been commercially launched, our revenues from this business are currently limited or may be limited in the near term. Our operating results may fluctuate as we continue to refine the platform’s technology, features, and business model.
Current report
Investment in Technology and Product Development
Current report
The development of our platform requires continued investment in technology infrastructure, artificial intelligence capabilities, and product development. As a result, we expect to incur expenses related to research and development, engineering, and platform infrastructure as we continue to build and enhance the platform. The timing and magnitude of these investments may affect our operating expenses and overall financial performance.
Current report
Ability to Attract Creators and Users
Current report
The success of our platform will depend in part on our ability to attract creators who can develop interactive narrative content and to grow a base of active users who engage with such content. Our operating results may be affected by the level of creator participation, the quantity and quality of available content, and user engagement on the platform.
Current report
Monetization and Market Acceptance
Current report
Our future revenues will depend on our ability to effectively monetize the platform and achieve market acceptance of our products and services. Potential revenue streams may include platform services, content distribution, or other digital content-related activities. However, the market for interactive narrative and AI-enabled content platforms is evolving, and there can be no assurance that our platform will achieve significant user adoption or generate meaningful revenue.
Current report
Other (Expenses) Income, Net
Current report
The Company’s other expenses increased to $162,385,371 during the three months ended March 31, 2026, compared to other income of $2,118 for the three months ended March 31, 2025. The increase was mainly due to the unrealized loss on fair value changes of digital assets for the three months ended March 31, 2026.
Current report
Net Loss
Current report
The Company’s net loss increased by approximately $163.1 million, or 16684.1%, to approximately $164.1 million, for the three months ended March 31, 2026, from $977,510 for the three months ended March 31, 2025. The increase was primarily driven by the unrealized loss on fair value changes of digital assets as discussed above.
Current report
From January 2026 to the date the unaudited interim condensed consolidated financial statements were available to be issued, Mr. Xiaojian Wang, the Chief Executive Officer of the Company (“CEO”), made advances of $310,000 to the Company through, these advances are non-interest bearing and due on demand.
Current report
In March 2026, 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 unaudited interim condensed consolidated financial statements for the three months ended March 31, 2026.
Current report
The Company expects to continue incurring significant operating cash outflows to support its operations. Additional financing may be required to sustain the business. Management will make its best efforts to secure the necessary funding to support the Company’s operations.
Current report
Net cash provided by financing activities was approximately $0.3 million for the three months ended March 31, 2026, as compared to approximately $0.9 million for the three months ended March 31, 2025. The decrease in cash flow from financing activities primarily due to the absence of funds from share issuance, partially offset by the proceeds from a related party.
Current report
Digital assets
Current report
The Company holds digital assets primarily for investment and treasury purposes rather than for use in the ordinary course of business. Based on management’s intent and expected holding period, digital assets are classified as either current or non-current assets.
Current report
In accordance withASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets, digital assets are accounted for as intangible assets measured at fair value, with changes in fair value recognized immediately in earnings. Digital assets are initially recorded at cost, including acquisition-related fees (see Note 1). Subsequent to initial recognition, digital assets are measured at fair value at each reporting date, and unrealized gains and losses are included in the statement of operations. Upon disposal, the difference between proceeds and carrying amount is recognized as a gain or loss in earnings. The Company discloses the number of units held, cost basis, fair value, and any significant restrictions on the ability to sell or transfer digital assets in the Note 3 to the unaudited interim condensed consolidated financial statements.
Current report
In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) which requires detailed disclosures in the notes to financial statements disaggregating specific expense categories and certain other disclosures to provide enhanced transparency into the nature and function of expenses. The FASB further clarified the effective date in January 2025 with the issuance of ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. The Company does not expect to adopt this guidance early and does not expect the adoption of this ASU to have a material impact on its future unaudited interim condensed consolidated financial statements.
Current report
In March 2025, the FASB issued ASU 2025-05, Credit Losses (Topic 326): Simplifications to the Accounting for Short-Term Receivables and Contract Assets. The update introduces practical expedients that allow entities to simplify the estimation of expected credit losses for accounts receivable and contract assets by permitting certain assumptions regarding current conditions and expectations of future economic conditions. The amendments are intended to reduce the complexity and cost of applying the current expected credit loss model for short-term financial assets. The amendments in this update are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its unaudited interim condensed consolidated financial statements. The Company does not currently expect the adoption of this guidance to have a material impact on its unaudited interim condensed consolidated financial statements.
Removed paragraphs (33)
Previous 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.
Previous report
The Company aims to generate revenue from customization services subscriptions.
Previous report
The Company is also working on the development of a mobile and web platform for interactive fiction—story experiences where readers make choices that branch the plot and lead to multiple endings.
Previous report
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 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.
Previous report
Pursuant to the October 2025 Securities Purchase Agreement, the Company has agreed to use commercially reasonable efforts to, within sixty (60) calendar days after the date of the October 2025 Securities Purchase Agreement, file a registration statement on the appropriate form providing for the resale by the Investor of the Shares.
Previous report
In connection with the October 2025 Private Placement, on October 24, 2025, the Company entered into a placement agency agreement (the “October 2025 Placement Agency Agreement”) with Univest (the “Placement Agent”). The Company agreed to pay the Placement Agent a total cash fee equal to seven percent (7%) of the aggregate gross proceeds raised in the October 2025 Private Placement. The Company has also agreed to reimburse the Placement Agent for all reasonable and out-of-pocket expenses incurred in connection with the Private Placement, including reasonable fees and expenses of the Placement Agent’s legal counsel and due diligence analysis up to $20,000. The Company also paid $40,000 legal fee to third party upon closing of the October 2025 Private Placement.
Previous report
Nasdaq Compliance
Previous 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. Between June 11, 2025 to June 25, 2025, the Company has maintained a market value of $35 million or greater for ten (10) consecutive business days. On June 26, 2025, the Staff confirmed that the Company meets the $35 million market value standard as required by the Nasdaq Capital Market set forth in Listing Rule 5550(b)(2). Accordingly, this matter is now closed.
Previous 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 on June 18, 2024, and that the matter is now closed.
Previous report
As a result, management determined that the Transaction lacks commercial substance and, in substance, represents a capital contribution from the related shareholders. Accordingly, the excess of the fair value of the digital assets acquired over the fair value of the common stock issued is recorded as an increase in investment with a corresponding credit to additional paid-in capital.
Previous report
Competition
Previous report
E-commerce and live streaming are 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 report
Retention of Key Management Team Members
Previous report
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 report
Our Ability to Grow Market Presence and Penetrate New Markets
Previous report
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 report
Other Income
Previous report
The Company’s other income increased by $16,222,229, from $10,381 for the three months ended September 30, 2024, to $16,232,610, during the three months ended September 30, 2025. The increase was mainly due to the unrealized gain of $16,230,431 arising from fair value changes of digital assets, partially offset by the absence of interest income for the three months ended September 30, 2025, which had been earned from a loan to a third party in 2024.
Previous report
Net Income (Loss)
Previous report
The Company achieved profitability during the three months ended September 30, 2025, generating net income of $12,088,469, compared to a net loss of $3,839,333 for the three months ended September 30, 2024. The improvement in results was primarily attributable to an unrealized gain of $16,230,431 arising from fair value changes of digital assets and the absence of other-than-temporary impairment losses on intangible assets for the three months ended September 30, 2025, as compared to the same period 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 decreased to $300,000 for the nine months ended September 30, 2025, compared to $2,402,909 for the nine months ended September 30, 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 $1,155,005 from $4,345,438 for the nine months ended September 30, 2024 to $3,190,433 for the nine months ended September 30, 2025. The decrease was mainly due to the decrease in the professional service fee, partially offset by the increase in amortization of intangible assets and short-term lease expenses. R&D expenses increased to $1,469,666 for the nine months ended September 30, 2025, compared to $652,500 for the nine months ended September 30, 2024. The increase was mainly due to research and development support activities for the newly purchased software, Chat Box and expenses incurred for development of AI immersive reading platform. This increase was partially offset by the decreased inputs on research and development about our artificial intelligence based digital human application.
Previous report
Other Income
Previous report
The Company’s other income increased by $16,191,524 during the nine months ended September 30, 2025, from $45,383 for the nine months ended September 30, 2024, to $16,236,907 for the nine months ended September 30, 2025. The increase was mainly due to the unrealized gain of $16,230,431 arising from fair value changes of digital assets, partially offset by the absence of interest income for the nine months ended September 30, 2025, which had been earned from a loan to a third party in 2024.
Previous report
Net Income (Loss)
Previous report
The Company achieved profitability during the nine months ended September 30, 2025, generating net income of $9,611,905, compared to a net loss of $11,589,784 for the three months ended September 30, 2024. The improvement in results was mainly driven by an increase in the unrealized gain arising from fair value changes of digital assets, the absence of other-than-temporary impairment losses on intangible assets and convertible notes for the nine months ended September 30, 2025, as compared to the same period in 2024.
Previous 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 extended the maturity date to July 23, 2025, which was further extended to July 23, 2026 through an amendment agreement signed on July 30, 2025.
Previous 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 used the proceeds from the offering for working capital purposes.
Previous 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. 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, with $17,390 still outstanding and receivable from the investor. The offering remains ongoing and has not yet been fully completed. Transaction costs incurred through September 30, 2025 included underwriter’s fees of $313,343 and a $20,000 reimbursement for the underwriter’s legal counsel and due diligence expenses. After deducting these expenses, net proceeds from the offering (excluding the receivable of $17,390 from the investor) amounted to $4,143,657. As of September 30, 2025, the Company used the proceeds from the offering for working capital purposes.
Previous report
Net cash provided by financing activities was approximately $4.8 million for the nine months ended September 30, 2025, compared to approximately $0.8 million for the nine months ended September 30, 2024. The increase was mainly caused by i) an increase in proceeds from issuance of common stock, which rose by approximately $0.7 million to approximately $1.5 million for the nine months ended September 30, 2025, compared to approximately $0.8 million in the same period of 2024; ii) proceeds from issuance of prefunded warrants, which totaled approximately $3.6 million in the nine months ended September 30, 2025, compared to nil for the nine months ended September 30, 2024. These increase in the cash provided by financing activities were partially offset by a repayment to a related party of $0.4 million.
Previous 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.
Previous 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.
Reworded paragraphs (16)
Previous wording
GD Culture Group Limited, formerly known as 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.
Current wording
GD Culture Group Limited, formerly known as Code Chain New Continent Limited, is a Nevada corporation and a holding company. The Company currently conducts its operations through the Company and its subsidiary, AI Catalysis. Historically, the Company’s business focused on artificial intelligence-driven digital human creation and customization as well as live streaming and e-commerce activities. The Company’s current subsidiaries, Citi Profit, Highlight HK, Highlight WFOE are holding companies with no material operations. The Company’s subsidiary Shanghai Xianzhui, previously engaged in marketing-related services but does not currently conduct business operations and has no material operating activities.
Previous wording
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. As of September 30, 2025, the Company used the proceeds from the offering for working capital purposes.
Current wording
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”). As of March 31, 2026, The Company received approximately $4.5 million 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 $314,343 and a $20,000 reimbursement for the underwriter’s legal counsel and due diligence expenses. The Company used the proceeds from the offering for working capital purposes.
Previous wording
On May 11, 2025, the Company entered into a Common Stock Purchase Agreement with an investor, pursuant to which the Company shall have the right to require the investor to purchase, from time to time, up to a cumulative total of $300,000,000 worth of the Company’s common stock. The Company plans to use the proceeds from the offering, if any, to invest in Bitcoin and OFFICIAL TRUMP and for general corporate purposes. The common stock will be issued and sold by the Company to the investor pursuant to a registration statement effective under the Securities Act of 1933, as amended (the “Securities Act”) or, if there is no effective registration statement registering, or no current prospectus available for the issuance of the common stock issuable pursuant to the Agreement, in reliance upon the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. On September 29, 2025, the Company issued 39,189,344 shares of common stock for acquisition of Bitcoin, as disclosed below, in section “Acquisition of Pallas”.
Current wording
On May 11, 2025, the Company entered into a Common Stock Purchase Agreement with an investor, pursuant to which the Company shall have the right to require the investor to purchase, from time to time, up to a cumulative total of $300,000,000 worth of the Company’s common stock. The Company plans to use the proceeds from the offering, if any, to invest in Bitcoin and OFFICIAL TRUMP and for general corporate purposes. The common stock will be issued and sold by the Company to the investor pursuant to a registration statement effective under the Securities Act of 1933, as amended (the “Securities Act”) or, if there is no effective registration statement registering, or no current prospectus available for the issuance of the common stock issuable pursuant to the Agreement, in reliance upon the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.
Previous wording
On October 24, 2025, the Company entered into securities purchase agreements (the “October 2025 Securities Purchase Agreement”) with certain accredited investor, pursuant to which the Company agreed to issue and sell, in a private placement (the “October 2025 Private Placement”), an aggregate of 1,333,334 shares of the Company’s common stock at a purchase price of $2.10 per share, for gross proceeds in the amount of $2,800,000. The Company plans to use the process for working capital and general corporate purposes.
Current wording
On October 24, 2025, the Company entered into securities purchase agreements (the “October 2025 Securities Purchase Agreement”) with certain accredited investor, pursuant to which the Company agreed to issue and sell, in a private placement (the “October 2025 Private Placement”), an aggregate of 1,333,334 shares of the Company’s common stock at a purchase price of $2.10 per share, for gross proceeds in the amount of $2,800,000. The Company received net proceeds of approximately $2.5 million after deducting underwriter’s fees of $196,000 and other offering costs of $60,000. The Company used the proceeds for working capital and general corporate purposes.
Previous wording
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. On April 28, 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.
Current wording
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.
Previous wording
Two shareholders of the Company, who beneficially own 11.4%, in the aggregate, of the outstanding shares of common stock of the Company, immediately before the execution of the Transaction, are the directors and share voting and dispositive power over the shares issued by the Target. Accordingly, the Transaction constitutes a related party transaction for the Company pursuant to Item 404 of Regulation S-K. Given the related party nature of the Transaction and the fact that the acquired digital assets are highly liquid and have observable market prices, management concluded that the fair value of the assets acquired is more reliably measurable than the fair value of the common stock issued as consideration.
Current wording
Two shareholders of the Company, who beneficially own approximately 12.86%, in the aggregate, of the outstanding shares of common stock of the Company, immediately before the execution of the Transaction, are the directors and share voting and dispositive power over the shares issued by the Target. Accordingly, the Transaction constitutes a related party transaction for the Company pursuant to Item 404 of Regulation S-K. Given the related party nature of the Transaction and the fact that the acquired digital assets are highly liquid and have observable market prices, management concluded that the fair value of the assets acquired is more reliably measurable than the fair value of the common stock issued as consideration.
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 decreased to nil for the three months ended September 30, 2025, as compared to $2,909 for the three months ended September 30, 2024. The decrease was mainly due to the Company’s decreased inputs on brand marketing expenses. G&A expenses increased by $356,759 from $873,067 for the three months ended September 30, 2024 to $1,229,826 for the three months ended September 30, 2025, primarily due to the increase in short-term rental expenses, amortization of intangible assets and travel expenses. R&D expenses increased by $1,018,833, from $217,500 for the three months ended September 30, 2024 to $1,236,333 for the three months ended September 30, 2025. The increase was mainly attributable to research and development support activities for the newly purchased software, Chat Box and expenses incurred for development of AI immersive reading platform. This increase was partially offset by decreased inputs in research and development related to the Company’s artificial intelligence-based digital human application.
Current wording
The Company’s operating expenses include general and administrative (“G&A”) expenses, research and development (“R&D”) expenses. G&A expenses increased by $408,927 from $937,877 for the three months ended March 31, 2025 to $1,346,804 for the three months ended March 31, 2026. The increase was mainly due to the increase in the amortization of intangible assets. R&D expenses increased to $303,000 for the three months ended March 31, 2026, compared to $nil for the three months ended March 31, 2025. The increase was mainly due to the Company increased inputs on research and development about its interactive fiction—story platform.
Previous wording
As of September 30, 2025, the Company had $225,072 in its operating bank accounts and working capital deficit of approximately $2.3 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 six loan agreements, for working capital purposes. Pursuant to the loan agreements, these loans are non-interest bearing and will be due from September 2025 to January 2026, respectively. From March 2025 to May 2025, the Company repaid $399,485 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.
Current wording
As of March 31, 2026, the Company had $16,805 in its operating bank accounts and working capital deficit of approximately $1.7 million.
Previous wording
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 wording
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. The management assessed 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 unaudited interim condensed consolidated financial statements are issued.
Previous wording
The following summarizes the key components of the Company’s cash flows for the nine months ended September 30, 2025 and 2024.
Current wording
The following summarizes the key components of the Company’s cash flows for the three months ended March 31, 2026 and 2025.
Previous wording
Net cash used in operating activities was approximately $4.6 million for the nine months ended September 30, 2025, as compared to approximately $5.3 million net cash used in operating activities for the nine months ended September 30, 2024. Net income for the nine months ended September 30, 2025 was approximately $9.6 million, as compared to a net loss of approximately $11.6 million for the nine months ended September 30, 2024. Adjustments to reconcile net income (loss) to net cash used in operating activities decreased by approximately $20.5 million for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, mainly due to (i) the unrealized gain arising from fair value changes of digital assets for the nine months ended September 30, 2025 of approximately $16.2 million, (ii) the decreased other-than-temporary impairment losses from convertible note and intangible assets of approximately $4.3 million. Changes in operating assets and liabilities remained relatively flat for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. Specifically, the decrease in prepaid expenses and other current assets was largely offset by the increase in income taxes payable, resulting in minimal net impact on operating cash flows.
Current wording
Net cash used in operating activities was approximately $0.6 million for the three months ended March 31, 2026, as compared to approximately $0.8 million net cash used in operating activities for the three months ended March 31, 2025. Net loss for the three months ended March 31, 2026 was approximately $164.1 million, as compared to approximately $1.0 million for the three months ended March 31, 2025. Adjustments to reconcile net loss to net cash used in operating activities increased by approximately $162.8 million, mainly due to the increased unrealized loss on fair value changes of digital assets and amortization of intangible assets, and changes in operating assets and liabilities increased approximately $0.5 million.
Previous wording
Net cash used in investing activities was nil for the nine months ended September 30, 2025, as compared to approximately $0.7 million for the nine months ended September 30, 2024. The decrease in net cash used in investing activities was due to the absence of the loan to a third party for the nine months ended September 30, 2025, as compared to the same period of 2024.
Current wording
Net cash used in investing activities was $100,000 for the three months ended March 31, 2026, as compared to $nil for the three months ended March 31, 2025. The increase in net cash used in investing activities was due to the purchase of digital assets for the three months ended March 31, 2026.
Previous 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.
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.
Previous wording
The Company’s determination of whether or not an indication of impairment exists at the cash generating unit level requires significant management judgment pertaining to intangible assets, including a software copyright of AI Box, which is used for online living-stream and a software copyright of Chat Box, which is used for online interactive entertainment scenarios, 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. Based on the evaluation, the Company recognized impairment losses in long-lived assets of nil and $2,756,986, respectively, for the nine months ended September 30, 2025 and 2024.
Current wording
The Company’s determination of whether or not an indication of impairment exists at the cash generating unit level requires significant management judgment pertaining to intangible assets, including a software copyright of AI Box, which is used for online living-stream and a software copyright of Chat Box, which is used for online interactive entertainment scenarios, 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. For the three months ended March 31, 2026 and 2025, the Company did not recognize any impairment losses in long-lived assets.
Previous wording
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.
Current wording
In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted ASU 2023-09 on a prospective basis for the 2025 annual reporting period since January 1, 2025 and the adoption has no impact on the accompanying unaudited interim condensed consolidated financial statements.
Previous wording
We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on our consolidated balance sheets, statements of operations and comprehensive income (loss) and statements of cash flows.
Current wording
We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on our unaudited interim condensed consolidated balance sheets, statements of operations and comprehensive loss and statements of cash flows.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
On April 28, 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.
Current report — wording carried from elsewhere
The Company identified the following critical accounting estimates.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Nine Months Ended September 30, 2025 vs. September 30, 2024
Previous report — wording carried elsewhere
On October 24, 2025, the Company sold 1,333,334 shares of common stock at $2.1 per share, generating gross proceeds of $2.8 million. The Company received net proceeds of approximately $2.5 million after deducting underwriter’s fees of $196,000 and other offering costs of $60,000. The Company plans to use the proceeds from the offering for working capital purposes.
Previous report — wording carried elsewhere
Considering the impact of the financing and the Company’s projected operating cash flows as described above, management 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.