GD Culture Group Ltd Fair Value Disclosure
Note 3 – Fair Value of Financial Instruments
ASC 820, Fair Value Measurements states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires the use of observable market data when available in determining fair value. The Company’s assets and liabilities that were measured at fair value on a recurring basis were as follows (in millions):
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||
| Fair Value | Level I | Level II | Level III | Fair Value | Level I | Level II | Level III | |||||||||||||||||||||||||
| Digital assets (1) | $ | 663 | $ | 663 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Total | $ | 663 | $ | 663 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
As of December 31, 2025, the Company’s digital assets were comprised of 7,500 units of Bitcoin, at cost of $842 million. These Bitcoins were originally held by Pallas and continued to be held following the Company’s acquisition of Pallas. In accordance with ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets, the Company accounts for its crypto assets as indefinite-lived intangible assets measured at fair value, with changes in fair value recognized in net income in each reporting period.
The fair value of Bitcoin is determined based on quoted prices in active markets. The Company does not apply amortization to digital assets. Gains and losses resulting from changes in fair value are presented within “Other income” in the consolidated statements of operations.
As of December 31, 2025, the fair value of the Company’s Bitcoin holdings was $662,996,878. For the year ended December 31, 2025, the Company recognized a net loss of $178,507,882 in the consolidated statements of operations related to changes in the fair value of its Bitcoin holdings. There was disposal of digital assets during the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 18, 2025 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.