GD Culture Group(GDC) - 2025 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2025, the company reported a net income of $12,088,469, a significant improvement from a net loss of $3,839,333 in the same period of 2024, representing a change of 414.9%[180]. - For the nine months ended September 30, 2025, net income was $9,611,905, compared to a net loss of $11,589,784 for the same period in 2024, marking an improvement of 182.9%[184]. - The company experienced a 57.5% reduction in loss from operations for the nine months ended September 30, 2025, reporting a loss of $4,960,099 compared to $11,657,833 in 2024[181]. - The company's other income surged by 156,268.5% to $16,232,610 for the three months ended September 30, 2025, driven mainly by an unrealized gain of $16,230,431 from digital assets[179]. Capital Raising and Use of Proceeds - The Company generated gross proceeds of $1,000,000 from the sale of 1,115,600 shares at $0.896379 per share in the March 2025 Offering[159]. - The Company received $4,478,000 in proceeds from the sale of 1,115,600 shares at approximately $0.524 per share and 9,380,582 pre-funded warrants at approximately $0.523 per warrant in the May 2025 Offering[160]. - The Company plans to use proceeds from the May 2025 Offering for working capital purposes, with net proceeds expected to be $5,095,000 after deducting transaction costs[160]. - The company raised $4,478,000 from a securities offering, with net proceeds of $4,143,657 after transaction costs, which will be used for working capital purposes[188]. - The Company has entered into an At-The-Market Issuance Sales Agreement allowing it to issue up to $10,000,000 in common stock[158]. Expenses and Cash Flow - Research and development expenses increased by 468.4% to $1,236,333 for the three months ended September 30, 2025, compared to $217,500 for the same period in 2024, primarily due to activities related to new software and AI platform development[178]. - Selling and marketing expenses decreased to nil for the three months ended September 30, 2025, down from $2,909 in the same period of 2024, reflecting reduced brand marketing inputs[178]. - The company reported net cash used in operating activities of approximately $4.6 million for the nine months ended September 30, 2025, an improvement from $5.3 million in the same period of 2024[194]. - Net cash provided by financing activities increased to approximately $4.8 million for the nine months ended September 30, 2025, compared to approximately $0.8 million for the same period in 2024, driven by a $0.7 million increase in common stock issuance proceeds and $3.6 million from prefunded warrants[196]. - The company had no cash used in investing activities for the nine months ended September 30, 2025, compared to approximately $650,000 in the same period of 2024[195]. Compliance and Regulatory Matters - The Company has an initial compliance period until November 11, 2024, to regain compliance with Nasdaq's Minimum Bid Price Requirement after its stock price fell below $1.00[167]. - The FASB issued ASU 2023-09, effective after December 15, 2024, which requires enhanced income tax disclosures; management does not expect a material impact on financial statements[199]. - ASU 2023-07, effective after December 15, 2023, aims to improve reportable segment disclosures, with the company planning to adopt it for the year ending December 31, 2024[200]. - ASU No. 2024-03, effective after December 15, 2026, focuses on disaggregation of income statement expenses, and the company is assessing its impact on consolidated financial statements[201]. Risks - The company is exposed to credit risk primarily from cash and accounts receivable, with cash held at major financial institutions in the PRC not insured by the government[204]. - Inflation risk may impair operating results due to increases in raw material and overhead costs, although it has not materially impacted financial performance to date[206]. - A significant portion of the company's assets and liabilities are denominated in RMB, which is not freely convertible into foreign currencies, exposing the company to foreign currency risk[207]. Strategic Initiatives - The Company aims to expand its market presence through social media to enhance its competitive position in the e-commerce and live streaming sectors[176]. - The Company is developing a mobile and web platform for interactive fiction, enhancing its product offerings in digital content[156]. - The Company’s management team has extensive experience in technology and content creation, which is crucial for deploying AI technology across various sectors[175]. - The Company’s competition includes content creators on platforms like TikTok, impacting its market share and sales performance[174].