GD Culture Group(GDC) - 2025 Q2 - Quarterly Report

Report Information Filing Details This report is GD Culture Group Limited's quarterly report as of June 30, 2025, registered in Nevada, with stock traded on Nasdaq Capital Market, identified as a non-accelerated filer and smaller reporting company - GD Culture Group Limited (formerly Code Chain New Continent Limited) filed its quarterly report as of June 30, 2025[2] - The company's stock (GDC) is listed on the Nasdaq Capital Market[3] Company Filing Status | Indicator | Status | | :--- | :--- | | Large Accelerated Filer | No | | Accelerated Filer | No | | Non-Accelerated Filer | Yes | | Smaller Reporting Company | Yes | | Emerging Growth Company | No | Table of Contents The report's table of contents outlines financial information, including unaudited financial statements, management's discussion and analysis, market risk disclosures, controls and procedures, and other information such as legal proceedings, risk factors, unregistered equity sales, senior securities defaults, mine safety disclosures, other information, and exhibits - The report is divided into two main parts: Part I for financial information and Part II for other information[6] - Financial information includes unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures[6] - Other information covers legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, other information, and exhibits[6] CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements regarding future events, operating results, and financial performance, based on current assumptions and subject to known and unknown risks and uncertainties that may cause actual results to differ materially from expectations, with no obligation to update these statements - Forward-looking statements in this report involve future events, operating results, and financial performance, and include words such as "expect," "believe," "may," and "estimate"[8] - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from forward-looking statements[8] - The company undertakes no obligation to update any forward-looking statements, except as required by law[10] PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section contains GD Culture Group Limited's and its subsidiaries' unaudited interim consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of changes in shareholders' equity, statements of cash flows, and related notes, reflecting financial position and operating results as of June 30, 2025 - This section provides the unaudited interim condensed consolidated financial statements of GD Culture Group Limited and its subsidiaries[13] - The financial statements include consolidated balance sheets as of June 30, 2025, and December 31, 2024[14] - Also included are unaudited interim condensed consolidated statements of operations and comprehensive loss, statements of changes in shareholders' equity, and statements of cash flows for the three and six months ended June 30, 2025, and 2024[14] Consolidated Balance Sheets As of June 30, 2025, the company's total assets and shareholders' equity significantly increased, primarily due to substantial rises in cash and cash equivalents and intangible assets, while current and total liabilities decreased Consolidated Balance Sheets Key Data | Indicator | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | 1,117,760 | 22,538 | | Prepaid and other current assets | 1,389,522 | - | | Intangible assets, net | 6,666,696 | 1,102,400 | | Total assets | 10,575,051 | 2,734,987 | | Total current liabilities | 1,062,256 | 1,473,881 | | Total liabilities | 2,011,539 | 2,732,344 | | Total shareholders' equity | 8,563,512 | 2,643 | - As of June 30, 2025, the company's cash and cash equivalents significantly increased to $1,117,760, compared to $22,538 as of December 31, 2024[16] - Net intangible assets increased from $1,102,400 as of December 31, 2024, to $6,666,696 as of June 30, 2025[16] Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss For the three and six months ended June 30, 2025, the company's net loss significantly decreased, primarily due to lower operating expenses, especially the elimination of a one-time impairment loss present in the prior year period Operations and Comprehensive Loss Key Data | Indicator | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Selling and marketing expenses | (300,000) | (208,333) | (300,000) | (2,400,000) | | General and administrative expenses | (1,022,730) | (1,703,091) | (1,960,607) | (3,472,371) | | Research and development expenses | (233,333) | (217,500) | (233,333) | (435,000) | | Operating loss | (1,556,063) | (3,628,924) | (2,493,940) | (7,807,371) | | Net loss | (1,499,054) | (3,592,912) | (2,476,564) | (7,750,451) | | Basic and diluted loss per share | (0.10) | (0.39) | (0.18) | (0.93) | - For the three months ended June 30, 2025, net loss decreased by 58.3% year-over-year to $1,499,054[17] - For the six months ended June 30, 2025, net loss decreased by 68.0% year-over-year to $2,476,564[17] Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders' Equity For the six months ended June 30, 2025, the company's shareholders' equity substantially increased, primarily driven by common stock issuance, prepaid warrant issuance, and financing activities such as software acquisition through common stock issuance Shareholders' Equity Changes Key Data | Indicator | January 1, 2025 | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Common shares outstanding | 11,167,294 | 16,795,433 | | Additional paid-in capital ($) | 82,758,975 | 93,813,211 | | Accumulated deficit ($) | (83,194,386) | (85,670,950) | | Total shareholders' equity ($) | 2,643 | 8,563,512 | - As of June 30, 2025, the number of common shares outstanding increased to 16,795,433 from 11,167,294 as of December 31, 2024[19] - The acquisition of specific software through common stock issuance increased additional paid-in capital by $5,988,523[19] Unaudited Interim Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, the company's net increase in cash and cash equivalents was primarily due to a significant rise in cash provided by financing activities, coupled with reduced cash outflows from operating activities and zero cash outflows from investing activities Cash Flow Key Data | Indicator | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (3,708,974) | (5,050,619) | | Net cash used in investing activities | - | (650,000) | | Net cash provided by financing activities | 4,804,172 | 830,533 | | Net increase (decrease) in cash and cash equivalents | 1,095,222 | (4,873,681) | | Cash and cash equivalents at end of period | 1,117,760 | 301,837 | - Net cash used in operating activities decreased from $5,050,619 in the first half of 2024 to $3,708,974 in the first half of 2025[23] - Cash provided by financing activities significantly increased to $4,804,172, compared to $830,533 in the prior year period[23] Notes to Unaudited Interim Condensed Consolidated Financial Statements The notes provide detailed information on the company's business nature, significant accounting policies, balance sheet item details, related party transactions, leases, taxes, credit risk concentration, equity changes, commitments and contingencies, segment reporting, and subsequent events - The notes detail the company's business nature, organizational structure, and principal operating subsidiaries[25] - Significant accounting policies are disclosed, including consolidation principles, use of estimates and assumptions, and foreign currency translation and transactions[36] - Detailed composition and changes for various balance sheet items are provided, such as prepaid and other current assets, equipment, intangible assets, accounts payable, and lease liabilities[70][71][72] Note 1 – Nature of Business and Organization GD Culture Group Limited focuses on virtual content production, including AI-driven digital human creation, live streaming, and e-commerce, operating through subsidiaries AI Catalysis and Shanghai Xuanzhirui Technology, and significantly improved liquidity in H1 2025 through financing activities, assessing sufficient going concern ability for the next 12 months - The company's primary business activities include AI-driven digital human creation and customization, live streaming, and e-commerce[25] - As of June 30, 2025, the company had $1,117,760 in cash and approximately $1.5 million in working capital[30] - Management assessed that the company will have sufficient liquidity to meet its obligations over the next 12 months, indicating its ability to continue as a going concern[35] Note 2 – Summary of Significant Accounting Policies This note outlines the significant accounting policies adopted for the company's financial statements, including the basis of preparation in accordance with U.S. GAAP, consolidation principles, use of estimates and assumptions, foreign currency translation, asset classification and depreciation/amortization, lease accounting, fair value measurement, expense classification, and income tax accounting, with ASU 2023-07 adopted and ASU 2024-03 impact under evaluation - The financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) and comply with SEC interim financial statement regulations[36] - Intangible assets, such as software copyrights, are stated at cost less accumulated amortization and amortized on a straight-line basis over 5 years[45] - The company adopted ASU 2023-07 (Segment Reporting) with no material impact on FY2024 financial statements; ASU 2023-09 (Income Tax Disclosures) is expected to have no material impact; and the impact of ASU 2024-03 (Income Statement Expense Disaggregation) is currently being evaluated[66][67][68] Note 3 – Prepaid and Other Current Assets As of June 30, 2025, the company's prepaid and other current assets significantly increased to $1,389,522, primarily comprising prepaid offering costs, prepaid operating leases, and prepaid R&D expenses, with the latter related to service activities for the Chat Box platform Composition of Prepaid and Other Current Assets | Item | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Prepaid offering costs | 70,000 | - | | Prepaid operating leases | 152,855 | - | | Prepaid research and development expenses | 1,166,667 | - | | Total | 1,389,522 | - | - Prepaid research and development expenses are primarily for service activities related to the Chat Box platform, including system configuration, integration, testing support, and other operational assistance, expected to be completed by November 30, 2025[70] Note 4 – Equipment, net As of June 30, 2025, the company's net equipment value slightly decreased due to accumulated depreciation, primarily consisting of office equipment and furniture Composition of Equipment, net | Item | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Office equipment and furniture | 14,190 | 14,190 | | Less: Accumulated depreciation | (8,561) | (6,409) | | Total | 5,629 | 7,781 | - For the six months ended June 30, 2025, depreciation expense was $2,152, compared to $2,365 for the prior year period[71] Note 5 – Intangible Assets, net As of June 30, 2025, the company's net intangible assets significantly increased due to the acquisition of "Chat Box" software in April 2025 through common stock issuance, intended for AI business development, particularly an interactive novel platform, with no impairment losses recognized during the period Composition of Intangible Assets, net | Item | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Software copyrights | 4,890,092 | 4,890,092 | | Additions: Software purchases | 5,988,523 | - | | Subtotal | 10,878,615 | 4,890,092 | | Less: Accumulated amortization | (1,460,745) | (1,036,518) | | Accumulated impairment | (2,751,174) | (2,751,174) | | Total | 6,666,696 | 1,102,400 | - On April 28, 2025, the company acquired "Chat Box" software for $5,988,523 by issuing 2,444,295 shares of common stock[72] - Chat Box is an AI-based immersive chatbot platform, which the company plans to further develop into a mobile and web platform for interactive novel experiences[72] - For the six months ended June 30, 2025, amortization expense was $424,227, compared to $385,468 for the prior year period[73] Note 6 – Other Payables and Accrued Liabilities As of June 30, 2025, the company's total other payables and accrued liabilities decreased, primarily due to a reduction in professional service fees, but a new shareholder loan was added Composition of Other Payables and Accrued Liabilities | Item | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Professional service fees | 130,641 | 375,085 | | Shareholder loan | 100,000 | - | | Total | 260,629 | 401,821 | - Professional service fees decreased from $375,085 as of December 31, 2024, to $130,641 as of June 30, 2025[75] Note 7 – Related Party Balances and Transactions As of June 30, 2025, the company's related party payables significantly decreased, mainly due to the full repayment of an interest-free loan from the CEO, with remaining balances primarily consisting of accrued compensation for company executives Related Party Payables Composition | Related Party | Nature | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | :--- | | Xiaojian Wang (CEO) | Accrued compensation | 75,000 | 50,000 | | Xiaojian Wang (CEO) | Interest-free loan to company | - | 349,485 | | Zihao Zhao (CFO) | Accrued compensation | 77,869 | 50,833 | | Total | | 204,339 | 502,266 | - As of June 30, 2025, the interest-free loan received from the CEO was fully repaid[78] - For the six months ended June 30, 2025, compensation expense paid to company executives was $52,036, compared to $40,000 for the prior year period[79] Note 8 – Leases The company primarily leases buildings and office facilities under operating leases, with operating lease right-of-use assets and lease liabilities both decreasing as of June 30, 2025, and changes in lease expenses and payments, including the first recognition of short-term lease expenses during the period Operating Lease Key Data | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets, net ($) | 1,135,509 | 1,342,333 | | Total lease liabilities ($) | 1,263,929 | 1,532,536 | | Weighted-average remaining lease term (years) | 3.31 | 3.63 | | Weighted-average discount rate | 7.54% | 7.53% | - For the six months ended June 30, 2025, operating lease expense was $242,016, compared to $248,155 for the prior year period[84] - For the six months ended June 30, 2025, the company incurred $84,218 in short-term lease expenses, with no short-term lease expenses in the prior year period[85] Note 9 – Taxes The company faces varying income tax regulations in the U.S., BVI, Hong Kong, and mainland China; as of June 30, 2025, U.S. income tax payable increased, and while significant tax loss carryforwards exist, a full valuation allowance has been recorded against deferred tax assets due to continuous losses Income Tax Expense and Deferred Tax Assets/Liabilities | Indicator | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Total income tax benefit | 13,079 | 21,918 | | U.S. income tax payable (June 30, 2025) ($) | 282,642 | 141,810 (December 31, 2024) | | Total deferred tax assets (June 30, 2025) ($) | 9,441,503 | 8,647,326 (December 31, 2024) | | Valuation allowance (June 30, 2025) ($) | (9,047,896) | (8,020,571) (December 31, 2024) | - As of June 30, 2025, the company had approximately $5.3 million in tax loss carryforwards in mainland China (expiring 2028-2029) and approximately $18.9 million in tax loss carryforwards in the U.S. (indefinite carryforward)[94] - Due to the company's operating history and continuous losses in the U.S., management has recorded a 100% valuation allowance against deferred tax assets[95] Note 10 – Concentration of Credit Risk The company's credit risk is primarily concentrated in cash deposits, with approximately $900,000 in U.S. bank accounts exceeding the FDIC insurance limit as of June 30, 2025 - The company's credit risk primarily arises from cash deposits and accounts receivable[96] - As of June 30, 2025, approximately $900,000 of the company's cash in U.S. bank accounts exceeded the FDIC's $250,000 insurance limit[97][176] - As of June 30, 2025, and December 31, 2024, $3,267 in cash was held in financial institutions in mainland China[97] Note 11 – Equity This note details changes in the company's equity, including statutory reserves, common stock issuance, and warrant activities; as of June 30, 2025, the company significantly increased outstanding shares and capital through multiple common stock and prepaid warrant issuances, completing several software acquisitions Common Stock and Warrants Key Data | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total common shares outstanding | 16,795,433 | 11,167,294 | | Prepaid warrants unexercised | 7,468,536 | 0 | | November 2023 registered warrants unexercised | 565,130 | 1,616,471 | | Total warrants | 8,729,201 | 2,312,006 | - On March 4, 2025, the company sold 1,115,600 shares of common stock at $0.896379 per share, generating net proceeds of $910,000 for working capital[109] - On May 2, 2025, the company received $4,478,000 in gross proceeds from the issuance of common stock and prepaid warrants, designated for working capital[110] - On April 28, 2025, the company issued 2,444,295 shares of common stock to acquire "Chat Box" software for AI business development[111] Note 12 – Commitments and Contingencies The company may face legal proceedings, claims, and disputes arising in the ordinary course of business, but management believes these matters will not have a material adverse effect on the company's financial position, operating results, or liquidity - The company may be subject to legal proceedings, claims, and disputes arising in the ordinary course of business[123] - Management believes these matters will not have a material adverse effect on the company's financial position, operating results, or liquidity[123] Note 13 – Segment Reporting The company operates and manages its business as a single reportable segment, "Virtual Content Production," with the CEO as the chief operating decision maker reviewing consolidated financial statements and operating metrics to allocate resources and assess overall performance; no geographical segments are presented as most long-lived assets and expenses are located in the U.S. - The company operates as a single operating and reportable segment, "Virtual Content Production"[125] - The Chief Executive Officer serves as the chief operating decision maker, making decisions by reviewing consolidated financial statements and operating metrics[125] - No geographical segments are presented because most of the company's long-lived assets and expenses are located in the United States[126] Note 14 – Subsequent events The company has evaluated subsequent events and transactions through August 12, 2025, and found no material subsequent events requiring adjustment or disclosure - The company evaluated subsequent events through August 12, 2025[127] - No material subsequent events requiring adjustment or disclosure were identified[127] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section discusses GD Culture Group Limited's financial condition and operating results for the three and six months ended June 30, 2025, highlighting the business overview, recent developments, key factors affecting operating results, analysis of operations, liquidity and capital resources, and critical accounting policies and recent accounting pronouncements related to AI-driven virtual content production, live streaming, and e-commerce - This discussion and analysis should be read in conjunction with the unaudited financial statements and their notes[129] - The company's business primarily focuses on AI-driven digital human creation and customization, live streaming, and e-commerce[132] - This section contains forward-looking statements, and actual results may differ materially from those discussed[130][131] Overview GD Culture Group Limited is a holding company focused on virtual content production, primarily AI-driven digital human creation and customization, live streaming, and e-commerce, offering services via AI tools like SyncWaveX and developing an interactive novel platform, with revenue mainly from personalized customization service subscriptions - The company's main business involves AI-driven digital human creation and customization, as well as live streaming and e-commerce[132] - SyncWaveX is the company's AI-powered virtual human video generation tool, offering text input, character models, and audio profile selection, with primary revenue from personalized customization service subscriptions[133][134] - The company is also developing a mobile and web platform for interactive novels[134] Recent Development The company recently raised capital through multiple equity issuances and prepaid warrants to support working capital and AI business development, successfully regaining Nasdaq listing compliance and acquiring key software like "AIBox" and "Chat Box" to enhance AI capabilities - On March 4, 2025, the company raised $1,000,000 in gross proceeds (net proceeds of $910,000) through common stock issuance for working capital[137] - On May 2, 2025, the company received $4,478,000 in subscription proceeds from the issuance of common stock and prepaid warrants, designated for working capital[138] - The company has regained compliance with Nasdaq's minimum bid price requirement and met the $35 million market value standard[141][142] - On April 28, 2025, the company acquired "Chat Box" software by issuing 2,444,295 shares of common stock for AI business development[145] Key Factors that Affect Operating Results Key factors influencing the company's operating results include intense competition in the e-commerce and live streaming industries, the ability to retain core management team members, and the capacity to expand market share and penetrate new markets - The e-commerce and live streaming industries are highly competitive, with competitors potentially having longer operating histories, more experience, or stronger financial/marketing resources[146] - The loss of key management team members could adversely affect the company's business and operating results[147] - The company's ability to effectively and cost-efficiently expand market share and penetrate new markets is crucial for operating results[148] Results of Operations The company achieved a significant reduction in net loss for both Q2 and H1 2025, primarily due to a substantial decrease in operating expenses, notably the elimination of a one-time impairment loss present in the prior year period, and controlled sales and marketing, general and administrative, and R&D expenses - For the three months ended June 30, 2025, net loss decreased by 58.3% to $1,499,054 year-over-year[152] - For the six months ended June 30, 2025, net loss decreased by 68.0% to $2,476,564 year-over-year[156] - Operating loss decreased by 68.1% year-over-year in the first half of 2025, from $7,807,371 to $2,493,940[153] Three Months Ended June 30, 2025 vs. June 30, 2024 Net loss for Q2 2025 significantly decreased by 58.3% year-over-year, primarily due to reduced general and administrative expenses and the elimination of a one-time impairment loss present in the prior year period, despite increases in sales and marketing and R&D expenses Q2 2025 Operating Expense Changes | Expense Category | Q2 2025 ($) | Q2 2024 ($) | Change Amount ($) | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Selling and marketing expenses | (300,000) | (208,333) | (91,667) | 44.0% | | General and administrative expenses | (1,022,730) | (1,703,091) | 680,361 | (39.9)% | | Research and development expenses | (233,333) | (217,500) | (15,833) | 7.3% | | Other-than-temporary impairment loss | - | (1,500,000) | 1,500,000 | (100.0)% | | Net loss | (1,499,054) | (3,592,912) | 2,093,858 | (58.3)% | - Selling and marketing expenses increased by 44.0%, primarily due to increased brand marketing expenses, partially offset by reduced investment in digital human and e-commerce live streaming marketing (affected by TikTok's potential exit from the U.S. market)[150] - General and administrative expenses decreased by 39.9%, mainly due to reduced professional service fees[150] - Research and development expenses increased by 7.3%, primarily due to R&D support activities for the newly acquired Chat Box software, partially offset by reduced investment in AI digital human application R&D[150] Six Months Ended June 30, 2025 vs. June 30, 2024 Net loss for H1 2025 significantly decreased by 68.0% year-over-year, primarily due to substantial reductions in sales and marketing, general and administrative, and R&D expenses, as well as the elimination of a one-time impairment loss present in the prior year period H1 2025 Operating Expense Changes | Expense Category | H1 2025 ($) | H1 2024 ($) | Change Amount ($) | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Selling and marketing expenses | (300,000) | (2,400,000) | 2,100,000 | (87.5)% | | General and administrative expenses | (1,960,607) | (3,472,371) | 1,511,764 | (43.5)% | | Research and development expenses | (233,333) | (435,000) | 201,667 | (46.4)% | | Other-than-temporary impairment loss | - | (1,500,000) | 1,500,000 | 100.0% | | Net loss | (2,476,564) | (7,750,451) | 5,273,887 | (68.0)% | - Selling and marketing expenses decreased by 87.5%, primarily due to reduced investment in digital human and e-commerce live streaming marketing (affected by TikTok's potential exit from the U.S. market)[154] - General and administrative expenses decreased by 43.5%, mainly due to reduced professional service fees, partially offset by increased intangible asset amortization and listing fees[154] - Research and development expenses decreased by 46.4%, primarily due to reduced investment in AI digital human application R&D, partially offset by R&D support activities for Chat Box software[154] Liquidity and Capital Resources As of June 30, 2025, the company's liquidity significantly improved with increased cash and working capital, primarily driven by financing activities through common stock and prepaid warrant issuances, and management assesses sufficient liquidity to meet obligations over the next 12 months - As of June 30, 2025, the company had $1,117,760 in cash and approximately $1.5 million in working capital[157] Cash Flow Summary | Cash Flow Category | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (3,708,974) | (5,050,619) | | Net cash used in investing activities | - | (650,000) | | Net cash provided by financing activities | 4,804,172 | 830,533 | | Net change in cash and cash equivalents | 1,095,222 | (4,873,681) | - Net cash provided by financing activities significantly increased, primarily from common stock issuances (approximately $1.5 million) and prepaid warrant issuances (approximately $3.6 million)[167] - Management assessed that the company will have sufficient liquidity to meet its obligations over the next 12 months[162] Critical Accounting Policies and Estimates The company makes significant estimates and assumptions in preparing financial statements, with long-lived asset impairment being a critical accounting estimate; no long-lived asset impairment losses were recognized for the six months ended June 30, 2025 - Long-lived asset impairment is a critical accounting estimate for the company, involving judgments on intangible assets such as AI Box and Chat Box software, and right-of-use assets[169] - For the six months ended June 30, 2025, the company recognized no long-lived asset impairment losses[169] Recently Issued Accounting Pronouncements The company adopted ASU 2023-07 (Segment Reporting) with no material impact on FY2024, ASU 2023-09 (Income Tax Disclosures) is not expected to have a material impact, and ASU 2024-03 (Income Statement Expense Disaggregation) is currently being evaluated for its impact on future financial statements - The company adopted ASU 2023-07 (Segment Reporting), which had no material impact on the 2024 fiscal year[171] - ASU 2023-09 (Income Tax Disclosures) is not expected to have a material impact on the company's financial statements and disclosures[170] - The company is currently evaluating the impact of ASU 2024-03 (Income Statement Expense Disaggregation) on its consolidated financial statements[172] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company faces credit, inflation, and foreign currency risks; credit risk is concentrated in cash deposits, with some exceeding FDIC insurance limits; inflation may affect operating results but currently has no material impact; foreign currency risk stems from RMB-denominated operations and assets in mainland China, influenced by government exchange controls and policy changes - Credit risk is one of the most significant risks facing the company's business, primarily concentrated in cash deposits and accounts receivable[175][176] - As of June 30, 2025, approximately $900,000 of the company's cash exceeded the FDIC insurance limit[97][176] - The company faces inflation risk, but it has not had a material impact on its financial condition or operating results to date[177] - Foreign currency risk primarily arises from the company's RMB-denominated operating activities and assets in mainland China, subject to Chinese government foreign exchange controls and policy changes[178] ITEM 4. CONTROLS AND PROCEDURES As of the end of the reporting period, management assessed the company's disclosure controls and procedures as ineffective; however, no significant changes occurred in internal control over financial reporting during the quarter - As of the end of the reporting period, management, including the Chief Executive Officer, President, and Chief Financial Officer, assessed the company's disclosure controls and procedures as ineffective[179] - No significant changes occurred in internal control over financial reporting during the quarter[181] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is not currently involved in any legal proceedings - The company is currently not involved in any legal proceedings[183] ITEM 1A. RISK FACTORS Investing in the company's common stock involves a high degree of risk, and no material changes were made to the risk factors discussed in the Form 10-K annual report for December 31, 2024, in this quarterly report - Investing in the company's common stock involves a high degree of risk, and risk factors in this quarterly report and the Form 10-K annual report should be carefully considered[184] - There were no material changes to the risk factors described in the Form 10-K annual report for December 31, 2024[184] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The company raised capital through multiple unregistered equity security sales, including common stock and prepaid warrant issuances, with proceeds primarily allocated to working capital and AI business development, specifically the acquisition of "AIBox" and "Chat Box" software - On March 4, 2025, the company issued 1,115,600 shares of common stock, generating $1,000,000 in gross proceeds for working capital[185] - On April 28, 2025, the company issued 2,444,295 shares of common stock to acquire "Chat Box" software, valued at $5,768,536.20[187] - On May 6, 2025, the company agreed to sell common stock and prepaid warrants, with the first closing yielding $4,478,000 in gross proceeds for working capital[188] ITEM 3. DEFAULTS UPON SENIOR SECURITIES The company has not experienced any defaults upon senior securities - No defaults upon senior securities[189] ITEM 4. MINE SAFETY DISCLOSURES This disclosure is not applicable to the company - Not applicable[190] ITEM 5. OTHER INFORMATION No other information requires disclosure in this report - No other information[191] ITEM 6. EXHIBITS This section lists exhibits filed as part of or incorporated by reference into the quarterly report on Form 10-Q, including certifications from the CEO and CFO and XBRL files - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer as required by Rule 13a-14(a) or Rule 15d-14(a) and 18 U.S.C. 1350[193] - Exhibits also include Inline XBRL Instance Document and its Taxonomy Extension Schema Document[193] SIGNATURES This quarterly report was duly signed by GD Culture Group Limited on August 12, 2025, by Xiaojian Wang, CEO, President, and Chairman of the Board, and Zihao Zhao, CFO and Secretary - This report was duly signed by GD Culture Group Limited on August 12, 2025[195][197] - Signatories include Xiaojian Wang, Chief Executive Officer, President, and Chairman of the Board, and Zihao Zhao, Chief Financial Officer and Secretary[197]