GD Culture Group(GDC) - 2024 Q2 - Quarterly Report

Revenue and Profitability - Total revenues decreased by approximately $150,000 to nil for the three months ended June 30, 2024, compared to approximately$150,000 for the same period in 2023, primarily due to no sales of software copyright in 2024 [222]. - Gross profit decreased by $150,000 to nil during the three months ended June 30, 2024, from$150,000 for the same period in 2023, attributed to the absence of software copyright sales [223]. - The Company's gross profit decreased by $150,000 to nil during the six months ended June 30, 2024, from$150,000 for the same period in 2023, attributed to no sales of software copyright [231]. - Net loss for the three months ended June 30, 2024, was $3,592,912, compared to a net loss of$155,498 for the same period in 2023, reflecting a 2,210.6% increase in losses [221]. - The Company's net loss increased by approximately $7.6 million, or 4,283.6$7.8 million for the six months ended June 30, 2024, from $176,807 for the same period in 2023 [235]. - The net loss for the six months ended June 30, 2024, was approximately$7.8 million, compared to approximately $177,000 for the same period in 2023 [254]. Operating Expenses - Operating expenses increased significantly to approximately$2.1 million for the three months ended June 30, 2024, compared to approximately $0.3 million for the same period in 2023, marking a 684.9$1.4 million to approximately $1.7 million for the three months ended June 30, 2024, driven by higher personnel costs and operating expenses [224]. - General and administrative expenses increased by approximately$3.2 million from approximately $0.3 million for the six months ended June 30, 2023, to approximately$3.5 million for the same period in 2024, driven by various operational costs [232]. - Selling and marketing expenses rose to $2.4 million for the six months ended June 30, 2024, compared to nil for the same period in 2023, reflecting increased investment in digital marketing [232]. - Selling expenses rose to approximately$208,333 for the three months ended June 30, 2024, compared to nil for the same period in 2023, reflecting increased marketing efforts [224]. Research and Development - Research and development expenses increased to approximately $217,500 for the three months ended June 30, 2024, compared to nil for the same period in 2023, indicating a focus on AI-driven digital human applications [224]. - Research and development expenses increased to approximately$0.4 million for the six months ended June 30, 2024, compared to nil for the same period in 2023, focusing on artificial intelligence-based digital human applications [232]. Loss from Operations - Loss from operations was $2,128,924 for the three months ended June 30, 2024, compared to a loss of$121,237 for the same period in 2023, representing a 1,656.0% increase in losses [221]. - Loss from operations for the six months ended June 30, 2024, was approximately $7.8 million, an increase of approximately 6,067.1$125,675 for the same period in 2023 [234]. - Loss from operations was $(6,307,371) for the six months ended June 30, 2024, compared to$(125,854) for the same period in 2023, marking a significant increase [229]. Cash Flow and Liquidity - As of June 30, 2024, the Company had $301,837 in operating bank accounts and working capital of approximately$2.1 million [249]. - Net cash used in operating activities was approximately $5.1 million for the six months ended June 30, 2024, compared to approximately$1.7 million for the same period in 2023 [254]. - Net cash used in investing activities was approximately $0.7 million for the six months ended June 30, 2024, compared to$4,642 for the same period in 2023 [255]. - Net cash provided by financing activities was approximately $0.8 million for the six months ended June 30, 2024, a decrease of approximately$7.9 million from $8.7 million for the same period in 2023 [256]. - The Company plans to raise additional debt or equity capital to fund future operations, but there is no assurance that sufficient funds will be obtained [250]. - The Company is exposed to liquidity risk and will seek short-term funding from financial institutions and owners when necessary [260]. Strategic Initiatives - The company aims to generate revenue from service and advertising related to digital human creation, product sales from live streaming e-commerce, and virtual paid gifts from interactive gaming [208]. - The company has expanded its operations into social media marketing through the establishment of Shanghai Xianzhui, where it owns 73.3333% equity interest [210][211]. Risks - The Company is also exposed to inflation risk, which could impair operating results if raw material and overhead costs increase significantly [261]. - The Company has implemented cost-cutting measures to reduce operating expenditures and loss [250].