Executive Summary / Key Takeaways

• Pop Culture Group Co., Ltd. (CPOP) is undergoing a significant strategic transformation, pivoting from its traditional Chinese hip-hop and event-focused entertainment business into a diversified cultural industry operation with a strong emphasis on Web3 technologies and innovative lifestyle solutions.
• The company is making a full-scale entry into the crypto entertainment market with a planned $100 million "Crypto Pop Fund," aiming to integrate AI, blockchain, tokenization, and gamification to revolutionize ticketing, audience engagement, and financing for live events.
• CPOP has also diversified into residential real estate with its "Huaya Times" project, offering a unique "20-year long-term lease + fixed low-rent residency rights" model, signaling a broader ambition to provide lifestyle solutions.
• Despite reporting substantial revenue growth in 2024 to $47.38 million, the company continues to face profitability challenges, with a net loss of -$12.41 million in 2024 and TTM net profit margin of -26.19%, necessitating recent capital raises, including a $6 million direct offering.
• The investment thesis hinges on CPOP's ability to successfully execute these ambitious, technology-driven diversification strategies and achieve profitability in highly competitive and evolving markets, while managing inherent risks associated with new ventures and regulatory landscapes.

CPOP's Evolving Identity: From Hip-Hop Roots to a Web3 Future

Pop Culture Group Co., Ltd. (CPOP), established in 2020 and headquartered in Xiamen, China, has rapidly evolved from its foundational focus on hip-hop related entertainment events to become a diversified cultural industry operation enterprise. Initially, the company specialized in hosting concerts, dance competitions, cultural festivals, and promotional parties for corporate clients, alongside creating hip-hop online programs and providing comprehensive event planning services across various sectors. This historical emphasis on live entertainment and event execution provided CPOP with deep operational experience and a strong understanding of the Chinese cultural market.

The company's strategic trajectory now extends far beyond its initial scope, embracing a broader vision for Chinese Pop Culture industrialization. This expansion encompasses live entertainment, digital entertainment services, artist management, and investment in film and television content. CPOP's journey reflects a dynamic response to evolving consumer preferences and technological advancements within the entertainment industry, particularly the burgeoning digital and Web3 landscapes.

Technological Edge: Fueling the Future of Entertainment

At the core of CPOP's ambitious transformation is its strategic embrace of cutting-edge technologies, including Artificial Intelligence (AI), blockchain, tokenization, and gamification. These technologies are not merely supplementary but are foundational to the company's vision of a "global Web3 pan-entertainment super ecosystem."

CPOP aims to leverage these innovations to revolutionize fundamental aspects of the entertainment industry. Specifically, the company intends to transform ticketing systems, enhance real-time audience engagement experiences, and develop innovative financing solutions for music festivals and concerts. The strategic intent is to shift entertainment from "disposable emotional experiences into sustainably appreciating digital assets," as articulated by CEO Huang Zhuoqin. This approach seeks to create a symbiotic network connecting creators, users, and the platform itself, thereby establishing a significant competitive moat in the rapidly evolving digital entertainment space.

While specific quantifiable performance metrics for these technologies are not yet publicly detailed, the strategic intent is clear: to drive efficiency, create new revenue streams, and deepen audience connection. The company's existing Web3 digital collectibles, such as "Bored Ape" and "Hip-Hop Master" NFTs, demonstrate an early foray into this space. The immense potential of celebrity IPs in the digital collectibles market is underscored by the "Fantasy Bear" NFT project by Jay Chou's company, which recorded a single transaction of 3.2 million yuan. This highlights the significant financial opportunities CPOP aims to capture through its technological roadmap.

Strategic Diversification: Beyond the Stage

CPOP's recent strategic initiatives underscore a bold diversification strategy, moving beyond its traditional entertainment core into new, high-growth areas. These moves are designed to broaden revenue streams and capitalize on emerging market opportunities.

A significant pivot is the company's full-scale entry into the trillion-dollar crypto entertainment market with the planned establishment of a $100 million "Crypto Pop Fund". This initiative includes accumulating an additional 1,000 Bitcoin (BTC) over the next year, building on an earlier $33 million investment that acquired 300 BTC. The fund will target promising cryptocurrencies like Bitcoin, Ethereum (ETH), and BOT, as well as Web3 pan-entertainment projects and artist incubation. This aggressive move positions CPOP at the forefront of integrating digital assets with entertainment, aiming to create a new paradigm for content monetization and fan engagement.

Further diversifying its portfolio, CPOP officially launched the "Huaya Times" residential project in Xiamen on July 24, 2025. This innovative venture introduces a "20-year long-term lease + fixed low-rent residency rights" model, presenting a third option beyond traditional buying or renting. The project aims to redefine urban living by providing stable, high-quality experiences at a reasonable cost, shifting the industry focus from "selling properties" to "providing lifestyles." "Huaya Times" features comprehensive amenities, including "8 public areas for all age groups" and a free community shuttle service that reduces average commute times by 40%. Units range from 46 to 92 square meters, offering various finish choices and constructed by a Fortune Global 500 company, Shaanxi Construction - Minqin Construction Co., Ltd., ensuring high quality.

In the content creation sphere, CPOP has expanded its intellectual property (IP) portfolio through strategic partnerships. The company signed an exclusive collaboration with trend comics artist Li Guo to co-create a new IP series, fusing classic aesthetics with contemporary youth culture, particularly in trendy sports comics. Additionally, CPOP entered a deep strategic cooperation with Macau Platinum, a professional distributor of short dramas, to invest core resources into Chinese short drama projects for global distribution. This partnership leverages Macau Platinum's distribution network and data capabilities to create high-quality content for the international market.

Financial Performance and Capital Structure: A Turnaround Story in Progress

CPOP's financial performance in recent years reflects a company in transition, marked by significant revenue growth alongside persistent profitability challenges. For the fiscal year ended June 30, 2024, total revenue surged to $47.38 million, a substantial increase from $18.54 million in 2023. The trailing twelve months (TTM) revenue as of September 26, 2025, stands at $65.19 million. This revenue expansion indicates a growing top line, likely driven by the company's diversified initiatives and its core entertainment services. Despite robust revenue growth, CPOP has faced considerable profitability hurdles. The company reported net losses from continuing operations of -$24.33 million in 2023 and -$12.41 million in 2024. The TTM net income as of September 26, 2025, remains negative at -$7.50 million.

Key profitability metrics underscore these challenges: a TTM Gross Profit Margin of 6.08%, Operating Profit Margin of -28.79%, and Net Profit Margin of -26.19%. These figures highlight the significant costs associated with CPOP's operations and its ongoing investments in new ventures.

Operational challenges are also evident in the increase in the provision for doubtful accounts, which rose from $1.31 million in 2022 to $8.33 million in 2024, and impairment of capital assets totaling $1.11 million in 2023 and $5.20 million in 2024. These indicate potential issues with asset quality and receivable collection. Cash flow from operations has also been negative, with -$5.16 million in 2024 and TTM operating cash flow of -$5.16 million, leading to negative free cash flow of -$5.17 million in 2024.

To bolster its capital structure and fund these ambitious strategic pivots, CPOP recently announced a registered direct offering of 5,000,000 Class A ordinary shares at $1.20 per share, expected to generate approximately $6.0 million in gross proceeds. These net proceeds are earmarked for working capital and general corporate purposes, crucial for supporting the company's expansion into crypto entertainment and residential solutions. As of September 26, 2025, CPOP maintains a current ratio of 1.83, suggesting adequate short-term liquidity despite its losses. However, a debt-to-equity ratio of 173.62% indicates significant leverage, a factor that warrants close monitoring by investors.

Competitive Landscape: Carving a Niche in a Dynamic Market

CPOP operates within a highly dynamic and competitive entertainment and lifestyle services sector, facing both large, diversified conglomerates and specialized niche players. Its competitive positioning is defined by its unique blend of cultural expertise, localized market focus, and an aggressive push into new technological frontiers.

Direct competitors include global live entertainment giants like Live Nation Entertainment (LYV), as well as major Chinese digital content and media platforms such as Bilibili Inc. (BILI), Tencent Holdings (TCEHY), and Alibaba Group (BABA) through their respective entertainment and marketing arms. Live Nation, with its global scale and extensive venue network, typically exhibits stronger profitability and cash flow generation, as evidenced by its 2024 revenue of $23.156 billion and positive operating income. CPOP's niche in Chinese cultural events and tailored corporate services provides a differentiated offering, allowing it to compete effectively in specific segments where cultural relevance and localized execution are paramount. However, CPOP's financial health, marked by recent losses, suggests more moderate growth and profitability compared to Live Nation's established global operations.

Against Chinese digital powerhouses like Bilibili and Tencent, CPOP's competitive stance is more nuanced. Bilibili reported strong financial performance in the first half of 2025, with net revenues increasing by 21.6% year-over-year to RMB 14.34 billion and achieving a net profit of RMB 207.6 million, driven by mobile games and advertising. Tencent, a dominant force in digital media and gaming, consistently demonstrates strong revenue growth and healthy profitability margins, with TTM revenue of $90.11 billion. CPOP's emphasis on physical events and corporate branding offers a distinct value proposition compared to Bilibili's user-generated content and community focus, or Tencent's vast digital ecosystem. While CPOP may lead in execution speed for niche, culturally specific events, it lags in technological capabilities and market reach compared to these scaled digital platforms. CPOP's event-dependent revenue model could be less stable than the recurring digital income streams of its larger, more diversified Chinese counterparts.

CPOP's competitive advantages, or moats, stem from its deep expertise in hip-hop and broader Chinese cultural events, its established corporate partnerships, and its regulatory licenses within China. These strengths foster customer loyalty and can lead to recurring revenue in specialized segments. The company's strategic pivot into Web3 technologies, particularly its "Crypto Pop Fund" and the integration of AI, blockchain, tokenization, and gamification, aims to create new competitive advantages by transforming traditional entertainment models. This technological differentiation could enable CPOP to capture market share in emerging digital entertainment segments and potentially improve gross margins by offering innovative, high-value services.

However, CPOP also faces vulnerabilities, including its primary focus on the China market, potential customer concentration, and the need to rapidly develop and integrate advanced digital tools to match the innovation speed of its tech-centric rivals. These factors could impact revenue stability and profitability, making CPOP susceptible to shifts in market preferences or intensified competition. The barriers to entry in CPOP's industry, such as regulatory approvals and established networks, offer some protection but also favor larger, well-capitalized competitors.

Outlook and Risks: A High-Stakes Transformation

CPOP's outlook is defined by an ambitious, high-stakes transformation, with its future growth heavily reliant on the successful execution of its diversified strategies, particularly in Web3 and lifestyle solutions. The company's commitment to accumulating 1,000 Bitcoin for its "Crypto Pop Fund" and integrating advanced technologies like AI and blockchain into its entertainment offerings signals a clear intent to capture a significant share of the evolving digital entertainment market. The "Huaya Times" project also represents a bold move into a new sector, aiming to redefine residential living with its innovative lease model.

While specific quantitative guidance figures are not available, management's strategic rationale points to a future where entertainment experiences are transformed into "sustainably appreciating digital assets." The 2025 Equity Incentive Plan, which became effective on September 17, 2025, is a key initiative to attract and retain talent crucial for driving these complex strategic shifts.

However, this ambitious transformation is not without substantial risks. Execution risk is paramount, as CPOP is simultaneously venturing into multiple new and complex areas, including cryptocurrency investments, blockchain-based entertainment, and innovative real estate models. Each of these segments carries its own set of operational and market challenges. Regulatory uncertainty in both the crypto market and China's real estate sector poses significant external risks that could impact the viability and profitability of these new ventures. Furthermore, CPOP faces intense competition from larger, more established players with greater financial resources and technological infrastructure. The company's historical unprofitability, despite recent revenue growth, underscores the financial pressures it must overcome to achieve sustainable success in these new markets. The recent direct offering, while providing capital, also resulted in dilution for existing shareholders.

Conclusion

Pop Culture Group Co., Ltd. stands at a pivotal juncture, undergoing a profound transformation from a traditional Chinese entertainment provider to a diversified cultural industry and Web3 innovator. The company's strategic pivots into crypto entertainment, underpinned by its "Crypto Pop Fund" and the integration of AI, blockchain, tokenization, and gamification, represent a forward-looking attempt to redefine audience engagement and content monetization. Concurrently, its foray into lifestyle solutions with the "Huaya Times" residential project demonstrates an expansive vision beyond its entertainment core.

This ambitious strategy positions CPOP as a high-risk, high-reward investment. While the company has demonstrated impressive revenue growth, its persistent unprofitability and significant leverage highlight the substantial execution challenges ahead. The success of CPOP's vision hinges on its ability to seamlessly integrate its technological roadmap, effectively manage the complexities and regulatory uncertainties of its new ventures, and carve out sustainable competitive advantages against formidable rivals. For discerning investors, CPOP represents a compelling, albeit speculative, opportunity to participate in the evolution of Chinese pop culture and the emerging Web3 economy, provided the company can translate its bold strategic intent into tangible and profitable operational realities.