UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-37513

GD CULTURE GROUP LIMITED

(Exact name of registrant as specified in its charter)

Nevada		47-3709051
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

22F - 810 Seventh Avenue,
New York, NY 10019		10019
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +1-347- 2590292

Not applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001		GDC		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 14, 2024, there were 11,167,294 shares of the Company’s common stock issued and outstanding.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	1

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40

ITEM 4.	CONTROLS AND PROCEDURES	41

PART II.	OTHER INFORMATION	42

ITEM 1.	LEGAL PROCEEDINGS	42

ITEM 1A.	RISK FACTORS	42

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	42

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	42

ITEM 4.	MINE SAFETY DISCLOSURES	42

ITEM 5.	OTHER INFORMATION	42

ITEM 6.	EXHIBITS	42

CAUTIONARY NOTE REGARDING

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that may be deemed to be “forward-looking statements” within the meaning of the federal securities laws. These statements relate to anticipated future events, future results of operations and or future financial performance. In some cases, you can identify forward-looking statements by their use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “ought to,” “plan,” “possible,” “potentially,” “predicts,” “project,” “should,” “will,” “would,” negatives of such terms or other similar terms. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements relating to:

●

our goals and strategies;

●

our future business development, results of operations and financial condition;

●

our estimates regarding expenses, future revenues, capital requirements and our need for additional financing;

●

our estimates regarding the market opportunity for our services;

●

the impact of government laws and regulations;

●

our ability to recruit and retain qualified personnel;

●

our failure to comply with regulatory guidelines;

●

uncertainty in industry demand;

●

general economic conditions and market conditions in the financial services industry;

●

future sales of large blocks or our securities, which may adversely impact our share price; and

●

depth of the trading market in our securities.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties, including those described in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and elsewhere in this Quarterly Report on Form 10-Q.

You should not unduly rely on any forward-looking statements. Although we believe that the expectations reflected in the forward- looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q, to conform these statements to actual results or to changes in our expectations.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

UNAUDITED INTERIM consolidated financial statements AND SUPPLEMENTARY DATA

Index to unaudited interim consolidated financial statements

	Page
Unaudited Interim Consolidated Financial Statements:
Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	2
Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months ended September 30, 2024 and 2023 (Unaudited)	3
Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months ended September 30, 2024 and 2023 (Unaudited)	4
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2024 and 2023 (Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	7

GD CULTURE GROUP LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30,			December 31,
	2024			2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	31,969		$	5,175,518
Loan receivable		650,000			-
Other receivables, net		48,046			9,459
Convertible notes receivable		1,062,858			2,602,027
Prepaid and other current assets		157,370			1,290,890
Total current assets		1,950,243			9,077,894

EQUIPMENT, NET		8,963			12,511

RIGHT-OF-USE ASSETS, NET		1,453,125			1,561,058

OTHER ASSETS
Intangible assets, net		1,164,800			3,307,949
Other assets		250,740			250,740
Total other assets		1,415,540			3,558,689
Total assets	$	4,827,871		$	14,210,152

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Other payables and accrued liabilities	$	161,518		$	23,338
Other payables - related parties		172,361			20,833
Lease liabilities - current		406,414			358,998
Total current liabilities		740,293			403,169

OTHER LIABILITIES
Lease liabilities – non-current		1,181,309			1,317,678
Deferred tax liabilities		305,156			327,822
Total other liabilities		1,486,465			1,645,500
Total liabilities		2,226,758			2,048,669

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized, 10,171,024 and 5,453,416 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		1,017			545
Additional paid-in capital		82,759,075			77,530,221
Accumulated deficit		(80,663,233	)		(69,358,225	)
Accumulated other comprehensive income		218,812			175,306
Total GD Culture Group Limited shareholders’ equity		2,315,671			8,347,847
Noncontrolling interest		285,442			3,813,636
Total shareholders’ equity		2,601,113			12,161,483
Total liabilities and shareholders’ equity	$	4,827,871		$	14,210,152

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

GD CULTURE GROUP LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

	For the Three Months ended September 30,						For the Nine Months ended September 30,
	2024			2023			2024			2023
REVENUES
Software copyright	$	-		$	-		$	-		$	150,000
TOTAL REVENUES		-			-			-			150,000

COST OF REVENUES
Software copyright		-			-			-			-
TOTAL COST OF REVENUES		-			-			-			-

GROSS PROFIT		-			-			-			150,000

OPERATING EXPENSES
Selling expenses		2,909			-			2,402,909			-
General and administrative expenses		873,067			1,596,340			4,345,438			1,872,194
Research and development expenses		217,500			-			652,500			-
TOTAL OPERATING EXPENSES		1,093,476			1,596,340			7,400,847			1,872,194

LOSS FROM OPERATIONS		(1,093,476	)		(1,596,340	)		(7,400,847	)		(1,722,194	)

OTHER INCOME (EXPENSE)
Interest income		10,381			46,891			45,383			47,070
Interest expense		-			(52	)		-			(52	)
Other-than-temporary impairment losses		(2,756,986	)		-			(4,256,986	)		-
Gain from disposal of subsidiaries		-			100,000			-			100,000
TOTAL OTHER INCOME (EXPENSE)		(2,746,605	)		146,839			(4,211,603	)		147,018

LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS		(3,840,081	)		(1,449,501	)		(11,612,450	)		(1,575,176	)

LESS: INCOME TAX BENEFIT		(748	)		-			(22,666	)		-

LOSS FROM CONTINUING OPERATIONS		(3,839,333	)		(1,449,501	)		(11,589,784	)		(1,575,176	)
Net loss from continuing operations attributable to noncontrolling interest		(98,134	)		(102,485	)		(284,776	)		(102,485	)
Net loss from continuing operations attributable to shareholders of common stock		(3,741,199	)		(1,347,016	)		(11,305,008	)		(1,472,691	)

Discontinued operations:
Loss on disposal, net of taxes		-			(230	)		-			(230	)
Loss from discontinued operations, net of taxes		-			(2,081,029	)		-			(2,132,161	)

NET LOSS	$	(3,839,333	)	$	(3,530,760	)	$	(11,589,784	)	$	(3,707,567	)
Net loss attributable to noncontrolling interest		(98,134	)		(102,485	)		(284,776	)		(102,485	)
Net loss attributable to shareholders of common stock		(3,741,199	)		(3,428,275	)		(11,305,008	)		(3,605,082	)

OTHER COMPREHENSIVE INCOME (LOSS)
- Foreign currency translation adjustment		9,961			4,291			(9,950	)		(107,992	)
- Fair value changes of convertible note receivables		(106	)		-			(39,169	)		-
COMPREHENSIVE LOSS, net of tax	$	(3,829,478	)	$	(3,526,469	)	$	(11,638,903	)	$	(3,815,559	)
Comprehensive loss attributable to noncontrolling interest		(95,478	)		(102,485	)		(377,401	)		(102,485	)
Comprehensive loss attributable to shareholders of common stock		(3,734,000	)		(3,423,984	)		(11,261,502	)		(3,713,074	)

WEIGHTED AVERAGE NUMBER OF COMMON STOCKS
Basic and diluted		10,453,319			3,053,563			9,065,183			2,447,446

Loss per share from continuing operations
Basic and diluted	$	(0.36	)	$	(0.44	)	$	(1.25	)	$	(0.60	)
Loss per share from discontinued operations
Basic and diluted	$	(0.00	)	$	(0.68	)	$	(0.00	)	$	(0.87	)
Loss per share available to common shareholders
Basic and diluted	$	(0.36	)	$	(1.12	)	$	(1.25	)	$	(1.47	)

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

GD CULTURE GROUP LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

For the three and nine months ended September 30, 2024

									Additional						Accumulated Other			Total GD Culture Group Limited			Non			Total
	Preferred Stock				Common Stock				Paid-in			Accumulated			Comprehensive			Shareholders’			controlling			Shareholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Income			Equity			Interest			Equity
Balance, January 1, 2024		-	$	-		5,453,416	$	545	$	77,530,221		$	(69,358,225	)	$	175,306		$	8,347,847		$	3,813,636		$	12,161,483
Net loss		-		-		-		-		-			(3,978,628	)		-			(3,978,628	)		(178,911	)		(4,157,539	)
Issuance of common stock for Cash		-		-		810,277		81		829,798			-			-			829,879			-			829,879
Issuance of common stock for acquisition of 13.33% noncontrolling interest of Shanghai Xianzhui		-		-		400,000		40		3,150,753			-			-			3,150,793			(3,150,793	)		-
Exercise of pre-funded warrants		-		-		567,691		57		597			-			-			654			-			654
Exercise of November 2023 Registered Warrants		-		-		709,877		71		(71	)		-			-			-			-			-
Foreign currency translation		-		-		-		-		-			-			78,891			78,891			(94,000	)		(15,109	)
Fair value changes of convertible notes receivable		-		-		-		-		-			-			54,849			54,849			-			54,849
Balance, March 31, 2024		-	$	-		7,941,261	$	794	$	81,511,298		$	(73,336,853	)	$	309,046		$	8,484,285		$	389,932		$	8,874,217
Net loss		-		-		-		-		-			(3,585,181	)		-			(3,585,181	)		(7,731	)		(3,592,912	)
Issuance of common stock for acquisition of copyright		-		-		1,560,000		156		1,247,844			-			-			1,248,000			-			1,248,000
Foreign currency translation		-		-		-		-		-			-			(3,521	)		(3,521	)		(1,281	)		(4,802	)
Fair value changes of convertible notes receivable		-		-		-		-		-			-			(93,912	)		(93,912	)		-			(93,912	)
Balance, June 30, 2024		-	$	-		9,501,261	$	950	$	82,759,142		$	(76,922,034	)	$	211,613		$	6,049,671		$	380,920		$	6,430,591
Net loss		-		-		-		-		-			(3,741,199	)		-			(3,741,199	)		(98,134	)		(3,839,333	)
Exercise of pre-funded warrants		-		-		577,007		58		(58	)		-			-			-			-			-
Exercise of February 2021 Registered Warrants		-		-		92,756		9		(9	)		-			-			-			-			-
Foreign currency translation		-		-		-		-		-			-			7,305			7,305			2,656			9,961
Fair value changes of convertible notes receivable		-		-		-		-		-			-			(106	)		(106	)		-			(106	)
Balance, September 30, 2024		-	$	-		10,171,024	$	1,017	$	82,759,075		$	(80,663,233	)	$	218,812		$	2,315,671		$	285,442		$	2,601,113

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

GD CULTURE GROUP LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

For the three and nine months ended September 30, 2023

											Additional			Stock		Accumulated Deficit					Accumulated Other			Total GD Culture Group Limited			Non-			Total
	Preferred Stock				Common Stock						Paid-in			Subscription		Statutory					Comprehensive			Shareholders’			Controlling			Shareholders’
	Shares		Amount		Shares			Amount			Capital			Receivable		Reserves		Unrestricted			Income			Equity			Interest			Equity
Balance, January 1, 2023		-	$	-		1,844,877		$	184		$	60,124,087		$	-	$	4,467	$	(56,841,074	)	$	179,460		$	3,467,124		$	-		$	3,467,124
Net loss		-		-		-			-			-					-		(21,309	)		-			(21,309	)		-			(21,309	)
The cancellation of the common stock		-		-		(133,333	)		(13	)		(947,987	)		-		-		-			-			(948,000	)		-			(948,000	)
Foreign currency translation		-		-		-			-			-			-		-		-			10,188			10,188			-			10,188
Balance, March 31, 2023		-	$	-		1,711,544		$	171		$	59,176,100		$	-	$	4,467	$	(56,862,383	)	$	189,648		$	2,508,003		$	-		$	2,508,003
Net loss		-		-		-			-			-			-		-		(155,498	)		-			(155,498	)		-			(155,498	)
Issuance of common stock for Cash		-		-		1,154,519			115			8,618,125			-		-		-			-			8,718,240			-			8,718,240
Issuance of common stock for acquisition right, title, and interest in and to the certain software copyright		-		-		187,500			19			749,981			-		-		-			-			750,000			-			750,000
Foreign currency translation		-		-		-			-			-			-		-		-			(122,471	)		(122,471	)		-			(122,471	)
Balance, June 30, 2023		-	$	-		3,053,563		$	305		$	68,544,206		$	-	$	4,467	$	(57,017,881	)	$	67,177		$	11,698,274			-			11,598,274
Net loss		-		-		-			-			-			-		-		(3,428,275	)		-			(3,428,275	)		(102,485	)		(3,530,760	)
Contribution by noncontrolling interest shareholder		-		-		-			-			-			-		-		-			-			-			5,486,133			5,486,133

SEC Form 10-Q filed by GD Culture Group Limited