GDC 10-K & 10-Q changes, risk factors and insider trading

Under the laws of the British Virgin Islands, our BVI subsidiary and a direct subsidiary of GDC, Citi Profit, may pay a dividend to GDC out of profit, provided that in no circumstances may a dividend be paid if this would result in Citi Profit being unable to pay its debts due in the ordinary course of business. Under the laws of the British Virgin Islands, our BVI subsidiary, Pallas, may pay a dividend to GDC out of profit, provided that in no circumstances may a dividend be paid if this would result in Pallas being unable to pay its debts due in the ordinary course of business.

Under PRC laws and regulations, our PRC subsidiaries, Highlight WFOE (a direct subsidiary of Citi Profit), and Shanghai Xianzhui (a direct subsidiary of Highlight WFOE), may pay dividends only out of itstheir accumulated profits as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE.

Under PRC law, Highlight WFOE and Shanghai Xianzhui may be funded through capital contributions by itstheir immediate parent company or loans, subject to satisfaction of applicable government registration and approval requirements. Before providing loans to our PRC subsidiaries, we will be required to make filings about details of the loans with the SAFE in accordance with relevant PRC laws and regulations.

GDC is permitted under the laws of Nevada to provide funding to Citi Profit and Pallas through capital contributions or to other companies within our corporate structure through loans without restrictions on the amount of the funds and such funding is not subject to government registration or filing requirements under the laws of the Nevada.

Prior to September 28, 2022, Makesi IoT Technology (Shanghai) Co., Ltd., a then indirect subsidiary of the Company (“Makesi WFOE”), had a series of contractual arrangement with Sichuan Wuge Network Games Co., Ltd. (“Wuge”) and its shareholders that established a variable interest entity (the “VIE”) structure. For accounting purposes, Makesi WFOE was the primary beneficiary of Wuge. Accordingly, Accordingly, under accounting principles generally accepted in the United States of America (“U.S. GAAP”), the Company treated Wuge as the consolidated affiliated entity and hashad consolidated Wuge’s financial statements prior to September 28, 2022. Wuge focused its its business on research, development and application of Internet of Things (IoT) and electronic tokens Wuge digital door signs. On September 28, 2022, Makesi WFOE entered into a termination agreement with Wuge and the shareholders of Wuge to terminate the VIE Agreements and to cancel the shares previously issued to the shareholders of Wuge, based on the average closing price of $0.237 per share of the Company during the 30 trading days immediately prior to the date of the termination agreement. As a result of such termination, the Company no longer treats Wuge as a consolidated affiliated entity or consolidates the financial results and balance sheet of Wuge in the Company’s consolidated financial statements under U.S. GAAP.

Prior to June 26, 2023, Makesi WFOE had a series of contractual arrangement with Shanghai Yuanma Food and Beverage Management Co., Ltd. (“Yuan Ma”) and its shareholders that established a VIE structure. For accounting purposes, Makesi WFOE was the primary beneficiary of Yuan Ma. Accordingly, under U.S. GAAP, the Company treated Yuan Ma as the consolidated affiliated entity and hashad consolidated Yuan Ma’s financial results in the Company’s consolidated financial statements prior to June 26, 2023. On June 26, 2023, the Company entered into a share purchase agreement with a buyer unaffiliated with the Company. Pursuant to the agreement, the Company agreed to sell and the buyer agreed to purchase all the issued and outstanding equity interest in TMSR Holdings Limited (“TMSR HK”), which owned 100% equity interest in Makesi WFOE. The purchase price for the transaction contemplated by the Agreement was $100,000. The sale of TMSR HK did not have any material impact on the Company’s consolidated financial statements.

Prior to September 26, 2023, Highlight WFOE had a series of contractual arrangement with Highlight Media and its shareholders that established a VIE structure. For accounting purposes, Highlight WFOE was the primary beneficiary of Highlight Media. Accordingly, under U.S. GAAP, the Company treated Highlight Media as the consolidated affiliated entity and hashad consolidated Highlight Media’s financial results in the Company’s financial statements prior to September 26, 2023. Highlight Media was an integrated marketing service agency, focusing on enterprise brand management, crisis public relations, intelligent public opinion monitoring, media PR, financial and economic we-media self-media operation, digital face application, large-scale exhibition services and other businesses. On September 26, 2023, Highlight WFOE entered into a termination agreement with Highlight Media and the shareholders of Highlight Media to terminate the VIE Agreements and sold the interest in the VIE Agreements for a purchase price of $100,000. As a result of such termination, the Company no longer treats Highlight Media as a consolidated affiliated entity or consolidates the financial results and balance sheet of Highlight Media in the Company’s consolidated financial statements under U.S. GAAP.

During the three months ended March 31, 2025 and the fiscal year ended December 31, 2024,2025, thereGDC wasmade a cash transfer of $11,000 to AI Catalysis Corp. Other than this transfer, no transfer ofother assets were transferred between GDC and its subsidiaries. No amounts owed under any previous VIE agreements were settled. There were no cash transfers to or from the VIEs. GDC did not make any dividends or distributions to U.S. investors.

During the fiscal years ended December 31, 2023,2024, GDCthere transferredwas ano totaltransfer of $2,100,000assets tobetween GDC and its subsidiary AI Catalysis Corp as capital contribution. No subsidiary made any dividends or distributions to GDC.subsidiaries. No amounts owed under any previous VIE agreements were settled. There were no cash transfers to or from the VIEs. GDC did not make any dividends or distributions to U.S. investors.

As of the date of thisIf report, we have no intention of distributing any earnings as dividends to our investors or to settle amounts owned under the previous VIE agreements. If our subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. See “Item 1. Business – Asset Transfer between our Company and our Subsidiaries.”

China passed theThe PRC Enterprise Income Tax Law, or the EIT Law, and its implementing rules,rules both of which became effective on January 1, 2008.2008, and were most recently amended in 2018 and 2019, respectively. Under the EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise.

Uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice,China could limit the legal protection available to you and us.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, however, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy in the PRC legal system than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies, internal rules, and regulations that may have retroactive effect and the interpretation and implementation of which may changecontinuously quickly with little advance notice.evolve. As a result, Shanghai Xianzhui may not be aware of its violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainties over the scope and effect of the contractual, property (including intellectual property), and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect Shanghai Xianzhui’s business and impede Shanghai Xianzhui’s ability to continue its operations.

Given the PRC government’s role in regulating industrial development, the Chinese government’sevolving significantregulatory oversight and discretion over the conduct of the business of Shanghai Xianzhui, the Chinese government may intervene or influence its operations at any time, whichframework could result in a material change in the operations of Shanghai Xianzhui and/or the value of our common stock.

The Chinese PRC government has significantcontinuous oversight and discretion over the conductregulatory framework of Shanghaivarious Xianzhuiindustries and may interveneguide orand influence itsregulate operations atin accordance anywith time aslaws theand government deems appropriateregulations to further regulatory, political,macroeconomic and societal goals, which could result in a material change in the operations operations of Shanghai Xianzhui and/or the value of our common stock.

The Chinese PRC government has exercisedplays a significant role in regulating industrial development and continues to exercise substantial control over virtually every sector ofshaping the Chinesemacroeconomic economyenvironment through regulationimplementing relevant and state ownership.policies. Under the current government leadership, the government of the PRC has been pursuing reform policies which have adversely affected China-based operating companies whose securities are listed in the United States, with significant policies changes being made made from time to time without notice. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our contractual contractual arrangements with borrowers in the event of the imposition of statutory liens, bankruptcy or criminal proceedings. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, policies in the future could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

On February 17, 2023, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC. If a domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. As a listed company, we believe that neither the Company nor the PRC subsidiaries are required to fulfill filing procedures with the CSRC to continue to offer our our securities, or continue listing on the Nasdaq Capital Market, considering that (i) the operating income and total profit of the Company’s subsidiaries that were established in China for the year ended December 31, 2023 do not account for more than 50% of the operating income and total profit in our consolidated financial statements for the same period, (ii) our main business is not conducted within China, and and (iii) the majority of our senior management personnel are not Chinese citizens or reside in China on a regular basis. Therefore, it is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that we are not required to complete the record filing requirement under the Trial Measures. However, there are substantial uncertainties regarding the interpretation and application of the M&A Rules, other PRC Laws and future PRC laws and regulations, and there can be no assurance that any governmental agency will not take a view that is contrary to or otherwise different from our belief stated herein. See “Risk Factors - Risk Factors Relating to Doing Business in China - The CSRC has released the Trial MeasuresMeasures. for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”). With such rules in effect, , the ChinesePRC governmentregulatory authorities may exertenhance more oversight supervision and controladministration over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to continue to offer our securities to investors and could cause the value of our securities to significantly decline or become worthless.”

Since July 2005, the RMB is no longer pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes inmanages the foreign exchange market market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen interventionits management in the foreign exchange market.

We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our vehicle buyerscustomers by increasing the prices of our products and services, our financial condition and results of operations would be materially and adversely affected.

In July 2014, SAFE promulgated the Circular on Issues Concerning Foreign Exchange Administration over the Overseas Investment and Financing and Roundtrip Investment by Domestic Residents via Special Purpose Vehicles, or “Circular 37”. According to Circular 37,37 and subsequent regulations, prior registration with the localqualified SAFE branchbanks is required for Chinese residents to contribute domestic assets or interests to offshore companies, known as Special Purpose Vehicles (“SPVs”). Circular 37 further requires amendment to a PRC resident’s registration in the event of any significant changes with respect to the SPV, such as an increase or decrease in the capital contributed by PRC individuals, share transfer or exchange, merger, division, or other material event. Further, foreign investment enterprises established by way of round-tripping shall complete the relevant foreign exchange registration formalities pursuant to the prevailing foreign exchange control provisions for direct investments by foreign investors, and disclose the relevant information such as actual controlling party of the shareholders truthfully.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009), and Amendment 9 (effective on November 1, 2015), 2015Amendment 10 (effective on November 4, 2017) and Amendment 11 (effective on March 1, 2021), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal information obtained during the course of performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017.

On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations.

In April 2020, the CAC and certain other PRC regulatory authorities promulgated the Cybersecurity Review Measures, which became effective in June 2020. Pursuant to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. On June 10, 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect on September 1, 2021. The Data Security Law also sets forth the data security protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits The costs of compliance with, and other burdens imposed by, CSLCyber Security Law and any other cybersecurity and related laws may limit the use and adoption of our products and services and could have an adverse impact on our business. On January 4, 2022, thirteen PRC regulatory agencies, namely, the CAC, the NDRC, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of State Security, the MOF, MOFCOM, SAMR, CSRC, the People’s Bank of China, the National Radio and Television Administration, National Administration of State Secrets Protection and the National Cryptography Administration, jointly adopted and published the Measures for Cybersecurity Review (2021), which became effective on February 15, 2022. The Measures for Cybersecurity Review (2021) required that, among others, in addition to “operator of critical information infrastructure” any “operator of network platform” holding personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review.

On July 10, 2021, the CAC issued a revised draft of the Measures for Cybersecurity Review for public comments (the “Review Measures”), and on December 28, 2021, the CAC, the NDRC, and several other administrations jointly issued the revised Measures for Cybersecurity Review, Review, or the Revised Review Measures, which became effective and has replaced the existing Measures for Cybersecurity Review on February 15, 15, 2022. According to the Revised Review Measures, if an “online platform operator” that is in possession of personal data of of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. Based on a set of Q&A published on the official website of the State Cipher Code Administration in connection with the issuance of the Revised Review Measures, an official of the said administration indicated that an online platform operator should apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators. GivenAs the recencyinterpretation ofand the issuanceimplementation of the Revised Review Measures Measures andare theircontinuously pending effectiveness, there is a general lack of guidance and substantialevolving, uncertainties exist with respect to their interpretation andapplication implementation.in specific practices. For example, it is unclear whether the requirement of cybersecurity review applies to follow-on offerings by an “online platform operator” that is in possession of personal data of more than one million users where the offshore holding company of such operator is already listed overseas. Furthermore, Furthermore,on September 24, 2024, the CACState releasedCouncil the draft ofpromulgated the Regulations on the Network Data Security Management in(the “Data NovemberSecurity 2021Management for public consultation,Regulations”), which amongbecame othereffective things,on stipulatesJanuary that1, a2025. data processor listed overseas must conduct an annual data security review by itself or by engaging a data security service provider and submit the annual data security review report for a given yearPursuant to the municipal cybersecurity department before January 31 of the following year. If the draft Regulations on Network Data Security Management areRegulations, network enacteddata inprocessing activities refer to activities such as the currentcollection, form,storage, we,use, asprocessing, antransmission, overseasprovision, listeddisclosure, and company,deletion willof bedata. requiredNetwork data processors refer to carryindividuals outor organizations that independently determine the purposes and methods an annualof data processing activities. Network data processors conducting any data processing activities that affect or may affect national security shall undergo national security review andin complyaccordance with the relevant reportingnational obligations.regulations.

It is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that we will not be subject to cybersecurity review with the CAC, given that: (i) Shanghai Xianzhui does not possess and does not anticipate that it will possess a large amount of personal information in our business operations and operations, (ii) data processed in Shanghai Xianzhui’s business does not have a bearing on national security and thus may not be classified as core or important data by the authorities.authorities, and (iii) any cross-border data transfers conducted in our ordinary course of business fall under the exemptions provided by the Provisions on Promoting and Regulating Cross-Border Data Flows. In addition, for the same reasons, we are not subject to network data security review by the CAC pursuant to the Data Security Management Regulations. In addition, for the same reasons, we are not subject to network data security review by the CAC if the Draft Regulations on the Network Data Security Administration are enacted as proposed. However, the definition of “network platform operator” is unclear and it is also unclear on how it will be interpreted and implemented by the relevant PRC governmental authorities.

It is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that because the Company is not a company registered and formed in the territory of China, its continued listing on Nasdaq and future offerings are not “direct overseas offering and listing of domestic enterprises” as defined under the Trial Measures. Furthermore, according to Article 2 of the Trial Measures, the “indirect overseas offering and listing of domestic enterprises” refers to the overseas offering and listing of enterprises whose main business activities are in China, in the name of enterprises registered overseas, which offering and listing are based on the equity, assets, income or other similar rights and interests of the domestic enterprises. According to Article 15 of the Trial Measures, if the issuer meets both of the following conditions, the overseas offerings and listings shall be determined as an “indirect overseas offering and listing of domestic enterprises”: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic enterprises; and; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in China.

The Company does not meet both the requirements under Article 15 of the Trial Measures and therefore its continued listing on Nasdaq and future offerings are not an “Indirect overseas offering and listing of domestic enterprises”, considering that (i) the operating income and total profit of the Company’s subsidiaries that were established in China for the year ended December 31, 2023 do not account for more than 50% of the operating income and total profit in our consolidated financial statements for the same period, (ii) our main business is not conducted within China, and (iii) the majority of our senior management personnel are not Chinese citizens or reside in China on a regular basis. Therefore, it is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that we are not required to complete the record filing requirement under the Trial Measures. However, if we inadvertently conclude that such filing procedures are not required, or applicable laws, regulations, or interpretations change such that we are required to complete the filing procedures in the future, we may be subject to investigations by the regulators, fines or penalties, ordered to suspend our relevant operations and rectify any non-compliance, prohibited from engaging in relevant business or conducting any offering, and these risks could result in a material adverse change in our operations and/or the value of our common stock, and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

As of the date of this report, Report, it is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that our PRC operating subsidiaries have received all requisite permissions or approvals to operate the business and no such permissions or approvals have been denied. It is also the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that except for the business license mentioned in “Item 1. Business – Governmental Regulations in the PRC – Regulations on Business License” in this report,Report, our PRC operating subsidiaries are not required to obtain any other permissions or approvals from any Chinese authorities to operate the business. It is the further opinion of our PRC counsel, Jiangsu Junjin Law Firm, that nounder relevantcurrently effective PRC laws orand regulations in effect require thatregulations, we are not required to obtain permission fromor complete filing procedures with any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations. See “Item 1. Business – Governmental Regulations in the PRC – Regulations on Mergers & Acquisitions and Overseas Listings” and “– Regulations on Cybersecurity Review” in this report.Report. However, However,the interpretation and implementation of applicable laws and regulations mayare becontinuously tightened,evolving, and new laws or regulations may be introduced to impose additional government approval, license, and permit requirements. If (i) we or our subsidiaries do not receive or maintain all such required permissions or approvals to operate our business, (ii) we or our subsidiaries inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to to obtain such permissions or approvals in the future, we may face sanctions, including fines and penalties, by the CAC, CSRC, or other PRC PRC regulatory agencies, our PRC subsidiaries’ ability to pay dividends outside of the PRC could be limited, our operations could be be adversely affected, directly or indirectly, we could be required to restructure our operations to comply with such regulations or potentially potentially cease operations in the PRC entirely, our ability to offer, or continue to offer, securities to investors could be significantly limited limited or completely hindered and the value of our securities might significantly decline or be worthless.

The CSRC has released the Trial MeasuresMeasures. for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”). With such rules in effect, the ChinesePRC governmentregulatory authorities may exertenhance more oversightsupervision and control administration over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to continue to offer our securities to investors and could cause the value of our securities to significantly decline or become worthless.

It is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that because the Company is not a company registered and formed in the territory of China, its continued listing on Nasdaq and future offerings are not “direct overseas offering and listing of domestic enterprises” as defined under the Trial Measures. Furthermore, according to Article 2 of the Trial Measures, the “indirect overseas offering and listing of domestic enterprises” refers to the overseas offering and listing of enterprises whose main business activities are in China, in the name of enterprises registered overseas, which offering and listing are based on the equity, assets, income or other similar rights and interests of the domestic enterprises. According to Article 15 of the Trial Measures, if the issuer meets both of the following conditions, the overseas offerings and listings shall be determined as an “indirect overseas offering and listing of domestic enterprises”: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic enterprises; and; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in China.

The Company does not meet both the requirements under Article 15 of the Trial Measures and therefore its continued listing on Nasdaq and future offerings are not an “Indirect overseas offering and listing of domestic enterprises”, considering that (i) the operating income and total profit of the Company’s subsidiaries that were established in China for the year ended December 31, 2023 do not account for more than 50% of the operating income and total profit in our consolidated financial statements for the same period, (ii) our main business is not conducted within China, and (iii) the majority of our senior management personnel are not Chinese citizens or reside in China on a regular basis. Therefore, it is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that we are not required to complete the record filing requirement under the Trial Measures. However, if we inadvertently conclude that such filing procedures are not required, or applicable laws, regulations, or interpretations change such that we are required to complete the filing procedures in the future, we may be subject to investigations by the regulators, fines or penalties, ordered to suspend our relevant operations and rectify any non-compliance, prohibited from engaging in relevant business or conducting any offering, and these risks could result in a material adverse change in our operations and/or the value of our common stock, and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable ActHFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. AlthoughThese thedevelopments could auditadd report included in this annual report was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unableuncertainties to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection and our common stock may be delisted or prohibited from trading.offering.

OnOur Decemberprevious 15,auditor, 2022,HTL International, the PCAOB determined thatLLC, the PCAOB was able to secure complete access to inspect and investigateindependent registered public accounting firmsfirm headquarteredthat issued the audit report for the fiscal year ended December 31, 2024, inwhich mainlandis Chinaregistered andwith Hongthe KongPCAOB and(PCAOB votedID: 7000), is subject to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s accesslaws in the future,United States pursuant to which the PCAOB willconducts regular considerinspections to assess its compliance with applicable professional standards. Our current auditor, GGF, the needindependent registered public accounting firm that issued the audit report included in our Annual Report, which is registered with the PCAOB (PCAOB ID: 2729), is subject to issuelaws ain newthe determination. OurUnited auditor,States HTLpursuant International,to LLC, with their headquarter at 12 Greenway Plaza Suite 1100, Houston, Texas 77046, has been inspected bywhich the PCAOB on aconducts regular basisinspections asto well.assess its compliance with applicable professional standards. If it is later determined that the PCAOB is unable to inspect or investigate our auditor auditors completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate. Moreover, if trading in our securities is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, an exchange may determine to delist our securities.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in August 2006 and amended in 2009, and some other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some instances that the MOCMOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Moreover, the Anti-Monopoly Law promulgated by the SCNPC effective in 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds (i.e., during the previous fiscal year, (i) the total global turnover of all operators participating in the transaction exceeds RMB RMB1012 billion and at least two of these operators each had a turnover of more than RMB400RMB 800 million within China, or (ii) the total turnover within China of all the operators participating in the concentration exceeded RMB 24 billion, and at least two of these operators each had a turnover of more than RMB 400800 million within China) must be cleared by the State Administration for Market Regulation (SAMR, which has taken over the anti-monopoly review function from MOFCOM) before they can be completed.

Moreover, the Anti-Monopoly Law requires that the MOCMOFCOM shall be notified in advance of any concentration of undertaking if certain thresholds are triggered. In addition, the security review rules issued by the MOCMOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOC, MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the MOCMOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

As of the date of this report, Report, it is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that our PRC operating subsidiaries have received all requisite permissions or approvals to operate the business and no such permissions or approvals have been denied. It is also the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that except for the business license mentioned in “Item 1. Business – Governmental Regulations in the PRC – Regulations on Business License” in this report,Report, our PRC operating subsidiaries are not required to obtain any other permissions or approvals from any Chinese authorities to operate the business. It is the further opinion of our PRC counsel, Jiangsu Junjin Law Firm, that no relevant PRC laws or regulations in effect require that we obtain permission from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations. See “Item 1. Business – Governmental Regulations in the PRC – Regulations on Mergers & Acquisitions and Overseas Listings” and “– Regulations on Cybersecurity Review” in this report.Report. However, applicable laws and regulations may be tightened, and new laws or regulations may be introduced to impose additional government approval, license, and permit requirements. If (i) we or our subsidiaries do not receive or maintain all such required permissions or approvals to operate our business, (ii) we or our subsidiaries inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we may face sanctions, including fines and penalties, by the CAC, CSRC, or other PRC regulatory agencies, our PRC subsidiaries’ ability to pay dividends outside of the PRC could be limited, our operations could be adversely affected, directly or indirectly, we could be required to restructure our operations to comply with such regulations or potentially cease operations in the PRC entirely, our ability to offer, or continue to offer, securities to investors could be significantly limited or completely hindered and the value of our securities might significantly decline or be worthless.

We conduct part of our operations in China. As such, the PRC government may exercise significant oversight and discretion over the conduct of our operating subsidiaries’ business and may interveneguide inand or influenceregulate their operations atin anyaccordance time,with relevant laws and regulations, which could result in a material change in their operations and/or the value of our ordinary shares. ChangesThe ininterpretation and implementation of the policies, regulations, rules, and the enforcement of laws of the PRC government may alsocontinuously be implemented quickly with little advance notice.evolve. Therefore, our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.

GDC conducts its operations and operates its business in both United States and China by itself and through its subsidiaries, AI Catalysis Corp., a Nevada corporation, and Shanghai Xianzhui Technology Co., Ltd., a company incorporated in China. The majority of the Company’s operation is in the United States. As of the date of this report,Report, we are not materially affected by recent statements by the PRC government indicating an intention to exertenhance moresupervision oversight and controladministration over offerings that are conducted overseas and/or foreign investment in China-based issuers. However, due to certain long arm provisions in the current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in the PRC. The PRC government may choose to exercise significant oversight and discretion, and the regulations to which our operating subsidiaries are subject may changecontinuously rapidlyevolve and with little notice to us and our operating subsidiaries or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our and our operating subsidiaries’ current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

We are aware that recently, the PRC government initiated a series ofinitiates regulatory actions and statements to regulate business operations in certain areas in the PRC withfrom littletime advance notice,to time, including crackingenhancing downsupervision onover illegal activities in the securities market, enhancing supervision over China-based companies companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

The PRC government may intervene or influenceregulate our operating subsidiaries’ operations at any time and may exertenhance more controlsupervision over offerings conducted overseas and foreign investment in China-based issuers, which may result in a material change in our operating subsidiaries’ operations and/or the value of our ordinary shares. Any legal or regulatory changes that restrict or otherwise unfavorably impact our operating subsidiaries’ subsidiaries’ ability to conduct their business could decrease demand for their services, reduce revenues, increase costs, require our operating subsidiaries to obtain more licenses, permits, approvals or certificates, or subject them to additional liabilities. To the extent any new or more stringent measures are implemented, our operating subsidiaries’ business, financial condition and results of operations could be adversely affected, and the value of our ordinary shares could decrease or become worthless.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which became effective on March 31, 2023. See “—The CSRC has released the Trial Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”). With such rules in effect, the PRC Chineseregulatory government authorities may exertenhance more oversightsupervision and controladministration over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to continue to offer our securities to investors and could cause the value of our securities to significantly decline or become worthless.”

On December 28, 2021, the CAC, the NDRC, and several other administrations jointly adopted and published the new Measures for CybersecurityRevised Review (“NewMeasures, Measures”),which which came into effect on February 15, 2022. See “— Shanghai Xianzhui may become subject to a variety of laws and regulations in in the PRC regarding privacy, data security, cybersecurity, and data protection. Shanghai Xianzhui may be required to suspend its business, be liable for improper use or appropriation of personal information provided by our customers and face other penalties.”

As of the date of this report,Report, it is the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that our PRC operating subsidiaries have received all requisite permissions or approvals to operate the business and no such permissions or approvals have been denied. It is also the opinion of our PRC counsel, Jiangsu Junjin Law Firm, that except for the business license mentioned in “Item 1. Business – Governmental Regulations in the PRC – Regulations on Business License” in this report,Report, our PRC operating subsidiaries are not required to obtain any other permissions or approvals from any Chinese authorities to operate the business. It is the further opinion of our PRC counsel, Jiangsu Junjin Law Firm, that no relevant PRC laws or regulations in effect require that we obtain permission from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations. See “Item 1. Business – Governmental Regulations in the PRC – Regulations on Mergers & Acquisitions and Overseas Listings” and “– Regulations on Cybersecurity Review” in this report.Report. However, applicable laws and regulations may be tightened, and new laws or regulations may be introduced to impose additional government approval, license, and permit requirements. If (i) we or our subsidiaries do not receive or maintain all such required permissions or approvals to operate our business, (ii) we or our subsidiaries inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we may face sanctions, including fines and penalties, by the CAC, CSRC, or other PRC regulatory agencies, our PRC subsidiaries’ ability to pay dividends outside of the PRC could be limited, our operations could be adversely affected, directly or indirectly, we could be required to restructure our operations to comply with such regulations or potentially cease operations in the PRC entirely, our ability to offer, or continue to offer, securities to investors could be significantly limited or completely hindered and the value of our securities might significantly decline or be worthless.

The unwinding and disposal of our previous VIE structure may not be liability-free and we may be seemeddeemed to be in violation of PRC laws regulating our industry and operations.

The viability of our business largely depends on TikTok users engaging with our live streaming channels, which includes our live streaming e-commerce platforms. Our revenue is generated through product purchases, e-gift or token transactions with our live hosts. To increase user spending, we must diversify our e-commerce product catalog, increase the frequency of live streaming sessions, and collaborate with key opinion leaders (KOLs) to increase product sales. If we fail to attract new TikTok users or increase their average spending, it could have a significant negative impact on our business, financial stability, and operational performance.

We do not have insurance coverage. We’ve We have evaluated the risks associated with potential business disruptions, liabilities, loss or damage to our fixed assets (such as equipment and office furniture), the associated insurance costs, and the challenges of obtaining such coverage on commercially reasonable terms. Based on this assessment, it is not commercially practical for us to secure comprehensive insurance coverage for these risks. These circumstances could adversely impact our financial results.

Our growth strategy for is substantially dependent upon our ability to market our intended products and services successfully to prospective clients. Our intended products and services may not achieve significant market acceptance. If acceptance is achieved, it may not be sustained for any significant period of time. Failure of our intended products and services to achieve or sustain market acceptance could have a material adverse effect on our business, financial conditions and the results of our operations.

GD Culture Group Limited, formerly known as JM Global Holding Company, TMSR Holding Company Limited and Code Chain New Continent Limited, is a Nevada corporation and a holding company. The Company currently conducts its operations on virtual content production (the “Virtual Content Production”) through the Company and twoits subsidiaries,subsidiary, AI CatalysisCatalysis. andHistorically, Shanghaithe Xianzhui. The Company focuses itsCompany’s business mainly focused on 1)artificial AI-driven intelligence-driven digital human creation and customization; andas 2)well Liveas live streaming and e-commerce.e-commerce The company has relentlessly been focusing on serving its customers and creating value for them through the continual innovation and optimization of its products and services.activities. The Company’s current subsidiaries, Citi Profit, Highlight HK, Highlight WFOE, and previous subsidiaries, TMSR Holdings Limited (“TMSR HK”) and Makesi WFOE are holding companies with no material operations. The Company’s subsidiary Shanghai Xianzhui, previously engaged in marketing-related services but does not currently conduct business operations and has no material operating activities.

On February 10, 2025, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Univest Securities, LLC as the sales agent (the “February 2025 Offering”). Pursuant to the ATM Agreement, the Company may issue and sell from time to time, shares of its common stock having an aggregate offering price of not more than $10,000,000 through the sales agent or any of its sub-agent(s) or other designees, acting as sales agent. Up to the date the consolidated financial statements were issued, the Company has not issue issued or sellsold any shares under the ATM Agreement.

On March 4, 2025, the Company entered into a securities purchase agreement (the “March 2025 Securities Purchase Agreement”) with certain investor (thefor “Purchaser”) for the sale of 1,115,600 shares of common stock (the “Shares”) at $0.896379 per share (the “March 2025 Offering”), generating gross proceeds in the amount of $1,000,000, before deducting underwriter’s fees and accountable expenses and other estimated expenses. The Company plans to useused the proceeds from the offering for working capital purposes. Upon closing of the March 2025 Offering, the Company paid $90,000 cash for underwriting, which consists of a total cash fee of $70,000, equal to seven percent (7%) of the aggregate gross proceeds raised in the March 2025 Offering and reimbursement of reasonable fees and expenses of $20,000 for the underwriter’s legal counsel and due diligence analysis expenses.

On April May28, 31, 2024,2025, the Company entered into a software purchase agreement (the “Agreement”) with ShanxiGongzheng GangdongXu Culturaland MediaQing Co.,Wang (the Ltd.,“GXQW”), awho sellerare unaffiliated with the Company (the “Seller”).Company. Pursuant to the agreement,Agreement, the Company agreed to purchase and the Seller GXQW agreed to sell all of Seller’sGXQW’s right, title, and interest in and to the certain software.software (the “Chat Box”). The purchase price of the software shall be $1,248,000, payable in the form of an issuance of 1,560,0002,444,295 shares of common stock of the Company, valued at $0.80 per share. The Company plans to use the software to develop its AI business. On June 4, 2024, the Company issued 1,560,000 shares ofCompany’s common stock of the Company to the Seller’s designees and the transaction was completed.stock.

Our Ability to Grow MarketAttract PresenceCreators and Penetrate New MarketsUsers

The Company’s net loss decreasedincreased by approximately $0.2$172.8 million, or 1.6%,1223.4%, to approximately $186.9 million net loss for the year ended December 31, 2025, from approximately $14.1 million net loss for the year ended December 31, 2024, from approximately $14.3 million net loss for the year ended December 31, 2023.2024. The decreaseincrease was primarily driven by lowerthe operatingunrealized expenses, loss on fair value changes of digital assets as discussed above, and a reduction in the loss from discontinued operations. These factors were partially offset by ana increasedecrease in the impairment impairment of intangible assets and provisions for credit losses related to convertible notes and loan receivables.

The Company prepares its consolidated financial statements in accordance with U.S. GAAP. The preparation of these consolidated financial statements require requires the Company to make estimates, assumptions and judgments that can significantly impact the amounts the Company reports as assets, liabilities, revenue, costs and expenses and the related disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable under the circumstances. The Company’s actual results could differ significantly from these estimates under different assumptions and conditions. The Company has identified the following keycritical accounting estimates:estimates.

The Company’s determination of whether or not an indication of impairment exists at the cash generating unit level requires significant management judgment pertaining to intangible assets, including a software copyright of AI Box, which is used for online living-stream and a software copyright of a broadcast game (the “Tribal Light”), 55 digital humans and a software copyright of AIChat Box, which areis used for online interactive living-stream,entertainment scenarios, as well as the operating Right-of-useright-of-use (“ROU”) assets, including the offices of the Company. Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s intangible assets and ROU assets are impaired. Based on the evaluation, the Company recognized impairment losses in intangible assets of $852,800 and $2,755,659, respectively, for the years ended December 31, 2025 and 2024.

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with our unaudited condensed consolidated financial statements, and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Report. All monetary figures are presented in U.S. dollars, unless otherwise indicated.

On May 2, 2025, the Company entered into a securities purchase agreement (the “May 2025 Securities Purchase Agreement”) with certain investors for the sale of 1,115,6004,462 shares of common stock at approximately $0.524$131 per share and 9,380,58237,523 pre-funded warrants (the “May 2025 Pre-Funded Warrants”) at approximately $0.523$130.75 per warrant (the “May 2025 Offering”). As of MarchJune 31,30, 2026, Thethe Company received gross proceeds of approximately $4.5 million in proceeds for subscription of 1,115,6004,462 shares of its common stock and 7,468,53629,875 pre-funded warrants. The offering remains ongoing and has not yet been fully completed. Transaction costs incurred through theJune reporting30, date2026 included underwriter’s fees of $314,343 and a $20,000 reimbursement for the underwriter’s legal counsel and due diligence expenses. The Company used the proceeds from the offering for working capital purposes.

On OctoberJune 24, 2025,2026, the Company entered into a securities purchase agreementsagreement (the “OctoberJune 2025 Securities2026 Purchase Agreement”) with certain accreditedinstitutional investor,investors named thereto (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a privateregistered placementdirect offering (the “OctoberJune 20252026 Private PlacementOffering”), of an aggregate of 1,333,3341,037,206 shares of the Company’s common stockstock, at a purchase price of $2.10$5.25 per share, for gross proceeds in the amount of $2,800,000. approximately $5.45 million. The Company receivedexpects to receive net proceeds of approximately $2.5$4.9 million after deducting underwriter’s fees of $196,000$50,000 and other offering costs of $60,000.$80,000. The Company used the proceeds from the offering for working capital andpurposes. generalAs corporateof purposes.June 30, 2026, the Company fully received the $4.9 million under the June 2026 Offering.

Three Months Ended MarchJune 31,30, 2026 vs. MarchJune 31, 30, 2025

The Company’s operating expenses include selling and marketing expenses(“S&M”), general and administrative (“G&A”) expenses, research and development (“R&D”) expenses. GS&AM expenses increased by $408,927$700,000 from $937,877$300,000 for the three months ended MarchJune 31,30, 2025 to $1,346,804$1,000,000 for the three months ended MarchJune 31,30, 2026. The increase was mainly rise in brand marketing expenses and the Company’s increased inputs on marketing and advertising for its interactive reading and narrative entertainment platform. G&A expenses increased by $274,224 from $1,022,730 for the three months ended June 30, 2025 to $1,296,954 for the three months ended June 30, 2026. The increase was mainly due to the increase in the amortization of intangible assets. R&D expenses increased to $303,000 for the three months ended March 31, 2026, compared to $nil$553,000 for the three months ended MarchJune 31,30, 2026, compared to $233,333 for the three months ended June 30, 2025. The increase was mainly due to the Company increased inputs on research and development about its interactive fiction—story platform.

The Company’s other expenses increased to $162,385,371$49,310,042 during the three months ended MarchJune 31,30, 2026, compared to other income of $2,118$2,179 for the three months ended MarchJune 31, 30, 2025. The increase was mainly due to the unrealized loss on fair value changes of digital assets for the three months ended MarchJune 31, 30, 2026.

The Company’s net loss increased by approximately $163.1 $50.7 million, or 16684.1%,3379.4%, to approximately $164.1$52.2 million, for the three months ended MarchJune 31,30, 2026, from $977,510approximately $1.5 million for the three months ended MarchJune 31,30, 2025. The increase was primarily driven by the unrealized loss on fair value changes of digital assets as discussed above.

The following summarizes the key components of the Company’s cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025.

Net cash used in operating activities was approximately $0.6$12.3 million for the threesix months ended MarchJune 31,30, 2026, as compared to approximately $0.8$3.7 million net cash used in operating activities for the three months ended March 31, 2025. Net loss for the three months ended March 31, 2026 was approximately $164.1 million, as compared to approximately $1.0 million for the three months ended March 31, 2025. Adjustments to reconcile net loss to net cash used in operating activities increasedfor the six months ended June 30, 2025. Net loss for the six months ended June 30, 2026 was approximately $216.2 million, as compared to approximately $2.5 million for the six months ended June 30, 2025. The year-over-year increase in net loss was largely offset, for purposes of determining operating cash flows, by an approximately $162.8$212.2 million,million mainlyincrease duein non-cash adjustments, primarily attributable to the increasedhigher unrealized losslosses onfrom changes in the fair value changes of digital assets and increased amortization of intangible assets,assets. andIn addition, changes in operating assets and liabilities increasedresulted in an approximately $0.5 million.$7.1 million increase in net cash used in operating activities, mainly attribute to the increase of prepayments made to third parties for selling and marketing services and research and development services. This increase was partially offset by an increase in other payables and accrued liabilities, which primarily attributable to the accrual of research and development expenses incurred but not yet paid.

Net cash used in investing activities was $100,000approximately $6.0 million for the threesix months ended MarchJune 31,30, 2026, as compared to $nil for the threesix months ended MarchJune 31,30, 2025. The increase in net cash used in investing activities was due to the purchase of intangible assets of $6.0 million and purchase of digital assets of $100,000 for the threesix months ended MarchJune 31,30, 2026.2026, partially offset by the Proceeds from disposal of digital assets of $71,201.

Net cash provided by financing activities was approximately $0.3$25.1 million for the threesix months ended MarchJune 31,30, 2026, as compared to approximately $0.9$4.8 million for the threesix months ended MarchJune 31,30, 2025. The decreaseincrease in cash flow from financing activities primarily due to the absence of funds from share issuance, partially offset by the proceeds from aApril related2026 party.At-the-Market Offering and June 2026 Offering.

The Company’s determination of whether or not an indication of impairment exists at the cash generating unit level requires significant management judgment pertaining to intangible assets, including a software copyright of AI Box, which is used for online living-stream and a software copyright of Chat Box, which is used for online interactive entertainment scenarios, as well as the operating Right-of-use (“ROU”) assets, including the offices of the Company. Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s intangible assets and ROU assets are impaired. For the threesix months ended MarchJune 31,30, 2026 and 2025, the Company did not recognize any impairment losses in long-lived assets.