GD Culture Group Ltd

GD Culture Group Limited (GDC) is a Nevada corporation operating primarily in the United States through its subsidiary AI Catalysis Corp., with a subsidiary in China, Shanghai Xianzhui Technology Co., Ltd., which currently has no material operating activities. The Company is undergoing a strategic transition, shifting from AI-driven digital human creation and customization and live streaming/e-commerce to the interactive reading and narrative entertainment market. This involves leveraging its existing AI and virtual content generation technologies. The Company's core business model is evolving to generate revenue through content access fees, in-application purchases, and potential creator revenue-sharing arrangements on its interactive reading platform. Primary customer segments are content creators, including independent writers, game designers, digital storytellers, and creative studios, as well as end users (readers) who engage with interactive stories. The Company may also target publishers, entertainment companies, and educational institutions.

For the fiscal year ended December 31, 2025, GDC reported a net loss of approximately $186.9 million ¹, a significant increase from the net loss of approximately $14.1 million ² for the year ended December 31, 2024. This increase in net loss was primarily driven by an unrealized loss on fair value changes of digital assets. Total operating expenses decreased by 40.2% ³ to $8,462,862 ⁴ in 2025 from $14,161,574 ⁵ in 2024. Selling and marketing expenses decreased to $300,000 ⁶ in 2025 from $2,402,908 ⁷ in 2024, an 87.5% ⁸ reduction. General and administrative expenses remained relatively consistent at $5,054,062 ⁹ in 2025 compared to $5,055,507 ¹⁰ in 2024. Research and development expenses increased by 182.9% ¹¹ to approximately $2.3 million ¹² in 2025 from approximately $0.8 million ¹³ in 2024. Impairment of intangible assets decreased to $852,800 ¹⁴ in 2025 from $2,755,659 ¹⁵ in 2024. The provision for credit loss expenses was nil ¹⁶ in 2025, down from $3,150,000 ¹⁷ in 2024. Other expenses increased significantly to $178,468,838 ¹⁸ in 2025 from other income of $8,671 ¹⁹ in 2024, primarily due to an unrealized loss on fair value changes of digital assets of $178,507,882 ²⁰. Cash and cash equivalents stood at $456,041 ²¹ as of December 31, 2025, compared to $22,538 ²² as of December 31, 2024. The Company had a working capital deficit of approximately $0.3 million ²³ as of December 31, 2025.

During the fiscal year ended December 31, 2025, GDC completed several significant operational and financial developments. On September 29, 2025, the Company acquired Pallas Capital Holding Ltd, a British Virgin Islands company, in exchange for 39,189,344 ²⁴ shares of the Company's common stock. Pallas was established to hold digital assets as a long-term reserve, and as of December 31, 2025, it held 7,500 ²⁵ units of Bitcoin. This acquisition is accounted for as an asset acquisition, with the excess of the fair value of the digital assets acquired over the fair value of the common stock issued recorded as an increase in additional paid-in capital of $615,774,140 ²⁶. In January 2025, the Company discontinued its online livestreaming gaming business following a strategic review. The Company also entered into several securities purchase agreements, including a private placement on March 4, 2025, selling 1,115,600 ²⁷ shares of common stock for gross proceeds of $1,000,000 ²⁸, and another offering on May 2, 2025, selling 1,115,600 ²⁹ shares of common stock and 9,380,582 ³⁰ pre-funded warrants, receiving gross proceeds of approximately $4.5 million ³¹ as of December 31, 2025. Additionally, on April 28, 2025, the Company purchased software called "Chat Box" by issuing 2,444,295 ³² shares of common stock, valued at $2.36 ³³ per share, for a total purchase price of $5,768,536.20 ³⁴.

The Company is currently undergoing a strategic transition to leverage its artificial intelligence and virtual content generation technologies to enter the interactive reading and narrative entertainment market. This shift involves developing a platform designed to enable creators to produce interactive, game-like reading experiences for end users. The platform will offer AI-powered content creation tools to assist creators in generating narrative structures, story plots, and visual assets, as well as AI-driven dialogue systems for reader interaction with story characters. This is expected to create a more immersive and personalized storytelling experience, with reader choices potentially influencing story progression. The Company believes this integration of AI-assisted tools will lower barriers for creators and provide users with more engaging digital entertainment.

As an initial step, the Company is developing a pilot product consisting of a single interactive reading experience to demonstrate core functionality and test user engagement. This pilot application is expected to be distributed through the Apple iOS App Store and will incorporate AI-enabled features such as narrative generation support, visual content creation, and interactive dialogue systems. Feedback and performance data from this pilot will inform the development of a broader platform that would allow third-party creators to develop and publish their own interactive narrative content using the Company’s AI-powered tools. However, the Company is in the early stages of development, and there is no assurance of commercial success or significant future revenue from this platform.

Monetization for the interactive reading platform is anticipated through content access fees, in-application purchases, and potential creator revenue-sharing arrangements. Users may pay for premium interactive stories or additional content. As the platform matures, the Company may introduce tools for third-party creators, potentially receiving a portion of the revenue generated from their content.

The Company expects to continue incurring significant operating cash outflows to support its operations, particularly due to ongoing investments in technology infrastructure, artificial intelligence capabilities, and product development for its new platform. Research and development expenses increased to approximately $2.3 million ³⁵ for the year ended December 31, 2025, from approximately $0.8 million ³⁶ in 2024, reflecting increased inputs into the interactive fiction story platform. The timing and magnitude of these investments are expected to affect operating expenses and overall financial performance.

Regarding capital allocation, the Board of Directors approved a share repurchase program on February 17, 2026, authorizing the Company to repurchase up to $100 million ³⁷ of its common stock. This program expires on August 17, 2026. The Company also has an At-The-Market Issuance Sales Agreement from February 10, 2025, allowing it to sell up to $10,000,000 ³⁸ of common stock. Additionally, a Common Stock Purchase Agreement dated May 11, 2025, provides the right to require an investor to purchase up to $300,000,000 ³⁹ worth of common stock. The Company plans to use proceeds from this offering, if any, to invest in Bitcoin and for general corporate purposes.

The Company's ability to continue as a going concern is dependent upon its ability to obtain additional financing and generate sufficient revenues. The CEO has executed a Letter of Support in March 2026, agreeing to provide continuing financial support for at least 12 months from the issuance date of the consolidated financial statements for the year ended December 31, 2025.

The Company faces material risks including significant exposure to Bitcoin price volatility and regulatory uncertainty due to its substantial holdings of 7,500 ⁴⁰ units of Bitcoin as a long-term digital asset reserve, which could materially and adversely affect its financial condition. The Company does not currently generate revenues from its core business operations and its ability to continue as a going concern is dependent on raising additional capital and generating future revenues, with no assurance that such capital or revenues will be available on acceptable terms or at all. Operational risks include potential e-commerce fraud, which could negatively impact profitability, and significant reliance on the TikTok platform for inventory management, client services, and live streaming channels, making operations vulnerable to TikTok downtime. Furthermore, the evolving nature of AI technologies presents risks, as flaws or inappropriate usage could negatively impact the Company's business and reputation. The Company also faces risks related to its early-stage development of the interactive reading platform, including the ability to attract creators and users, and achieve market acceptance and monetization. Geopolitical and regulatory risks associated with its operations in China, particularly for its subsidiary Shanghai Xianzhui, include potential changes in PRC laws and regulations, capital controls, and cybersecurity review requirements, which could limit the ability to transfer funds or affect the value of its common stock. The Company has previously failed to comply with Nasdaq continued listing requirements, such as the minimum bid price and minimum stockholders' equity, and may face delisting if it cannot maintain compliance, which would adversely affect liquidity and market price.

Management's message to shareholders emphasizes a strategic transition towards leveraging artificial intelligence and virtual content generation technologies to enter the interactive reading and narrative entertainment market, moving away from its online livestreaming gaming business which was discontinued in January 2025. The Company is focused on developing a platform that enables creators to produce interactive, game-like reading experiences, supported by AI-powered content creation tools and interactive dialogue systems. Management explicitly states that the Company is in the early stages of development for this platform and there can be no assurance that the product will achieve commercial success or generate significant revenue in the future. A key strategic priority is to attract creators and users to this new platform, with anticipated monetization through content access fees, in-application purchases, and potential creator revenue-sharing arrangements. Another strategic priority is to strengthen the Company's reserves and presence in the decentralized finance ecosystem through its crypto asset treasury strategy, as evidenced by the acquisition of Pallas Capital Holding Ltd and its 7,500 ⁴¹ units of Bitcoin. Management also highlights the ongoing need for additional capital to sustain operations, with the CEO having provided a Letter of Support in March 2026, agreeing to provide continuing financial support for at least 12 months ⁴² from the issuance date of the consolidated financial statements for the year ended December 31, 2025.